Case study summary
A suspicious matter report (SMR) was the catalyst for a law enforcement investigation, which led to the arrest of an offender for structuring (a money laundering technique that involves the deliberate division of a large amount of cash into smaller deposits to evade threshold reporting requirements) cash deposits to avoid threshold transaction reporting requirements. The offender structured cash deposits totalling more than AUD2.5 million over a five-year period.
The offender was charged with:
- commonwealth offences relating to structuring transactions and;
- firearms related offences under State law.
He pleaded guilty to all offences and was ordered to pay a pecuniary penalty order of over AUD1 million.
This case study involves the stockpiling of cash and the structuring of cash deposits to launder funds and evade tax.
The following indicators may help identify similar criminal activity:
- a large cash deposit into an account, including a term deposit account, above the customer's established transactional activity
- advice from a customer that a large cash deposit is the result of stockpiling cash
- structured cash deposits into personal credit card accounts on the same day
- regular structured cash deposits deposit of personal cheques drawn on customer’s accounts held with another bank
- exchange of cash for the equivalent amount in denominations of AUD100
The offender was the owner and sole director of a retail business. He used cash, derived from the business, to systematically structure cash payments in an attempt to avoid transaction reporting requirements.
Once alerted by AUSTRAC, law enforcement conducted enquiries into the offender's suspicious financial activities. Enquiries identified that, on 28 occasions, the offender deposited AUD9,500 in cash into his personal credit card account. On a number of occasions the offender conducted two separate cash deposits of AUD9,500 on the same day.
Authorities alleged that the offender made regular structured deposits of cash obtained through his commercial business into his personal bank account in an attempt to avoid transaction reporting requirements.
Search warrants were executed at the offender's residential and commercial properties. As a result, law enforcement officers seized approximately AUD70,000 cash as well as a number of unlicensed firearms and ammunition.
Law enforcement restrained:
- funds deposited into an account,
- two residential properties and
- two commercial properties
These had a combined net worth of approximately AUD7 million.
A SMR, submitted by a bank, triggered AUSTRAC's automated monitoring systems . AUSTRAC forwarded the SMR to law enforcement which alerted them to the financial activities of the offender.
This SMR relating to the offender noted:
- The offender deposited a personal cheque for AUD570,000 and cash totalling AUD1 million into a term deposit account on the same day, at the same time. The term deposit account was held in the name of a business owned and operated by the offender.
- The cheque for AUD570,000 was drawn on an account held by the offender with another bank.
- The bank staff asked the offender about the origin of the funds. The offender claimed:
- the cash was obtained through his commercial business
- he accumulated the cash to avoid paying tax
- he intended to buy a residential property using cash.
- The term deposit had been operating for two-and-a-half years and its balance was AUD2.1 million. The majority of deposits were made in cash.
- Each time the term deposit was due to expire, the offender deposited additional cash in amounts of AUD250,000, using AUD100 notes and cheques drawn on an account with another bank.
Further AUSTRAC information revealed:
- Over five years, the offender made regular cash deposits into his personal credit card account. These amounts were just below the AUD10,000 cash transaction reporting threshold.
- In one three-month period, the offender deposited AUD125,000 in cash into his personal credit card account in a series of AUD9,000 deposits.
- The offender exchanged AUD15,000 in cash from AUD50 notes to AUD100 notes.
- The offender deposited AUD250,000 in cash and AUD450,000 in cheques, on the same day, into his term deposit account. The cheques were drawn from personal and business accounts held by the offender with another bank.
AUSTRAC also received threshold transaction reports (TTRs) indicating that the offender made more than AUD2.5 million in cash deposits over a five-year period.
- The offender was convicted of one rolled up count of structuring transactions contrary to section 142 of the Anti-Money Laundering Counter Terrorism Financing Act 2006 (Cth) and issued with a $7,000 fine.
- The offender was ordered to pay a pecuniary penalty order of over $1,000,000.
- The offender pleaded guilty to 13 counts of firearm related offences under relevant state law. A conviction was recorded.
Case study summary
|Industry||Authorised deposit-taking institution (ADI)|