Background to the case
Our client had operated a successful business in China for many years. With his career stable and retirement approaching, he and his wife planned to relocate to Australia to reunite with their daughter. To support their retirement life, he wished to transfer his legitimately earned business income and personal savings to Australia.
However, China imposes strict annual foreign exchange limits—each individual may convert and remit no more than USD 50,000 per year. This restriction made it impossible for him to transfer his full savings in a single remittance.
To achieve his goal, the client was introduced by a friend to a middleman and entered into what is commonly known as a “parallel exchange” or “informal swap.” Under this arrangement, the client transferred RMB into several bank accounts in China designated by the middleman (all under different individuals’ names). The middleman then arranged for his associated companies or individuals in Australia to deposit the equivalent amount of AUD into the client’s Australian bank account.
Although the funds never physically crossed borders, the practical effect was the same as a normal international transfer. The middleman claimed he operated a clothing business in Australia, intended to retire to China, and therefore needed to exchange a large amount of legitimately earned AUD back into RMB.
Bank Account Freezing and Fraud Allegations
What seemed like a practical and mutually beneficial solution quickly turned into a nightmare. One day, the client’s Australian bank account was suddenly frozen. The bank informed him that incoming payments to his account had been reported as potentially linked to fraud and were under investigation. Shocked, the client immediately sought urgent legal assistance from us.
We took swift action: we wrote to the bank and the Australian Financial Complaints Authority (AFCA), requesting that the disputed funds be held in freeze, and that no payments be released to any third party until the matter was fully investigated. This ensured the safety of the client's assets.
While we were in communication with the bank and AFCA, an even more unexpected development occurred—the client was served with court proceedings. The plaintiff was a company in New South Wales, one of the entities arranged by the middleman to transfer AUD to the client. Its director claimed he had fallen victim to an online “pig-butchering” scam and had been induced to use his company account to invest in cryptocurrency, during which he transferred a total of AUD 3 million to the client’s account as “top-up transactions.”
The plaintiff alleged that the client was part of the scam operation, or at least knowingly accepted funds of suspicious origin. The plaintiff also obtained a court-issued freezing order over the client’s assets.
Challenging the Allegations and Freezing Orders
Upon receiving instructions, we immediately conducted a detailed review of more than one hundred transactions made by the client in both Australia and China. We cross-checked nearly a year’s worth of WeChat messages between the client and the middleman. We verified that every AUD payment received by the client matched the amounts, exchange rates, and payor details provided by the middleman, and that the client paid the corresponding RMB for each transfer.
We compiled all relevant exchange information, evidence of the middleman’s purported legitimate AUD sources, and prepared a comprehensive affidavit for the court. It explained the commercial basis for each transaction, the client’s rationale for using the middleman, and established that the client had no knowledge of any potentially unlawful activity.
To strengthen the evidentiary position, we also undertook extensive investigations into the plaintiff and uncovered several inconsistencies. For example, although the plaintiff claimed he had been deceived in a “pig-butchering” scam, he had inexplicably deleted all chat records with the alleged scammer—behaviour inconsistent with that of a typical victim.
Furthermore, the plaintiff had not registered for GST (indicating no legitimate business operation), yet the heavily redacted bank statements he provided to the court showed significant transactional activity.
We applied for and obtained subpoenas to compel production of the plaintiff’s complete bank statements. Upon review, we discovered that the plaintiff had also conducted transactions with other Australian accounts that had transferred funds to our client. While not definitive proof that the plaintiff was connected to the fraud syndicate, this evidence severely undermined the credibility of his “scam victim” narrative.
Our further investigation revealed that the so-called “scam website” referenced by the plaintiff did not actually exist. We promptly wrote to the plaintiff’s solicitors, highlighting the substantial flaws and contradictions in their client’s claims and advising that, should the matter proceed, their client had no prospect of success.
Facing the risk that further litigation could expose their own links to suspicious activity, the plaintiff ultimately chose to discontinue the proceeding. Relying on this outcome, we successfully obtained the bank’s agreement to release our client’s frozen funds.
Kay Takeaways
This case demonstrates not only the legal and financial risks associated with cross-border fund arrangements, but also the critical importance of detailed transactional analysis, decisive legal action, and a deep understanding of both the Australian and Chinese financial systems when confronted with account freezes or fraud allegations.
If you or someone you know is facing issues involving cross-border fund freezing, bank investigations, or mistaken allegations of fraud, please feel free to contact us. We have extensive experience in complex fund-flow analysis, financial investigations, and litigation, and can provide strong, strategic legal support when it matters most.
How can I learn more?
Lucia Liu.
Associate.
- Disputes & Business Law
- 03 9890 3321
- Email Address: l.liu@robinsongill.com.au
Lu Cheng.
Principal.
- Disputes & Business Law
- 03 9890 3321
- Email Address: l.cheng@robinsongill.com.au
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