How criminals launder money through today’s networks

Jackie Blondell:
Kris, could you just give me your actual title and job title? So, we've got that as a timestamp so we know how to refer to you.

Kris Wilson:
Certainly. Kris Wilson, Detective Sergeant with the Joint Policing Cyber Crime Coordination Centre with the Australian Federal Police in Sydney.

Jackie Blondell:
Lovely. Thanks very much. Okay. Let's start with the AFP's role in combating money laundering.

Kris Wilson:
Yeah, certainly. So, I mean, effectively money laundering powers organised crime, which I guess many people would know that. But I mean, the AFP's job effectively is to work towards stopping that power source. So, when we are successful in disrupting the flow of money, we can actually disrupt the entire criminal business model. And the AFP investigates money laundering and serious financial crime that impacts the Commonwealth of Australia.

And in addition to that, that money laundering, it's closely linked to organised crime in a variety of formats, which is often responsible for serious offences, such as drug trafficking, fraud, corruption, cyber crime, to name just a few.

Jackie Blondell:
Okay. Now, because it's a white collar crime or what's thought of as a white collar crime, it's often seen as victimless, but who are the real victims of money laundering?

Kris Wilson:
Yeah, it's a good question. As far as victims are concerned, it's really quite broad and buried. So, whilst the term victimless crime gets thrown around a lot, it's far from the truth. And I mean, really the victims are front and centre, really it's the community. I can sort of break it down in terms of the public sector. For example, in 2023, 2024, money laundering costs the public sector approximately $10.8 billion and the private sector $12.7 billion.

Now, that's a considerable sum of money by any stretch of the imagination. But when you break it down further, the community really suffers here, including businesses and financial institutions. So, legitimate businesses can be undercut or infiltrated.

Banks face financial losses, regulatory consequences and reputational damage when criminals exploit their systems, government departments and taxpayers, which is a large portion of the Australian population also suffer here as well. What that can result in is reduced tax revenue, which increases the cost of policing and regulation. And that's just one cost that would then fall onto taxpayers as a result of money laundering. And then you have victims of the original crime itself, people harmed by scams, fraud, drug crime, any means of exploitation or corruption.

And effectively, what happens there is that the money laundering allows those crimes to remain profitable, which is why it's a continual battle from law enforcement to combat it.

Jackie Blondell:
Okay. You know those figures you mentioned earlier in terms of cost to the public sector and private sector, is that what we know in terms of what we've managed to successfully detect and convict, or is that an estimate of what also is out there?

Kris Wilson:
That's what we can definitively say at the moment. To a degree, it is an estimate, but in terms of the cost of prevention and response to money laundering, it's serious. And in terms of serious and organised crime to Australia, I guess to elaborate on that, we're looking at a figure in excess of $80 billion.

Jackie Blondell:
Okay. Okay. That's serious. Let's just get back to basics. Why do cyber criminals in particular feel the need to clean their money?

Kris Wilson:
Yeah, good question. Thank you. Cyber criminals effectively rely on money laundering for the same reason as traditional offenders do, and that's to hide the original criminal origin of their profits. And obviously they want to be able to take advantage of those profits, of effectively their criminal undertaking. So, that's really why they do it. And cyber crime has accelerated the process by allowing offenders to move illicit funds rapidly. Cryptocurrency now offers a very fast and also secure means of moving money.

And when you can sort of move cryptocurrency through multiple wallets, obviously acknowledging that you're going to lose very, very small amounts in fees, that's a very, very small price to pay when you've stolen the money in the first instance or laundering the money. And again, you have online gambling services that trade and deal in crypto.

So, they offer very fast and secure means of moving cryptocurrency in, moving cryptocurrency out. And you could either keep it in that sort of cryptocurrency form to obviously play the market and await for cryptocurrency fluctuations, or you can then look at a more conventional means of withdrawing that crypto and converting it into currency.

Jackie Blondell:
Is it so much harder to detect once we get into the crypto environment?

Kris Wilson:
It certainly has its challenges. We do have cryptocurrency analysts and investigators that work on that in that space. And we do work with cryptocurrency exchanges as well, but there are certain coins, certain cryptocurrencies that can be harder to trace compared to others. So, they do present challenges for Australian law enforcement when we encounter them.

