Australian sting operation offers new insights into criminal money laundering | Thomson Reuters Regulatory watch and compliance learning


The recent Australian police covert operation revealed a lot about how transnational organized crime syndicates carry out their money laundering activities

Landmark of the Australian Federal Police (AFP) AN0M The interceptions gave the agency a new set of information about the money laundering activities of some of the world’s largest organized crime syndicates.

Operation Ironside saw Australian and US police working secretly to seed 12,000 encrypted cell phones into the criminal underworld. The devices, called AN0M, have been sold to more than 100 countries. The three-year survey eventually widened to include 9,000 law enforcement officers from 17 countries. Authorities have secured a treasure trove of data, including 27 million messages from more than 300 organized crime groups.

A year after police stepped in with globally coordinated arrests, they are still working “boots and all” on prosecutions, according to AFP officials. They also continue to sift through millions of messages that criminals believe were locked away under layers of military-grade encryption.

The AN0M interceptions gave police unprecedented insight into the techniques transnational organized crime syndicates use to wash away their illicit funds, said Russel Smith, a detective superintendent who leads the AFP money laundering team. . “We got some big insights from the AN0M work,” Smith said. “We talk about crypto and other topologies, but in AN0M we seized over A$50 million in cash in this job alone. Large sums of money were seized abroad.

Use of professional facilitators

Operation Ironside showed that “the money is still huge” in the world of organized crime, Smith said, adding that the operation also provided new insights into the ability of transnational organized crime groups to launder their own funds. , through the use of professional facilitators. .

“One thing that AN0M identified was the use of a number of professions to aid them in the illicit activity that was going on at the time,” he said. “It really underscored the fact that professional facilitators in Australia are actively supporting transnational organized crime groups in laundering their funds.”

Traditional organized crime groups still rely on professional money laundering organizations, but they also have “well-developed self-laundering techniques”. This has challenged the long held belief that criminal groups are more likely to separate the crime from the offense as quickly as possible by turning the funds over to money laundering organisations.

“They will go through professional facilitators, to layer cash, to conceal beneficial ownership and purchase real estate and assets,” Smith said.

Attractive asset classes

Real estate remains the most attractive asset class for money launderers in Australia. In the AN0M case, AFP seized properties in New South Wales and Queensland as well as vehicles, bullion and jewellery. They have also traced Australian species to offshore jurisdictions, which has been restricted. The police are working with their overseas counterparts to get the money sent back to Australia. “There are a number of things that came out of AN0M that were very interesting to us and eye-opening, in terms of how transnational organized crime syndicates will work together,” Smith noted. “Before, you would have thought they were a bit more compartmentalised, but that’s definitely not the case. They will work together to move their money in many ways.

AN0M interceptions have helped AFP retain over A$600 million in criminal assets in just three years. This was two years ahead of the ambitious target set by Reece Kershaw, the AFP commissioner, in February 2020. Meanwhile, the AFP-led Criminal Assets Forfeiture Task Force (CACT) withheld A$380 million in residential and commercial properties, A$200 million in cash and bank accounts, and A$35 million in cars, boats, planes, cryptocurrency, artwork, bullion, jewelry and other luxury items.

The foreclosures also provide unprecedented insight into the volume of criminal money being laundered through property purchases. In a work in August, the CACT withheld three properties in New South Wales, 47 vehicles – including 31 classic cars – and around A$676,000 in gold and silver bullion. Kershaw made the confiscation of criminal assets a priority for AFP with the creation of the Criminal Assets Confiscation Command, which reports directly to him.

The pursuit of the proceeds of crime is a central pillar of AFP’s efforts to disrupt organized crime, said Ian McCartney, AFP assistant commissioner for investigations. “Today’s criminal environment is highly complex and requires an agile and far-reaching response from law enforcement,” McCartney said. “This strategy, which has maximum impact on the criminal environment, is despised by organized crime.”

CACT brings together police officers, litigants, financial investigators, forensic accountants and specialists from partner agencies, including the Australian Transaction Reports and Analysis Centre. Federal Proceeds of Crime laws allow the CACT to restrain both proceeds and instrumentalities of crime (based on a civil standard of proof), as well as obtain financial sanction and unexplained wealth orders , whether or not there is a related criminal prosecution or investigation. .

AFP and its partners have successfully withheld more than A$200 million from offshore locations over the past decade, said Stefan Jerga, AFP’s country director, criminal asset forfeiture. “CACT will continue to strike [criminals] where it hurts the most: their wallets, their lavish lifestyles and their profits,” Jerga said.

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