QLD Transferring Money from Friend's Bank Account - Implications on Me?

[JHunt]

Hi,

I want to help out a friend overseas transfer $60,000 AUD from their foreign account to their Australian bank account and want to know if there are any financial implications for myself or otherwise. Let's say my friend's name is 'X'. This would be the process:

'X' transfers $60,000 from their foreign account to another friend's (call them 'Y') account in the same country. 'Y' then transfers the money to my account in Australia. I then immediately transfer the money to 'X's Australian account.

How do I ensure (if it is possible) that the $60,000 is never considered by the banks, ATO, or other Australian Departments (e.g. Centrelink) as being mine and is always recognized as being 'X's?

Thanks!

 

[Tim W]

Why would you want to do this?

 

[JHunt]

Because a certain country doesn't want it's citizens moving large amounts of money out of the country and has relatively recently imposed tighter restrictions in an attempt to prevent this happening. Also... the friend I want to help out might be a close relation of mine by marriage.

 

[Tim W]

Well then....

1. To your average bank security bonce, this would look like a scam.
   If your bank has the country of origin "on their radar" for questions of security and integrity,
   then chances are, the bank will notice this transaction, and look into it.
   And, while doing so, they might freeze the money until it's proven clean
   (which is not a given in this case).
   
   
2. I suggest that it may not be clean money because,
   in the eyes of the regulator in your friend's country,
   you could be talking about currency smuggling.
   That is, moving money while evading the foreign exchange
   and banking regime in the country of origin.
   
   
3. Are you the Centrelink client?
   How then would you explain to them (in a reverse onus context)
   that you're just handling this big lump of money for a mate?
   What impact will it have on the Liquid Assets test?
   
   
4. The ATO can require you to demonstrate the lawful origin of money you hold.
   Could you explain to them (again, in a reverse onus context)
   why it should not be taxable income in your hands.
   
   
5. AUSTRAC, however, will be less likely to be concerned,
   unless you propose to bank physical cash

 

[JHunt]

Hi Tim,

I appreciate your thorough reply. I think I should clarify the country in question is China and it is a Government regulation that is preventing individuals from moving large sums of money out of the country.

So yes, I can prove with a paper trail where the money has originated (from X's Chinese account, through another Chinese friend's account, to my account, finally into an Australian account held solely in the name of X. As long as I can do this and that I transfer the money to X's Australian account immediately upon receiving it, is it of your opinion this should satisfy ATO etc?

Regarding Centrelink, yes it is us (family benefit) - and we have previously been successful appealing a Centrelink decision by providing the paper trailer evidence (however, this was more difficult as the money had remained in our account and not been moved. It was Visa money and it was more convenient for us to have direct access to it to pay the Visa when requested).

Thanks.

 

[Tim W]

I figured it was China.
Compliance with the foreign exchange and currency law in PRC is a matter for the PRC national involved.

As you know, both the rule of law and law enforcement practices in PRC are
<ahem> highly flexible. So your friend does this at her/his own risk.

Why doesn't Person X simply transfer it to you?

Are you getting involved in a transfer-splitting scheme with others,
aimed at keeping the amounts down below the approval threshold?

 

[JHunt]

Person X is not permitted to make any more international transfers for the year, so X is transferring money to friends in China for them to transfer to Australian accounts, then domestically into person X's Australian account. Yes, they are aware of what they are doing and the associated risks from Chinese authorities.

I am particularly seeking an opinion on legal and financial consequences of passing this money that isn't mine through my account. I assume there are no legal issues under Australian law (other than that generally money in your account is deemed to be yours). From what you have said I gather that if there is a clean electronic trail from person X's Chinese account, through a couple of other accounts (one of which being mine), then to their Australia account, there will be no financial penalties for me either (tax / Centrelink)?

Also, the motivation for doing this is that person X is family and they will be moving permanently to Australia. It is preferable / highly desirable for them to be able to get their savings out of China asap.

Appreciate the dialogue!

 

[Tim W]

I'm not in a position on this board to give you an opinion upon which you can rely.
(refer to my signature below)
For that, you need formal advice from a solicitor with expertise in this sort of transaction.

 

[JHunt]

Thanks Tim, I understand.