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Couple’s $3m frozen in ‘cuckoo smurfing’ scheme

WA’s highest court has ruled that Federal Police can seize almost $3 million from a couple who have committed no crime — but who have had their Perth-based bank accounts used in a sinister “cuckoo smurfing” scheme.

Malaysian citizen Ganesh Kalimuthu and his wife Macquelene, have been embroiled in a legal nightmare for years, after Australian Federal Police came calling to ask questions about streams of cash deposits of just under $10,000 which appeared in their three bank accounts in 2014.

The AFP did not suggest the Kalimuthu family were knowingly involved in money laundering, but does allege the couple should have been suspicious of the transactions involving the Perth accounts — which they say were part of a “cuckoo smurfing” scheme.

Cuckoo smurfing involves shady overseas money remitters who take legitimate money from a would-be client, but rather than sending it on, hand it over to a criminal gang.

The honest recipient in Australia still sees money coming into their account, but it is not the previously clean deposit — instead it is criminal Australian cash linked to the overseas syndicate.

The AFP had argued that if the money in Australia was not frozen, then it would create a “loophole” for a known money-laundering technique.

Last year, a WA Supreme Court judge ruled the Kalimuthu cash should be returned to the account holders because there was no evidence they knew it was “linked to criminal activity”.

But after an appeal by the AFP , WA’s Court of Appeal have now said the money should be frozen, following on from a similar NSW judgment which one barrister said would have consequences for at least a dozen other cuckoo smurfing cases across the country involving up to $100 million dollars.

The Kalimuthu case was one of them.

Mr Kalimuthu, a successful scrap metal merchant, told a trial he was considering moving to WA for family reasons when he asked an associate help him move big money from the sale of a turbine.

The money did arrive in the three bank accounts he had set up but in multiple deposits of $10,000 or less — apparently designed to avoid Federal scrutiny — in cash, mostly in NSW.

The Kalimuthus’ lawyers argued the couple had no idea of Australian banking regulations and therefore could not have had their suspicions. Justices Michael Buss, Graeme Murphy and Andrew Beech ruled that under the current terms of the Proceeds of Crime Act 2002, the couple should not be allowed to access the accounts.

One of their barristers, Edward Greaves, said they had 28 days to decide whether to apply to the High Court for leave to appeal.

“Whilst the cases raise difficult legal questions, they also raise serious questions about why the AFP is continuing to pursue innocent people,” Mr Greaves said.

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