NOTICE OF COMMENCEMENT OF ACTION TO CANCEL REGISTRATION

SUBSECTION 75G(1) OF THE ANTI-MONEY LAUNDERING AND COUNTER-TERRORISM FINANCING ACT 2006

Australian Transaction Reports and Analysis Centre

To:Bisotel Rieh Pty Ltd

ACN 114205775

Unit 7, 64 Gillies Street

Lakemba NSW 2195

I, , delegate of the Chief Executive Officer (CEO) of the Australian Transaction Reports and Analysis Centre (AUSTRAC), am satisfied that Bisotel Rieh Pty Ltd is registered on the Remittance Sector Register (RSR) established under section 75 of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act)as an independent remittance dealer.

Commencement of Action to CancelRegistration

I am considering whether it is appropriate to cancel the registration of Bisotel Rieh Pty Ltd (Bisotel Rieh) on the RSR because the continued registration of Bisotel Rieh involves, or may involve, a significant financing of terrorism risk, based on the facts and circumstances set out in the schedule (the Schedule) attached to this notice.

Opportunity to provide submissions

You have until 12:00 noon on Monday 22 September 2014 to provide any additional information for AUSTRAC to consider before taking any further steps to cancel Bisotel Rieh’s registration. Would you please provide any additional information in writing, addressed to me at the address shown on the next page.

Subject to your submissions, the next step would be to give Bisotel Rieh a written notice under subsection 75Q(1) of the AML/CTF Act setting out:

(a)the terms of any proposed reviewable decision that it is appropriate to cancel the registration of Bisotel Rieh on the RSR;

(b)the date on which cancellation is proposed to take effect;

(c)the reasons for the proposed cancellation; and

(d)that Bisotel Rieh has twenty-eight (28) days to make submissions before a final decision on cancellation is made.

Any submissions about why I should not make a proposed reviewable decision to cancel the registration of Bisotel Rieh are to be given in writing, in paper form in person or in electronic form via email:

To:

At:

Whether or not you make any submissions in response to this notice you will still be given an opportunity to make submissions in response to a notice under subsection 75Q(1) about any proposed reviewable decision to cancel Bisotel Rieh’s registration.

Dated this 16day of September 2014

SIGNED

SCHEDULE To the notice

Introduction

  1. On 9 November 2011, Bisotel Reih applied for registration on the RSR, as an independent remittance dealer, in which it advised that it had three key personnel, being:
  2. (Annexure 1).
  3. On 15 December 2011, Bisotel Rieh was registered on the RSR, without conditions (Annexure 2).

Overview of persons

  1. It is AUSTRAC’s understanding, that:
  • :
  • .
  1. It is AUSTRAC’s understanding, that:
  • .

Material facts

  1. The material facts, which I consider supports my view, that it is appropriate to cancel Bisotel Rieh’s registration, are as follows:
A.The risk that Bisotel Rieh may be involved in, or utilised for, terrorism financing
  1. On 8 May 2013, AUSTRAC undertook an on-site compliance visit of Bisotel Rieh during which AUSTRAC staff:
  • were informed that, as Bisotel Rieh had not been able to obtain a bank account in Lebanon, it arranged for bulk cash to be smuggled from Turkey into Lebanon; and
  • they informed Bisotel Rieh staff that there were significant deficiencies in the quality of the data they were reporting in their IFTIs (Annexure 7).
  • Given these circumstances, AUSTRAC undertook an assessment of Bisotel Rieh’s compliance with the AML/CTF Act, with particular reference to the individual and jurisdictions of concern. As will be further discussed this established that, between 1 January 2014 and 31 August 2014 Bisotel Rieh had sent:
  • three IFTIs, with an approximate value of $38,000 to an individual in Malaysia, which contained insufficient details to determine that this was not (Annexure 12);
  • but seemingly coincidentally had also sent one IFTI to in Malaysia (within the same time period) (Annexure 13);
  • five IFTIs (four of which are attached) were sent to a beneficiary customer with the name , in Lebanon, which contained insufficient details to determine that this was not (Annexure 14); and
  • approximately $18.8 million dollars to Turkey and Lebanon (Annexure 15); and whilst Lebanon is the subject of Australian regime sanctions:
  • Bisotel Rieh has previously admitted that it actively smuggles monies into Lebanon (from Turkey); and
  • it routinely fails to provide the ultimate beneficiary details as to these transactions (examples of such reports are located at Annexure 16).
  • Accordingly, I am considering the preliminary view that:
  • Bisotel Rieh has sent monies to an individual ;
  • Bisotel Rieh has sent monies to an individual;
  • as Bisotel Rieh routinely fails to provide the full beneficiary details in IFTIs that are sent to high risk jurisdictions, including Lebanon, AUSTRAC cannot be certain that these individuals are not the one and the same; and
  • Bisotel Rieh has admitted that it smuggles monies between Turkey and Lebanon; and;
  • these factors mean that its continued registration on the RSR would present a significant TF risk.
B.A failure to comply with the AML/CTF Act

