Money laundering: AFP exposes industrial-scale surrogate shopping ring, lays charges

Baby formula boxes stuffed with cash, an army of surrogate shoppers and watchful handlers surveilling it all from China discovered as AFP investigators raided a money laundering ring.

Liang Zhang, left, and his lawyer Dominic Oliveri leave Parramatta District Court after pleading not guilty to dealing with the proceeds of crime in connection to what the AFP allege is a multimillion-dollar money laundering plot. Picture: Rhiannon Down/The Australian

Baby formula boxes stuffed with cash, an army of surrogate shoppers and handlers overseeing it all by CCTV from China, form part of a well-drilled money laundering operation uncovered by the Australian Federal Police, which is bringing charges against one of its alleged foot soldiers.

Liang Zhang fronted Parramatta District Court on Friday and entered a not guilty plea after he was charged with laundering more than $1m of suspected proceeds of crime in connection to the alleged plot.

Judge Stephen Hanley told Mr Zhang’s lawyer, Dominic ­Oliveri, that the case contained “quite a bit of material” including CCTV footage, bank records, cash deposits and the accused’s phone and WeChat records that would need to be analysed.

The AFP allege Mr Zhang, who was released on bail, was involved in an industrial scale “daigou’’ – or surrogate shopping – scheme that processed boxes ­labelled as containing baby formula but were ­really filled with cash at a commercial warehouse in Auburn.

The office where the AFP allege a Chinese syndicate was running an industrial scale “daigou’’ or surrogate shopping operation and received boxes of cash. Picture: AFP

The AFP alleges the syndicate would then deposit the money in ATMs and use the funds to buy real baby formula to hawk for high profits in China. A handler in China would monitor the workers through CCTV as they ­counted the money.

The warehouse where the AFP alleges a Chinese syndicate was running an industrial scale “daigou’’ or surrogate shopping operation and stored boxes of goods such as baby formula and vitamins. Picture: AFP

Investigators seized $300,000 in cash when they raided the warehouse last April, alleging that the operation could have processed as much as $14.5m over a year.

Mr Zhang – who spoke through a Mandarin translator in court – is the only known arrest in connection to the alleged syndicate and faces up to 25 years in prison if convicted.

The matter will return to court in June.

The AFP has launched a major crackdown on suspected money launderers operating in Australia.

A secret taskforce called Taskforce Avarus, has been working behind the scenes to disrupt these operations, the most lucrative of which can bring in as much as $1m an hour.