Billion dollar bags of cash could mask crime gang activity

Bags bulging with billions of dollars in cash are crisscrossing Australia’s international borders in ways that may actually be masking criminal activity.

Passengers are smuggling millions of dollars in and out of the country every year. Picture: AFP

Bags bulging with billions of dollars in cash are crisscrossing Australia’s international borders every year in “legitimate” movements that may actually be masking criminal activity.

An investigation by News Corp Australia can reveal top of the list as source countries and destinations for the eye-watering amounts of cash are Hong Kong, Japan, Singapore, New Zealand, China, Thailand and the UAE.

Anti-money laundering experts warn despite the transactions being declared on official forms, few international passengers or banking entities are ever checked on the accuracy of the cash amount reported.

Nor do they have to reveal why they are moving such large amounts of cash.

The large amounts are raising concerns that the activity reported to the financial watchdog Austrac, could be masking money laundering right under the noses of officials.

A Financial Action Task Force (FATF) report warned in 2015 that cash smuggling is an increasing problem and criminals are carrying the cash to other countries to break audit trails and exploit cash declaration systems as a way to “legitimise” criminal cash into a new “above board” financial system.

Dr Ron Pol, an anti-money laundering expert, says analysing cash flow is vital in helping detect and prevent crime. Picture: Supplied

Dr Derwent Coshott University of Sydney Law School says studying money trails can potentially reveal any patterns around “illicit activity”. Picture: Supplied

Dr Ron Pol who has a PhD in money laundering and policy effectiveness said analysing the cash flow is vital in helping detect and prevent crime as well as dismantling serious organised and transnational crime networks.

“For border cash flows, rules and reporting are meaningless if there’s little capacity to understand what the reporting means,” Dr Pol said.

“Criminals know the truth about regulators’ rules obsession and anti-crime rhetoric. Crime still pays. Handsomely.”

Austrac data released under Freedom of Information laws reveals $4 billion in cash left Australia for Hong Kong in 2019 while only $2 billion came in. That same year, $400 million was carried into Australia from China, with $7 million in cash leaving for China.

During the past 10 years $3.3 billion has come in from Singapore while $583 million left Australia for Singapore, and $3.2 billion came in from New Zealand while $4.4 billion left.

More than $1.2 billion came in from the UK and $1.06 billion left Australia for the UK.

Border Force officers and currency sniffer dogs have caught thousands of people in the past few years illegally smuggling currency in and out of Australia.

The document also revealed unusual and unexplained one-way cash flow patterns from Australia to Pacific Island nations such as New Caledonia, French Polynesia, PNG, the Solomon Islands, and Kirabati.

The FATF report said carrying cash across borders is a basic form of money laundering and criminals rely on few checks being done so they can over-declare cash on entry to cover the receipt of criminally derived cash in the country of import.

An Austrac spokeswoman said the vast majority of cash movements (99 per cent) are bulk mailings by financial institutions, regulated by AUSTRAC.

She said Austrac collects and analyses the data and uses it to identify links to crimes including money laundering, terrorism financing, organised crime, child exploitation and tax evasion. She said actionable intelligence is sent to law enforcement partners.

Dogs are used to detect cash on international flights. Picture: ABF

When Austrac was asked for what analysis or profiling had been done on cross border cash movements, the spokeswoman said they produce a wide range of risk assessments and indicator reports.

But there are no public reports or analysis of the cash flow. She also said Austrac was unable to provide a breakdown of the cash movements by state.

Austrac was warned a decade ago by the Australian Crime Intelligence Commission (ACIC) it needed to conduct meaningful analysis of cash flows across borders because it is a “money laundering issue”.

An ACIC report warned criminals are likely to continue to move cash covertly into and out of Australia.

“Although substantial numbers of reports are made to AUSTRAC each year, information is not available on the proportion of these that may be indicative of illegal activities … some cross-border movements of large amounts of currency involve attempts to launder the proceeds of crime,” the report said.

– with data analysis by Peter Judd, Sayee Shree Ravi Sankar and Dhivya Rajanala

Dr Derwent Coshott from the University of Sydney Law School said studying the money trails can potentially reveal any patterns around “illicit activity”.

“Austrac also has an educational role, so it should be more open in explaining to the public, who have a right to look at such cash movements suspiciously, why these amounts of cash are being transferred and why. Of course, this again depends on that analysis being done,” Dr Coshott said.

“We don’t know if it is suspicious because we don’t know the exact reason for the movement if the analysis is not being done.

“Understanding the legitimate reasons why money is moved is important in understanding the illegitimate ones. Money laundering works by using the legitimate banking system to mask illegal conduct, so understanding the reasons why money is moved is often the only thing that tells us whether the money itself is clean or dirty. “

Originally published as Billion dollar bags of cash could mask crime gang activity