Huge money is being washed due to money laundering and terrorist financing. Examples of these activities are arms trafficking, human trafficking, drug trafficking. Financial criminals carry out activities to turn their income from criminal activities into legal money. In order to carry out these activities, criminals often find different ways and tools. One of these methods is Cuckoo Smurfing. Cuckoo Smurfing, a special money laundering techniques, is a method for money launderers to hide their transactions as international legal activities of non-doubtful bank customers.
What Is The Cuckoo Smurfing?
Cuckoo Smurfing, which is one of the money laundering methods used by criminals, is simpler than other methods. Cuckoo Smurfing is a money launderer that steals or launders money from the government by splitting large transactions into small transactions. This can also be called a kind of illegal tax avoidance. Cuckoo Smurfing helps criminals use cash or drugs. Even if the Cuckoo Smurfing does not directly perform money laundering activities, they are considered guilty because they help them carry out these activities. Criminals use this technique to carry their money worldwide.
In the Cuckoo Smurfing, criminals are saving money in bank accounts that seem innocent and ordinary. When finding these accounts, it is usually done with the help of internal members of banks that help criminals. In the first stage, the criminal inserts the money into a financial system. When entering the system, they usually buy casinos or international currency. Afterward, money is allocated to other accounts by making many complex bank transactions in order not to understand the source of the money to be laundered. Thus, the process becomes difficult to monitor. At the last stage, the money is returned to the criminal. In order not to understand the money laundering activities in these return transactions, the process should be kept confidential, and the sources should be shown as legitimate sources.
Example of Cuckoo Smurfing
Suppose a Texas criminal owes £7,000 to a Manchester criminal, and a Manchester merchant owes £7,000 to a Texas supplier. The merchant in Manchester goes to Manchester Bank and deposits £7,000 with instructions to transfer the money to the Texas supplier's bank. Working with a Texas criminal, the Manchester banker tells the Texas criminal to invest £7,000 in the Texas supplier's bank account. The Manchester banker then transfers £7,000 from the merchant account in Manchester to the Manchester criminal account. The merchant and buyer have no idea that funds are never transferred directly, so the merchant and Texas supplier in Manchester knows that the funds are never transferred directly. They know that the merchant in Manchester paid £7,000, and the Texas supplier received £7,000. If this simple crime is noticed and transactions are caught, the Manchester banker may face serious consequences as he does not comply with the moneyregulations.
The main logic in Cuckoo Smurfing is that the funds between the interested parties act separately; this is the basic skill required. Financial criminals mask their identity and use the identity of another innocent-looking account to transfer money without being caught. Thus, innocent people can get caught up in systems without realizing that money laundering activities are taking place, just like Money Mules. Cuckoo Smurfing is a rare but highly effective method of money laundering. The money laundering crime network is extremely complicated. In addition, when it comes to third participation, it is difficult for banks to detect such suspicious activities. That's why criminals aren't caught, and dirty money travels all over the world. As a result, financial criminals use the assets they convert into legal money for transactions such as purchases.
According to the Australian High Court The Cuckoo Smurfing
The term Cuckoo smurfing is of European origin and is named in this way because the crime is compared to the activities of the Cuckoo. As we mentioned before, the situation in Australia is not much different. The innocent party will fund an alternative reminder in a foreign country to transfer funds to Australian accounts. This is usually done to save bank fees. Australian criminals, also known as Cuckoo Smurfing, deposit illegal cash profits from Australian crime unions into the bank account of the Customer who is waiting for an overseas transfer. Cash transactions are carried out under existing reporting requirements to ensure that crimes are not detected.
According to the Australian High Court, If any bank in Australia wants to transfer money to their account using a Money reminder, the reminder automatically washes the amounts corresponding to the amount of money they are told in Australia. That is, the Customer's bank account information is provided to people in Australia. A deposit team in Australia usually deposits cash at a number of bank branches and transactions involving physical currency to account below the regulatory threshold, below $ 10,000. The account holder sees deposits that match the amounts they intend to pay. Since each deposit's amount is below the threshold, records are not provided that will allow regulatory agencies to intervene. According to the Huge Court's decision, if an innocent victim can provide sufficient and real information to prove that it is innocent and the court accepts this evidence, victims of this crime will be protected.
Australian Federal Police (AFP) has been investigating the Cuckoo Smurfing technique for almost 20 years. So, Cuckoo Smurfing was featured prominently in 2019 due to a Supreme Court case related to the legal obligation to abuse accounts in Australia. Until 2014, the Australian government admitted that Cuckoo-smurfing victims were innocent victims. Therefore, the Australian Federal Police(AFP) decided to freeze Australian bank accounts that received structured funds. AFP has been continuing this movement since 2014.
On the other hand, Cuckoo smurfing shares some similarities with the hawala system. The Hawala system is a money transfer that occurs when funds are not traditionally moving. There is a big difference between the Hawala system and the Cuckoo smurfing, which creates an alternative money laundering risk to hawala, while the Cuckoo smurfing intentionally creates money laundering risks. Regulators and banks are required to take measures to prevent all these risks such as Know Your Customer, Customer Due Diligence, AML Transaction Monitoring, Transaction Screening, etc. Sanction Scanner offers AML solutions in compliance with all regulations. Sanction Scanner solutions minimize risks and protect yourself against risks. You can talk to us for detailed information or request a demo.