Australia’s criminal underworld is sticking to what it knows for laundering illegal funds according to the country’s financial intelligence agency, the Australian Transaction Reports and Analysis Centre (AUSTRAC).
Drug proceeds are the main area of concern for Australia’s AML authorities, as revealed by AUSTRAC’s latest National Risk Assessment (NRA). The authority estimates the value of the Australian drug market at around AUS$12.4bn (£6.5bn) per year, much of which is laundered through the country’s legal and regulated business networks.
Terrorist funding is another area AUSTRAC is concerned about, with a number of case studies highlighted in the NRA linking examples to Islamic State members. The report notes an ongoing threat from ideological and religious terrorist groups, although stating that the risk from the latter has reduced significantly in recent years.
The most popular means of money laundering remained consistent over the years, with criminals preferring the traditional methods of cash, banks, luxury goods, real estate and casinos.
This does not mean that emerging technologies have gone unnoticed by Australia’s criminal underworld, however. AUSTRAC’s NRA has taken note of the increasing use of digital currencies as a means for criminals to discreetly transfer funds.
AUSTRAC CEO, Brendan Thomas, said: “Crimes like money laundering and terrorism financing erode trust in Australia’s financial system and the security of the Australian population. Criminals might be persistent, but so are we.
“That’s why AUSTRAC has worked with the national intelligence community, law enforcement and regulatory agencies, together with industry and international financial intelligence units to build these risk assessments.
“We have drawn on insights and data from all these groups to capture a comprehensive picture of what is happening across our nation. These NRAs will help strengthen Australia’s anti-money laundering and counter terrorism financing (AML/CTF) regime, which is a key component of the national, cooperative approach to countering serious and organised crime. It has been a joint effort that everyone should be proud of.”
A more detailed breakdown of the money laundering channels used by criminals sees the banking system, remittance service providers, non-bank online payment service providers and digital currencies marked as high risk.
Domestic cash exchanges are classed as medium-high risk, with the remaining channels all categorised as either very low, low or medium risk.
These remaining channels are offshore cash smuggling, foreign exchange providers, luxury goods – such as jewellery and watches – precious metal traders, stored value cards, non-bank lenders and financiers, pubs and clubs, casinos, betting firms and other forms of gambling, and finally stockbrokers and securities dealers.
Thomas continued: “We know there are particular sectors that pose money laundering and terrorism financing risks and are consistently exploited – knowingly and unknowingly – by transnational, serious and organised crime groups to disguise and launder criminal wealth.”
Focusing on the high-risk banking sector, the report highlights two vulnerabilities. . Illicit transactions for laundering money and support for terrorist activity are often deemed low value, and thus difficult to differentiate from legitimate finance activity.
The NRA states that this can make it difficult for banks, which handle vast amounts of transaction data to detect suspicious payments.
Secondly, the report notes technological innovations, with new payments platforms (NPPs) enabling near real-time transactions, making it harder for banks to identify and freeze suspicious traders before funds leave an account.
Turning to digital currencies, the NRA highlighted this area as key for some actors to move illicit funds. Low level crypto payments from Australians to crypto wallets held by overseas terrorist organisations have been observed.
Other uses of digital currency for illicit purposes include transfering coins through peer-to-peer (P2P) traders, the use of crypto ATMs to on-ramp funds and the use of mixer services to further distance itself from the original source and wallet holder.
AUSTRAC expects digital currencies to remain attractive to terrorist financiers due to its accessibility, privacy and pseudonymity. The authority states that innovation and adaption from law enforcement agencies will be needed to address these risks.
