4.5 Some authors have criticized aspects of financial services regulation and the role of ASICs themselves. For example, the National Credit Providers Association[1] (NCPA) has challenged a regulatory system that penalizes licensed traders more severely than unlicensed illegal operators. Unregistered businesses unwittingly support crime and expose themselves to human trafficking, child exploitation, illegal arms sales and drug networks. Unregistered money transfer traders pose a real threat to Australian communities as they are used as safe havens for criminals to entice money to fund their criminal activities. 4.10 Some communicants, including the NCPA, argued that registered operators who inadvertently violate AFS (ASIC-regulated) regulations through legal advice or incorrect interpretation would be penalized much more severely than an unlicensed operator. The NCPA suggested that this does create incentives to act as unlicensed operators: In the last week of August, AUSTRAC launched a campaign to crack down firmly on unregistered money transfer services in Australia. Illegal money transfer merchants commit a serious crime and are considered to be at high risk of being used to launder proceeds of crime. “More and more hawala (underground) operators are thriving now,” said a person from the Australian Federal Police`s investigative unit, who wished to remain anonymous. The national community-based campaign, led by AUSTRAC, aims to raise awareness among money transfer companies about the risks of illegal operations. AUSTRAC staff will report on the threat posed by illegal MSBs and how suspected unregistered traders can be reported anonymously. Community members are encouraged to use the MSBs listed on the AUSTRAC website.

Instead of the risks associated with illicit money transfer business models, the Big Four banks ended the remittance industry in 2016 by denying access to correspondent banking services. As no money is transferred between borders, the Cuckoo Smurf has some similarities with the alternative fund transfer system “Hawala”. Hawala is a method of transferring money without the funds moving in the traditional sense. However, a key difference between hawala smurfs and cuckoo smurfs is that hawala carries money laundering risks as an alternative money transfer practice, but cuckoo smurfs are intentional money laundering behavior. So, while Hawala relies on a legitimate and trust-based alternative money transfer system, the Cuckoo Smurfs use a criminal network to launder the nose of the authorities. “Hawala is illegal in Australia. AUSTRAC and the remittance community have done a lot of work to bring these customers into legal, registered and regulated channels. This meant that many customers used underground money movers or “hawala” to transfer money. The penalty for unauthorized activities if someone is caught. is a penalty unit for unauthorized activities. The law states that you will be fined the same amount. However, an authorized lender who does what is right and does it wrong unintentionally through incorrect legal advice or misinterpretation can be penalized far more than this punishment unit alone, even if they are licensed and trying to do the right thing.

We are saying that the penalty for unauthorized activities must be much higher than the penalty that a company that tries to do the right thing can be fined. [6] Banks` risk mitigation measures have increased the country`s exposure to money laundering and money market fund risks. An AUSTRAC report mentions how more hawala (underground) operators thrived as money transfers were pushed underground to circumvent surveillance and reporting. It has made it more difficult to trace illegal transactions and remittances, which has increased the risk of money laundering and terrorist financing. As stated above, cuckoo Smurfs need the use of bank accounts dishonestly, where they become instruments of money laundering. Interestingly, the phrase “money in the bank” is not really an accurate legal description of a bank account as property. For example, cash is tangible property until it is deposited into a bank account. Instead, the bank account and its balance are intangible assets – a choice in action. Bieytes Corro: Yes, it is possible. If you do hawala or dog, yes, you could. In this sense, there will be no real money transfers between Australia and Hong Kong. You will only have a bank account there and a bank account here.

The money is not actually transferred. After all, you use the banks if you can to reach an agreement with your counterpart on the other side – but it`s not regulated. [50] “We don`t want money to enter the Middle East, and we don`t want Australia to become an easy target for transferring illicit money. But we don`t necessarily have the bandwidth to get them. It seems that the “main guideline” for the regulator (ASIC) is to focus on licensed lenders (who constantly bend back to comply with the law) rather than unauthorized illegal businesses that have been or have entered the market. [7] In addition, money laundering experts are concerned that the absence of large banks has eliminated a layer of supervision by AUSTRAC. 4.48 Second, it was alleged that the same large Australian banks did so, while continuing to offer their own money transfer services for potentially anti-competitive reasons. However, financial media AUSTRAC claimed that “repeated patterns of frequent low-value transactions on the accounts of 12 customers” on LitePay “indicate risks of child exploitation” and that Westpac was specifically informed of these types of risks before launching the service. Three big companies told Reuters they had set up a holding company under a new name to open a bank account without identifying their core remittance business. The POCA (and the Schedule to Division 400 of the Penal Code (Penal Code) Act 1995) covers types of money laundering, even if the activity involves only a structuring offence and uses legitimate bank accounts.

Understanding these typologies and the scope of the POCA and the Criminal Code is relevant to assessing the risks of financial institutions for AML/CFT compliance. 4.20 Even assuming that the typical ASIC processing time is twice as fast as its response in this example, this means that the ASIC`s response ranges from 65 to 110 days from the day ASIC becomes aware of this type of financial crime. In the best case, this corresponds to more than 2 months, in the worst case almost 4 months. 4.66. ACCC criticised the importance of independent remittances for members of migrant communities in Australia, many of whom use remittance services to send money to family and friends abroad. ACCC noted that the AGD Working Group was established to address these issues and offered its support to this process. [43] An AFP spokesman declined to comment on ongoing operations. On the contrary, the available evidence suggests that Australia`s major banks have individually decided to stop providing banking services to independent money service companies in order to individually manage their compliance risk and meet their obligations under anti-money laundering and countering the financing of terrorism regulations. [40] There is no longer any doubt that sophisticated and modern varieties of Cuckoo Smurf are captured by POCA.

Lordianto; Kalmuthu is also a reminder that the regime will apply to persons who, although not involved in the cuckoo smurf process, cannot prove that the property in question was acquired by them in circumstances that would not constitute reasonable suspicion. 4.76 The Committee recognizes that many IVTS users legally access these services, but also recognizes the high risks to which IVTS users are exposed, given that ASIC or AUSTRAC do not take regulatory action. [51] As a result, Australian banks assess the risks associated with the use of money service operators and companies and, in some cases, choose to stop providing services to ensure that they do not violate international law. [31] 4.45 The Committee recommends that AUSTRAC consider and subsequently implement mechanisms to strengthen regulatory oversight of unregistered credit transfer activities.