Trade-based money laundering: Russian sanctions
Recent sanctions against Russia, Queensland Alumina Limited’s clash with Russian aluminium producer, Rusal, in the Federal Court of Australia, and seizures of Russian oligarch’s assets such as superyachts and luxury villas, are likely to further encourage wealthy parties with Russian assets to mask their sources and attempt to shift them to ‘safe’ foreign jurisdictions, report Partner Ian Hughes and Special Counsel Hui Ling Dean in HopgoodGanim's Dispute Resolution and Litigation practice.
Players routing money or other assets via or to an ultimate destination in Australia will confront our tough anti-money laundering and counter-terrorism financing legislation ( AML ) and some of the most effective enforcement agencies in the world.
But the complex and secretive webs used by active players are also potential traps for innocent actors because enforcement agencies can take civil, and criminal action, even where a party is unaware that the funds, assets and/or transaction/s passing through their network emanate from unlawful sources.
To understand how sanction laws can affect even innocent actors involved in shifting money, and other assets between jurisdictions, it is first necessary to understand the basic AML framework in Australia.
The global value of international trade was nearly 28 trillion USD in 2021. 1
Modern technology and electronic banking enable instantaneous daily transfers of billions of dollars in trade funds around the world. The global logistics network allows assets such as luxury cars, artwork and gems, to vanish using complex shipping routes and safe-haven port transfers.
For example, despite UN sanctions against North Korea, its dictator, Kim Jong-un enjoys a fleet of sanctioned luxury vehicles including multi-million dollar Maybach S600 Pullman Guards, which he has acquired using several of the 90 or so countries currently known to facilitate trade-based money laundering. 2
In this environment, trade-based money laundering and asset transfers have become even more attractive to criminal entities and, considering sanctions against Russia, are more likely to interest parties with Russian assets who may previously have traded lawfully but whose wealth is now at risk of being frozen or confiscated.
Trade-based money laundering can take many forms – the only limit is imagination.
Transactional red flags to be aware of include:
Find out more about HopgoodGanim's Dispute Resolution and Litigation practice. Our dispute resolution team includes both general commercial litigation practitioners as well as industry expert practitioners in the areas of banking and finance, intellectual property, technology, digital assets, resources and energy, construction, hospitality, environment and planning, taxation, employment law and property.
The team covers financial crime and corporate investigations, with Hui Ling and Ian advising on corporate anti-money laundering and proceeds of crime litigation. All of our practitioners are focused on helping clients achieve exceptional outcomes.
This article is part of our content series, 'The money laundering deck: AML and counter-terrorism financing laws'. The series uses Russia as a case study to provide an analogy for how businesses can be impacted by AML and counter-terrorism financing laws while operating in Australia. Read the related articles in the series here: