AUSTRALIA: Exposed: multimillion-dollar drug network

For a single-fronted store with a sink that doubled as a toilet, Long Thanh Money Transfer Company's last financial year was extraordinary.

From its setting among fruit shops, seafood stalls and hairdressers in Footscray's "little Saigon" shopping district, the money remitter moved — according to police estimates — more than $200 million out of Australia.

Much of it was delivered as bundles of cash stuffed in Safeway bags. And much of it, according to allegations made later in court by the Australian Crime Commission, was drug money.

The October arrests of the Long Thanh operators marked the climax of one of the most significant operations ever undertaken by the commission.

Despite minimal publicity, the investigation has achieved multiple successes. Scores of drug dealers belonging to five, mostly Vietnamese, syndicates have been arrested. The channels they allegedly used to siphon the drug money to South-East Asia syndicates have been dismantled, a rare coup for police given the difficulty of following money trails.

Investigators have learned how the arrested money-movers infiltrated some of Australia's major banks and an international airline. And in the face of fierce global criticism about the way Australia is fighting money laundering — estimated to involve $2 billion to $3 billion billion annually — and terrorist financing, investigators have laid the groundwork for an increasingly sophisticated law enforcement battle.

Two vastly different events set Australia's biggest-ever drug-money investigation in motion. The first was an ACC operation codenamed Katakan. It focused on drug trafficking down the east coast by Brisbane-based Asian syndicates and also gathered intelligence on the movement of the syndicate's earnings.

The second event took place in a confidential meeting in early 2005 between senior police.

Australia had been under pressure from international agencies, including the Paris-based Financial Action Task Force, over holes in the nation's financial system that left it vulnerable to money laundering and terrorist financing.

The Federal Government was mid-way through drafting new laws toughening anti-laundering regulation and policing.

Against that backdrop, those at the meeting, including ACC chief Alastair Milroy and Australian Federal Police Commissioner Mick Keelty, signed off on a new operational approach focusing on the movement of dirty money, not just the crime that produced it.

Using the intelligence from Operation Katakan, Taskforce Gordian was born. Its motto was simple: follow the money trail.

With continuing demand among drug users for methamphetamine ("ice") and heroin, the nation's drug syndicates enjoy a steady stream of profits. But the dealers face a problem: how to transfer large amounts of dirty money — to invest in assets or send overseas to drug exporters — without attracting scrutiny from authorities.

Businesses are required to report transactions of $10,000 or more, overseas wire transfers, and suspicious money movements to the financial watchdog, AUSTRAC.

But the intelligence from Katakan pointed to a system used by Asian drug syndicates to send money overseas — where it can be more easily hidden or cleaned — without setting off AUSTRAC's alarm bells.

The system allegedly involved a small network of money remitters in Melbourne and Sydney, controlled by Long Thanh Money Transfer's manager, Hang Thanh Huynh, 36, her husband, Tuong Manh Hoang, 45, and Huynh's mother in Ho Chi Minh City. (All have denied any wrongdoing.)

Long Thanh is just one of hundreds of money remitters tucked away in ethnic enclaves. The remitters offer a less formal and cheaper money-moving service for expatriate workers, combining their pay before sending the money overseas to avoid multiple transfer fees.

Such was the service Long Thanh ostensibly offered in the district nicknamed "little Saigon". Here, soup shops, men playing draughts and blaring Vietnamese pop songs provide a sense of home for the Asian community.

Yet it is alleged that many of Long Thanh's customers were not interested in saving on fees. Rather, they had money to burn. In court in late October, ACC investigators alleged the shop was frequented by figures from major Asian crime syndicates based in Victoria and NSW. One client, known as "Choc", allegedly visited Long Thanh's store in Bankstown, Sydney, twice a week to check that the money deposited matched that sent overseas. He is alleged to have ordered 90 transactions totalling $20 million.

The monitoring of facsimiles sent between the Victorian and NSW remitters was a key part of the ACC's investigation, especially as the suspects regularly switched mobile phones or talked in code to counter phone-taps. According to an ACC fact sheet tendered to court: "Intercepted facsimiles reveal that since December 2005, approximately $93 million has been transferred (by Long Thanh) to their businesses in Vietnam.

