AUSTRAC Has Published a New Guidance For Detecting “Cuckoo Smurfing”

Richard Marley
June 08, 2021
3 minutes read
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AUSTRAC’s guidance offers indicators for financial institutions, to allow them to detect suspicious transactions related to “Cuckoo Smurfing”

A new financial crime guide published by AUSTRAC helps financial institutions in detecting, identifying, and reporting suspicious transactions related to a money-laundering scheme known as cuckoo smurfing.

Cuckoo smurfing is a money-laundering tactic through which illicit funds are made to appear legitimate.

This technique depends on the exploitation of customer accounts in banks. Funds from overseas that are due in a customer’s bank account are diverted into the criminal’s account, while illegitimate funds are deposited in the account of the customer to cover the situation.

Cuckoo Smurfing

The name is based on the similarities found between this technique of money laundering and the activities of a cuckoo bird. Cuckoos lay their eggs, that are taken care of by other birds unknowingly.

In the same way, Australian customers are unaware that the funds in their accounts are in fact illegitimate and being mishandled by criminals.

The new financial crime guide has been developed by Fintel Alliance to provide specific indicators for the assistance of remittance service providers as well as banking and non-banking financial institutions.

The following indicators have been pointed out that may suggest cuckoo smurfing:

Multiple cash deposits in amounts under the AUD 10,000 reporting thresholds
Multiple cash deposits made on the same day or within a short period
Cash deposits made across numerous bank branches and ATMs, including across different states
Cash deposits from multiple third parties
Cash deposits appearing inconsistent with the expected transaction activity of the account holder
The account holder is listed as unemployed, retired or a student

In case a financial institution identifies these indicators, they are required to find the relationship between the account holder and the depositor.

Where possible, financial institutions have also been directed to engage with overseas counterparts for the identification of the source of the funds.

Additionally, if numerous indicators are observed and suspicion arises, a Suspicious Matter Report (SMR) must be filed to AUSTRAC.

According to the AUSTRAC CEO, Nicole Rose,

“We rely on financial businesses to report to AUSTRAC and partner with enforcement to stop these criminal syndicates and protect members of the Australian community,”

Disclaimer: No warranty is herein provided that the information contained in this document is accurate, up-to-date, and/or complete. In no circumstance(s), does such information constitute legal or any other advice. Any person who intends to use, rely, pass-on, or re-publish the information contained herein in any way is solely responsible for the same. We suggest to verify the information and/or obtain expert advice independently if required.

Latest News

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ASIC Expands its Team to Enhance Cryptocurrency Regulations
Australia’s financial regulator has enhanced the size of its crypto team. The crypto regulatory measures include their application for financial services licenses and show that specific crypto platforms have particular liquidity in reserve.

After shifting popular blockchain from a proof-of-work (PoW) to a proof-of-stake (PoS) system, ASIC, Australia’s financial regulator, has increased the size of its crypto team.

U.S. Security and Exchange Commission Chairman Gary Gensler stated that PoS-based tokens might be classified as securities.

The decision of ASIC to keep PoS tokens for example Ethereum, Cardano and Solana under its remit will further clarify the situation and enable crypto regulations to be more effective. To cope with the latest regulatory reforms, the crypto exchange must either delist the tokens or start complying with robust crypto laws.

Such moves may force a few crypto firms to manage their operating models. Even the largest stablecoin of the crypto market, Tether, has been caught in a controversy created over the failure of holding enough dollar reserves to back the stablecoin.

The crypto regulatory measures include their application for financial services licenses and show that these platforms have particular liquidity in reserve.

The final decision by the regulator has not been issued yet. Greg Yanco, the executive director for marketers, said that ASIC won’t be a “cheerleader for crypto assets.”

SEC Newgate carried out research the last November. It showed that 44% of Australian retail investors reported holding crypto. Out of these investors, only 20% viewed crypto as high-risk.

The chairperson of ASIC responded and said that the regulators were “concerned that there are limited protections for crypto-asset investments given they have become increasingly mainstream and are heavily advertised and promoted. There is a strong case for regulating crypto-assets to better protect investors.”

According to Yanco, until the last year, cryptocurrency was not such a high priority. Still, due to the decline of cryptocurrency in the previous few years and investors wiped out around the globe, ASIC expanded its team. It made crypto one of its “core strategic projects.”

Suggested Read: Regulatory Authorities to File a New Bill to Secure the Citizens from Cyber Criminal Activities

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AUSTRAC Has Published a New Guidance For Detecting “Cuckoo Smurfing”

Forensic Document Verification – A New Standard

How Forensic Document Verification is Carried Out?

High-Profile Crime Cases of Document Fraud

Gang Arrested for Printing Fake Documents in Greece

Criminal Network Busted for Distributing Fake Documents

Regulatory Authorities Monitoring Document Fraud

Canada

Australia

Document Forgery Forensic Authentication – Ensuring KYC Compliance

What Shufti Pro Offers?

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Let’s prove your customer’s

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