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Remittance business laundered millions in drug money through student’s bank account

Image on money being handled by someone in gloves

A suspect transaction report (SUSTR) triggered AUSTRAC’s automated monitoring system, revealing a syndicate using a technique known as ‘cuckoo smurfing’ to launder funds, suspected to be the proceeds of illicit drug sales. A more detailed explanation of ‘cuckoo smurfing’ can be found in the AUSTRAC Typologies and Case Studies Report 2008.

The SUSTR was submitted after a legitimate customer in Indonesia attempted to transfer AUD1.75 million to his daughter, who was studying in Australia. However, the funds were unlawfully diverted by an Indonesian remittance dealer, who was connected with an international money laundering syndicate operating in Australia.

The money laundering methodology operated as follows:

  1. The customer in Indonesia deposited cash into the remittance dealer’s bank account in Indonesia. He provided the remittance dealer with his daughter’s Australian bank account details and instructed that the deposited funds be transferred to his daughter.
  2. Rather than transfer the funds to Australia, the Indonesian remittance dealer informed members of the syndicate in Australia of the daughter’s bank account details. The syndicate members in Australia used this information to make a number of ‘third-party’ cash deposits into the account. The syndicate members made multiple cash deposits at bank branches throughout New South Wales and Victoria. Often these deposits were made on the same day, prompting bank staff to suspect that the cash deposits may have been for illicit purposes.
  3. Over a six-week period, the daughter’s Australian bank account received 60 cash deposits totalling AUD1.75 million. The cash deposits ranged from AUD3,500 to AUD150,000.
  4. The cash the customer had originally deposited into the remitter’s bank account in Indonesia was transferred to another bank account (Account X) to be accessed by the syndicate members at a later time.
  5. This completed the ‘cuckoo smurfing’ operation. With the assistance of the complicit remittance dealer, the syndicate had introduced illicit cash into the Australian banking system via the bank account of the unsuspecting customer in Australia. This left the syndicate free to access the ‘clean’ money, which the Indonesian remitter had transferred into Account X, without attracting the attention of authorities.

The third-party depositors made deliberate attempts to avoid being identified when undertaking the deposits, prompting bank staff in Australia to report the transactions to AUSTRAC as suspicious. In particular, four SUSTRs submitted to AUSTRAC detailed how:

  • the third-party depositors attempted to avoid being identified by not wanting to provide their names and details on deposit slips and by writing telephone/fax numbers in an illegible manner
  • the third-party depositors only used their given names on deposit slips.

Authorities also identified that one of the third-party depositors was involved with a drug syndicate.

Case 21 - Remmitance business laundered millions in drug money through students bank account

Case 21 - Remmitance business laundered millions in drug money through students bank account

Offence

  • Money laundering

Customer

  • Business
  • Individual

Industry

  • Remittance services
  • Banking (ADIs)

Channel

  • Physical

Report type

  • IFTI
  • SCTR
  • SUSTR

Jurisdiction

  • Domestic
  • International – Indonesia

Designated service

  • Account and deposit-taking services

Indicators

  • High levels of cash deposits far in excess of expected legitimate banking activity of the account holder
  • Multiple cash deposits, at multiple bank branches, often on the same day
  • Third-party cash deposits made at branches distant from the branch at which the account is held
  • Third-party cash deposits made by unidentifiable persons
  • Third-party deposits made by evasive customers with incomplete identification
Last modified: 21/08/2015 14:41