Property grab: AFP smashes alleged $10 billion Chinese money-laundering operation
February 2, 2023 — 12.01am
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KEY POINTS
- Australian Federal Police have charged nine people after smashing an alleged Chinese-Australian money laundering syndicate.
- The group allegedly moved an estimated $10 billion out of Australia while amassing a blue-chip property portfolio in Sydney.
- Police have seized properties and luxury assets worth at least $150 million.
- Two of the charged suspects are alleged Chinese-Australian gangsters in Sydney, with a combined personal fortune estimated at more than $1 billion.
- The pair are accused of accumulating wealth by becoming the Australian-based bankers of choice for international drug cartels and wealthy Chinese nationals seeking to circumvent China’s capital-flight laws.
Federal agents have dismantled an alleged Chinese-Australian money laundering organisation that moved an estimated $10 billion offshore while amassing a blue-chip property portfolio comprising Sydney mansions, a luxury city building and hundreds of acres of land near Sydney’s second airport.
On Wednesday, Australian Federal Police officers seized properties and luxury assets worth at least $150 million and arrested and charged nine suspects, including two alleged Chinese-Australian gangsters in Sydney with a combined personal fortune estimated at more than $1 billion.
Federal police arrest a man in Sydney as they dismantle a money-laundering syndicate.CREDIT:AFP
The arrests bring to an end a property-buying spree that one official source said included land purchased for a new Sydney suburb owned and developed by Chinese organised crime near Sydney’s new international airport.
The landmark AFP operation uncovered an industrial-scale shadow-banking organisation that stretched from Australia to Asia, the Caribbean, Switzerland, America and the United Arab Emirates, and which facilitated the purchase of Australian real estate that police sources suggest might be worth billions. The syndicate, alleged to be responsible for the money laundering, was deemed to be such a risk to the national interest it was designated an Australian Priority Organisation Target by the Australian Criminal Intelligence Commission last year.
The AFP operation, and the fact that the organisation targeted is just one of several large money-laundering syndicates operating in Australia, will raise fresh questions about the role of foreign funds in inflating the nation’s property market and other legislative and policy gaps in the financial and migration systems that continue to be exploited by criminals.
Police have also seized cryptocurrency and are examining how the syndicate used crypto exchanges to transfer tainted funds around the world without drawing the attention of authorities, according to confidential sources with knowledge of the investigation.
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The Australian Federal Police addressed the media in relation to the arrests of nine people alleged to be involved with an international money laundering organisation.
One of those arrested, Steven Xin, is the local business partner of
fallen global casino industry tycoon, Alvin Chau, who was sensationally jailed in Macau last week after being exposed in Australian media reports and casino commissions of inquiry as having links to money laundering and organised crime.
Xin and his co-accused, Zhaohua Ma, are facing accusations they accumulated their wealth by becoming the Australian-based bankers of choice for international drug cartels and wealthy Chinese nationals seeking to circumvent the Communist Party’s capital-flight laws.
Also arrested and charged in Sydney was a mid-ranking employee of the National Australia Bank, Chen Zhang. Others charged include an accountant and a lawyer.
The NAB worked closely with the federal police and is one of several of the big four banks, along with second and third-tier lenders, to be targeted by the syndicate.
AFP raided several addresses across Sydney’s eastern suburbs on Wednesday.CREDIT:NICK MOIR
Houses bought by syndicate members and seized by the federal police included two luxury homes in Vaucluse and Bellevue Hill with a combined worth of $19 million, a $22 million tower in St Leonards and a $21 million five-storey property adjoining Pitt Street Mall in Sydney. Luxury goods including watches and handbags worth millions of dollars were also confiscated.
Federal agents have also seized a 360-hectare plot of land in Cawdor, near Camden, which Ma bought for $47 million in August. Police intelligence suggests the syndicate had aspirations to develop the land into a small suburb, given its proximity to the planned Western Sydney international airport.
