Almost all criminal acts are motivated by profit, and investigations typically involve “following the money”. AUSTRAC uses financial intelligence and regulation to follow these financial trails to detect and disrupt money laundering, terrorism financing and other serious crime.
In addition to helping catch criminals, AUSTRAC is responsible for regulating entities to ensure compliance with their AML/CTF obligations. AUSTRAC has a range of enforcement powers which may be exercised for compliance breaches, including:
- issuing infringement notices
- issuing remedial directions, which require a reporting entity to take specified action to ensure compliance
- accepting enforceable undertakings detailing the specific actions a reporting entity will commence or cease in order to comply with the AML/CTF Act
- seeking injunctions and/or civil penalty orders in the Federal Court
- referring a matter to the Commonwealth Director of Public Prosecution for possible criminal prosecution.
We take a look at some recent AUSTRAC activity demonstrating this work in action.
AUSTRAC orders audit of PayPal Australia’s compliance with financial crime laws
AUSTRAC requires all entities that it regulates to report the transfer of funds or property to or from Australia, providing critical intelligence that enables AUSTRAC and its partners to combat serious crimes and to stop the movement of money to criminals and terrorists.
AUSTRAC has ordered the appointment of an external auditor in response to concerns regarding PayPal Australia’s compliance with the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (the AML/CTF Act), and specifically compliance with its International Funds Transfer Instruction reporting obligations.
The external auditor must report to AUSTRAC within 120 days of being appointed and will examine PayPal Australia’s compliance with its:
- AML/CTF Program obligations
- International Funds Transfer Instruction (IFTI) reporting obligations
- Record keeping obligations
Following a request from PayPal, on 27 February 2020 AUSTRAC granted an extension for the appointment of the external auditor until 31 August 2020.
AUSTRAC issues $252,000 infringement notice to Compass
AUSTRAC has issued a $252,000 infringement notice to Compass Global Holdings Pty Ltd (Compass) for failing to report international funds transfers between 2018 and 2019.
This is an example of the type of enforcement action that could potentially be taken against PayPal Australia depending on the findings of the audit.
AUSTRAC is working with Compass to address concerns that it does not have adequate systems and processes in place to identify, mitigate and manage money laundering and terrorism financing risks.
AUSTRAC launches campaign against illegal money transfer dealers
Money transfer dealers who have not registered with AUSTRAC are operating illegally and are at high risk of having their services used by criminals to launder proceeds of crime and enable further criminal activity.
AUSTRAC has launched a campaign to raise public awareness of these risks, encouraging people to only use registered money transfer businesses and to report suspected unregistered operators.
Such businesses who fail to register with AUSTRAC may be liable to fines of up to $420,000, seven years’ jail, or both.
Australia hosts the Asia Pacific Group on Money Laundering
In August 2019 AUSTRAC and the AFP co-hosted the 22nd Annual Asia Pacific Group on Money Laundering (APG) meeting in Canberra, bringing together 520 delegates from 41 jurisdictions to explore ways to collectively tackle money laundering and terrorism financing affecting the Asia-Pacific region.
AUSTRAC CEO, Nicole Rose PSM said that “While we do a great job here in Australia at detecting, tracking and disrupting financial crime, to effectively combat transnational criminal networks we need to collaborate with our regional intelligence and law enforcement partners.”
The annual meeting also provides an opportunity for Australia to support its regional partners, helping to build technical capabilities and strengthen AML/CTF measures throughout the Asia-Pacific.
The Fintel alliance sees AUSTRAC work with Australia’s major banks and other law enforcement partners including the AFP and ACIC to combat serious crime such as terrorism financing, child sexual exploitation and serious financial crime.
In a recent success, the alliance partners dismantled a criminal syndicate preying on Australia’s most vulnerable to defraud them out of their savings.
The Alliance was able to provide NSW Police with financial intelligence about a 79-year-old customer who had $20,000 stolen from him. This enhanced intelligence also enabled law enforcement to identify and arrest the head of the syndicate, a 25-year-old man from South Wentworthville, and dismantle the syndicate’s operations.