Last edition, we put the spotlight on AUSTRAC and their unique financial intelligence capabilities. This edition includes case studies that illustrate how these capabilities assist partner agencies to investigate and prosecute criminal and terrorist enterprises in Australia and overseas.
AUSTRAC's work increases the visibility of movement of funds, both within Australia as well as into and out of Australia. Patterns and suspicious behaviour identified by AUSTRAC analysts, using sophisticated software, can indicate where law enforcement agencies need to investigate potential criminal activity.
This is yet another example of cross-agency partnerships enabling us to close the gap on those who choose not to comply and demonstrates that it's not if, but when, they will be found out.
The following are extracts of real-life case studies featured in the AUSTRAC typologies and case studies report 2012.
Million dollar tax fraud uncovered
AUSTRAC intelligence assisted law enforcement in exposing a criminal syndicate which was facilitating large-scale tax evasion for a number of clothing manufacturers.
Clothing manufacturers were approached by promoters to evade income tax and other taxation obligations, and move their profits into the cash economy. The manufacturing businesses were associated with more than $16 million in cash withdrawals over a 12 month period.
The promoters set up a series of shell companies using details of members of the manufacturing companies. These shell companies created false invoices for fictitious goods and services, enabling the manufacturers to claim tax deductions for subcontracting expenses that were never incurred. Cheques from the manufacturers were deposited into the shell companies by syndicate members, and the funds withdrawn from various banks in small amounts and returned to the manufacturer, minus a commission. Manufacturers used the cash to fund their lifestyles and pay cash wages to their employees, thereby avoiding income taxes and super obligations. The scheme was uncovered through suspicious matter reports (SMRs) from reporting entities which helped reveal the syndicate's methodology.
Law enforcement officers restrained more than $1 million in cash, as well as a number of properties. Two members of the syndicate were charged with dealing in proceeds of crime.
Superannuation fraud syndicate disrupted
AUSTRAC helped a law enforcement agency to disrupt an identity theft and fraud syndicate targeting super accounts.
Syndicate members stole cheques, super statements and personal bank statements from mailboxes of victims and used this information to produce high-quality counterfeit identity documents, which were used to conduct frauds.
Other victims were approached directly and offered early access to their super funds or roll over to another fund promising high returns. Syndicate members used their details to steal the victim's super by rolling it into a fraudulent self-managed super fund and withdrawing the money leaving victims with nothing, or illegally withdrawing the super funds, taking a large fee, and paying the balance to victims in cash.
AUSTRAC acted on suspicious matter reports (SMRs) and suspect transaction reports (SUSTRs) with details about individuals suspected of perpetrating the fraud.
A total of 25 syndicate members were charged with more than 2,500 offences involving the laundering of over $8 million in fraudulently obtained funds. The head of the syndicate, who controlled three bank accounts which turned over $1.6 million was charged and found guilty of 57 counts of identity fraud and money laundering.
AUSTRAC's role in Project Wickenby
Cash flows reported to AUSTRAC are telling indicators of tax crime, and provide a unique capability in the work of Project Wickenby. AUSTRAC administers a comprehensive international funds transfer regime, overseeing the compliance of Australian businesses (known as 'reporting entities') and providing financial intelligence to other Australian government agencies and certain international counterparts.
Each year, AUSTRAC releases a Typologies and case studies report which includes case studies illustrating how legitimate services offered by Australian businesses have been exploited for criminal purposes.