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Syndicate used real estate and trust accounts to launder cannabis cash

Image of Cannabis plant

An Australian drug syndicate used multiple money laundering methods to launder more than AUD1 million worth of proceeds of crime. Trust accounts, a ‘front’ company, high-value goods and real estate were used to launder the profits from cannabis sales. The syndicate also misused the services of two ‘professional facilitators’ (an accountant and solicitor) to facilitate its criminal activity.

The syndicate made significant profits by purchasing bulk amounts of cannabis in one state and then selling the drugs in another state. As a cover for its illicit activities, the syndicate established what appeared to be a transport company. The syndicate purchased a truck and rented a warehouse in the name of the company and used these to traffic the cannabis interstate.

The syndicate used four methods to launder its illicit profits.

  • The syndicate members employed a company that specialised in processing wages to pay them a wage from their new transport company. Members of the syndicate deposited the cash proceeds of the cannabis sales into the transport company’s account. From this account the funds were transferred to the wage processing company. The wage processing company then paid these funds to the syndicate members, seemingly as legitimate wages. Syndicate members were paid a wage of around AUD100,000 per year.
  • The syndicate created trust accounts and investment companies. It gave an accountant AUD100,000 cash from the proceeds of cannabis sales and instructed the accountant to purchase shares in the name of the trust accounts and investment companies.
  • One syndicate member purchased a property worth more than AUD700,000 in a family member’s name. The property purchase was financed using a mortgage. This is an example of a criminal purchasing high-value goods in the name of a third party to disguise the true ownership of assets. Over a two-month period the syndicate member paid more than AUD320,000 in 16 cash deposits to their solicitor (who provided conveyancing services and acted on behalf of the syndicate member in the transaction) to pay off the mortgage on the property. These cash payments were the proceeds of crime.
  • The syndicate members invested the profits from the sale of the drugs to support their lavish lifestyle by using cash to purchase high-value goods including motor vehicles, jewellery, designer clothing and electronics.

Two suspect transaction reports (SUSTRs) submitted to AUSTRAC initially alerted law enforcement to the syndicate’s financial activity. These SUSTRs identified one member of the syndicate making multiple cash deposits into their account in amounts just below the AUD10,000 cash transaction reporting threshold. (This is an offence known as ‘structuring’. See the Glossary for a definition of ‘structuring’.) On occasions these deposits occurred on the same day but at different bank branches. The syndicate member explained to bank staff the funds were to purchase a home but could not explain the source of the funds.

AUSTRAC referred the SUSTRs to law enforcement and also prepared a financial intelligence report detailing the wider financial transactions undertaken by members of the syndicate and associated companies and trust accounts. This report supported existing law enforcement intelligence.

Law enforcement confiscated approximately AUD600,000 worth of assets that were proceeds of crime. Two members of the syndicate pleaded guilty to multiple money laundering and drug trafficking charges and both were sentenced to six years imprisonment.

Case 3 - Syndicate used real estate and trust accounts to launder cannabis cash

Case 3 - Syndicate used real estate and trust accounts to launder cannabis cash

Offence

  • Money laundering
  • Drug trafficking

Customer

  • Individual
  • Business

Industry

  • Banking (ADIs)
  • Real estate

Channel

  • Physical
  • Electronic

Report type

  • SUSTR

Jurisdiction

  • Domestic

Designated service

  • Account and deposit-taking services

Indicators

  • Client pays cash to accountant to purchase shares in the client’s trust account and in the name of investment companies
  • Mortgage for real estate taken out in relative’s name
  • Purchase of high-value goods in cash
  • Structured same-day cash deposits at multiple bank branches within a two to three-week period
  • Structured cash payments into solicitor’s account
  • Use of multiple large cash payments for mortgage repayment
  • Unexplained source of funds used to conduct cash deposits
Last modified: 30/07/2015 15:37