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<![CDATA[www.moneylaundering.com.au - News/Typologies]]>Mon, 02 Sep 2024 09:19:27 +1000Weebly<![CDATA[Bank worker avoids jail after stealing customer data and defrauding fintech paypal. Says he was motivated by people in his online gaming community and that he was bored.]]>Tue, 27 Aug 2024 07:14:14 GMThttp://moneylaundering.com.au/newstypologies/bank-worker-avoids-jail-after-stealing-customer-data-and-defrauding-fintech-paypal-says-he-was-motivated-by-people-in-his-online-gaming-community-and-that-he-was-bored

What happened?
Former Commonwealth Bank worker Curtis McNulty who admitted to accessing and photographing names, emails, dates of birth, contact numbers, addresses and driver’s licence details of nearly 500 bank customers, and then lodging applications for financial products for six customers and defrauding fintech PayPal avoids a jail sentence.

McNulty avoided jail on Tuesday for stealing more than $53,000 from PayPal from October 2020 to August 2022, mainly by using fraudulent refunds for items such as $3000 sneakers.

McNulty made 16 PayPal accounts held in names of other people using Commonwealth Bank data, then defrauded the payment company using two methods.

How did the fraud operate?

First, he bought goods, pretended to return them with a fake tracking ID, and later sold them online.
Second, he transferred funds between Paypal accounts and withdrew them. He disputed the transaction with PayPal as “unauthorised” and was refunded as compensation.

McNulty also created bank customer profiles using identification information from non-customers which he bought via Telegram chats. Readers might recall that just a few days ago (Saturday 24 August 2024) Pavel Durov, the Russian-born billionaire and founder of the Telegram messaging app, was arrested on landing in Paris.

McNulty's phone contained detailed notes describing how to carry out the fake refunds. Australian Federal Police discovered debit and credit cards in four Commonwealth Bank customer’s names, two laptops and six mobile phones. And on his devices police found information from customers’ drivers licences, credit and debit cards, Medicare cards, passports and utility bills.

McNulty pleaded guilty to dishonestly obtaining or dealing in personal financial information, accessing data by a carriage service with intent to commit a serious offence, dishonestly obtaining financial advantage by deception, and possessing identification information.

Why did he do it?

The Judge accepted earlier evidence given by McNulty that McNulty was somewhat motivated by people in his online gaming community, whom he met in the height of COVID and had pressured him to open fake accounts.
McNulty was also partly motivated by helping his debt-ridden ex-partner, as well as simply “out of his own greed”.
McNulty lacked impulse control due to his ADHD diagnosis, had people-pleasing tendencies and struggled with social awareness, with his mental health slightly reducing his moral culpability.

What was the penalty?
The Judge noted that the impact of identity fraud was serious.

McNulty had no prior criminal record and showed good prospects of rehabilitation
sentenced to a supervised intensive correction order of two years and four months for three Commonwealth offences.
Received a separate 16-month intensive correction order for the NSW offence, beginning on December 22, 2025 and expiring on April 26, 2027.
McNulty must do 500 hours of community service, pay a $7000 fine, continue mental health treatment and abstain from alcohol and illegal drugs.

Sources:
https://www.brisbanetimes.com.au/national/nsw/bored-cba-staffer-stole-details-of-hundreds-of-customers-to-feed-fraud-20240827-p5k5lw.html

https://www.smh.com.au/national/nsw/bored-cba-staffer-stole-details-of-hundreds-of-customers-to-feed-fraud-20240827-p5k5lw.html

]]><![CDATA[research finds that as gambling profits grew, crime rose with it.]]>Mon, 26 Aug 2024 07:57:38 GMThttp://moneylaundering.com.au/newstypologies/research-finds-that-as-gambling-profits-grew-crime-rose-with-it

For those interested in the root cause of some financial cime, money laundering and fraud, you may wish to note that researchers in Australia conclude that every 10 per cent increase in gambling expenditure causes a:

7.4% increase in assaults
10.5% increase in break and enter into and stealing from homes
10.3% increase in break and enter into and stealing from businesses
11% increase in motor vehicle thefts
8.2% increase in stealing from a motor vehicle
7.4% increase in fraud.

