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Risk vulnerabilities and money laundering typologies: What lawyers need to know
Episode 12 • 7th July 2026 • Cross-Examined • The Law Institute of Victoria
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Episode Summary:

What if the biggest money laundering risks in your practice looked exactly like your most routine transactions? This episode explores money laundering typologies and why criminal activity often hides in plain sight within legitimate legal work. Learn how recognising patterns – not just stand-alone red flags – can help mitigate risks for your practice.

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Episode Overview:

For lawyers now operating under the AML/CTF regime, the key risk is not deliberate involvement in financial crime, but inadvertent facilitation through routine work.

Far from abstract concepts, money laundering typologies reflect real, documented methods criminals use to exploit legitimate legal services. In this episode, Neil Jeans explains how these patterns persist and why they may appear completely ordinary at the point of transaction.

This episode explores practical examples, including trust account transactions, property settlements and nominee structures, to show how they can inadvertently create opportunities for criminal networks to exploit. It also examines why red flags often seem obvious only in hindsight and at what junctions applying additional scrutiny yields most benefit. Listeners will gain a clearer understanding of financial crime risk in legal practice, AML reporting obligations for lawyers, and how to identify suspicious transaction behaviours before they escalate.

Topics & Timestamps:

  • [00:12] Introduction and AML regime context
  • [01:39] Money laundering typologies explained
  • [04:28] Why particular legal services are attractive to criminals
  • [06:35] Lessons from CBA and Westpac enforcement cases
  • [09:01] How criminals approach lawyers as clients
  • [12:06] Red flags and ambiguity in real transactions
  • [14:06] Reporting obligations and tipping-off concerns
  • [16:40] Key resources for understanding typologies
  • [18:44] Final advice: applying professional judgment

Key Takeaways:

  • Criminal networks exploit legal services by making fraudulent transactions look routine and legitimate
  • Most exposure for lawyers is inadvertent facilitation, not deliberate wrongdoing
  • Structural factors such as trust accounts and professional credibility create money laundering vulnerabilities
  • Red flags often appear plausible in real time and only stand out in hindsight
  • An effective way to approach unusual behaviour is to rationalise it before forming a suspicion
  • The AML/CTF regime creates a degree of tension between client relationships and reporting obligations
  • Curiosity and sound professional judgment are critical tools in identifying money laundering risks

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About This Podcast:

Cross-Examined is a new podcast from the Law Institute of Victoria. Tune in to hear experts discuss hot topics in the law and the changes shaping the legal profession. Regular episodes will cover everything from AI and cyber threats to ethical dilemmas, workplace taboos and practice management insights.

This podcast is recorded on the traditional lands of the Wurundjeri people of the Kulin Nation. The Law Institute of Victoria acknowledges the Traditional Custodians of Country across Australia. We pay our respects to Elders past and present.

Disclaimer:

This podcast is for informational purposes only and is not intended to replace professional legal advice. The views expressed in this podcast do not necessarily reflect the views of the Law Institute of Victoria (LIV). The LIV is not responsible for any losses, damages or liabilities that may arise from the use of this podcast. Listeners should seek independent legal advice for their matters.

Production Information:

  • Produced by: The Law Institute of Victoria
  • Producer and audio editor: Garreth Hanley
  • Music: Garreth Hanley
  • Copy and show notes: Louise Surette

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Transcripts

Garreth Hanley:

Welcome to Cross-Examined, a podcast by the Law Institute of Victoria.

Artemis Evangelidis:

From the 1st of July this year, Australian lawyers providing certain designated services became reporting entities under AUSTRAC's AML/CTF regime for the first time. On today's episode, we are looking at how criminals exploit the system and what makes them so difficult to recognise when they arrive in the disguise of a routine transaction.

Welcome to Cross-Examined. I'm Artemis Evangelidis. My guest today is Neil Jeans, partner in risk consulting at Grant Thornton Australia.

Neil has spent almost 30 years in financial crime risk management across law enforcement, regulation and senior compliance roles in global banks. Neil was also AUSTRAC's expert witness in its proceedings against the Commonwealth Bank and Westpac, the two largest AML enforcement actions in Australian history.

Today, we are talking to Neil about what money laundering looks like in legal and professional services, discussing the patterns and the methods criminals use, and why lawyers sit at an intersection that sophisticated criminal networks are looking to exploit.

Welcome to Cross-Examined, Neil.

Neil Jeans:

Thanks, Art. Great to be here with you.

Artemis Evangelidis:

Neil, before you became a consultant, you investigated money laundering cases as a law enforcement officer. What were the most common patterns you saw? And are these still the most common when you reflect on the typologies that FATF and APG publish today? And just for our listeners who might be unfamiliar with the term, could you also explain what typologies actually are?

