It is used to move illegal funds into Australia and disguise profits from criminal activities.
The key targets appear to be Australian expatriates and exporters, international students studying in Australia, international investors and migrants wishing to settle in Australia.
When Australia’s financial crime regulator, AUSTRAC, released its new financial crime guide last week (3 June 2021), it warned businesses and consumers about the “cuckoo Smurfing” method, and described it as a “sinister practice with an endearing name.”
It’s not wrong.
In a statement, AUSTRAC said the Australian account holder will commonly be expecting genuine funds to be deposited into their account from a friend, relative or business partner overseas.
Often these recipients are unaware that the funds transferred into their accounts have in fact come from criminals using funds generated from drug dealing and other serious criminal activities.
AUSTRAC’s new financial guide helps businesses know how to spot the illegal activity and report it to AUSTRAC.
The launch coincides with new educational materials developed by the Australian Federal Police (AFP), in collaboration with AUSTRAC, to further assist consumers protect themselves from cuckoo Smurfing.
The AFP fact sheet says you need to first be aware of the activity, and how it works, and protect yourself accordingly.
“The deposits into the Australian account (the ‘cuckoo’s nest’) are often made by cash mules (‘Smurfs’) in amounts less than $10,000,” it says.
“It is a criminal offence to deliberately split large transactions into smaller amounts of less than $10,000 in an attempt to avoid threshold transaction reporting.”
AUSTRAC CEO Nicole Rose PSM said if businesses identify behaviour that indicates potential cuckoo Smurfing, they must report it to AUSTRAC.
“So together we can disrupt criminal syndicates targeting the bank accounts of Australians,” Ms Rose said.
“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.”
AUSTRAC has advised money-transfer businesses, banks and financial institutions to keep an eye on any clues of the potential criminal activity, such as cash deposits appearing inconsistent with expected transaction activity of an account holder, cash deposits conducted on the same day across multiple branches, and ATMs and multiple cash deposits predominately in amounts under $10,000.
The public can also protect themselves by only dealing with, or requesting funds to be sent through, legitimate financial institutions or money-transfer businesses.
If you’re expecting to receive funds from overseas, review your bank account activity and report any suspicious transactions.