The high-tech sleuthing banks are using to help cops catch crooks

To write something positive about big banks is about as popular as supporting a diamond mine owner who uses orphans to dig out precious stones with rusted soup spoons.

We have all heard stories of heartless bankers who refuse to help little old ladies scammed of their tiny nest eggs by heartless internet predators. But there is another side.

Former Australian Federal Police officer turned National Australia Bank executive Chris Sheehan may work for a bank, but he remains a cop at heart. His job these days is the same as it was for his 28 years with the feds. To catch crooks.

Chris Sheehan, NAB executive, group investigations.

Sheehan spent 10 years in the ACT mastering street policing, worked with the National Crime Authority, led multiple organised crime investigations, was stationed in Washington concentrating on terrorism, and worked in Europe and Africa on kidnapping cases and in South-East Asia on human trafficking.

What he learned is the AFP does its best work when it forms partnerships with international and state police. He also found that organisations like the FBI create national taskforces with private sector members.

Once a cop ... then AFP acting assistant commissioner Chris Sheehan and NSW Police assistant commissioner Mark Jenkins announcing arrests in 2016.Credit: Kate Geraghty

The sharing of intelligence, he says, is always a dealmaker.

Six years ago, he joined NAB, immediately realising how little he knew about what banks keep on their computers.

“When I walked into a bank as a cop I would have a warrant for CCTV vision and bank statements. I didn’t know what to ask for. I wish I knew what was here back then.”

What he knows is that banks have vast intelligence capacities to track the behaviour of customers that can be used to trace local, national and international criminals. “It was an eye-opener on what intelligence we can generate.”

Crooks want money, and usually, they need a financial institution to move it.

He says the banks and law enforcement have a common interest: to expose crooks. “We don’t want criminals as our customers.”

The trouble is the criminals don’t walk into a bank branch wearing prison pyjamas, a bail ankle bracelet and a parrot on their shoulder when inquiring about opening a new account.

They use mule accounts to move money around the world.

Sheehan says there are two types, complicit and non-complicit. Non-complicit can involve a real person who has their identity stolen. He says the victim may not know until they apply for a loan only to find their credit rating is in the toilet because they have failed to repay credit card debts accrued by the thieves.

Banks have vast intelligence capacities to track the behaviour of customers that can be used to trace local and international criminals. Credit: Bloomberg

“Sexploitation victims can be forced to set up accounts,” says Sheehan.

Then there are the complicit. Foreign students can sell their Australian bank accounts to crime syndicates when they return home.

One syndicate used the bank accounts of 250 Chinese students who had studied in Australia to launder $62 million.

Police seized $2 million found at one house, illicit tobacco and four luxury cars.

The investigators found thousands of withdrawals and deposits into ATMs moving money around the world.

The former students have been able to sell their identities and bank details on the dark web.

“Organised crime groups fly out people just to set up thousands of accounts,” Sheehan says.

In Australia, the gangs infiltrate large ethnic social events and offer locals $1500 to set up an account and $200 as a callout fee if they need to deal directly with the bank to maintain it.

A perfect example of the sort of results that can be achieved when financial institutions work with police is Operation Huntsman - an AFP, AUSTRAC, bank investigation that has closed 1800 mule accounts since 2022.

The investigation found multiple payments between $50 and $1000 from sexploitation victims, usually young males.

It found more than 100 of the mule accounts were set up by blackmail victims forced to co-operate.

According to AUSTRAC: “Criminal networks primarily target international students and non-permanent residents, offering them a way to make money while living in Australia. They recruit them face to face or online to launder their proceeds of crime.”

The FBI has found launderers “advertise their services as a money mule, to include what actions they offer and at what prices. This may also include a review and/or rating by other criminal actors on the money mule’s speed and reliability. Travel, as directed, to different countries to open financial accounts or register companies.”

In the international police sting operation Ironside, Sheehan says, banks were embedded with the AFP and were able to identify the assets of criminals “before police were kicking down their doors”.

