**Editor’s note: Vision of this operation is available to download via hightail**.
Two Sydney men accused of laundering tens of millions of dollars for offshore Australian crime figures have been arrested and more than $1 million seized as part of an ongoing joint investigation into a transnational money laundering syndicate.
Police will allege the men work for an international money laundering organisation and have been moving illicit drug profits through a Sydney daigou, a surrogate shopping business.
The clients of this money laundering organisation allegedly include several high-value targets of Australian law enforcement who are currently based overseas.
Police executed search warrants in Sydney on Monday (10 August 2020), arresting a 37-year-old alleged ‘cash-collector’ as he delivered $1 million cash contained in cooler bags to a daigou business in Auburn.
A 40-year-old man from Dundas Valley, who is allegedly the Sydney-based coordinator of the overseas money laundering enterprise, was arrested as he left a pub in Ermington.
The two men were allegedly identified as part of a long-running joint agency investigation into the money laundering operation, which has involved the Australian Criminal Intelligence Commission (ACIC) and the United States Drug Enforcement Administration (DEA).
New South Wales Police arrested a third man – a 21-year-old Jannali man - who is accused of handing over the bags of cash to the 37-year-old to be ‘laundered’.
The 37-year-old Carlingford man and 40-year-old Dundas Valley man have been charged with Dealing in the proceeds of crime - money or property worth $1,000,000 or more, contrary to section 400.3(1) of the Criminal Code (Cth).
This offence carries a maximum penalty of 25 years’ imprisonment.
Investigations are ongoing into whether the daigou operators were aware that they were allegedly helping to move ‘dirty money’ offshore on behalf of the criminal money laundering organisation.
Daigous use cash to legally buy goods in Australia that are sought-after in China, including baby formula, cosmetics and luxury clothing and accessories.
They then export the goods for re-sale. If they are sold on behalf of money launderers, the profit from selling the goods would go to a money launderer, who would have already released funds to their offshore criminal clients as per the money laundering arrangement.
Police claim money laundering operations often funnel illegitimate funds through the cash-intensive daigous so they can transfer dirty proceeds offshore without using Australian bank accounts, in a bid to avoid the attention of authorities.
Police will allege the two Sydney men have funnelled millions of dollars from the sale of drugs through the daigou business on behalf of their criminal clients.
AFP Federal Agent Geoff Hyde said money laundering networks help transnational serious organised crime groups access the profits from their Australian crimes by moving the proceeds offshore.
“Money laundering is a key enabler of organised crime and drug trafficking – and is a serious criminal enterprise in its own right,” he said.
“That ability to move the money offshore enables international drug trafficking organisations to continue the cycle of importing drugs into Australia, selling them and accessing those profits by getting the proceeds of sales offshore.”
Federal Agent Hyde said while police will allege the heads of the money laundering network and many of their clients are overseas – they should not think they are untouchable by Australian law enforcement agencies.
“We are working closely with our partners to track their activities and make them accountable to the law. We aim to outsmart them, we will strip them of their dishonest wealth and we will dismantle their criminal networks.”
State Crime Command’s Organised Crime Squad Commander, Detective Superintendent Martin Fileman said NSW Police would continue to work with their partners to dismantle international criminal networks operating in NSW.
“Our priority is to keep the people of this state safe from threats both locally and abroad,” Det. Supt. Fileman said.
“Those who attempt to benefit from criminal activity in NSW should know that we are working closely with our partnering agencies to pull apart their operations and put them before the courts.”
BACKGROUND: Money Laundering Networks
International Controller Network
An International Controller Network is an organised criminal group which specialises in laundering the proceeds of crime between international jurisdictions. They are professional money laundering networks which have extensive global reach and employ a variety of money laundering methodologies. The networks are hierarchical in nature and consist of a number of defined roles. The roles most commonly consist of a Controller, Coordinator, Collector and Transmitter.
At various levels within an International Controller Network, records are kept to enable the Controller to balance transactions, manipulate cash pools and keep track of remittances. Typically the Coordinators and Collectors will keep hand written ledgers or electronic records of transactions. It is common for ledgers to contain lists of token numbers, account numbers, names, dates, receipt numbers and/or amounts of cash. These records can also include coded language and slang terms.
The Controller is often based in an overseas location and is responsible for directing the activities of the group and being the point of contact for Organised Crime Groups who want to launder money. The Controller’s business model relies heavily on their reputation to be able to guarantee the transmission of value from one jurisdiction to another. The Controller makes a profit by charging a commission for each transaction undertaken by their network, as well as negotiating the currency exchange rate in their favour.
The Coordinator in an International Controller Network is responsible for managing the Collectors and Transmitters. They execute the instructions of the Controller and may be based in Australia or overseas. This role is not always present in an International Controller Network and can be dependent on the size of the group in that particular jurisdiction.
The Collector in an International Controller Network acts upon the direction of the Controller or Coordinator and collects the proceeds of crime from Organised Crime Groups generally through token based exchanges. They can then provide the money to Transmitters to process, or fill the role of Transmitter themselves and deal with the proceeds of crime.
Transmitters in an International Controller Network are responsible for getting the proceeds of crime off shore. This is usually achieved through structured depositing into bank accounts,
handing the cash to a registered remittance service, handing the cash to an unregistered remittance service or handing the cash to a third party to balance unrelated transactions undertaken through Informal Value Transfer Systems, including those operated by Hawala and other similar service providers.
Explainer of money laundering
Organised crime group leaders based overseas, for example in Columbia, sell their drugs through a local distributor in Australia.
The drug distributor in Australia needs to launder the proceeds and get the money back to the syndicate heads in Columbia without attracting the attention of authorities.
They reach out to a money-launderer, often based in Asia, and negotiate a contract on how much is to be laundered, and how. The money-launderers then nominate a cash collector in Australia.
The Australian drug distributors will nominate a money-man to meet the Australian cash collector working on behalf of the overseas money-laundering organisation. The money-man will hand over the cash to be laundered.
The money-launderer will have a large supply of cash on hand either in Asia, or in Colombia, and will then release the money to the offshore syndicate, charging a commission.
The cash collector in Australia then gets to work turning the illegal drug profits into legitimate cash or goods. This can be done by funnelling money through cash-based businesses such as “daigous’’ – legal businesses buying goods to send back to China. Daigou translates to “surrogate shopper.’’
The daigous hire members of the Australian Chinese community to buy large amounts of baby formula, cosmetics, vitamins, designer shoes and handbags from pharmacies, supermarkets and department stores.
The goods are then shipped to China and re-sold, with the profits going back to the Asian-based money-launderer.
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