‘Money mules’ use Aussie bank accounts to beat Asian cryptocurrency crackdown

Foreign cryptocurrency investors are using Australian bank accounts to deposit and transfer profits on deals that are banned in their own countries, particularly China and South Korea, according to tax and security specialists.

‘Money mules’, such as foreign students at Australian universities, are being used to set up the accounts that can then be sold, or given, to crypto investors to avoid regulatory scrutiny in their own countries.

Alternatively, cyber criminals are selling forged Australian bank account, credit card, bank and investment statements for between $6 and $24 with the promise of delivery anywhere in the world within 24 hours.

Top security experts warn using Australia as a safe haven for cryptocurrency deals will “increase massively” as other countries attempt to crackdown on the growing mania.

It comes as policy makers in Australia and around the world struggle to improve transparency, lower volatility and strengthen cryptocurrency regulation, which in Asian economies has meant a ban of trading and shutdown on exchanges.

Cryptocurrency is usually held in an anonymous  ‘wallet’, which is a software program that interacts with various blockchain to enable users to send and receive digital currency and monitor their balances.

Bank accounts are needed for associated transactions, such as paying fees or charges, and they could also be the original source of the funds used by the account to make the purchases and receive cash proceeds from sales.

Security specialists claim overseas’ crypto dealers are using accounts in Australia for transactions that if undertaken in their domicile might alert local authorities to their activities.  

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The money can then be transferred out of the country using other ‘money mules’ carrying cash, high value gift cards, popular money remittance services or invested in Australia.  

Alex Tilley, a senior security researcher at SecureWorks, which is listed on Nasdaq, the US bourse for technology stocks, said ‘money muling’ is a common – and effective – way for third parties to anonymously use Australian banks.

“Get a student in Australia to open an account and hand over the pin number when they return home is common place,” he said.

“They are able to distribute proceeds in small enough amounts to not alert regulatory or police attention. It is reasonable to expect a massive increase in this activity as cryptocurrency profits soar.”

 Leading tax specialists are expected to raise the issue of local accounts being used for crypto business when they meet senior Australian Tax Officials at a special meeting to be held next month, according to tax specialists.

Using Australian accounts for crypto transactions is not unlawful.

Overseas interest in local accounts is growing because China is escalating a clampdown on cryptocurrency trading, targeting online platforms and mobile apps that offer exchange-like services.

Authorities banned cryptocurrency exchanges last year and on Friday announced they are targeting alternative platforms where it can be traded such as mobile apps and online platforms.

State media also reported the country’s central bank had published a regulation banning vendors from providing cryptocurrency transactions from Jan 20.

 

South Korea is also preparing a ban following raids on exchanges for alleged tax evasion,  according to recent reports.

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Taxable asset

The ATO considers popular crypto currencies as “neither money nor a foreign currency”.

While it is not subject to goods and services tax (GST), it is an asset that can be used in income and calculating capital gains tax (CGT).

 “An Australian account could be very useful if you reside somewhere where trading in these things is banned,” said Mark Chapman, director of tax communications for H&R Block.

“The issue for anybody doing that is possible Australian tax liabilities,” he said.

Cryptocurrencies are assets for tax purposes and may be subject to capital gains tax if acquired for $10,000 or more.

 If the original cost is less than $10,000 the asset is covered by the personal use exemption and potentially tax free on disposal, not matter how big the gain.

But the high prices bitcoin is trading for, despite the volatility, means the exemption is unlikely to apply.

An ATO spokesman said the issue of foreigners using domestic bank accounts does “not relate to the administration of tax laws and, as such, it is unable to comment”.

But banks are deeply sensitive about any possibility their accounts could be used for any untoward activity, particularly following last year’s bruising revelations about alleged money laundering.

AUSTRAC is alleging the CBA it was too slow to inform it of suspicious activity and close an account used by a convicted terrorist . It also claims CBA accounts were used by several ‘money mules’ who attempted to launder money out of Australia for organised crime groups dealing and drugs and firearms.

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Spokesmen for leading banks said they are monitoring accounts for unusual activity, such as suspicious deposits or large transfers that might need an explanation by the account holder.

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