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Taskforce Avarus: ‘Red-shoe crime ring’ busted wide open by police
New money laundering taskforce tackles lifeblood of organised crime
Editor’s Note: Audio grabs from AFP Assistant Commissioner Stephen Dametto are available via Hightail.
The AFP is unleashing a highly-skilled, multi-agency taskforce to target criminals who are laundering tens of millions of dollars in Australia every day to bankroll lavish lifestyles and further crime.
Revealed today, Taskforce Avarus is the next targeted offensive against Australian and offshore organised criminals, who are laundering money through the nation’s financial system and property market at an alarming scale.
Recent investigations have exposed the extent of large-scale and systemic money laundering throughout Australia, with a high proportion driven by illicit drug trafficking.
It is believed billions of dollars are being laundered in Australia every year. Intelligence and investigations have revealed that:
- One Sydney criminal gang in 2022, on some days, was laundering $1 million every hour for three to five hours;
- On behalf of organised crime, students, foreign nationals and others are making multiple, significant illicit cash deposits in ATMs – going from one ATM to the next;
- Money mules are being flown throughout Australia to collect illicit money and then deposit it into ATMs;
- Safe houses across Australia are hiding illicit money – sometimes millions of dollars;
- Cash couriers have moved large amounts of illicit cash to “dead drop zones” in parks and bushland;
- Criminal syndicates are using baby formula, vitamins and high-end goods to launder money;
- Criminal syndicates are opening bank accounts in the names of law-abiding Australians to move money offshore; and;
- Illicit money is being used to invest in property, often further enriching organised crime.
Taskforce Avarus is using the firepower of the AFP, AUSTRAC, Australian Criminal Intelligence Commission and Australian Border Force to unravel the complex structures and methods criminals adopt to hide their illicit money.
With Commonwealth partners in the Taskforce, the AFP will also seek the participation of a number of public private relationships, including financial institutions that currently assist law enforcement to combat money laundering.
Working closely with private industry will make the sharing of information faster and increase bilateral capability.
Overseas law enforcement agencies, which have significant partnerships with the AFP, will also work closely with the Taskforce.
The AFP collaborates with its law enforcement counterparts to target money laundering organisations and assist with arrests offshore and possible court processes in Australia.
Additionally, the AFP participates in the Five Eyes Law Enforcement Group’s Money Laundering Community of Practice, which brings together senior law enforcement leaders and subject matter experts to share intelligence and cooperate on international operations.
Australia will host the next face-to-face meeting of the Communities of Practice in Sydney later this year.
The AFP’s investigative resources now dedicated to the Taskforce have executed 164 search warrants.
Forty-two people have been arrested, 66 charges laid, and criminal groups have been deprived of more than a $250 million in cash and assets.
Overall in 2022, the AFP charged 74 people with 82 money laundering offences.
In the same year, the AFP-led Criminal Assets Confiscation Taskforce (CACT) obtained restraining orders over criminal assets, including real estate, cash, cryptocurrency, vehicles, jewellery and luxury items, with a combined value of about $160 million.
Operation Avarus-Midas last month alone resulted in the arrest of nine people in Australia and one person in Malaysia.
The AFP executed 13 premises search warrants across Sydney on 1 February, 2023. The CACT sought and obtained restraining orders in the Supreme Court of NSW over 20 properties, with all assets, including seized cash and luxury items totalling more than $200 million, including $30 million in cryptocurrency.
AFP Assistant Commissioner Eastern Command Stephen Dametto said money laundering undermined Australia’s national security, the economy and social security system.
“These money laundering syndicates being targeted by the taskforce are sophisticated, international groups with one purpose - to provide a shadow economy enabling crime,’’ Assistant Commissioner Dametto said.
"They exist only to launder money on behalf of organised crime and rely on the expertise of professionals, such as lawyers and accountants, to help them evade law enforcement.
“This dirty money that is laundered through our economy is not only bankrolling lavish lifestyles but also funding future crime, such as more illicit drug importations and weapons trafficking. Put simply, without the ability to launder their money, transnational serious organised crime ceases to function.
“While law-abiding Australians are earning an honest day’s living, paying their taxes or being good community citizens, organised crime gangs are using money gained illegally to increase their wealth.
“They are buying homes, commercial property, investing in our financial systems and living large without the financial pressures felt by ordinary Australians.”
AUSTRAC Deputy CEO Intelligence Dr John Moss said there was an inaccurate perception that money laundering was a victimless crime.
”It’s important to understand that money laundering is not something that just happens in movies. It is a real-world crime with real-world consequences, and not in some place far away, but right here in Australia, and in our communities,’’ Dr Moss said.
“Criminals engage in the activities which are the most lucrative, like trafficking in drugs or humans. So when criminals are cleaning the money made from these crimes, people shouldn’t lose sight of the child that was exploited, or the violence and deaths caused by the trafficking of illicit drugs.
“That’s why AUSTRAC is proud to be part of this taskforce and brings our strong partnership with the financial industry through the AUSTRAC-led Fintel Alliance, our deep expertise in Financial Intelligence and our regulatory powers to work with our law enforcement partners to hit transnational, serious and organised crime where it hurts.”