"The money is then transferred on to various groups in Cambodia, Hong Kong and other South-East Asian countries on behalf of clients of the money remittance business. It is believed that the majority of this total is the proceeds of drug importation and distribution operations."

Long Thanh allegedly used a range of methods to sidestep AUSTRAC's attention. The store's operators failed to lodge transaction records; they hid the identities of their clients and the overseas recipients; and they used other remitters to dilute the volume of money and the frequency with which it was sent offshore.

But, perhaps most ominously, Long Thanh also had its tentacles inside some major banks, as well as Vietnam Airlines. It is understood the ACC has concerns about some of the suburban bank employees who managed the remitter's accounts. An employee of the ANZ bank in the western suburbs is under scrutiny for her failure to report the extraordinary deposits and transfers made through Long Thanh's accounts. Questions are also being asked about employees from another major bank.

Authorities are also concerned about Long Thanh's relationship with members of flight crews working for Vietnam Airlines.

In court, it was revealed that an ACC surveillance crew targeted a Vietnam Airlines pilot, Van Dang Tran, after he flew into Sydney in early June. Within 24 hours, he was taking a phone call from a Long Thanh manager about "how many green tops" he could carry on his flight home. Tran responded that he could handle as much as possible.

A day later, during a routine search of the checked-in baggage belonging to the Vietnam Airlines air crew, Tran's suitcase was searched. Customs officers allegedly found 14 packages containing $549,265.

The find may have been the tip of the iceberg. The ACC later alleged in court that more than $10 million has flown out of the country as Long Thanh "used employees from Vietnam Airlines to remove large amounts of (drug) money from Australia".

Along with Tran and some of Long Thanh's employees, Taskforce Gordian has arrested more than 50 people in Australia over the past six months. Long Thanh's manager, Hang Thanh Huynh, is charged with conspiracy to launder up to $93 million of drug money overseas. A number of the company's clients have been charged with drug offences.

More arrests are planned, but the focus is shifting to the court cases, which are likely to be long and complex. Money laundering prosecutions in Australia have a poor success rate, partly because of the difficulty of proving that funds were "tainted" and those moving them knew it.

A November report by the International Monetary Fund states that "while the (Australian) legal measures are comprehensive, they are not fully effective, as investigators generally do not investigate and refer money laundering as a separate charge, and (the) number of prosecutions for money laundering is generally low".

Money launderings experts, such as former National Crime Authority chairman John Broome, blame a tendency for police and prosecutors to focus on "primary" crimes, rather than the movement of profits they generate. Taskforce Gordian, he says, may signal a welcome shift. But Mr Broome believes the anti-money laundering and terrorist financing reforms passed earlier this month still leave Australia vulnerable.

After September 11, scores of countries, including Australia, signed the Financial Action Task Force's new regime for fighting the black money trade.

Australia's new laws include boosts to AUSTRAC's resources and powers, and new rules for money remitters, banks, bullion dealers, accountants and casinos to report suspicious transactions and scrutinise customers.

After intense lobbying from business groups, especially the banks, the Government will phase the changes in over two years.

"A lot of banks have not been strongly compliant with existing rules, especially banks with branches in Asia and the Pacific," says Mr Broome.

"We have made some steps forward. But have we really got stuck into this stuff? The answer has to be no. For instance, I see no discernible crackdown on charities. And the phased approach means we won't see needed changes in place by 2009."

There are private rumblings among some senior police as to whether the new reforms go far enough given the negligible amount of terrorist funds seized in Australia.

Even with Gordian's concerted effort to track drug funds, the ease with which money moves overseas presents problems. Developing countries often do not have the expertise, laws or will to locate and seize dirty money.

According to public announcements, Gordian had seized less than 5 per cent of the drug dollars allegedly sent to South-East Asia.

It is, however, a work in progress. ACC officers have made numerous trips to Vietnam and are working closely with the country's authorities.

The money trail is not cold yet.

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