Jackie Blondell:
Which ones? Can you tell me?

Kris Wilson:
Monero, for example, is a coin which is particularly difficult to trace and often used by the cyber criminal fraternity, but it's also not a coin that is easily used in Australia, for example, either you can't walk into a cryptocurrency ATM and deposit or withdraw Monero. We do have regulations in relation to what is legally acceptable in Australia.

Jackie Blondell:
Okay. And does that mean that a lot of cases where crypto's involved, it's overseas criminal interests using Australia as its laundry as such, and then washing it and sending it back out as crypto? Is it often that way rather than a local criminal enterprise?

Kris Wilson:
It's an interesting question. It's really a mix. I wouldn't say Australia is specifically used to move crypto or launder it. Certainly, cryptocurrency uptake in Australia, like many Western countries is on the rise, but cryptocurrency as you could appreciate is digital. Therefore, it's very easy to move at the click of a button, but singling Australia out is probably not quite right.

I think other Western countries, the United States, the United Kingdom, for example, cryptocurrency is where we're dealing with... When we talk transnational organised crime, we speak and deal with those countries a lot as well, and they quite often face the same problems that we do.

Jackie Blondell:
Okay. All right. Can you talk about how money laundering, just to show us how it actually operates through the different stages, has operated in a recent case that the AFP has been associated with? Obviously, a case that's gone to trial, been convicted and so on. Just to use it as an example.

Kris Wilson:
I probably don't have one right at the moment that I could talk to that's been through the court process. We've got one right now that's sort of still ongoing, so I'd probably have to take that question more on notice.

Jackie Blondell:
More on notice. Okay. Maybe I'll get back to you on that. Do you know how long, or you can't tell with the court case, how long it's been? No?

Kris Wilson:
The court cases for some of our matters can take years to go through that process. So, I mean, we've had some interesting ones in cyber crime, but at the moment, we do have some that are going through sentencing for a large-ish money laundering job. We've actually got one of the offenders in court for sentencing this afternoon, but that's not the last offender, so I can't probably...

Jackie Blondell:
Yeah, so you can't... no, no?

Kris Wilson:
Yeah.

Jackie Blondell:
That's fine. I mean, we have to come out in June, so if we can't wait years, so I'll leave that one for the moment.

Kris Wilson:
Well, I mean, you could probably come back to me before June. I think I expected-

Jackie Blondell:
Oh, really?

Kris Wilson:
... probably have it all wrapped up by then.

Jackie Blondell:
Okay, that's great. You've got a deal. Let's talk about money mules because when we spoke before briefly, you did talk about them at length, and I think it's interesting to see how key players fit into the operation. So, could you just explain what a money mule is and how they fit within a money laundering operation?

Kris Wilson:
Yeah. So, money mules, the phenomenon is certainly not new to Australia. Money mules have been recruited for some decades now, really. And money muling is extensively widely used across multiple crime types as a means of deflecting attention from the more serious criminals that are seeking to launder money from whatever the crime type may be, whether it be from illicit drug sales or looking at conducting SIM swapping off the back of social engineering, victim's personal identity information and draining their bank accounts. Or indeed, if it's going to be probably the more topical one at the moment that affects Australia is online scams, which come in many, many forms.

We've obviously got romance scams which have plagued Australia for years, but then also we've got a lot of the investment type of opportunities that Australians look to, I guess, invest money in due to rising cost of living. Really off the back of COVID as well, that has seen a real upturn and spike in frequency and amount. So, I mean, online scams at the moment are costing Australia $1 to $2 billion a year alone. We're considered to be a very green country when it comes to online scams. And when I say green country, we're a very rich target. We have a high standard of living.

We have a generally high disposable average income amongst our population and Australians in general are also seen to be as a nation, we're very trusting. We like to look for the best in everyone, and that probably makes us maybe a little more susceptible to falling victim to scams. And with that comes has a flow on effect really. We see people that are investing in supposed opportunities. It might be an investment bond scheme that turns out to be a scam. It might be investing in a technology startup company that people get luyed into, which is, in reality, it's a scam. Money mules are involved at the very sort of basic level of the scams.

