AUSTRAC uncover tax crime link
In October 2009, the Organisation for Economic Co-operation and Development stated that 'tax crime is one of the top three sources of dirty money'. The Australian Transaction Reports and Analysis Centre (AUSTRAC) works closely with the ATO to uncover and disrupt cases of money laundering and tax crime.
The following case study, from the recently published AUSTRAC typologies and case studies report 2010External Link, illustrates how tax evasion and money laundering can be linked.
AUSTRAC began monitoring the transactions of a network of suspects after receiving reports about their financial activity. The reports detailed the suspects' substantial gambling activities and revealed casino chip cash-outs* worth over AUD1 million and casino chip buy-ins* worth almost AUD500,000.
Additionally, more than AUD80,000 was sent to Vietnam by one network member. A subsequent report to AUSTRAC revealed this same individual was purchasing casino chips on behalf of another suspect.
This financial intelligence was found to relate to an ongoing joint investigation by law enforcement agencies into taxation fraud. Initial search warrants resulted in the seizure of AUD735,000 in cash.
Further investigation revealed two of the suspects were the directors of a company involved in a 'round-robin' money laundering scheme, where illicit funds generated by tax fraud were filtered through sub-contractor companies. The scheme involved:
- payment of cash wages to employees. Authorities believe over AUD2 million in cash income was hidden using this method
- creation of sub-contractor companies linked to the main company, which were used to issue false invoices. Through these false invoices, more than AUD1 million was over-claimed as GST input tax credits through the sub-contractor companies when in fact the suspects had actually withdrawn the funds from the sub-contractor companies as cash for their own use.
Both suspects were convicted on two counts of defrauding the Commonwealth, several counts of obtaining property by deception and dishonestly causing a risk of loss to the Commonwealth and one count of dealing with money or property intended to become an instrument of crime. They were each sentenced to a total of ten years imprisonment.
The AUSTRAC typologies and case studies report 2010External Link is available on AUSTRAC's website www.austrac.gov.aExternal Link
* Chip cash-out - the process of converting casino gambling chips back into cash.
* Chip buy-in - the process of converting cash into gaming chips to be used in casino gambling.