Cutting gambling expenditure by just 10 per cent across NSW would result in 4579 fewer assaults; 4247 fewer break and enters; 1398 fewer car thefts; 2361 fewer stealing from motor vehicle offences; and 3793 fewer frauds each year.

The paper’s lead author, the renowned former head of the NSW Bureau of Crime Statistics and Research, Don Weatherburn, said the entire community “suffers from Australia’s love affair with gambling”.

There is a particular story in article about how 12 people were defrauded by financial adviser Gavin Fineff of a total $3.35 million. Half of his victims were older than 70.

“The disease got me. I lost control and ended up losing it all,” Fineff wrote in a note to his boss.

Police soon found “the disease” in Fineff’s gambling slips – he had deposited more than $8 million with Ladbrokes and Sportsbet.

Fineff was not a battler; he made $160,000 each year, but turned to fraud to fund the massive habit.

Sources:

https://www.linkedin.com/posts/peteroakes_the-free-heroin-behind-thousands-of-violent-activity-7233725312293900288-6US9 Follow Peter Oakes on Linkedin here.
https://www.smh.com.au/national/nsw/the-free-heroin-behind-thousands-of-violent-crimes-in-nsw-20240821-p5k441.htmlwww.smh.com.au/national/nsw/the-free-heroin-behind-thousands-of-violent-crimes-in-nsw-20240821-p5k441.html

]]><![CDATA[Chinese nationals jailed over 'eye-watering' money laundering scheme in Melbourne's east]]>Tue, 06 Aug 2024 14:00:00 GMThttp://moneylaundering.com.au/newstypologies/chinese-nationals-jailed-over-eye-watering-money-laundering-scheme-in-melbournes-east

The judge said the group was able to avoid detection from the banks because individual transactions never exceeded $10,000.

Two men laundered more than $60 million using a scheme involving huge wads of cash, bank accounts and cryptocurrency, a Victorian court is told.

One of the men spent his fortune on luxury items, including designer watches and a Porsche.

According to court documents, a combined $63 million was laundered by Liu and Zhou in 2020 and 2021.

Liu and Zhou were sentenced in the County Court of Victoria after pleading guilty to dealing with proceeds of crime.

Judge Michael Cahill jailed Liu, 37, for five-and-a-half years, while Zhou, 41, was sentenced to three-and-a-half years.

The group were charged over their involvement in a syndicate that laundered tens of millions of dollars using cryptocurrency, foreign bank accounts and ATMs across Melbourne's east.

When investigators raided the Burwood home where Liu lived, they seized shopping bags filled with money, cash counting machines and numerous credit cards in other people's names.

Officers also seized luxury watches, a Gucci bag, three framed pictures of boxer Mike Tyson, the Porsche, and two four-wheel drives.

Liu and Zhou initially denied any involvement in criminal activity, telling police they were high-stakes poker players.

As a leader of a criminal syndicate, Boliang Liu became rich enough to buy luxury items and keep $913,000 cash in his house. Liu may have thought he could avoid detection from police, but he could not escape being "lectured" by his father. Fulai Liu did not think it was wise his son — who declared no taxable income for the year — had traded in an SUV and forked out a further $107,000 to purchase a Porsche 911 Carrera.

Source: https://www.abc.net.au/news/2024-08-07/men-jailed-over-eye-watering-money-laundering-scheme/104195074

]]><![CDATA[How criminals are exploiting digital technology like video games to launder money]]>Wed, 31 Jul 2024 14:00:00 GMThttp://moneylaundering.com.au/newstypologies/how-criminals-are-exploiting-digital-technology-like-video-games-to-launder-money

It's a dilemma faced by countless criminals.

The heist, deal or operation has worked, bringing in a huge amount of money. But now where do you put it?

"Banks ask awkward questions … so the doors to traditional finance are closed," Geoff White, investigative journalist and author of Rinsed, tells ABC RN's The Money.

To hide the illegal origins and make it safe to use, the money needs to be laundered.
And in recent years, new digital technologies have offered more sophisticated — and surprising — ways of making dirty money clean.

"Criminals are really innovative. They adapt quickly and they're good at finding loopholes and spaces where they have a lesser chance of getting caught," says Jamie Ferrill, a senior lecturer and the head of financial crime studies at Charles Sturt University.

