The opening of a Chinese currency remitter in Sydney’s CBD in the middle of the pandemic sparked a police investigation which has allegedly exposed Australia’s biggest money-laundering ring, with ties to cyber crime, drug running, cryptocurrency and violent crime.
More than 240 Australian Federal Police and dozens of officials from agencies including the financial crimes authority AUSTRAC led raids on Wednesday that smashed the alleged ring and arrested seven people in eastern suburbs of Melbourne.
Members of the alleged Chinese organised crime syndicate are accused of laundering close to $229 million from the proceeds of crime through the Changjiang Currency Exchange – part of $10 billion-plus transferred by the exchange in the past three years, including by customers engaged in lawful transfers.
Former Howard government minister and Sky News contributor Gary Hardgrave – who lists himself as a director of the exchange on LinkedIn – spruiked the Sydney shopfront last year as a “great Australian company growing business”.
There is no suggestion of wrongdoing by Mr Hardgrave. When asked by The Australian Financial Review if he remained a director, Mr Hardgrave said: “I was engaged to help spruik the business. I’m not involved in the day to day operations of the company.”
Four Chinese nationals and three Australian citizens including four men and three women, aged between 33 and 40 - were arrested for their alleged involvement in the money laundering syndicate dubbed Long River. The AFP said it was the country’s most significant and complex money laundering ring.
With the assistance of the United States Secret Service, police also charged a Chinese national for allegedly using the syndicate to help to launder $100 million stolen from victims who invested in a global investment scam linked to foreign exchange and cryptocurrencies.
More than $50 million in assets have been restrained from the alleged operators – who were living the high life in mansions across Melbourne, flying in private jets and buying luxury watches, wine and sake – as part of a 14-month operation coined Avarus-Nightwolf.
The assets restrained are believed to include a Mercedes-Maybach GLS luxury car worth $400,000, a $94,000 diamond Rolex watch, luxury handbags designed by Hermes and Louis Vuitton and bottles of Penfold’s Grange valued at more than $100,000.
“We allege they lived the high life by eating at Australia’s most extravagant restaurants, drinking wine and sake valued in the tens of thousands of dollars, travelling on private jets, driving vehicles purchased for $400,000 and living in expensive homes, with one valued at more than $10 million,” said Stephen Dametto, assistant commissioner of the AFP’s Eastern Command.
Hiding in plain sight - ‘just a gut feeling’
More than 240 AFP members and another 92 specialist members executed 20 search warrants across Australia on Wednesday, in an operation supported by the Australian Securities and Investments Commission, AUSTRAC, the Tax Office, Australian Border Force and the US Homeland Security Department.
The big four banks and Bendigo Bank were also brought into the operation, after some bank staff were unwittingly drawn in as accomplices to facilitate the alleged criminal syndicate.
The Long River syndicate is accused of secretly running the prominent, multi-billion-dollar money remitting chain across 12 shopfronts in every mainland state in an attempt to look and act like a law-abiding remittance company.
“This alleged syndicate was operating in plain sight with shiny shopfronts across the country – it was not operating in the shadows like other money laundering organisations,” Assistant Commissioner Dametto said.
He said the investigation was sparked by AFP members who came to work during COVID-19, when most of Sydney was a ghost town. When Changjiang Currency Exchange began operating two new shopfronts in the heart of Sydney, alarm bells sounded.
“It was just a gut feeling – it didn’t feel right. Many international students and tourists had returned home, and there was no apparent business case for [them] to expand,” he said.
It is alleged the co-mingling of legal and illicit funds enabled the company to transfer up to $100 million a day for customers in Australia and throughout the world, with the volume of transfers masking the alleged laundering of tainted funds.
It is alleged the syndicate would coach its criminal customers how to create fake business paperwork, like false invoices and bank statements.
Assistant Commissioner Dametto said AFP would allege the syndicate purchased false passports for $200,000 each, which could have enabled members to flee the country in the event law enforcement agencies became suspicious about their activities.
Melbourne man behind $160m FX and crypto scam
The 37-year-old Melbourne man arrested on charges in relation to the global investment scam is the seventh person charged under Operation Wickham, a joint operation between the AFP and US Secret Service.
Operation Wickham was launched when the US Secret Service alerted the AFP cybercrime centre that millions of dollars in allegedly scammed funds were being transferred from the US to an Australian business bank account.
The investigation found that more than $160 million had allegedly been stolen from victims worldwide.
AFP Commander Investigations Kate Ferry said that the accused syndicate behind the scam allegedly tricked victims into thinking they were getting high returns on investments.
“The majority of the money deposited into Australian bank accounts or remitted by Changjiang Currency Exchange was linked to the exploitation of an investment application called MetaTrader, and other platforms dealing in foreign exchange and cryptocurrencies,” she said.
“A key feature of the scam, was the alleged syndicate’s ability to produce dedicated software, compatible with the legitimate trading platform to misrepresent the true market value of currency rates.”
The AFP has alleged the offshore syndicate used Chinese nationals living in Australia, predominantly on student visas, to register sham Australian companies and trading licences with ASIC. It used those Chinese nationals to set up Australian bank accounts, mostly linked to the sham businesses; and then, used the fake businesses, with straw directors and bank accounts to allegedly launder the scammed funds through the Changjiang Currency Exchange.
“To date, the AFP-led Criminal Assets Confiscation Taskforce has restrained more than $21 million held in Australian bank accounts that is suspected to be the proceeds of the investment scam that were laundered through the accounts,” Commander Ferry said.
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