For Sheehan, it wasn’t enough, and he established, with the approval of the NAB board, a team to assist police in attacking sexploitation rings and linked up with the AFP Australian Centre to Counter Child Exploitation and the Queensland police.

“We can be the canary in the coalmine.”

They look for patterns, such as young customers transferring relatively small amounts regularly to questionable accounts.

If the bank finds suspicious transactions, they are reported to specialists who simply knock on the door of the customer in what is really a welfare check.

Sheehan says authorities can’t wait for a victim to report.

“We know that self-harm, including suicide, can occur within hours or days of the first blackmail threat. Since October last year we think we have saved eight lives.”

In one case a 15-year-old boy in Queensland was the victim of sexploitation. The bank contacted police with its suspicions, and they went to the home. “He denied it at first but when he was told he was not in trouble he admitted what had happened. He was in a bad state and self-harm wasn’t too far away,” says Sheehan.

“These syndicates are opportunistic and well resourced. They can infiltrate sporting and school groups, making friend requests and then chipping away at everyone in the group.”

The technique is simple. Throw out a massive net, catch the unsuspecting, flirt, ask for intimate images and then demand payment with the threat of dumping the images online. Of course, it will be only one payment and then there will be another and another. The victim doesn’t even need to be duped, with the gangs using artificial intelligence deep-fake images and threatening to release them online unless there are payments.

AFP Commander (Human Exploitation) Helen Schneider tells us: “We have seen this lead to self-harm including suicide. Our priority is the victim. They need to know they are not in trouble.”

She says signs of a set-up are unsolicited friend requests, fake profiles that claim their microphone and webcams are not working, pressure to move from one app to another and indications the person sending the messages has English as a second language.

The Australian Centre to Counter Child Exploitation has an online kit for parents on sexploitation.

The AFP’s Operation Blackheath identified 47 offenders who tricked young people into performing sexually explicit acts. The offenders capture or “cap” the images and then sell them to international pay-for-view platforms. The victims did not know they had been exploited.

AFP commander Helen Schneider

Nearly 100 victims were found in the US, Britain, Russia, Denmark, Argentina, South Korea, Canada, Sweden, Norway, Belgium, Italy, South Africa, Germany and France.

Schneider says: “The majority of Australian child victims are identified by offshore offenders searching the list of people that follow, like or comment on prominent online pages or sites relating to school-aged children.

“Those children and their friends are then approached by offenders via social media or direct-messaging apps. Once children respond, the offender communicates to establish a common link, and the child is encouraged to install and communicate via an alternative application they are less familiar with (usually one that provides the illusion of anonymity and has video functionality).

“The children readily forget that the offender has access to their family, friend and social contacts via the original mainstream application, which is later used as part of the extortion.

“In the first six months of 2024, the [Australian Centre to Counter Child Exploitation] received 560 reports of sextortion, an average of 93 reports a month, compared to an average of 300 reports a month in the 2023 calendar year.

“This is still an under-reported crime and the sad reality is that we are still receiving almost 100 reports of children in Australia being targeted by criminals every month.

“When talking to a young person about sextortion, we advise you to stay factual. Avoid suggesting that a young person is ‘stupid’ because they sent an image. Remember that young people in these situations are tricked by sophisticated and skilled online criminals. It is not their fault this has happened.

“An important message we need to reinforce to young people is that they’re not alone in dealing with sextortion, and they are not to blame. It is an unfortunate reality that this is happening to too many young people their age, all around the world.”

NAB’s Chris Sheehan says another area where banks help police is the issue of crime gangs supplying alcohol to dry areas in northern Australia.

“We have actionable intelligence about who is sly-grogging in these communities,” he says.

Rather than wait for crimes and then police turn up with warrants for information, financial institutions should be volunteering intelligence that does not breach privacy restrictions.

“We should be sharing information as quickly as possible,” he says. “We need to trust each other to solve problems.”