Author: Nyman Gibson Miralis
Subject: Serious Financial Crime
Keywords: Australian Criminal Intelligence Commission (ACIC), fraud, cybercrime
The term serious financial crime can be applied to a wide range of activities where financial systems are exploited, including fraud, stock market manipulation and money laundering. While organisations and institutions are typical targets of financial crime, many individuals are also affected, being defrauded out of their savings and also suffering emotional consequences.
Conversely, serious financial crime is not only carried out by organised crime groups but increasingly is being committed by individuals, with offences including tax refund fraud, the exploitation of government health and welfare programs and using offshore structures to avoid paying tax in Australia.
Other less obvious impacts of serious financial crime on the Australian community include reduced government spending on essential services, infrastructure and education programs due to the loss of government funds through fraud.
The Australian Criminal Intelligence Commission (ACIC) released their Serious Financial Crime in Australia 2017 report, identifying the key financial crime markets.
What are the key financial crime markets in Australia?
Cybercrime actors targeting Australia for profit are predominantly based offshore, and their activities can be difficult to disrupt due to their highly technical nature, and the use of various anonymising techniques. A number of different types of financially-motivated cybercrimes pose a risk to the Australian public, the government, and businesses, including:
- credential-harvesting malware: used to extract account and password information such as banking login details for financial gain
- ransomware: blocking an individual’s access to their computer or files and requesting a ‘ransom’ to be paid
- distributed denial of service extortion: threatening to disrupt a business by preventing legitimate access to online services (typically a website) unless a fee is paid
- Business Email Compromise: targeting businesses for financial gain by impersonating a high-level executive to elicit payment
Investment and financial market fraud
Common types of investment and financial market fraud include:
- Fraudulent investment schemes, such as Ponzi schemes, where victims are lured in with the promise of high financial returns
- Manipulation of the share market to artificially raise or lower the price of shares for financial gain
- Exploitation of financial securities for financial gain or to launder the proceeds of crime
Revenue and Taxation Fraud
This type of fraud involves abusing the taxation system for financial gain. Common examples include:
- Tax refund fraud: claiming tax refunds that one is not entitled to
- Offshore tax evasion: holding investments in offshore financial institutions to avoid paying tax
- Illegal Phoenix activities: defined by the ATO as when ‘a new company is created to continue the business of a company that has been deliberately liquidated to avoid paying its debts, including taxes, creditors and employee entitlements’
- Abusive use of trusts: exploiting trusts to avoid paying tax by concealing income, artificially reducing income and mischaracterising financial transactions
Australia’s large pool of superannuation funds is an attractive target for criminal groups and individuals, with offences including:
- Fraudulently authorising the transfer of an individual’s superannuation funds into an illegitimate self-managed superannuation fund (SMSF) that is accessible by the criminal
- Exploiting SMSF fund holders through fraudulent fund investments, non-existent schemes and charging excessive advisory fees
Card fraud involves fraudulently obtaining or using credit/debit cards and may include:
- theft of the cards or card details through means such as:
- physical theft of the card
- skimming of card details at ATMs
- phishing and hacking to obtain card details
- fraudulent card applications
- producing counterfeit cards
The move towards a cashless society, where increasingly payments are made online and through mobile devices with linked credit card details, has also influenced an increase in card-not-present fraud.
Health and Welfare Fraud
Health and welfare fraud involves exploiting vulnerabilities in government welfare programs. Many of these instances of fraud tend to be opportunistic and committed by individuals or businesses such as family day care services, rather than serious and organised crime groups.
There are many different types of serious financial crime committed in Australia, and the ACIC assesses that instances of these crimes committed by both organised crime groups and individuals are likely to increase over the next couple of years. The Australian Government has supported various initiatives that bring together government, private sector and regulatory stakeholders in order to tackle serious financial crime in Australia.
Nyman Gibson Miralis specialise in all aspects of white collar crime law, including laws concerning money laundering, fraud, tax offences and bribery of foreign public officials. If you require assistance, contact one of our expert criminal defence lawyers