ABF Assistant Commissioner Erin Dale said the ABF is committed to whole of government priorities in combatting money laundering activities that are facilitated through, and impact the integrity of, Australia’s border.
“This taskforce allows the ABF to maintain a contemporary operational presence in the area of serious organised crime where there is an identified border nexus,” Assistant Commissioner Dale said.
“Multi-agency activities like AVARUS provide an important opportunity for law enforcement partners to leverage the ABF’s substantial capabilities.
“And so while the ABF will continue to fiercely protect the integrity of Australia’s border, Taskforce AVARUS will only serve to further enhance our capability to target activities driven by criminal syndicates,” she said.
Anyone with information about suspicious border activity or border-related crime the community can report it anytime through Border Watch at borderwatch.gov.au. Information can be provided anonymously.
ACIC Executive Director Intelligence Operations Jennifer Hurst said that the ACIC is committed to supporting its partners deliver on their functions as they relate to money laundering which is a key enabler for transnational serious organised crime.
“The vast majority of organised crime is motivated by profit. The ACIC is committed to working collaboratively with our partners to develop intelligence on money laundering to better inform operational responses and insights.”
WHY CRIMINALS MONEY LAUNDER AND HOW THEY DO IT
Money is the lifeblood of organised crime. The AFP has already had significant success intargeting the encrypted communications of organised crime, and now it will focus on eliminating its other key enabler.
Money launderers use many different methods to avoid detection by law enforcement agencies.
They can range from using pools of criminal cash held in different jurisdictions to off-setting one transaction against another, to purchasing cryptocurrency, property and gold, as well as recruiting everyday people to make cash deposits at multiple ATMs into multiple bank accounts.
Cryptocurrency is used by money launderers because it takes only seconds to create a crypto account (or address) with a crypto service provider, which is free of cost and provides a perceived level of anonymity.
Crypto ATMs, prepaid debit cards loaded with cryptocurrency or online gaming sites that accept cryptocurrency are some of the ways crypto is then used to hide illicit funds.
Example scenario of how dirty money is cleaned using cryptocurrency methods
- A money launderer has $5000 of illicit cash.
- The money launderer deposits the cash at a crypto ATM to a crypto address he or she opened earlier.
- The money launderer then sends the funds from crypto address (1) to another crypto address (2).
- Others connected to the money laundering organisation also send funds to crypto address (2), known as a crypto-mixer. The funds are now mixed together in one address.
- The funds are portioned out and sent to different addresses.
- This process is repeated multiple times with different crypto addresses and crypto-mixers until the funds reach their final destination e.g. organised crime group based offshore.
- It is now nearly impossible to trace the origins of the illicit funds.
How structuring in money laundering works
- Most financial institutions and some other service providers must submit a report to AUSTRAC when their customers engage in cash transactions of $10,000 or more.
- Money laundering syndicates seek to avoid triggering these reports by using one or more workers within the money laundering syndicate to, for example, deposit funds into bank accounts in lots of less than $10,000.
- This practice happens using both ATMs and in-branch deposits. However, recent changes to the way ATMs operate have made that mode of structuring more difficult.
How money laundering works, using daigous as an example
- An organised crime syndicate based offshore, sells 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 offshore without attracting the attention of authorities.
- They reach out to a money laundering organisation, based offshore or in Australia, and negotiate a contract on how much is to be laundered. The money launderers then nominate a cash collector in Australia.
- The Australian drug distributors will nominate a syndicate member to meet the Australian cash collector working on behalf of the money laundering organisation. The syndicate member will hand over the cash to be laundered.
- The money laundering organisation will have a large supply of cash on hand, 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 to another country. Daigou translates to "surrogate shopper.''
- The daigous hire community members to buy large amounts of baby formula, cosmetics, vitamins, designer shoes and handbags from pharmacies, supermarkets and department stores.
- The goods are then shipped overseas and re-sold, with the profits going back to the money laundering organisation.
Some criminals in Australia find it hard to transfer money out of offshore bank accounts because some foreign governments prevent large amounts of money leaving their country.
Often these criminals turn to money launderers, who use complex methods to facilitate payments.
Criminals often mix their illicit money with legitimately-earned cash, making it harder for law enforcement to identify or seize. Money laundering organisations are the equivalent of underground banks with branches all over the world.
The cash reserves these money laundering organisations hold – tens of millions of dollars – are often from the proceeds of illicit drug trafficking.
One typical example of money laundering is the following:
- A criminal syndicate in Australia needs to repay a debt owed to another organised crime group overseas, but it would attract the attention of law enforcement or regulators if a large amount of cash was transferred.
- The criminal syndicate in Australia turns to a money laundering organisation to repay the debt.
- The money laundering organisation gives its low-level syndicate members in Australia money to buy goods, such as baby formula, designer handbags or other wanted items. The goods are to the value that is owed to the crime group overseas.
- All the goods are transferred to one location in Australia and shipped overseas to a group, which then sells the goods and the money raised provided to the overseas organised crime group.
