Police probe into Chinese money laundering syndicate headquartered in Australia

By Nick McKenzie and Anthony Galloway for the Sydney Morning Herald - June 8, 2022

Police have uncovered a suspected Chinese money laundering syndicate headquartered in Victoria and NSW that is moving hundreds of millions of dollars annually to China and across the globe, raising serious questions about whether Beijing is turning a blind eye to organised crime.

Australian law enforcement agencies, in partnership with officials from the United States and Canada, have also compiled intelligence that suggests Chinese companies and brokers are supplying the vast majority of precursor chemicals used to make illicit drugs on the Australian market.

AFP Commissioner Reece Kershaw says some foreign governments are turning a blind eye to money laundering syndicates. Credit:Alex Ellinghausen

The suspected money laundering syndicate, known as the “Chen Organisation”, counts as its customers a relative of Chinese President Xi Jinping, along with Asian triads and bikies, according to briefings from officials.

Australian Federal Police (AFP) Commissioner Reece Kershaw told his “Five Eyes” counterparts on Tuesday night that some “countries … [are] producing precursors at an eye-watering scale”, and governments were “turning a blind eye to the proceeds of crime washing through their economies”.

The speech in Sydney to the Five Eyes Law Enforcement Group did not identify the Chinese Communist Party by name, but his remarks appeared aimed at Beijing. The Five Eyes group – Australia, the US, New Zealand, Britain and Canada – share intelligence to target serious transnational organised crime. The speech was also attended by Attorney-General Mark Dreyfus, the minister responsible for the AFP.

“State actors and citizens from some nations are using our countries at the expense of our sovereignty and economies,” Kershaw said. “Unfortunately, federal crime in Australia is increasing. Contributing to this increase is the long shadow of organised crime and state aggression.”

The Melbourne house listed in police intelligence reports as one of the properties connected to a Chinese money-laundering syndicate.

In what was a veiled reference to the Chen Organisation, Kershaw described “money-laundering organisations from one region alone [that] are clearly visible in all Five Eyes countries”.

“They maintain global financial flows by exploiting illicit and legitimate industries across our countries,” the police chief said.

Money-moving businesses linked to the Chen Organisation include a company based in a nondescript house in Melbourne’s eastern suburbs. The business has been investigated by state and federal agencies since 2016 over allegations it transferred hundreds of millions of dollars in suspect wealth for figures linked to organised crime, including criminally linked Victorian Simon Pan.

Xi Jinping’s cousin, Ming Chai.

Law enforcement and intelligence officials have also tracked money movements from one of Pan’s business partners, Ming Chai, who is the cousin of Xi. The Age and The Sydney Morning Herald previously reported how Chai was of particular interest to the Australian Security Intelligence Organisation (ASIO) due to his family ties with the Chinese president and business links with Chinese crime figures and Chinese Communist Party operatives in Melbourne.

Chai, who has not been charged with any criminal offence, previously worked for a Chinese public security agency and telecommunications company with documented ties to the Chinese military-industrial complex.

Pan, who runs a brothel and escort agency in Melbourne along with a business providing short-term loans and transport to high-wealth Chinese gamblers, has moved more than $200 million via the Chen Organisation, some of which officials believe is the proceeds of crime.

Chai has moved at least $1 million via entities tied to the Chen Organisation, a network of money remitting agencies operating in Australia, Canada, the US and New Zealand. Officials suspect the organisation is controlled by a Chinese-born New Zealand citizen and his wife, who also holds a New Zealand passport.

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Nick McKenzie is an Age investigative journalist who has twice been named the Graham Perkin Australian Journalist of the Year. A winner of 10 Walkley Awards, he investigates politics, business, foreign affairs, human rights and criminal justice.Connect via Twitter or email.

Anthony Galloway is foreign affairs and national security correspondent for The Sydney Morning Herald and The Age.Connect via email.

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