Austrac warns banks of AML compliance scam

Austrac has issued a warning to banks that criminal organisations are using business express deposit boxes to get around anti-money laundering and counter-terrorism financing compliance checks.

The AML/CTF regulator has issued a report outlining a procedure where crime groups use a third party with no criminal history, such as a foreign student, to incorporate businesses and open bank accounts for those businesses.

Illicit funds are deposited into the accounts via deposits in business express deposit boxes and, as a result, the people depositing the funds are not identified.

Members of the crime group have access to the bank accounts' online services and start sending the money offshore.

Austrac said it has been receiving reports of this type of activity recently. In one case a crime group deposited A$11 million by making 200 deposits in deposit boxes over ten months.

Anti-money laundering law requires that financial institutions must report deposits of $10,000 or more, including details of the person conducting the transaction ("agent details") where that person is not the account holder.

However, financial institutions do not have to collect agent details when the transaction is not carried out face to face. In such situations the financial institution is required to include the account holder's details with the transaction report but not the agent's details.

Austrac has advised banks to be alert for signs of this type of activity, including accounts being opened in company names by foreign students, businesses receiving larger cash deposits than would normally be expected for such a business, and frequent bulk cash deposits in business express deposit boxes.

Other signs include numerous deposits occurring each day at different branches, deposits being made in different states to where the accounts are held and business accounts that have no address.