Austrac warns the banks about cuckoo smurfing

Australia’s financial crimes regulator has warned banks and their customers about the dangers of a money laundering method known as ‘cuckoo smurfing’ which is becoming increasingly widespread. 

Australian bank customers will often have funds deposited into their account from a friend, relative, or business partner overseas, Austrac explained. Often these customers are unaware that the funds transferred into their accounts have come from criminals using funds generated from drug dealing and other serious criminal activity, the regulator said. 

Put simply, cuckoo smurfing is a technique whereby innocent bank customers make and receive legitimate payments, but illicit funds are inserted into the money transfer process. 

Cuckoo smurfing occurs when an offshore customer transfers money into an Australian account through an overseas money transfer business. The problem is that the money transfer business could be acting on behalf of an Australian‑based crime syndicate that needs to move funds offshore. The money transfers business then swaps “clean” cash with the “dirty” money before depositing the latter into the innocent customer's bank account without them knowing. 

Austrac’s chief executive Nicole Rose said if businesses identify behaviour that indicates potential cuckoo smurfing, they must report it so the regulator can disrupt criminal syndicates targeting the bank accounts of Australians. 

“This method has been used by criminal syndicates involved in crimes that inflict serious harm on our community such as drug trafficking, slavery, fraud, and corruption,” she said. 

“We rely on banks and money transfer businesses to report to Austrac and partner with enforcement to stop these criminal syndicates and protect members of the Australian community.” 

Checking for signs 

Rose said lenders should check for signs of potential criminal activity including cash deposits appearing inconsistent with an account holder's usual transactions, cash deposits made on the same day across multiple branches and ATMs, and multiple cash deposits in amounts under $10,000. 

She urged bank customers expecting to receive funds from overseas to examine their bank account activity and report any unexpected and suspicious transactions.  

“Any individual or company can be targeted, some of the most at-risk customers include Australian expatriates, Australian exporters, and international students studying in Australia.” 

 

Upcoming Events
26
Oct
21
Australian Banking Innovation Summit 2021
Sydney, NSW, Australia
See all upcoming events
map4
Subscribe to receive insights delivered straight to your inbox
Latest news, unbiased expert analysis and insights across banking and finance