AUSTRAC money laundering

Money laundering, white collar crime and financial fraud are significant problems facing the Australian law enforcement community, particularly in an increasingly connected digital world. The Australian Transaction Reports and Analysis Centre (AUSTRAC) plays a key role in preventing, deterring, and prosecuting these crimes.

This article explores AUSTRAC’s functions and success in combatting money laundering and other types of financial crime in Australia.

 

What is AUSTRAC?

AUSTRAC is Australia’s anti-money laundering and counter-terrorism financing (AML / CTF) regulator and specialist financial intelligence unit (FIU).

It oversees the compliance of thousands of Australian businesses including financial services providers, the gambling industry, bullion dealers, remittance service providers, and cash dealers.

AUSTRAC collects and analyses information provided by businesses about financial transactions and suspicious matters, providing the resulting financial intelligence to domestic and international partner agencies spanning the areas of law enforcement, national security, human services, and revenue.

This financial intelligence assists partner agencies and international counterparts in investigating and prosecuting serious criminal activity including money laundering, terrorism financing, organised crime, and tax evasion.

AUSTRAC also educates, monitors, and works with reporting entities to improve their compliance with the anti-money laundering requirements of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 and Financial Transaction Reports Act 1988. In some circumstances AUSTRAC seeks to enforce compliance with these acts through more formal mechanisms.

 

What information must be reported to AUSTRAC?

AUSTRAC’s key function is the collection and analysis of data relating to financial movements nationwide, with a view to determining whether inappropriate or inconsistent transactions have occurred and should be further investigated.

AUSTRAC requires all reporting entities to notify it of:

  • All international funds transfer instructions.
  • Suspicious matters.
  • Threshold and significant cash transactions.
  • Cross-border movement of cash declarations and bearer negotiable instrument declarations.

In addition to mandatory reporting, AUSTRAC can specifically direct financial institutions to provide further information if required.

 

What happens to the information collected by AUSTRAC?

Once AUSTRAC has received a notification, that data is input into the Transaction Reports Analysis and Query (TRAQ) database for analysis.

Information collated by AUSTRAC can be passed on to partner agencies, including all Australian law enforcement bodies such as state and federal police. Other partner agencies include the Department of Immigration and Border Protection and the Australian Taxation Office (ATO). Generally, AUSTRAC’s specific expertise is used to analyse the information before it is passed on (rather than simply sending raw, unreviewed data).

Alternatively, partner agencies can access the TRAQ database and search for relevant information.

Generally, the information passed on by AUSTRAC relates to particularly high-risk reports, depending on the types of red flags which might be triggered.

 

How does AUSTRAC assist law enforcement?

The information collected and disseminated by AUSTRAC can be relied upon by law enforcement to conduct surveillance based on patterns of anomalous financial transactions and behaviour, or unusual financial relationships.

In particular, the collection of information relating to predicate offences – minor offences which generally accompany more serious offences – can be utilised by law enforcement to attempt to prevent significant crimes from taking place, or from being successful.

AUSTRAC’s intelligence can also create the backbone of a chain of evidence utilised in prosecutions.

 

Recent AUSTRAC Investigations

 

Offender convicted of structuring funds to launder money: $1 million recovered

AUSTRAC was alerted to the activities of the offender by a bank, who submitted a Suspicious Matter Report (SMR). Subsequent investigation by AUSTRAC revealed that the offender was deliberately dividing large amounts of cash from his business into smaller amounts before depositing them, to avoid threshold reporting requirements. He structured cash deposits totalling more than AU $2.5 million over a five-year period.

Further AUSTRAC information revealed:

  • Over five years, the offender made regular cash deposits into his personal credit card account. These amounts were just below the $10,000 cash transaction reporting threshold.
  • In one three-month period, the offender deposited $125,000 in cash into his personal credit card account in a series of $9,000 deposits.
  • The offender exchanged $15,000 in cash from $50 notes to $100 notes.
  • The offender deposited $250,000 in cash and $450,000 in cheques, on the same day, into his term deposit account. The cheques were drawn from personal and business accounts held by the offender with another bank.

He was charged with Commonwealth offences relating to structuring transactions and pleaded guilty to all. He was ordered to pay a penalty of over AU $1 million.

 

International drug importation scheme targeted, and trafficker convicted

SMRs were received from several remittance service providers relating to one individual, which initiated an investigation by AUSTRAC. These SMRs showed:

  • A higher than normal volume and frequency of international funds transfer instructions (IFTIs).
  • All outgoing IFTIs were paid for in cash, in structured amounts below the $10,000 cash reporting threshold.
  • The recording of multiple address details and telephone numbers.
  • Addresses slightly altered or completely different to previous transactions.

AUSTRAC commenced an investigation into these transactions, identifying the overseas beneficiary customers, along with other aliases and identities used by the suspect. AUSTRAC was then able to monitor these aliases and any financial transactions conducted by them. Data showed a correlation between the transfers of funds to Laos, Brazil and Nigeria and the importation of drugs. The suspect was charged and convicted of drug importation offences, and for dealing with the proceeds of crime.

 

Online transactions led to convictions for child sex offences

AUSTRAC contributed to an investigation into the use of pay-per-view child pornography websites and chatrooms based in the Philippines by Australian suspects.

AUSTRAC prepared financial intelligence assessments to support the investigation on various transactions conducted by two suspects. This investigation uncovered a number of international money transfers sent via remittance service providers to common beneficiaries in countries such as Thailand and the Philippines. These money transfers were frequent and for small amounts; approximately half were between $10 and $100, and the other were between $10 and $1,000.

The two suspects were successfully charged and convicted of child sex offences under Commonwealth and Victorian jurisdictions. They were sentenced to jail time with sex offender therapy.

 

Australia and Colombia join forces to bring down international drug syndicate

Australian and Colombian law enforcement agencies conducted a joint investigation into an international drug syndicate with links to Thailand, Ecuador, Italy, the USA, and France.

The syndicate were using couriers to smuggle drugs from Colombia and the USA into Australia. AUSTRAC became involved when they received an SMR from a currency exchange service regarding a customer who was travelling to Colombia, and insisted on exchanging Australian dollars for Euros in cash, rather than as a cash passport as suggested by the currency exchange service. The funds exchanged were also below the transaction reporting threshold.

AUSTRAC then analysed the financial activities of other suspects and prepared financial intelligence assessments. Analysis of international funds transfers showed that a number of Australian suspects were linked to the suspect based in Colombia. AUSTRAC also discovered information about an Australian suspect who exchanged AU $11,000 for US dollars on the day she departed for the US. She returned to Australia and was discovered carrying 140g of methamphetamine concealed on her person.

AUSTRAC shared financial intelligence with counterpart authorities in the United States, assisting authorities to confirm drug syndicate associations in the U.S.

 

Conclusion

AUSTRAC is Australia’s anti-money laundering and counter-terrorism financing regulator and financial intelligence unit. It oversees the compliance of financial services providers and other related Australian businesses, who are required to notify it of suspicious matters and other significant transactions. Recent investigations show that AUSTRAC successfully collaborates with domestic and international partner agencies, providing financial intelligence which leads to the disruption of significant money laundering and organised crime operations.

Nyman Gibson Miralis provides expert advice and representation in cases involving money laundering and financial crime.

Contact us if you require assistance.