"[And] with this really rapid technology evolution, it's really hard for law enforcement to keep up."

* How do criminals launder money?

* How do criminals launder money?

Ill-gotten cash is hard to store and easy for other criminals to steal. Inflation will eventually nibble away at it. And most critically, piles of dirty money can be very suspicious.

White explains that in the classic world of money laundering, there are three steps.

The first step is called "placement", which involves getting that dirty criminal cash into a financial system.

This could be, for example, using a restaurant as a front operation and mixing the legitimate proceeds with those cocaine earnings. Then, each week, this so-called restaurant money can be deposited in a bank.

The second step is called "layering". This is all about moving the money around, to obscure the source from which it originated.

Criminals might, for example, withdraw that restaurant money, buy some gold, swap that gold back for cash and then redeposit the cash.

The final step — which White calls "the fun stage" for crims — is "integration".

It's taking the money and going on a spending spree, ideally on assets that could offer long-term returns like property or artwork, so if a stint in jail is on the cards, the gains can still be enjoyed afterwards.

But it's all extremely risky. There are severe penalties for money laundering in Australia, including up to 25 years in prison.

* So how does it work online?

* So how does it work online?

These money laundering steps are now being replicated and adapted in a digital environment.

In recent years, criminals have been trading some or all of their dirty money for cryptocurrencies, like Bitcoin.

Take UK sisters Abia and Shazia Din. They operated a beauty business in Manchester, along with a multi-million-dollar drug-smuggling empire.

Like most drug operations, they were selling their product for wads of cash.

They would then courier this cash to a Bitcoin broker — "a chap who had a lot of Bitcoin and didn't ask too many questions" as White explains — and get cryptocurrency in return.

The Din sisters were arrested in 2019. Abia was sentenced to 18 years in prison and Shazia got 15 years. In total, 18 people connected with them were sentenced to almost 140 years in total behind bars.

The police were able to seize all sorts of items, like Rolex watches, expensive cars and luxury clothing, which could be linked back to the drug deals.

But they were unable to seize the Bitcoin — they couldn't track and trace it.

"It's possible that when the Din sisters get out of prison, that cryptocurrency will still be there waiting for them. And given cryptocurrency values, it might be worth more than when they put it in," White says.

But authorities around the world are getting much better at confiscating crypto, seizing hundreds of millions of dollars worth.

And there have been several recent cases in Australia of alleged money laundering operations where crypto was partly used, with arrests made [https://www.afp.gov.au/news-centre/media-release/seven-syndicate-members-charged-allegedly-laundering-almost-229-million].

* The tools that hide the crypto

* The tools that hide the crypto

But laundering money through cryptocurrency comes with its own challenges.

This is because every crypto transaction is recorded on a blockchain, which is basically a publicly available, online ledger.

"In terms of tracing someone, you can't get more transparent [than cryptocurrency]," says Steven Conway, course director of games and interactivity at Swinburne University of Technology.

Unlike regular cash, each "dodgy action" is tracked and "everyone can see it", Dr Conway explains.

But if you're running a drug empire, a virtual paper trail attached to your money is the last thing you want.

So to camouflage the trail of crypto, there are nifty — but not faultless — digital services called "mixers".

For a fee and with a few clicks of a mouse, launderers can put their cryptocurrency into one of these digital mixers, which will spit it out clean.

"These services mix cryptocurrency together from a number of different users, which obscures the transaction trails and makes it really hard to trace the original source," Dr Ferrill says.

There are some legitimate uses for these services, like ensuring privacy for crypto transactions, but White says they're "almost custom built" for money launderers.

One popular example was called Helix. The darknet-based mixer helped launder millions of dollars worth of Bitcoin, but was shut down in 2017 and its American creator was arrested and jailed. [https://www.justice.gov/opa/pr/ohio-resident-charged-operating-darknet-based-bitcoin-mixer-which-laundered-over-300-million].

* Laundering after a cyber heist

* Laundering after a cyber heist

Axie Infinity is an online game where users can raise and battle salamander-like digital pets called axies.

It may sound like an unlikely setting for a major crime.

But inside the game, players can buy and sell all sorts of things, like potions for their axies and the axies themselves.

