Beware! The potential pitfalls of transferring money to Australia via alternative remittance schemes

Proceeds of Crime litigation - Commissioner AFP v Ganesh Kalimuthu & Anor [2017] WASC 108

Putt Legal recently undertook lengthy complex legal proceedings in the the Supreme Court of Western Australia for a Malaysian potential business visa migrant who was inadvertently caught up in an international money laundering scheme. A decision in our client’s favour was recently delivered by the Supreme Court.

The matter has been recently reported in the media – https://thewest.com.au/news/wa/innocents-duped-by-launderers-ng-b88450425z

Our client used a licenced money changer in Malaysia to transfer money to Australia. Unbeknownst to our client his money was ‘swapped’ with money that likely came from illegal activity in Australia (such as the sale of drugs).  This money laundering methodology is referred to by Police as ‘cuckoo smurfing’. It works like this:

  1. Client pays Malaysian ringgit to a Malaysian money changer.
  2. The money changer is supposed to deposit an equivalent value in Aussie dollars into our client’s account here in Perth.
  3. An Australian agent of the money changer in fact deposits dirty cash from Australian criminal activity into the account. To avoid automatic reports that are made by Australian banks to Australian authorities of large cash deposits, all the deposits made to our clients’ account are in amounts of less than AU $10,000. This is an offence on the part of the people making the deposits.
  4. Our client sees that the correct amount has been deposited (although notices that the amounts are all split up). When he asks the money changer he is reassured that this is normal in Australia.

There was no previous Australian court decisions on whether a cuckoo smurfing victim was protected from the harsh operation of the Proceeds of Crime Act 2002. The Australian Federal Police (AFP) were seeking to confiscate the money (from our client, sitting in his Australian account), even though he had not committed any offence.

Justice Allanson has ruled that the money cannot be confiscated and should be returned to our client. The AFP was also ordered to pay our client’s legal costs. The Court will assess any other damages suffered by our client at a later date.

It is highly likely that the AFP will appeal the decision.

Even though this decision represented a very good outcome for our client, the decision serves as a warning generally, especially to people who are looking to move to Australia and send a substantial sum of money (likely their life savings).

We recommend that if you wish to avoid high bank fees to transfer funds into Australia, you use a reputable currency exchange service such as:

http://www.fcexchange.com – contact Will Hewitson - wjh@fcexchange.com

www.moneycorp.com.au – contact susan.watts@moneycorp.com.au

More information on emigrating to Australia can also be seen here - http://www.fcexchange.com/uk/personal/emigrating/?a=IA6589PUT