Private currency exchange is not uncommon in Australian WeChat groups for international students, second-hand goods, rental accommodation and shared interests.
One particularly difficult situation arises when you transfer renminbi to someone you met in a group to exchange currency, but the Australian dollars you receive come directly from a scam victim rather than that person.
Once the victim reports the matter to police, your name and account details are the first things the bank records show.
The person who actually arranged the exchange may have left the WeChat group, deleted their account or become uncontactable. As the recipient of the Australian dollars, however, you may still need to explain to the bank and police why you received the funds, who ultimately received the renminbi, and whether there were already unusual circumstances during the transaction that should have raised suspicion.
Why might you receive a scam victim’s money through a private currency exchange?
These situations often involve an intermediary controlling both sides of the transaction.
On one side is an international student wanting to exchange renminbi for Australian dollars. On the other is a person being scammed and instructed to pay a specified account.
The criminal group may instruct the victim to transfer Australian dollars directly to the student’s bank account, then tell the student to transfer the equivalent amount in renminbi to the group’s account or another nominated account.
From the student’s perspective, the transaction appears complete: they have paid renminbi and received Australian dollars.
However, the Australian bank records may show that the funds actually received were proceeds of fraud.
When the victim reports the matter to police and tries to recover the money, the bank may first freeze the recipient’s account, and police will usually begin investigating from the account into which the funds were paid.
Why might police investigate me if I did not obtain the money through fraud?
Criminal investigations involving proceeds of crime do not focus solely on who personally carried out the fraud.
Receiving, holding, transferring or participating in dealing with the funds may all form part of a police investigation.
Police usually need to establish whether, at the time of the transaction, the person knew the funds came from crime, was aware of the risks but continued to participate, or had reasonable grounds, based on the information then available, to suspect a problem with the source of the funds.
An account having received proceeds of fraud does not, therefore, necessarily mean its holder has committed money laundering or an offence of dealing with proceeds of crime.
Equally, saying “I did not know” is usually insufficient to end an investigation.
Police will examine the entire exchange process, including how the parties met, whether the exchange rate was normal, who made the payment, who received the renminbi, whether transactions occurred repeatedly and whether the person continued trading after noticing unusual activity.
Which private currency exchange arrangements are more likely to raise suspicion?
Police will usually analyse the transaction as a whole rather than reach a conclusion based on a single factor.
For example, a fairly clear warning sign is where the person arranging the exchange through WeChat is different from the person actually paying the Australian dollars.
Further concerns may arise if the other party asks for renminbi to be sent to several different accounts, or if one exchange is split into multiple payments from different strangers.
An exchange rate markedly better than the normal market rate, persistent pressure to transfer immediately, instructions not to write “currency exchange” in the bank transfer reference, and repeated changes to the Australian dollar payer or renminbi recipient may all be relevant when police assess the nature of the transaction.
If someone regularly receives Australian dollars and pays renminbi for different people, earning commissions or fees, police may examine whether the activity extends beyond occasional exchanges between friends.
Of course, the presence of any one of these circumstances does not necessarily mean an offence has been committed.
If a normal exchange rate was used, the other party’s identity was reasonably verified, complete conversation records were kept and the connection between the Australian dollar and renminbi transfers can be clearly demonstrated, that evidence may help show that the person did not know the funds came from fraud.
How should you explain the source of funds after your bank account is frozen?
If you discover that your account has been frozen, first confirm the reason for the restriction through the bank’s official channels and provide truthful, complete transaction information as requested.
It is not advisable to describe an actual currency exchange as “repayment by a friend”, “repayment of a loan” or another inaccurate source of funds just to make the transaction seem simpler.
If that explanation conflicts with WeChat conversations, bank statements or renminbi transfer records, it may instead raise further questions for the bank or police.
Preserve, wherever possible, the currency exchange advertisements posted in the WeChat group, complete conversations between the parties, the agreed exchange rate and amount, the time the Australian dollars arrived and the payer’s name, as well as renminbi transfer receipts and details of the account that actually received them.
If the other party supplied identity documents, a telephone number or other contact details, keep those too.
Records of any previous exchanges with the same person may also help establish the true relationship and pattern of transactions between you.