The game became wildly popular during COVID, particularly in Southeast Asia, meaning there was a sea of cryptocurrency sloshing around inside the game.

Then in 2022, North Korean-sponsored hackers struck. They managed to take over computers connected to the game and steal US$625 million (AU$926 million) in just 1 minute and 55 seconds.

White calls it "the biggest cyber heist in history, and I think, a strong contender for the biggest theft in history".

But after stealing it, the hackers had to launder it, so they turned to a crypto mixer called Tornado Cash. The crypto was mixed and then it was gone.

The US put Tornado Cash under sanctions, thanks to the North Korea link, and people connected to the mixer were later arrested.

But this left some in the crypto and tech communities angry.

White says they argued that services like Tornado Cash were essential privacy tools, and without them, "we have no secrecy, we're under surveillance".

* Buying and selling digital goodies

* Buying and selling digital goodies

Dirty money can also be cleaned inside the actual world of video games.

Counter-Strike: Global Offensive (CS:GO) is one famous example. Released in 2012, it's a first-person shooter game where terrorists and counter-terrorists battle it out.

Players can add cosmetics to their weapons from virtual containers known as "loot boxes" — opened by virtual keys that are bought via the in-game purchasing system or from other players.

With millions of people playing the game each month, the trade in loot box keys boomed. They became a hot commodity.

White points out that most people "probably don't care a jot if we can upgrade our in-game AK-47 assault rifle with the iconic Fire Serpent design".

"But for some avid players of the game, that upgrade is worth as much as US$5,000 [AU$7,000]."

Enter the money launderers. They used their dirty money to buy CS:GO loot box keys, sold the keys onward in the marketplace, and voilà, had much cleaner money.

And it was a big deal, with criminals taking over the trade.

"At this point, nearly all key purchases that end up being traded or sold on the marketplace are believed to be fraud-sourced," CS:GO creators Valve said in 2019.

So the game creators stopped keys being traded and the company has cracked down on criminal activity.

Money launderers have been buying and selling other digital assets to help clean their dirty money, including NFTs, or non-fungible tokens.

"NFTs have really come into this space recently," Dr Ferrill says.

An NFT is a unique identifier which can be part of a digital file. For example, an artist can create an NFT of their digital artwork — which essentially proves its originality.

In early 2021, trade in NFT artworks boomed, with some selling for millions. [https://www.abc.net.au/news/2021-03-12/nft-digital-artwork-sells-for-nearly-us-70-million-beeple/13241076]

"NFTs have a really subjective value, and that can be exploited for money laundering by purchasing and selling them at arbitrary values," Dr Ferrill says.

* Risks and rewards

* Risks and rewards
But experts are divided on just how serious the problem of digital money laundering is.

Dr Conway says it's still "very small" compared to traditional money laundering. "It's so much riskier … with so many more [potential] points of failure along the whole chain," he says.

Cryptocurrency, for example, remains "extraordinarily risky and volatile", as is the value of items bought and sold inside video games, which can depend on "how trendy the item is".

So, Dr Conway says launderers would likely ask: "Why would I do any of that when I could just open a little tanning salon and say, 'I've had a booming year and I've made all of this great money — prove that I didn't'?"

But Dr Ferrill says cyberspace offers some big and very tempting advantages for crims, meaning we'll likely see far more digital money laundering.

"There's a lot of money moving through digital spaces … so it's easier to commingle the dirty money with the clean money," she says.

The internet is inherently global and "anytime something is international in scope, it's going to be much harder to catch [illegal activity] … because it complicates any law enforcement efforts".

Plus, Dr Ferrill says, "there's a lot less regulation in cyberspace".

"It's this more nebulous space that you can operate relatively anonymously in, compared to anything that you're doing in person," she says.

"Just as we move into more digital spaces ourselves, criminals are going to do that too."

Source: https://www.abc.net.au/news/2024-07-21/digital-technology-and-money-laundering/104081836

]]><![CDATA[Four face jail time over ‘pump and dump’ scam on messaging app]]>Tue, 23 Jul 2024 08:01:58 GMThttp://moneylaundering.com.au/newstypologies/four-face-jail-time-over-pump-and-dump-scam-on-messaging-app

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This is a great typology for both market manipulation (predatory offence) and money laundering.