Neil Jeans:

Yes, actually, maybe let's start with that, because obviously, it's important you understand what they are. They are the ways that criminals can use or abuse your legitimate services ‒ effectively, the ways that the criminal or the money launderer looks at your business and seeks to use it in ways to achieve their illegal or illegitimate end.

So, there's certain basically patterns of activity, types of behaviour or almost thought processes that the criminal will go through when deciding whether a law firm, in this case, is particularly attractive to being used, basically.

So those are the typologies. And to be fair, money laundering had been around for a very, very long time ‒ effectively ever since there's been money and there's been crime. So, effectively, what money laundering is, as we should all know, is moving the money away from the crime, making it appear legitimate. And in the case of lawyers, really, it's leveraging your good name. It's leveraging your legitimate persona as a person in the community. That is of great interest and a great benefit to the criminal.

Money laundering is effectively an obfuscation sport, where basically they are trying to conceal the true source or the true origin of the money that is being used for a particular thing. And having lawyers and other professionals involved creates an area of legitimacy that wouldn't be there if they weren't. So, and the typologies broadly are around using your good name, using your services to appear to be legitimate.

And if you look at the designated services in the legislation, they are primarily designed on typologies. And they are basically acting on behalf of, so standing between the real world and the criminal or the money laundering, or assisting, and so therefore creating an air of legitimacy to do certain transactions.

money laundering in the early:

Artemis Evangelidis:

Neil, the regulators singled out certain types of transactions as being particularly attractive for laundering funds. What are some of the characteristics that make these services more susceptible than others?

Neil Jeans:

That's a great question, Art. So again, if you read the designated services, there are things like assisting in a transaction. That is, effectively, using the lawyer as, effectively, assure – to say, well, I'm using a lawyer, so therefore I must be legitimate. The lawyer gives me an area of legitimacy. So that's a significant number of the designated services.

There is another designated service which is about the handling of money and moving money through your trust account. Again, you are creating a cutout for the criminals to be able to move money into your bank account and out. So, the person sending the money thinks it's going to a lawyer and assumes it's a legitimate purpose. The person receiving the money realises it's from a law firm, so therefore has a higher degree of confidence that the money is legitimate. But they are really using those services for you.

The third type of designated service is effectively where you are providing nominee directors, nominee shareholders, et cetera, et cetera, or your actual registered address to your customers. And again, that creates something that the criminal or the money launderer could hide behind. So, it's not them representing themselves, it's actually, you represented them to the outside world, which meant it’s really difficult to know who is really behind the transaction.

And that can get really sophisticated. So, a case I dealt with is as the money laundering officer, there were criminals that were actually using the head of the Liberian mission to the United Nations ‒ so, somebody with a diplomatic passport ‒ as their beneficiary owner and director of the companies they set up, to commit securities fraud. And again so, effectively, when, if you were doing an investigation or looking at this from the outside world, you had a high-ranking diplomat who was the owner of these companies, when actually behind them were criminal stockbrokers that were basically committing securities fraud on a massive scale.

Artemis Evangelidis:

Neil, you were AUSTRAC’s expert witness in both the CBA proceedings and the Westpac proceedings, the two largest enforcement actions in Australian history. Without going into anything that's not on the public record, of course, and any compliance issues that may have occurred, what do those cases show us about how criminals operate and identify laundering opportunities?

Neil Jeans:

Well, again, they are looking for weaknesses in the system. That's what criminals do. You may have heard many times about the risk-based approach. Criminals have their own risk-based approach. So, they are looking for things that are different and will help them get through the system.

So, let's take CBA's example. Again, this is publicly on the record. CBA established a new type of ATM called an IDM, an intelligent deposit machine. They were no different from the other banks who also at the same time put in place intelligent deposit machines. The difference between an ATM and an IDM is basically the ATM you get money out of, the IDM you can put money in and take money out of.

And again, the other three banks had a very different approach at that time to CBA, where they limited the transaction to one transaction a day. They limited it to $5,000, and it took 24 hours for the money to clear that you put into the IDM.

CBA, for legitimate business reasons ‒ because they wanted to make it easier for their customers ‒ had unlimited transactions. Each transaction could be up to $20,000, and the money was immediately cleared into the bank account.

So, if you think about that, if I'm a money launderer, which am I going to use? I'm going to use the one where I can only do one transaction, it's only for $5,000, and it takes 24 hours for me to be able to then move the money to the next stage. Or do I target somebody that is basically allowing me to do as many as I like, $20,000 a time, and I get the money immediately.

