Identifying serious financial criminals

Serious financial crimes can wipe out the lifesavings of victims, and significantly reduce the money available for essential services such as health and education. Such crimes include where funds are illegally obtained through tax evasion or avoidance, and other offences like money laundering.

The ATO-led Serious Financial Crime Taskforce has released a guide to identifying serious financial criminals, encouraging the community to keep an eye out for and report suspicious activity.

The guide outlines a number of “personas” to describe the kinds of criminals that are typically involved, and explain how to spot them based on their behaviours.

 

The key personas involved in serious financial crime

Behind every serious financial crime is a group of people who play different roles. These roles include The Hardcore Criminal, The Lieutenant, The Launderer, The Straw Director, The Phoenix Operator, The Enabler, The Cyber Criminal, The Fixer, The Tax Fraud, and The Rorter.

 

The Hardcore Criminal

Behind most serious financial crimes is a “mastermind” who is part of an international organised crime group. These individuals conduct opportunistic crimes, responding to market conditions and working with professional enablers to facilitate their crimes.

The Hardcore Criminal often uses violence and coercion, makes large payments in cash, and uses criminal proceeds to fund other crimes such as drug trafficking. No individual below them has full oversight of their operations, to protect the criminal organisation.

 

The Lieutenant

The Lieutenant is the person on the ground who works for the Hardcore Criminal to source and manage the different resources and enablers they need.

The Lieutenant will often lure professional enablers with large fees, recruit co-conspirators while providing them limited details about why their services are required, and increasingly uses technology and the dark web to conduct crimes.

 

The Launderer

The Launderer sets up companies and money flow structures that make illegally gained proceeds appear legal. For example, they often hide money offshore and use shell companies to avoid paying tax, working with professional enablers to evade detection by law enforcement.

Money may also be laundered through real estate, and The Launderer often lives a luxurious lifestyle that doesn’t seem to align with their income.

 

The Straw Director

This is a director of a company intended to be liquidated within a short period of time, or a shell company that has been set up to avoid tax obligations. These people may be coerced or bribed by a “Lieutenant” to help launder money, which is often connected with failure to pay creditors, employees, or subcontractors.

Often, The Straw Director is not aware of the full extent of the crimes they are involved in, and ends up “taking the fall” for organised criminals.

 

The Phoenix Operator

The Phoenix Operator deliberately winds up or abandons a company to avoid paying debts (also known as illegal phoenix activity). They will then start another company to pick up where the original company left off.

The Phoenix Operator will typically fail to pay workers and subcontractors, often fleeing the country and bribing people to keep quiet when the company is wound up.

“At risk” industries targeted include property and construction, food services, transport, agriculture, and payroll services.

 

The Enabler

Professional enablers advise criminals on how to structure their affairs, and help facilitate financial crimes. Examples include:

  • A lawyer who sets up companies and tax structures to circumvent tax obligations.
  • An accountant who helps clients evade tax.
  • A liquidator who repeatedly facilitates illegal phoenix activity.
  • A banker who facilitates offshore payments.
  • A service provider who generates false invoices.

Enablers often live a lavish lifestyle that doesn’t seem to align with their income, use large quantities of cash, and may appear to be “compromised”.

 

The Cyber Criminal

Cyber Criminals use technology to gain access to information and sensitive data which can be used to facilitate a range of crimes, including tax crime and identity theft.

The dark web is used to enable the sale of illicit goods, services, and information, such as using stolen identities and information to carry out serious financial crimes, or selling this information to other criminals to carry out such crimes.

Common cybercrimes include ransomware campaigns where payments are demanded in cryptocurrencies, which are also used to launder the illicit proceeds.

 

The Fixer

The Fixer facilitates offshore tax evasion, helping individuals, dodgy companies and criminal syndicates to conceal the source of money, and how much they have, through the use of offshore entities in tax havens.

These services are typically offered through the dark web, and are increasingly linked to money laundering.

 

The Tax Fraud

The Tax Fraud intentionally avoids paying tax in Australia through a range of methods such as understating income and failing to lodge income tax returns or business activity statements. They often work with professional enablers and intermediaries to game the system and avoid their tax obligations.

Warning signs include that a person keeps two sets of books or financial statements, accepts large cash payments, ignores legal advice or guidance from the ATO, and seems to live above their means.

 

The Rorter

The Rorter lies or withholds information to fraudulently access a range of government subsidies, such as COVID-19 stimulus measures. A Rorter may make false claims as both an employee and a business.

 

Conclusion

Behind every serious financial crime is a group of people who play different roles. According to the ATO typologies, these range from hardcore criminals who use violence and coercion, through to professional enablers such as accountants who help clients evade tax. The ATO’s Serious Financial Crime Taskforce has provided a guide to identifying the key players, encouraging the community to assist in the fight against serious financial crime.

Nyman Gibson Miralis provides expert advice and representation in serious financial crime matters, including cases involving fraud, tax offences and money laundering.

Contact us if you require assistance.