Four people face jail time after being criminally charged with operating a “pump and dump” scheme on encrypted messaging app Telegram.

“Pump and dump” schemes involve co-ordinated moves by groups of investors to push up the value of a stock higher before dumping the shares en masse for a profit.

Syed Yusuf, Larissa Quinlan**, Emma Summer and Kurt Stuart were charged in Sydney’s Downing Centre Local Court with conspiracy to commit market rigging and false trading to artificially increase the price of shares listed on the Australian Securities Exchange (ASX) before dumping them.

If found guilty, they face a maximum penalty of 15 years’ imprisonment and a fine of over $1 million for market manipulation.

ASIC alleges that in an organised operation the defendants formed a private group on the Telegram app where they discussed and selected penny stocks to announce to the public Telegram group named the ‘ASX Pump and Dump Group.’

The defendants have also been charged with dealing with the proceeds of crime in relation to the money that they each obtained from selling the shares subject of the pump and dump activity.

ASIC Chair Joe Longo said, ‘Market manipulation is illegal. Pump and dump schemes are a form of financial fraud, eroding investor wealth, threatening the integrity of our markets and potentially the Australian economy more broadly.

‘Upholding the integrity of Australia’s financial markets is a priority for ASIC.

‘ASIC monitors the cleanliness of our markets, and we take decisive action to disrupt activities that may impact cleanliness. This is why we took the action of entering social media forums and posting directly to issue warnings to members that their actions may be in breach of the law. Coordinated attempts to manipulate the market is a criminal offence.’

This matter is being prosecuted by the Commonwealth Director of Public Prosecutions after a referral from ASIC in December 2022.

The matter was adjourned to 30 July 2024 in the Downing Centre Local Court for a detention application to be made in respect of each of the defendants.

Background
ASIC monitors trading on Australian licensed markets through its sophisticated real-time surveillance system and by integrating trade data with data from third parties to monitor pump and dump activity in Australian securities markets. This enables ASIC to see underlying clients, to identify networks of connected parties and to analyse trading patterns.

Over three weeks in September 2021, nine announcements were made to the ‘ASX Pump and Dump Group’ to boost the selected stocks. The defendants allegedly purchased some or all of the stocks with the intention to ‘pump’ the share price to an artificial target and then sell them once the price of the stock had substantially increased.

In October 2021, ASIC warned traders in a Telegram share market chat room they may be breaking the law by seeking to organise stock price manipulation (21-256MR).

Each of the defendants purchased some, but not all, of the stocks that they had conspired to announce to the members of the ‘ASX Pump and Dump Group’.

The defendants are charged with dealing with the proceeds of crime in relation to the money that they each obtained from selling the shares subject of the pump and dump activity pursuant to s 400.4(1) of the Criminal Code, and conspiracy to commit market rigging and false trading, pursuant to s 11.5(1) of the Criminal Code (Cth) and s 1041B(1)(b) of the Corporations Act 2001 (Cth).

** Larissa Quinlan was charged with dealing in proceeds of crime – money or other property over $10,000 pursuant to section 400.6(1) of the Criminal Code Act 1995 (Cth). Syed Yusuf, Emma Summer, and Kurt Stuart were charged with section 400.4(1) of the Criminal Code Act 1995 (Cth).

Source: https://asic.gov.au/about-asic/news-centre/find-a-media-release/2024-releases/24-161mr-charges-laid-in-alleged-telegram-pump-and-dump-conspiracy-following-asic-investigation/

]]><![CDATA[Real estate agents, lawyers in spotlight for money laundering crackdown]]>Sun, 07 Jul 2024 14:00:00 GMThttp://moneylaundering.com.au/newstypologies/real-estate-agents-lawyers-in-spotlight-for-money-laundering-crackdown

Real estate agents, lawyers and accountants used to launder the money of drug dealers and terrorist-funders will be the target of new laws to stop the flow of dirty money in Australia.

Attorney-General Mark Dreyfus has announced strict reporting obligations for about 100,000 new entities. The move, which will include $165 million in new funding, has been resisted for years by real estate associations and other professional services lobby groups, who argue it would be costly and risk client confidentiality.