The AFP’s Operation Avarus-Midas – named after the ancient Greek king who in mythology could turn objects into gold – has also cast fresh light on legislative and policy gaps that continue to be exploited by criminals, including weaknesses in the visa and financial system that have turned Australia into a soft target for organised criminals seeking to operate here or invest in real estate.
Police allege the syndicate had a blue-chip property portfolio comprising Sydney mansions, a luxury city building and hundreds of acres of land near Sydney’s second airport.CREDIT:NICK MOIR
The alleged transnational crime organisation, known as the Xin Money Laundering Organisation (MLO), exploited Australia’s migration system, with a senior syndicate figure being granted a significant-investor visa and another receiving Australian citizenship despite being a wanted fugitive. A third suspected syndicate member is a former federal government registered migration agent who facilitates visas for Chinese nationals.
The Albanese government has already appointed former
Victorian police commissioner Christine Nixon to investigate the exploitation of Australia’s migration system by criminals, after this masthead and
60 Minutes revealed how human trafficking, worker exploitation and drug syndicates were rorting the nation’s visa programs.
The alleged role of a lawyer and ex migration agent, and, an accountant in the Xin MLO’s operation, as well as its property purchases, will ramp up pressure on the federal government to introduce long-stalled “Tranche 2” laws. The laws would force accountants, real estate agents and lawyers to face the same obligations as bankers and casinos to report suspected money laundering.
The ease with which the syndicate bought property also raises questions about the adequacy of the Foreign Investment Review Board in safeguarding Australian real estate and businesses from tainted overseas money.
Sam Boarder, who runs the national security practice at McGrathNicol Advisory, said the booming operations of transnational organised crime had increased the urgency of proceeding with Tranche 2 reforms to anti-money-laundering laws.
Suburb aspirations: the 360 hectares of land on Cawdor Road was bought by Zhaohua Ma for $47 million in August.
“Criminal syndicates are working around our existing countermeasures”, he said.
“The national security risks from these criminal operations are immense, particularly if entangled with foreign government-backed influence platforms. The democratic world is still coming to terms with these massive flows of ‘grey’ unregulated capital, which distort our real estate markets and introduce vulnerabilities into our economic and financial systems.”
A shadow bank is born
The origins of the Xin MLO lie in tycoon Alvin Chau’s SunCity casino junket business, which gained infamy after this masthead and
60 Minutes exposed its involvement in large-scale money laundering at Australian casinos and its links to the Chinese triads, which are secretive and powerful criminal organisations.
Jewellery was among the luxury items federal police seized.CREDIT:AFP
The media exposure in 2019 and 2020, and subsequent scrutiny by various casino commissions of inquiry, led to the collapse of SunCity’s Australian operations.
But one of SunCity’s key lieutenants, Steven Xin, pivoted from the casino trade to a service that allowed high-wealth Chinese nationals to shift funds into Australia and other attractive overseas investment destinations in defiance of China’s capital-flight laws.
The AFP alleges Xin, who fled China, where he is wanted for running an illegal gambling enterprise, obtained Australian citizenship and partnered with Chinese businessman Zhouhua Ma to provide this service.
The pair won the trust of international drug cartels and other crime syndicates seeking another service: the movement of dirty cash – that was earned in countries such as Australia – to China or other offshore locations.
AFP officers at a home in Vaucluse on Wednesday. CREDIT:NICK MOIR
For a 4 to 10 per cent cut of every dollar moved, the Xin MLO would collect this suspected dirty cash and provide it to its Chinese customers – who did not have access to their Chinese funds – to fund real estate purchases and other acquisitions abroad.
To pay back the syndicate, these customers would then instruct their Chinese bank to transfer the same amount of money to another Chinese bank account or shelf company that was secretly controlled by the Xin MLO.
Police allege these ghost accounts or shelf companies would then move the funds onto the criminal syndicates that had provided the original funds.
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The money scheme also utilised casinos, cryptocurrency and daigou businesses to ensure no actual funds crossed international borders, evading international law enforcement detection.
But it was also in breach of Australian counter-money laundering laws, which require all money-moving businesses to register with regulator AUSTRAC or face accusations of moving the proceeds of crime.