So again, this is one of the vulnerabilities that are in existence for all reporting entities in their own world. If you have a weak control, or you are doing different things differently to your peers, you could be exploited by the criminal. Because effectively, that may create a loophole or an additional benefit that they are not going to be receiving from somebody else. So, if you don't ask the right questions, or you don't record the right information, or you are more willing to take the client on and start to do work without identifying the customer, then you undoubtedly are going to be more attractive to the criminal. And I can tell you, criminals talk. The word will get around that that's the law firm to go to.

Artemis Evangelidis:

Neil, we've spoken of the vulnerabilities that criminals will exploit. Can you take us through what an initial engagement may look like?

Neil Jeans:

Well, they are going to look like your own existing customers. It's a truth to say that it's really hard to detect criminals using your services. They are not going to invariably disclose to you that they are criminals. It's usually after the fact that you realise that they are criminals.

In the case I dealt with, with this securities fraud, we on each part of the case had a KPI of arresting at least four lawyers. That wasn't charging them, but arresting them, because they were being used. And they were all being used unwittingly, they didn't really know who they were being used by.

So, they will be able to provide you with the right levels of information, the right levels of identity documentation. Really, the way that they will be detected is when things start to be unplausible. So, as professional lawyers know how people react in particular matters or what they are trying to achieve by engaging for particular services. And it's really only through that engagement will you really be able to detect when things are unusual. And that's really what the legislation is driving at, it’s saying, “You know, the vast majority of your clients are going to be completely legitimate, but there will be people that do things that you go, well, that doesn't make sense”. And when that happens, that's when you have to start to do more investigation and start to really understand and rationalise their behaviour.

It's an important thing also to think about, and this is quite important from a mindset perspective. This legislation is not trying to turn you into Sherlock Holmes or Miss Marple or whatever crime fighter that takes your fancy. It's asking you to do things in a reasonable way and be alert to things, but being alert to things, it is quite important that you approach it in a particular way. So, there are two ways you can approach it – you can identify something that's unusual, and your sole purpose is to confirm that it's unusual, or the other alternative is, you identify something that's unusual and your purpose is to try to rationalise that and say, well, does it make sense?

People have particular perspectives and do things in particular ways, and it may well be that it's unusual but completely legitimate. And if you approach it in the second way – i.e. it's unusual and I need to try and rationalise it to see whether it is normal, and I just don't understand why it's normal – you will have a far better outcome with your clients, because you are trying to understand and get them to explain why they are using your services in a particular way without any prejudged bias about whether they are a criminal. And it's only really when you get to the end of that process or you've exhausted all your inquiries, and you cannot find a legitimate or an appropriate rationale, that really you are starting to then start to form a suspicion.

So, you can see how, if you approach it in that second way, which is, I'm trying to confirm this is legitimate, rather than I'm trying to confirm this is illegitimate, you'll have a far better outcome from your engagement with the client, and you'll actually really be doing what the law requires you to do.

Artemis Evangelidis:

Just continuing on from that, Neil, what would you say are some of the most visible red flags that come up in the moment that practitioners may miss?

Neil Jeans:

Both the CBA and the Westpac cases, the behaviour was normalised simply because it just became accepted. So, the challenge you've got, you are dealing with a client and suddenly the instructions change. You may be busy with other files, other matters, and you don't realise or have time to think about what's the consequence of those instructions changing or the money coming from a different location or going out to a different location or the name of the purchaser changing, or the property and the conveyancing transaction changing last minute and going into a complicated structure.

So, it's also being alive to those changes in details, and rationalising and understanding them from what you expected to happen in that transaction.

So, it's really hard to say that's definitely unusual or that's definitely suspicious. It's really a thing to look at the entire context of the matter, the transactions and the financial transactions in relation to that matter, the people that are involved in that matter, including not only your client, but also other parties that are involved as well, to really understand, does this make sense or is there something that doesn't [seem] quite right? And usually, these things are done with hindsight and “Yes, yeah, I should have picked that up”. But this legislation is now calling for you to be alive to those things as you are dealing with your clients.

It shouldn't be the first thing in your mind, but it certainly shouldn't be the last thing in your mind. It's something that you should just hold in the back of your mind as you are dealing with your clients. And again, can't emphasise enough – the vast majority of your clients are going to be completely legitimate people that are not trying to use your services for money laundering, even if they ask a strange thing or do things in a strange way. But again, it's for you to be on notice that your services could be used for money laundering.

Artemis Evangelidis:

Neil, we are going to change track a little bit. We've just passed the 1st of July 2026, where lawyers are now reporting entities for the first time. In your experience, what is the most misunderstood aspect of the tension between protecting the client relationship and lawyers' new reporting obligations?

Neil Jeans:

I think the most misunderstood thing is the tipping-off regime. So, again, tipping-off is an important part of the AML/CTF regime. And, in some quarters, that is being translated or identified as, “I can't talk to my client anymore, because as soon I speak to them, I could be tipping them off”. And again, as I've suggested, it's all about making legitimate and reasonable inquiry, about how you structure your conversation with the client. And it's also important to realise that your conversation will be based on the business arrangement you've had or are currently having.