Only casinos, bullion dealers and some solicitors are now required to report suspicious transactions of more than $10,000, making Australia one of only five countries whose rules do not extend to lower-level risks such as real estate agents.

“Let me be very clear: opposing these reforms means aiding and abetting the criminal abuse of our financial system by drug traffickers, people smugglers, terrorists and those who exploit and abuse children,” Dreyfus will say in a National Press Club speech, according to speaking notes.

Britain has also urged Australia to beef up its laws because international criminals exploited the weakest links in global regimes.

Source: https://www.smh.com.au/politics/federal/real-estate-agents-lawyers-in-spotlight-for-money-laundering-crackdown-20240708-p5jrzn.html

See also: Lawyers among opposers of new money laundering laws

]]><![CDATA[SkyCity Adelaide has been slapped with a $67 million fine over a money laundering and finance terrorism case]]>Thu, 06 Jun 2024 14:00:00 GMThttp://moneylaundering.com.au/newstypologies/skycity-adelaide-has-been-slapped-with-a-67-million-fine-over-a-money-laundering-and-finance-terrorism-case

The Federal Court has ordered the operator of Adelaide's casino to pay a $67 million fine in a money laundering case brought on by AUSTRAC.

Allegations in court documents revealed the casino had customers with links to organised crime, loan sharking human trafficking and sex slavery.

From AUSTRAC:

SkyCity Adelaide Pty Ltd (SkyCity) has been ordered by the Federal Court of Australia to pay a $67 million penalty after AUSTRAC launched civil penalty proceedings against it for breaches of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act). The Court also ordered SkyCity to pay AUSTRAC’s costs at $3 million.

The court found that SkyCity’s AML/CTF Programs failed to meet the requirements of the AML/CTF Act, and that it did not carry out appropriate ongoing customer due diligence.

Australia’s free and open economy can be exploited by bad actors to launder illicit funds, and money laundering remains an intractable issue that comes with significant harm to the public. SkyCity admitted that its contraventions made it vulnerable to criminal exploitation, and exposed the Australian community and financial system to money laundering and terrorism financing risk.

SkyCity’s failure to comply with the AML/CTF Act over many years allowed high-risk customers to move millions of dollars through the casino, in ways that made the source and ownership of the funds unclear.
SkyCity also provided services through high-risk channels and to high-risk customers without appropriate risk-based controls. It failed to carry out required checks on 121 customers, including where SkyCity knew customers were the subject of law enforcement interest, or where there were indications that some posed a higher risk of money laundering.

The casino also failed to establish an appropriate framework to ensure adequate board and senior management oversight of its AML/CTF Programs.

SkyCity has taken steps to address the issues identified in these proceedings however this remediation remains ongoing.

AUSTRAC acting Chief Executive Officer, Peter Soros said casinos, like all businesses, must take their anti-money laundering obligations seriously.

“Criminals will always seek to take advantage of the gambling sector to clean their dirty money. If casinos and other gambling entities have weak anti-money laundering systems and controls, they leave themselves vulnerable to criminal exploitation,” Mr Soros said.

“Today’s result shows AUSTRAC is prepared to take action when businesses, including casinos, fail to comply with the legislation. Businesses who ignore their obligations are affecting the Australian community by leaving the door open to criminal activity.

“Money laundering is not a victimless crime. It happens because criminals are trying to clean their dirty money obtained by lucrative illegal activities like trafficking drugs or humans, and it is often reinvested to further criminal enterprises and amplify these harms.”

This is the second civil penalty that AUSTRAC has secured against Australian casinos, after the Federal Court last year ordered Crown Melbourne and Crown Perth to pay a $450 million penalty over two years for breaches of the AML/CTF Act.

“Our continued efforts in this space will act as a strong deterrent for all casino operators in Australia who think they can avoid their AML/CTF obligations.”

The order from Justice Lee comes after SkyCity admitted contraventions of the AML/CTF Act. AUSTRAC and SkyCity agreed in May that a $67 million penalty was appropriate in all the circumstances. The penalty takes into account SkyCity’s cooperation during the investigation and admissions enabling early resolution of the proceedings.

Source: https://www.austrac.gov.au/news-and-media/media-release/federal-court-makes-ruling-skycity-case

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