Jackie Blondell:
Oh, sorry, can I just say, are they involved in the scam itself or are they sort of a low level, but integral part of washing the ill-gotten proceeds of the scam?

Kris Wilson:
Certainly low level. It's not to say that some money mules can be... Quite often, they'll turn a blind eye and they'll consider themselves to be unwitting in the crime, but in reality, they know that what they're being asked to do is not right, not legal. But again, it comes back to, I think, the point you made at the start of the podcast that money laundering is a victimless crime.

I think many of them would take that view and Anna perhaps even sold that as part of the sales tactic when they're recruited to fulfil their role as a money mule. So, what we see with the online scams is that the real criminals behind it will have a demographic.

They'll have a particular profile of a money mule already mapped out of people that they intend to target. And that could be everything from, say, university students or particularly foreign students that are studying in Australia and money for them when you're going through university can be typically quite tight.

So, people will look for easy opportunities to make a few extra dollars, or it might be sort of more middle-aged Australians or people that have sort of around that sort of retirement age that might be looking for a means or opportunity to earn a little bit of extra money because their superannuation balance might not be so great.

And earning, say, $5,000, for example, to create a registered Australian business, which can be done online, and then walking into a bank branch and opening up a business bank account and linking it to said business, that's pretty easy money for what is probably maybe one to two hours of work, or depending how proficient they are, maybe even less.

Jackie Blondell:
So, you were saying before that Australians are quite credulous when it comes to believing it's too good to be true scenarios like this. Is there enough education out there with the general public and with students, and particularly foreign students, about the dangers of being approached to do this kind of work, or does it just roll into scams generally?

Kris Wilson:
We do run media campaigns when it comes to money muling. We've done this for the last several years. In fact, we just had some media coverage promoting the pitfalls and dangers of romance schemes, for example. We had some national media coverage in that space, but that's just one type of scam as well. And I think part of the challenge we have, particularly when I look at university students, particularly international students that come into Australia, well, they come in by the thousands and they leave by the thousands.

And I guess it's part of the challenges having that brand awareness, that media awareness of the pitfalls and dangers, the warning signs of what a money mule is and how it occurs is something that we need to continually work at.

Jackie Blondell:
Okay. Can we talk about the different types of jobs these people do? The classic one is depositing money in a business bank ATM. So, it can be sent overseas overnight, particularly an intelligent ATM. And there's also cash businesses. What other types are there? Is there, for example, crypto mules? Is that a completely different area of muling? If I can use the term.

Kris Wilson:
Crypto muling actually is a role and trend that is unfortunately increasing in Australia. So, Australia has had one of the highest uptakes in rolling out cryptocurrency ATMs of anywhere in the world, and that's proven to be a challenge for us at the moment. But one thing we have been doing in that space, again, is promoting the pitfalls of cryptocurrency, particularly scams. And we've had some good response from industry where crypto machines are being identified as being used to launder cryptocurrency. Those machines are being shut down and removed from use. So, that's one example of how we're working towards making a difference in that space.

But I guess going back to your earlier point about how the mules do what they do, technology in general makes things quite easy now to do. As I said earlier, you can register a business online. You don't need to walk into a bricks and mortar building to do it. And even opening up bank accounts to a degree, provided you've got the right identity documents available for you, you can open up a bank account online as well and not actually physically speak to a person. In many cases, they still do, but you don't have to. But again, this is where I guess the real criminals in this space are clever.

By recruiting a money mule, they're effectively placing the majority of the risk on the money mule because it's the money mule that is compromising their own identity in the perpetration of the crime itself. So, usually what they will do once they've actually got to the point of opening the bank account, whatever bank that may be with and whatever means that bank uses to control access to the account, the money mule will provide that access back to the person who has recruited them, and that person may in turn hand it to somebody else that controls the online access to the account, and that's where they've then got the opportunity to hide behind in encryption techniques over the internet.

And again, we do become aware of the accounts that are opened by mules, but the challenge we have is that by the time the financial industry are aware that the account is effectively compromised, the money has gone in and it's been moved. Although having said that, the detection systems that the financial industry have are continually improving and we have had quite a few success stories, where we've been able to block money before it's actually been moved out of the mule account.

