The ATO has released a Fraud and Corruption Control Plan (the Plan) which outlines its approach to managing fraud and corruption risks.
The Plan is intended to be a tool to support ATO staff [including Australian Business Registry Services (ABRC), Tax Practitioners Board (TPB) and Australian Charities and Not-For-Profit Commission (ACNC)] staff in the prevention, detection and response to fraud and corruption.
What type of conduct is covered under the Plan?
Fraud refers to both internal and external fraud.
Internal fraud is committed by employees or contractors, and examples include an employee of the ATO accessing and disclosing taxpayer information without authorisation, or using ATO assets for personal benefit. This insider threat can undermine trust in Australia’s public institutions and potentially compromise national security.
External fraud is committed by taxpayers and other third parties, and examples include claiming tax refunds and laundering money using false or stolen identities, or falsely claiming benefits.
Examples of corruption that may occur within the ATO include:
- Abuse of office (for example, provision of sensitive information to facilitate external fraud committed by others).
- Biased tax-related decision-making by ATO officials.
- Nepotism (particularly in relation to employment).
- Collusion for personal gain.
Fraud and corruption control framework
The ATO implements its fraud and corruption control framework using the prevention, detection and response model.
Prevention
Prevention strategies are the first line of defence. They include proactive measures designed to help reduce the risk of fraud and corruption occurring, thereby minimising the need for the ATO to detect and respond to fraud.
Key elements of the ATO’s fraud and corruption prevention activity include:
- Development and implementation of the Plan.
- Engagement and education to build awareness of what fraud is and what to do about it.
- Robust recruitment and vetting processes.
- Regular risk assessments and reviews for both internal and external fraud and corruption.
- Mandatory training and awareness-building across ATO staff.
Detection
The ATO employs measures designed to uncover incidents of fraud and corruption when they occur. This activity includes:
- System monitoring and scanning.
- Proactive detection analytics.
- Internal and external audits.
- Dedicated reporting mechanisms to receive both internal and external fraud tip-offs confidentially.
- Review of referrals to identify possible trends.
- Intelligence sharing with, and collaborating across, law enforcement and integrity agencies both domestically and internationally.
Response
The ATO uses measures including assessment, investigation, analysis, referral, and recovery to respond to potentially fraudulent or corrupt behaviour. Response activity includes:
- Assessment of all reports and allegations to decide an appropriate response.
- Pursuing disciplinary, administrative, civil or criminal actions as appropriate.
- Pursuing the recovery of fraudulently or criminally obtained benefits where appropriate.
- Undertaking investigations, often in collaboration with other law enforcement bodies and agencies.
- Establishment of specialist roles to manage and respond to fraudulent or corrupt activities. An example is the Assistant Commissioner, Fraud Prevention and Internal Investigations (FPII), who is the risk owner for internal fraud and corruption, and is also responsible for developing the Plan.
Who has jurisdiction over the ATO in combatting insider threats?
The ATO currently falls under the jurisdiction of the Australian Commission for Law Enforcement Integrity (ACLEI) regarding the investigation of corruption issues with employees in law-enforcement related functions.
The establishment of the government’s National Anti-Corruption Commission (NACC) will move the ATO under NACC jurisdiction and provide additional capabilities for independent investigation of the most serious matters across all ATO staff.
Key takeaways
The ATO’s Fraud and Corruption Control Plan is a critical step in preserving financial integrity and public trust. The ATO’s three-pronged approach of prevention, detection, and response demonstrates its commitment to combatting fraud and corruption effectively.