So, it's highly unlikely that you will be tipping off. You are not likely to say to your client, “Look, I think you are a criminal, so I'm going to have to report you to the authorities”. That would be very bad, and I wouldn't suggest you do that because you would undermine the client relationship quite significantly.

So, I think that's one of the misnomers. The other one is that if I do a report on my client, they are going to get to know about it, and that's going to put myself and my business and my family in jeopardy, because they may be a criminal and I could be in physical danger. In my experience, that doesn't happen.

So, to reassure everybody – your suspicious matter reports are protected by law. They cannot be used in a court of law. If somebody wants the information contained in a suspicious matter report, they have to subpoena you and they will collect it that way. So, legitimately, as an officer of the court, you'll be responding to a lawful subpoena. You can't resist that, and no client will consider that to be a breach of their trust.

In addition to that, in my experience – and I've dealt with criminals both domestically and internationally – if they are facing that level of prosecution or that level of scrutiny, the last thing on their mind is to say, okay, who told them about it? They are more focused on making sure they don't go to prison or get prosecuted. So, it's unlikely that most of them will turn to the mind and go, oh, it was my lawyer that tipped them off. That doesn't happen, basically.

So, what I'm trying to do is take the fear out of this regime. You are required to report things because you will be providing valuable intelligence, but it is only intelligence. If law enforcement need it as evidence, they will find other ways to collect that from you in a way that protects you from any adverse scrutiny.

Artemis Evangelidis:

For a lawyer who wants to delve a little bit deeper, beyond compliance, and understand the patterns used by criminal networks, where is a good place to start?

Neil Jeans:

It's a great question. So, there's a lot of both domestic and international information. My first port of call would be the starter kits that were published by AUSTRAC in January this year. And, if you go to the risk assessment section of the starter kits, in the back of each of those risk assessments are a set of typologies, which are called methods, which describe how criminals are using law firms. So, that's a great source. And I can tell you, those are based on declassified criminal intelligence from a number of agencies, both in Australia and around the world.

hat was published in December:

Also in the starter kits, there's a set of indicators. So, straight after the methods in the back of the risk assessment in the starter kit, there's a section called “Indicators”. And those are things to look out for. Those are things that we know criminals exhibit when they are using lawyers. So again, great information and great intelligence for you to be able to look.

But also, you know, just keep an eye on what's going on in the world in general. We'll see, and there's cases already, where lawyers have been misused. The vast majority of lawyers aren't, aren't set up to support criminals. They are being misused. Their legitimate services are being used, but there's good, there's good case studies and fresh reports about how lawyers have been misused in the past, whether that's through conveyancing transactions or buying and selling businesses or the use of their trust account.

There's a lot of information out there. And again, just absorb the information that's out there, but then really think about it from your own business and the relative and practicality of your own business. Because there are some big salacious cases, but if you are a small law firm in a country town, is that really likely to be something that you are going to get caught up in?

Artemis Evangelidis:

If you could leave our listeners with one tip or one piece of wisdom, what would that be?

Neil Jeans:

That's a great question, Art. Look, having been doing this for 30 years, it's really about knowing your clients, knowing your business, but then applying your professional judgment and your professional knowledge.

I'm not a lawyer. I've got a good idea how law firms work, but I'm not trained to the level that you are. You are in a great position to be able to identify what's unusual. If you are identifying something unusual, try to rationalise it, so really, what that boils down to is continue to be curious, continue to ask why. Nine times out of 10 you are going to get a reasonable answer, and you'll be able to justify the situation, but it's that one time in 100 or one time in 10 that actually you might provide a nugget of information to law enforcement that could break a case open. And that's really what your role is, basically. So, my one piece of advice is, within the bounds of the law, within the bounds of the legislation, be curious.

Artemis Evangelidis:

What stays with me most from this conversation is that this is not about suspecting every client or second guessing every transaction. It is about understanding a set of patterns, being aware of the risks and knowing when to ask the right questions.

We have covered so much ground here today, Neil. Thank you so much for joining us and for your insights.

Neil Jeans:

Thank you for the opportunity to speak to everybody. Thank you.

Artemis Evangelidis:

And thank you for listening to Cross-Examined. The show notes for today's episode include links to resources from the Law Institute of Victoria, Neil's work at Grant Thornton, APG Typologies Reports and AUSTRAC's AML/CTF guides for Tranche 2 designated services.

If today's episode gave you food for thought, please share it with your colleagues and subscribe, so you can catch all the episodes in our AML/CTF mini-series. And, until next time, thanks for listening.

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