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Money exchange business laundered millions for drug syndicate

Image of currency exchange board

A multi-million dollar money laundering syndicate was dismantled following a 12-month joint agency investigation. The investigation uncovered a currency exchange business being used to launder the proceeds of crime for a European drug syndicate.

Law enforcement officers suspected that the currency exchange business had laundered more than AUD2 million for the drug syndicate. During the law enforcement investigation, financial transaction activity recorded on AUSTRAC’s database helped unravel the money laundering process used by the syndicate.

A suspect representing the European drug syndicate arrived in Australia to transfer back to Europe the illicit cash proceeds generated by a drug importation. The following steps outline the method used to launder the funds.

  • When the suspect arrived in Australia, European syndicate members informed him that the illicit cash was located in a safe in an apartment. The suspect followed instructions and took possession of more than USD2 million cash.
  • Over a 10-day period the suspect delivered the US dollars, in large amounts, to the operators of the currency exchange business.
  • The operators of the currency exchange accepted the US dollars and instructed an agent, on their behalf, to deposit the cash into third-party bank accounts in structured amounts worth less than AUD10,000. The agent undertook hundreds of cash deposits, often depositing cash into the same account and on the same day, but at different bank branches. The deposits of US dollars were all in amounts worth less than AUD10,000 to avoid triggering threshold transaction reporting requirements.

The activities of the currency exchange business came to AUSTRAC’s attention after it was the subject of a number of suspect transaction reports (SUSTRs) submitted by industry. The SUSTRs detailed the suspicious transactions undertaken by the operators of the currency exchange, including:

  • structuring of foreign currency exchange transactions and travellers cheques
  • always exchanging the same two currencies: United States Dollar and Hong Kong Dollar.

AUSTRAC prepared a financial intelligence assessment on the exchange business’s suspicious activity and disseminated it to a law enforcement agency.

The suspect representing the European drug syndicate was arrested in possession of more than 28 kilograms of illicit drugs with an estimated value of AUD8 million.

Law enforcement officers seized a further AUD47,500 cash and restrained approximately AUD247,000 in assets related to the currency exchange operators.

The two operators of the money exchange business were charged, under section 11.5 of the Criminal Code Act 1995, on two counts of conspiracy to commit an offence (money laundering) against Commonwealth law. They were convicted and sentenced to seven years imprisonment on each count.

Case 17 - Money exchange business laundered millions for drug syndicate

Case 17 - Money exchange business laundered millions for drug syndicate

Offence

  • Money laundering

Customer

  • Business
  • Individual

Industry

  • Banking (ADIs)
  • Remittance services

Channel

  • Electronic
  • Physical

Report type

  • SUSTR

Jurisdiction

  • Domestic
  • International - Europe

Designated service

  • Account and deposit-taking services
  • Remittance services (foreign exchange)

Indicators

  • Structuring of cash transactions by currency exchange business to avoid reporting requirements
  • Multiple structured cash deposits using a foreign currency
  • Multiple same-day cash deposits into same accounts at different branches
  • Multiple structured transactions to purchase foreign currency and/or travellers cheques
Last modified: 30/07/2015 15:36