Two alleged members of an organised crime gang have been arrested in police raids after they were accused of a $1million money smuggling operation involving damaged coins.
A man, 36, and a woman, 37, were seized during the riot squad swoops at homes and businesses in Sydney’s CBD, Haymarket and Strathfield.
The pair are said to have been caught importing damaged Australian coins back into the country where they then laundered them through Smart ATMs.
The alleged scam is said to have netted more than $1million in the past year which was then sent overseas.
The arrests have lifted the lid on the global trade in ‘mutilated’ money – as damaged currency is officially known – which can prove lucrative pickings for criminals.
Two alleged members of an organised crime gang have been arrested in police raids after they were accused of a $1million money smuggling operation involving damaged coins
A man, 36, and a woman, 37, were seized during the riot squad swoops at homes and businesses in Sydney’s CBD, Haymarket and Strathfield
The Royal Australian Mint cracked down and stopped paying out face value for damaged currency in 2004 over growing fears of imported damaged coins.
The Mint now pay face value for currency which is worn away through normal use, but anything badly damaged is not refunded and simply taken out of circulation.
Mutilated currency can only be surrendered for its scrap value, minus a fee for handling, losses and administration.
They currently offer $9.74 for a kilo of damaged currency, meaning a damaged $1 coin weighing 9g is worth less than 9c in scrap value.
Because of the ongoing investigation, the Mint refused Daily Mail Australia requests to reveal what it does with damaged coins which are surrendered to it.
But it is understood they are collected and should be securely sent to authorised currency recycling plants.
Poonsang Corp in Seoul, South Korea, is the largest supplier of coin blanks in the world but there are other international processing plants located in China and India.
The damaged coins – which are sorted into identical denominations – are melted down and forged into strips, which then have blank coins punched out of them.
The blanks are then sent back to their original nation’s Mint where they are ‘topped and tailed’ with the local markings before being returned to circulation.
It’s not clear where the alleged breach of security happened in the process from Mint to recycler or if the alleged gang somehow managed to buy them as scrap.
But in June, police were tipped off about high numbers of damaged coins allegedly turning up in the banking system by the financial intelligence unit of AUSTRAC, the Australian Transaction Reports and Analysis Centre.
Detectives then established Strike Force Gidding to investigate the source and destination of the bulk packages of damaged coins coming into the country.
The pair are said to have been caught importing damaged Australian coins back into the country where they then laundered them through Smart ATMs
Police allegedly found multiple large boxes containing rice bags stuffed with sealed bags of badly-damaged $1 coins which have now been sent for forensic examination
The alleged scam is said to have netted more than $1million in the past year which was then sent overseas
Working with Australian Border Force and the Mint, they allegedly found a series of imports marked as belt buckles which were actually damaged $1 and $2 coins.
On Tuesday, another consignment at Port Botany was seized and allegedly found to be two more bulk packages of damaged coins, sparking the raids and arrests on Wednesday.
The joint operation featured detectives from State Crime Command’s Organised Crime Squad and members of the ABF and AUSTRAC.
Police allegedly found multiple large boxes containing rice bags stuffed with sealed bags of badly-damaged $1 coins which have now been sent for forensic examination.
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The two arrested were charged with dealing with the proceeds of crime and appeared at Burwood and Downing Centre Local Courts on Thursday.
Police will allege in court the pair were part of a joint criminal syndicate, which would fraudulently obtain the damaged coins and import them into Australia.
They allege the syndicate laundered the coins through smart ATMs throughout Sydney and deposited sums of money into several bank accounts before the proceeds were sent offshore.
It’s alleged the syndicate has fraudulently obtained more than an estimated $1 million through the scheme since August 2022.
The two arrested were charged with dealing with the proceeds of crime and appeared at Burwood and Downing Centre Local Courts on Thursday
Police will allege in court the pair were part of a joint criminal syndicate, which would fraudulently obtain the damaged coins and import them into Australia
‘This syndicate allegedly attempted to avoid detection by going to various different ATMs in Sydney and depositing varying amounts of cash on a daily basis,’ said Organised Crime Squad Commander, Detective Superintendent Peter Faux.
‘The alleged actions of this group demonstrate the elaborate ways offshore syndicates are attempting to infiltrate our country and extort our financial system.
‘As we have said time and time again, these groups all chase one thing – money. They want the power and control which comes with it, and do not care who they defraud to get there.
‘We do not believe the coins are counterfeit, however we believe they are not legal tender.
‘We will continue to work with our partners, including the Royal Australian Mint, to determine the extent of this syndicate’s reach.’
Inside the world of mutilated coins
Australian Ronnie Shahar has made a living scouring the world for damaged money to sell back to its original nation – but he has been in and out of court as a result.
Mr Shahar, 53, who now lives in Israel, has had to battle with national banks to accept their banknotes and coins are still legal tender, even if they’re damaged.
Australian Ronnie Shahar has made a living scouring the world for damaged money to sell back to its original nation – but has been in and out of court
The father-of-three boasted of raking in $5million a year from the business but he regularly has to deny in court that he’s a counterfeiter or money launderer.
He began in 1989 as a student travelling through Thailand and saw tourists chuck coins into a temple’s wishing well.
The temple’s caretaker asked him to take the British coins – worth thousands – to the UK to redeem them for banknotes – and they would pay his airfare.
It sparked a career and he spent the next three decades travelling Asia collecting rusty coins and tatty banknotes from temples, scrap metal dealers and pawn shops.
But it has frequently seen him locked in legal battles, including the UK seizing £120,000 of his currency and the US holding onto $664,000 worth of coins.
He had to give up on Australia when they clamped down in 2004.
‘Years ago I shipped coins into Australia in crates,’ he said in 2018.
‘Australia was the first country to block it, because Treasury didn’t want to pay, so they were looking for a way out.
‘[The Mint’s scrap value system] is a program with no participants, because it costs more to ship the coins than they’re worth.’
He added: ‘I’ve made money and I’ve lost money. Governments over the last few years are becoming dishonest, they don’t want to pay.
‘America is one example. What they put me through is unbelievable.’