Can you issue a refund yourself if a scam victim asks you directly?
If someone contacts you claiming to be a scam victim and requests a direct refund, it is not advisable to pay their nominated account immediately without verification.
First confirm their identity and whether the funds are actually connected to the fraud transaction under investigation.
You should also notify the bank and find out what action it is taking.
If the account is already subject to a freeze, a disputed transaction process or a police investigation, transferring money to another account yourself could result in a duplicate refund or even interfere with the existing tracing of funds.
It is therefore safer to follow the procedure specified by the bank or police, or confirmed after obtaining legal advice.
Could private currency exchange also be subject to remittance services regulation?
Occasionally exchanging your own renminbi and Australian dollars with friends does not necessarily mean you are operating a remittance business.
However, if a person regularly receives Australian dollars for different customers and then pays renminbi overseas, while charging fees or commissions or profiting from exchange rate differences, it is necessary to assess whether the activity amounts to providing remittance services.
AUSTRAC has specific registration and regulatory requirements for remittance service providers.
Whether an activity is a regulated remittance service depends on how it actually operates, rather than whether the transactions take place in a WeChat group or another private platform.
Long-term, frequent transactions involving multiple unfamiliar payers and recipients therefore usually carry significantly greater legal risk than occasional exchanges between friends.
Using a bank or a legitimate, lawfully registered remittance provider can usually significantly reduce these risks.
Should you give a detailed explanation immediately after police call?
You should not ignore police contact entirely, but neither is it advisable to give a detailed explanation immediately without preparation.
Private currency exchange cases usually involve two currencies, multiple accounts, different payers and conversations spanning an extended period.
Answering from memory can easily produce an account of the payment sequence, amounts or relationships between people that conflicts with bank records.
You can first verify the officer’s identity, police station and the specific transactions under investigation.
Then obtain complete bank statements, WeChat conversations and renminbi transfer records, prepare an accurate timeline and decide whether to attend a formal interview based on the nature of the investigation.
In particular, you should not delete WeChat group records, coordinate accounts of events with the person who introduced you, or draw up new loan agreements, receipts or other documents to explain past transactions out of fear of being investigated.
Such actions may complicate a situation that could otherwise be explained through objective records.
NS Legal’s closing remarks
One of the greatest risks of private currency exchange is that, while you believe you are simply exchanging money with someone from a group, the funds entering your Australian bank account may actually belong to a scam victim.
Even if you genuinely paid an equivalent amount in renminbi, the bank and police may still start investigating your account first if it appears in the trail of fraud proceeds.
If your Australian bank account has been frozen after receiving problematic funds through a private currency exchange, or police are investigating the transactions, NS Legal’s criminal law team can help organise Australian dollar deposit records, renminbi payment receipts and WeChat group conversations, establish a complete timeline and assess whether the available evidence can show what you actually knew about the source of the funds at the time.
We can also help you understand how to respond to bank or police enquiries, and what documents to prepare before a formal interview if the matter already involves an investigation into money laundering or dealing with proceeds of crime.
Frequently asked questions
Have I committed an offence if I exchanged money only once and earned no commission?
Not necessarily. A one-off exchange, receiving no commission or having no long-term involvement in funds transactions may all be relevant context, but police will still examine the actual payer’s identity, the renminbi recipient and whether you had already noticed anything unusual at the time.
Can an exchange rate close to the normal market rate prove that I knew nothing about it?
A normal exchange rate helps explain the transaction but cannot determine the outcome on its own. Police will also consider whether the payer was the person who arranged the exchange, who ultimately received the renminbi and whether the conversations contained unusual arrangements.
If the bank asks about the source of funds, can I say it was a transfer from a friend?
If the transaction was a currency exchange, explain it truthfully. Deliberately describing it as a repayment by a friend or a loan may raise further suspicion if that account conflicts with objective transaction records.
What should I do if a scam victim asks me to refund the money directly?
You should not transfer money yourself without verification. Contact the bank first, confirm whether the transaction is already subject to a dispute or investigation, and follow the process confirmed by the bank, police or professional legal advice.
Disclaimer: this information provides general legal information only and does not constitute legal advice for any individual’s circumstances.
