Cuckoo Smurfing and Money Laundering

August 8, 2017 Australia , Crime , Opinion , OPINION/NEWS

Reuters photo

 

By

Ricardo Swire

 

Caribbean internal security intelligence officials have been sensitized by Australia’s most recent Federal Court action against the Commonwealth Bank of Australia Limited (CommBank) for an innovative Cuckoo Smurfing spree, along with “serious and systematic non-compliance.” The Cuckoo Smurfing technique is a type of financial structuring in which recruited individuals make cash deposits in amounts under the declarable $10,000 threshold. The Cuckoo Smurfer moves money from one place to another using a network of contacts, developed from traditional import-export activity.

If a criminal in London wants to pay-off another criminal in New York, in the amount of $10,000, the Londoner goes to a local Cuckoo Smurfer gives him/her $10,000. The Cuckoo Smurfer calls up an associate in New York and ask him/her to pay the underworld character in New York $10,000. The London based Cuckoo Smurfer settles with the associate in New York on a later date. Cash transactions all made outside the structured financial system. Profits are also derived from underpricing or overpricing traded goods.

Evidence confirms criminal masterminds recognize that several “unrelated” lodgments make illegitimacy hard to detect. On the surface such transactions appear as arbitrary individuals putting money in the national financial system. CommBank is an Australian multinational financial institution with offices in America, Asia, New Zealand, Fiji and the United Kingdom. In 2014 the Australian government instituted compulsory financial institution reporting. Local banks began “de risking” or refusing to open accounts for registered “alternative” remittance service providers.

Australia’s Transaction Reports & Analysis Center (AUSTRAC) explained that although CommBank declared more than four million transactions annually, it conveniently forgot to report irregularities related to business worth more than Aus$77 million. The doyen Australian Financial Intelligence Unit routinely shares data with associated internal revenue and law enforcement agencies. AUSTRAC electronically connected CommBank’s multi-million dollar mystery to fifty-three thousand, seven hundred anti-money laundering and counter-terrorism violations.

Underworld characters used CommBank’s state-of-the-art Intelligent Deposit Machines (IDMs) to launder tainted cash. These particular IDMs were targeted because of operational security loopholes. The Australian Financial Intelligence Unit noted each machine allowed Aus$20,000 per transaction, with no daily activity limit. CommBank’s IDMs calculated every payment and immediately credited nominated accounts.

Individuals made deposits incognito because the bank’s smart technology does not register cardholders’ details unless the individual is a CommBank client. Such anonymity, coupled with immediate cash availability, facilitated speedy domestic and international transfers. Money was deposited by fake names and directed to two known drug syndicates. Between 2012 and 2015 CommBank did not observe specified financial institution cash reporting rules for transactions valued Aus$10,000 or upward.

For the Fiscal Year 2016 CommBank recorded Aus$9.45 billion profit or a three percent increase, a meteoric rise compared to Aus$89 million after its IDM’s first six months of operations. Patterns show Australian banks routinely use the cash profit measure rather than net profit as their preferred performance gauge. AUSTRAC identified five criminal organizations that used CommBank accounts for Cuckoo Smurfing. The underworld syndicates orchestrated optical paper trails of inter-country money transfers, without actually sending cash across international borders.

 

 

 

 

Ricardo Swire - Tuck Magazine

Ricardo Swire

Ricardo Swire is the Principal Consultant at R-L-H Security Consultants & Business Support Services and writes on a number of important issues.

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