Tracking the trail
Operation Avarus-Midas commenced after federal agents working on an earlier money laundering operation, codenamed Zanella, began arresting suspects who were carrying bags stuffed with millions of dollars in cash.
Cash was seized in Operation Avarus-Midas. CREDIT:AFP
Frustrated with their inability to catch more senior syndicate members, police sources said investigators devised a long-term plan to patiently track a money trail to the suspected syndicate’s upper echelons.
While the syndicate engaged in counter-surveillance, including the use of encrypted phone devices, the federal police gradually built a picture of its operations in Australia and overseas.
It meant police were monitoring in February 2022, when a mysterious company called Tara Global Pty Ltd purchased for $21 million a five-storey building at 119 King Street, adjoining Sydney’s Pitt Street Mall.
The company funded the purchase with $7 million sent from two Hong Kong shelf companies to an account set up at the NAB’s Burwood branch by a woman who claimed to be a wealthy Chinese investor. She had reportedly arrived at the bank in a Lamborghini 4WD.
Police allege that the woman who claimed to represent Tara Global was in fact Xin’s mother-in-law and that she was helping Xin and other MLO syndicate members invest their profits in Australian real estate.
This building at 119 King St, Sydney has been seized by the AFP.CREDIT:NICK MOIR
After transferring the $7 million to Sydney, Tara Global then sought further funds from other Australian banks to complete the King Street purchase.
The Commonwealth Bank declined Tara Global’s $11 million loan application as it appeared suspicious, so the figures behind Tara Global contacted an alleged trusted insider at NAB, Chen Zhang. He gave them advice about making a fresh application with another financier, Latrobe Finance.
Police suspect this application was fraudulent. Zhang also allegedly gave the syndicate advice about getting further loans from NAB, but the bank froze Tara Global’s accounts in September.
The MLO was unfazed by the freezing of accounts given they had previously been able to start new accounts and obtain large loans, police sources allege. The case against Xin and his co-accused will allege that companies were routinely wound up and phoenixed into new corporate structures linked to new bank accounts as financial institutions froze existing accounts due to suspicions about the origins of funds.
Federal police have seized cars as they dismantled the syndicate.CREDIT:AFP
AFP Assistant Commissioner Eastern Command Kirsty Schofield described the alleged syndicate and others like it as providing “the lifeblood of organised crime” in Australia and internationally.
“This was a sophisticated, complex syndicate established to facilitate the movement of funds regardless of their origin, purpose or harm caused to the Australian community,” Assistant Commissioner Schofield said.
Most of the nine suspects charged are facing serious money laundering and proceeds of crime offences relating to activity that allegedly took place between 2018 and 2022.
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‘A sea of dirty funds’
A unique component of the federal police’s investigation was the behind-the-scenes co-operation of NAB, whose top financial crime investigator is former AFP senior officer Chris Sheehan. Sources said Sheehan and a small team of bank investigators provided the AFP with critical data on the operations’ targets in one of the first examples of a “public-private partnership” in law enforcement. Typically, police have been too suspicious of corporate institutions to work with them.
While the dismantling of the Xin syndicate and freezing of its property assets is significant given it involves the top levels of a major alleged organised crime operation, federal authorities are privately daunted by the scale of money laundering they are facing.
In June, this masthead
revealed how police were tracking another suspected Chinese money laundering syndicate with headquarters in Victoria and NSW that moved hundreds of millions of dollars annually to China and elsewhere.
The “Chen Organisation” counts as its customers a relative of Chinese President Xi Jinping, along with Asian triads and bikies, according to briefings from law enforcement officials.
The ability of the syndicates to operate under the noses of the Chinese government has also raised questions about Beijing’s desire to deal with the problem.
Officials in the United States have directly called out Beijing’s failure to combat money laundering trails that flow through Western countries.
Australian authorities, including the AFP, the Australian Criminal Intelligence Commission, AUSTRAC and the ATO, have recently ramped up efforts to target money laundering, but more than half a dozen sources say they are being hampered by the sheer scale of the problem, inadequate resources and the failure of Beijing to act.
