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BFCSA: Police Frustration - Westpac, ANZ linked to money laundering rings in Commonwealth Bank case

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Westpac, ANZ linked to money laundering rings in Commonwealth Bank case

Australian Financial Review Aug 8 2017 11:30 PM

Neil Chenoweth

 

At least half of the six money-laundering syndicates identified in AUSTRAC's statement of claim against the Commonwealth Bank of Australia used other banks including ANZ and Westpac to wash major portions of their funds.

The banks are not identified in the AUSTRAC claim, but CBA is expected to seek details through court discovery, and to query whether the rival banks made sufficient disclosure of the suspect trading.

CBA chief executive Ian Narev raised comparisons with other banks on Sunday when he told The Australian Financial Review: " You know any CEO of a major bank anywhere in the world who says they definitely don't have any problems with financial claims compliance would be a very bold CEO".

Both Westpac and ANZ told the Financial Review on Tuesday that while they were legally restricted from commenting on AUSTRAC reports, they were confident they had reported all suspicious transactions.

The court records of the six syndicates that AUSTRAC says laundered $44 million through CBA show that criminals rarely use a single bank.

'Singh the king'

"Getting busted is about two things – the drugs and the money," Ka Sing Lei, the head of one of the larger money laundering rings, said on a call taped by police in 2015. "Once the stuff is over the border that is not the problem – it's the money."

In one of the Australian Federal Police's largest money laundering investigations in 2014, the AFP uncovered an international network run out of Punjab, which laundered more than $200 million for Pasquel Barbaro and the Calabrian mafia, N'Drangheta, as well as other drug importers including Assam Lababidi, Michael Ross Harvey and Michael Polymiadis.

The AFP told Indian investigators the network was run by Gagandeep Singh, who flew to Australia in September 2013 and opened a CBA account.

He was known as "Singh the King" when it came to routing narcotics money to the United States and Hong Kong, the AFP told India's Enforcement Directorate, Indian newspapers reported.

Gulshan Saini, Sanjeev Saini and Mandeep Singh ran company accounts for AVSForex at ANZ, SK Trading at St George and ANZ, and SK Trading NSW, Tripat Enterprises and Ymaxis Enterprises at CBA, which all transferred funds to Billion Trend Forex in Hong Kong, under the guise of import-export payments.

"In some cases, we have also seized documents where Gagandeep has cancelled an order with the trading company and charged a 200 per cent fine on the pretext of late delivery, which indicates that many times the funds were transferred from Hong Kong and Australia to India," the AFP said in a report for the Enforcement Directorate in September 2014.

NSW Police arrested Mandeep Singh on January 28, 2015, in a parallel investigation into cuckoo smurfing, which launders black money by substituting for international transfers by third parties.

AUSTRAC says Mandeep Singh set up new accounts in October 2014, days after the AFP had arrested members of the syndicate and closed down the Australian companies, and laundered a further $739,000. But only a third of this was through CBA accounts.

On March 20, 2015, NSW Police asked CBA for BSB and account numbers and records for 39 suspect accounts. A month later police served a notice to produce on CBA to obtain the documents.

A second syndicate laundering drug money, detailed by AUSTRAC, deposited $2.3 million of drug money into CBA accounts, but then transferred them to a different bank.

Moved to another bank

In late 2013, CBA had dumped a customer – a money remitter with suspicious trading records. The company in question simply moved to another bank, and the money deposited with CBA in "unrelated" accounts was transferred to the other bank, where the drug funds were sent offshore.

AUSTRAC is critical of CBA for continuing to transfer funds to the account of the client it had dropped.

In December 2015, an AFP investigation into a major ice ring linked to a Chinese triad and a West Australian Police investigation targeting Asian meth dealers in Perth merged with the seizure of 321kg of ice worth $315 million hidden in tins of Chinese tea.

Ka Sing Lei, a 30 year-old Chinese man living in Sydney, masterminded an operation that laundered $29 million in nine months, from March to December 2015, working with Perth dealer Cheng Fatt Chow, through company accounts at CBA and Westpac.

Malaysian-born Chow came to Australia in 1983, aged 21, and built up a fishing fleet in Tonga. A cyclone in 2010 left him owing $1.5 million to Triad money men. They set him up in Perth to deal ice, the West Australian reported from his trial earlier this year.

Lei would regularly fly to Perth, to pick up $500,000 from Chow. He would meet with 10 younger couriers, and pass them a one yuan note to signal his identity. He then divided the money between the 10 couriers, with instructions to bank the money into 10 different company accounts.

One of them, Yeuk Tung Kong, was on a student visa in Perth studying English. He was sentenced to seven years and six months this year.

Another student, Wai Ki "Vicky" Fung, was arrested in October 2014 and sentenced this year to three years.

Police frustration

AUSTRAC says the syndicate deposited more than $21 million in cash into 11 CBA accounts in Perth and Sydney between February 16, 2015 and February 25, 2016. That leaves millions of dollars of funds laundered through other banks, notably Westpac.

It is this investigation that led to the AFP raiding CBA premises on April 4 last year. Four months earlier, on November 25, 2015, the AFP had sought documents from CBA, and while the bank did respond a month later police frustration eventually led them to seek a search warrant to obtain the documents they were seeking.

"We have processes and systems in place to ensure we comply with all relevant anti-money laundering and counter-terrorism financing laws, including monitoring and reporting suspicious activity to AUSTRAC," an ANZ spokesman said.

"AUSTRAC reviewed our ATMs and Intelligent Deposit Machines and found no evidence of non-compliance."

 

A Westpac spokesman said: "While we don't comment on individual cases, Westpac has robust systems in place to detect and report suspicious transactions, including large transactions, deposit structuring and cuckoo smurfing."

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