If you used a Commonwealth Bank ATM in Sydney’s inner-east around two years ago, you may have unwittingly witnessed the bagmen for a $22 million money laundering syndicate at work.
Court documents reveal details about members of one of the syndicates named by financial intelligence regulatory agency Austrac in a money laundering case targeting compliance at Australia’s biggest bank, CommBank.
The syndicate brazenly deposited tens of thousands of dollars into bank accounts in fake names at ATMs in Sydney’s Paddington and Surry Hills.
Shortly after one of the men in the syndicate deposited the cash, carefully making sure the amounts totalled less than $10,000, into several different bank accounts using different bank cards each time, another man transferred the cash from the CBA accounts to bank accounts in Hong Kong.
The men may not have been noticed by others at the bank – or, indeed, by CommBank – but they were being watched, nonetheless.
The AFP had them under surveillance on August 7, 2015, and would arrest them little more than a fortnight later.
Austrac’s case against CommBank in the Federal Court centres on streamline cash and cheque deposit ATMs introduced in 2012.
Within two years, the new intelligent deposit machines (IDMs) had been co-opted by at least four organised crime syndicates and used to launder at least $75 million, largely drug money, and get much of it out of the country under CommBank’s nose, Austrac alleged in court.
CommBank’s failures to pass on information about suspicious transactions posed a potential risk of terrorism or terrorism financing, Austrac alleged, accusing the bank of failing to inform regulators about some 53,000 suspicious transactions, including cash deposits in its new ATMs.
On August 7, 2015, Kha Weng Foong was the man making the deposits in inner Sydney. He arrived in Australia on a Malaysian passport in 2008, and was granted a temporary partner visa.
Yuen Hong Fung was the man police claim made the transfers. He travelled to Australia on a Hong Kong passport in another name in 2014, and was granted a temporary business visitor visa.
Along with another unidentified man, the syndicate were making as many as 25 deposits a day from late 2014 to August the following year.
Foong, alone, made 182 transactions in less than seven week before his arrest on August 24, 2015.
After his arrest, police found more than $200,000 cash, eight NSW drivers’ licences in different names with his photo, and multiple mobile phones at his Petersham unit and in his car.
At Fung’s apartment in Chippendale, police found $520,000 cash in $50 notes in a black bag, and two bundles of cash valued at more than $35,000 in set of drawers in a bedroom.
Both men have since been prosecuted, although the AFP did not charge them with offences prior to July, 2015.
Austrac suspects the syndicate used CBA intelligent deposit machines to deposit about $20.6 million, the majority of which was then transferred offshore.
It claims CBA failed to report suspicions relating to syndicate transactions valued about $22.7 million.
In a police interview, Fung claimed he had no idea there was $520,000 in the black bag, which had been given to him by someone called “Johnny”.
And, when asked who gave him the bank cards in the name Kevin Ho which were found in his wallet, he simply answered “I dunno”.
Austrac alleges that the new CommBank ATMs allowed customers to deposit up to 200 notes per deposit, which if used with $100 notes, would allow $20,000 to be deposited into an account in a single transaction. CommBank did not limit the number of transactions a customer could make. Banks are required to inform authorities of transactions over $10,000.
It didn’t take long for criminal syndicates to figure out they could exploit the loophole to launder money.
Austrac alleges syndicates laundered money using foreign nationals on holiday visas who deposited cash into CommBank accounts, much through the new IDM machines, followed immediately by international and domestic transfers.
Austrac says growth in the use of the direct deposit machines was huge.
In the six months from June to November 2012, nearly $90 million was deposited. But by January 2016 to June 2016, cash deposits had grown to about $5.8 billion. From May to June 2016 the amount was more than $1 billion. Banks are required to to report transactions of more than $10,000 to authorities within 10 days.
In its complaint to the Federal Court, Austrac detailed how four syndicates, including three with links to drug importation or manufacture, used CommBank to launder more than $75 million.
A second syndicate is alleged to be linked to a drug syndicate and involved more than $6 million being laundered via CommBank IDMs between June 2014 and January 2015. The money was transferred out of the accounts immediately after each deposit. Three individuals have been charged with dealing in proceeds of crime in connection with a drug importation syndicate.
A third syndicate linked to a drug manufacture and importation syndicate was accused of depositing and laundering more than $27 million that was transferred to offshore accounts. This syndicate is alleged to have made deposits of more than $530,000 regularly at branches. Some alerts were raised over these deposits at the bank but “were not reviewed in a timely manner”.
Austrac alleged that after CommBank raised concerns over one account, it allowed the “highly suspicious activity to continue”, with nearly $12 million allowed to be deposited and remitted overseas.
A fourth syndicate also linked to a drug importation and distribution syndicate, operating between February 2015 and May 2016, saw over $21 million deposited in cash into 11 CommBank accounts.
Another strategy uncovered in the operation involved a financial transfer strategy called “cuckoo smurfing”. Related parties in separate countries settled transactions within their company by transferring money within their company as opposed to across international borders, to potentially avoid triggering the interest of authorities.
Commonwealth Bank said it was working closely with Austrac and had cooperated fully.
“We take our regulatory obligations extremely seriously and we are one of the largest reporters to Austrac. On an annual basis we report over four million transactions to Austrac in an effort to identify and combat any suspicious activity as quickly and efficiently as we can.”
This article first appeared at Business Day. See the original article here.
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