1)Subsection 45(2) of the AML/CTF Act

  1. In accordance with subsection 45(2) of the AML/CTF Act requires a person who is the sender or recipient of an IFTI transmitted out of or into Australia to provide a report to AUSTRAC within 10 business days from the day the instruction was sent or received (the prescribed timeframe).
  2. AUSTRAC’s records demonstrate that, between 1 January 2014 and 31 August 2014:
  • Bisotel Rieh submitted IFTI reports to AUSTRAC, with an approximate value of $12.3 million; but
  • during this same period, other reporting entities submitted IFTI reports (in which Bisotel Rieh was listed as the ordering customer) with an approximate value of $21.3 million; and
  • there is no obvious explanation for this $9 million discrepancy (Annexure 17).
  • Accordingly, I am considering the preliminary view that Bisotel Rieh has seemingly not reported all of its IFTIs to AUSTRAC and, given the high risk jurisdictions it remits to, its continued registration on the RSR would present a significant ML/TF risk.

2)A failure to comply with subsection 45(3) of the AML/CTF Act

  1. Paragraph 45(3)(b) of the AML/CTF Act requires that IFTI reports submitted under subsection 45(2) must contain information specified in the AML/CTF Rules.
  2. Paragraph 17.2, of Chapter 17, of the AML/CTF Rules sets out the information which an IFTI report must contain.
  3. AUSTRAC has assessed the IFTIs Bisotel Rieh has submitted to it between 1 January 2014 and 31 August 2014, and has identified that:
  4. in contravention of the requirements of subparagraph 17.2(9)(c) of the AML/CTF Rules, seemingly none of these reports contained the address details of the ultimate transferee entity and instead, only the city or country is usually provided (Annexure 18).
  1. Accordingly, I am considering the preliminary view that:
  2. Bisotel Rieh routinely fails to include the mandatory address details of the ultimate beneficiary customer in its IFTIs;
  3. these IFTIs relate to high ML/TF risk jurisdictions, such as Lebanon; and
  4. may involve the movement of funds to individuals known to be engaged in terrorist activities; and
  5. this ongoing failure means that its continued registration on the RSR would present a significant ML/TF risk.

Specific examples of IFTI data and annexures that are referred to in material facts

  1. The risk that Bisotel Rieh may be involved in, or utilised for, terrorism financing (p.1-3)

Paragraph XVI

  • Bullet point 1: Three IFTIs, with an approximate value of $38,000 to an individual in Malaysia, which contained insufficient details to determine that this was not the same (Annexure 12)

On 14 July 2014, IFTI report shows that a total of $10,000 was transferred by Bisotel Rieh to the following beneficiary customer:
Name:
Branch/AccNo/Type:
On 15 August 2014, IFTI report indicated that a total of $19,975 was transferred by (email ) to the following beneficiary customer:
Name:
Address:
Phone/Fax:
On 26 August 2014, IFTI report shows that a total of $19,975 was transferred by Bisotel Rieh to the following beneficiary customer:
Name:
Branch/AccNo/Type:

  • Bullet point 2: But seemingly coincidentally had also sent one IFTI to , in Malaysia (within the same time period) (Annexure 13)

On 3 May 2014, IFTI report shows that a total of $331 was transferred by to the following beneficiary customer:
Name:
Address:
Country:
Phone/Fax:

  • Bullet point 3: Four IFTIs were sent to a beneficiary customer with the name , in Lebanon, which contained insufficient details to determine that this was not the same (Annexure 14)

On 1 March 2014, IFTI report shows that a total of $805 was transferred to the following beneficiary customer:
Name:
Address:
Country:
Phone:

On 28 June 2014, IFTI report shows that a total of $652 was transferred to the following beneficiary customer:
Name:
Address:
Country:
Phone:

On 26 July 2014, IFTI report shows that a total of $654 was transferred to the following beneficiary customer:
Name:
Address:
Country:
Phone:

On 23 August 2014, IFTI report shows that a total of $659 was transferred to the following beneficiary customer:
Name:
Address:
Country:
Phone/Fax:

  • Bullet point 4: Aapproximately $18.8 million dollars to Turkey and Lebanon (Annexure 15); and whilst Lebanon is the subject of Australian regime sanctions:
  • Bisotel Rieh has previously admitted that it actively smuggles monies into Lebanon (from Turkey); and
  • it routinely fails to provide the ultimate beneficiary details as to these transactions (examples of such reports are located at Annexure 16).

For example, on 9 September 2014, IFTI report shows that a total of $226,123 was transferred to the following beneficiary customer:

Name: Bisotel Rieh Pty Ltd
Address: Istanbul
Country: Turkey
Branch/AccNo/Type:

  1. A failure to comply with the AML/CTF Act (p.4)

Paragraph 2) A failure to comply with subsection 45(3) of the AML/CTF Act

  • Paragraph III:AUSTRAC has assessed the IFTIs Bisotel Rieh has submitted to it between 1 January 2014 and 31 August 2014, and has identified that in contravention of the requirements of subparagraph 17.2(9)(c) of the AML/CTF Rules, seemingly none of these reports contained the address details of the ultimate transferee entity and instead, only the city or country is usually provided (Annexure 18).

For example, on 4 March 2014, IFTI report 438316547 shows that a total of $2,289 was transferred to the following beneficiary customer:

Name:
Address: Lebanon
Country: Lebanon
DOB:

Page 1 of 9