Jackie Blondell:
Okay, that's great. Well, I think you answered my last question about four sentences ago, so that's everything, unless there's anything else that you want to add or you think that we should include from a detection perspective on money laundering.

Kris Wilson:
No, there's probably not much more to add there. I just unfortunately didn't have-

Jackie Blondell:
Oh, the case, that's all right.

Kris Wilson:
... the case which could have certainly filled in a few minutes. I'm not sure how we are for time here.

Jackie Blondell:
No, we're okay for time. In fact, I can give you time back in your day, which that's very rare to have. And then steal some time back from you, contact them through Emma maybe in a month's time, six weeks' time, see how it's going, see if we can just get you on for 10 minutes to give us a case. Because I think when we have a case, it really brings people's attention to it because you're telling them something that's happened and the consequences of it. Not because we've got a gang of criminals in the membership or the general public. It's just because it's such a grey crime to most people. It's a crime that they cannot see and they only think it affects banks and everyone hates banks. I mean it's... yeah.

Kris Wilson:
Yeah. No, I mean, look, we assisted the Royal Thai Police in taking down a call scam centre that was specifically designed to target Australia. So, we've got a bunch of people locked up overseas, including Australian citizens that were part of the syndicate. But again, the court process over there has not run its course. So, whilst the evidence is very, very strong and there has been media reporting around this particular scam centre being taken down, I can't really talk beyond-

Jackie Blondell:
You can't talk to it? No?

Kris Wilson:
... beyond what's already been put in the media. So, I can't talk about what the overall sentencing is or what the impact is. I can say we prevented a large amount of money from leaving Australia. I can say we had a certain number of victims that were identified. We were able to successfully pull some money back that were sitting in their accounts, but until that sort of court processes run its course, it's a bit hard to-

Jackie Blondell:
You can't?

Kris Wilson:
... sort of give the nitty-gritty- To comment on it?

Jackie Blondell:
... detail. No. No, I understand completely. Maybe we could just finish off just for now and then I'll chase you up in six weeks, two months' time.

Kris Wilson:
Yeah, certainly.

Jackie Blondell:
But what would your message be to finance professionals in particular about their awareness levels, what they should be thinking about? Or is that not an AFP thing? Should I be going say... I mean, I've asked AUSTRAC, but do you...

Kris Wilson:
The financial industry?

Jackie Blondell:
Yeah, yeah.

Kris Wilson:
Well, I mean, the financial industry, they all have anti-money laundering sort of teams. If there's obviously anti-money laundering legislation, which is really AUSTRAC's remit for enforcing, but I guess I can speak to the JPC3 here in Sydney that we do work very closely with the financial industry, the big four banks being CBA, Westpac, National Australia Bank, and ANZ all sit with us. And we are always working very, very closely with them. They compile a vast amount of intelligence on threats that target them, and certainly their detection systems are generally very good in this space.

So, they're not 100% fail-safe, no system sort of ever really is, but we do work closely with them and we've been successful, particularly with something like say business email compromise where money mules are recruited at the grassroots level. In four years, we've prevented almost $500 million from being lost to business email compromise syndicates that are either based within Australia or internationally.

Jackie Blondell:
With that, because I mean, the money that they're scamming out of people is dirty money, is that then washed with some other dirty money and some clean money to go out? Is that how it works or...

Kris Wilson:
I wouldn't say that we necessarily see clean money with it. Certainly the money, I'll go back to the online scams. The money that we see unwitting Australian victims deposit money into, say, an Australian business bank account, there'll usually be two or three international hops before it comes out in obviously another country.

I won't name any specific countries because it could be any country, but quite often what we see is either bank accounts either in Europe, the Middle East or Southeast Asia being used. They don't necessarily put any clean money through it. Those scams are designed to be sort of quick hit schemes.

So, the scam itself might last anywhere from say a month to maybe three months before the victims realise they've actually become a victim and then obviously criminal reports are filed and noise within law enforcement circles obviously grows and they shut the scam down and then move on to the next one.

Jackie Blondell:
Okay. Okay. Great. Okay, Kris, I think that might be it for the moment. And as I said, I'll chase you both down-

Kris Wilson:
Sure.

Jackie Blondell:
... yeah, in six weeks' time, but thanks again. Really appreciate it.