Countries/Jurisdictions of Primary Concern - Australia
Australia has deep, liquid financial markets and is recognized as a leader in investment management. Australia is also recognized internationally in areas such as infrastructure financing and structured products. As an emerging financial services center within the Asia-Pacific region, the country’s financial sector is supported by a number of government initiatives such as the implementation of an investment manager regime and measures to provide tax exemption or tax relief for foreign managers. Finance and insurance, significant sectors in the Australian economy, are estimated to account for 10 percent of total value added. Australia has one of the largest pools of consolidated assets under management globally, valued at A$2.35 trillion (approximately $2.02 trillion). It is also a major destination for foreign direct investment.
According to the Australian Crime Commission (ACC), financial crimes continue to increase in diversity, scale, and the level of overall harm they cause Australia. The ACC conservatively estimates that serious and organized crime costs Australia near to A$15 billion each year ($12.9 billion). Money laundering remains a key enabler of serious and organized crime.
The Australian Transaction and Reports Analysis Center (AUSTRAC) – the country’s financial intelligence unit (FIU) - identifies four key features of money laundering in the country: intermingling legitimate and illicit financial activity through cash intensive businesses or front companies; engaging professional expertise, such as lawyers and accountants; the use of money laundering syndicates to provide specific money laundering services to domestic and international crime groups; and the “internationalization” of the Australian crime environment, a reflection of the pervasive international money laundering ties of Australia-based organized criminal groups. The report also notes that major money laundering channels are prevalent in banking, money transfer and alternative remittance services, gaming, and luxury goods. Less visible conduits include legal persons and arrangements, cash intensive businesses, electronic payment systems, cross-border movement of cash and bearer negotiable instruments, international trade, and investment vehicles.
Trade-based money laundering (TBML), and its potential role in drug trafficking and importation, is a concern of law enforcement agencies. With its strict border and customs regulations, however, the potential for TBML is limited in comparison to other jurisdictions with free trade zones or open border arrangements. Australia’s lack of free trade zones is considered to have lowered the risk of TBML.
For additional information focusing on terrorist financing, please refer to the Department of State’s Country Reports on Terrorism, which can be found at: //2009-2017.state.gov/j/ct/rls/crt/
Do FINANCIAL INSTITUTIONs engage in currency transactions related to international narcotics trafficking that include significant amounts of US currency; currency derived from illegal sales in the U.S.; or illegal drug sales that otherwise significantly affect the U.S.: NO
criminalizATION OF money laundering:
“All serious crimes” approach or “list” approach to predicate crimes: All serious crimes
Are legal persons covered: criminally: YES civilly: YES
Know-your-customer (KYC) rules:
Enhanced due diligence procedures for PEPs: Foreign: YES Domestic: YES
KYC covered entities: Banks; gaming and bookmaking establishments and casinos; bullion and cash dealers and money exchanges and remitters; electronic funds transferors; insurers and insurance intermediaries; securities or derivatives dealers; registrars and trustees; issuers, sellers, or redeemers of traveler’s checks, money orders, or similar instruments; preparers of payroll, in whole or in part in currency, on behalf of other persons; and currency couriers
Number of STRs received and time frame: 64,076: July 2013 - June 2014
Number of CTRs received and time frame: 5,210,418: July 2013 - June 2014
STR covered entities: Banks; gaming and bookmaking establishments and casinos; bullion and cash dealers and money exchanges and remitters; electronic funds transferors; insurers and insurance intermediaries; securities or derivatives dealers; registrars and trustees; issuers, sellers, or redeemers of traveler’s checks, money orders, or similar instruments; preparers of payroll, in whole or in part in currency, on behalf of other persons; and currency couriers
money laundering criminal Prosecutions/convictions:
Prosecutions: 99: July 2013 - June 2014
Convictions: 77: July 2013 - June 2014
Records exchange mechanism:
With U.S.: MLAT: YES Other mechanism: YES
With other governments/jurisdictions: YES
Australia is a member of the FATF and of the Asia/Pacific Group on Money Laundering (APG),
a FATF-style regional body. Its most recent mutual evaluation report can be found at: http://www.fatf-gafi.org/countries/a-c/australia/documents/mutualevaluationofaustralia.html
Enforcement and implementation issues and comments:
The Government of Australia maintains a comprehensive system to detect, prevent, and prosecute money laundering. The election of a new government in September 2013 resulted in a number of changes in implementation of the AML/CFT regulatory framework. In December 2013, the Minister for Justice announced the commencement of the statutory review of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CFT Act). The review is being conducted by the Attorney-General’s Department with assistance from AUSTRAC. The review will examine the objectives and scope of the AML/CFT regime, opportunities for deregulation, the risk-based approach to AML/CFT, and industry reporting obligations. The review will be completed in 2015 with the submission of a final report to the government.
Seven amendments have been incorporated to the AML/CFT Act in 2013-14. A major enforcement tool to reduce money laundering risks inherent in the alternative remittance sector and informal value transfer systems is the ACC-led Eligo National Task Force (ENTF). The ENTF is an initiative involving the ACC, AUSTRAC, and the Australian Federal Police. In 2014, the ENTF resulted in 12 disruptions to criminal entities and identified 95 criminal targets previously unknown to law enforcement. The ENTF-initiated investigations resulted in seizures of more than A$21 million ($17.2 million) in cash and drugs with an estimated street value of more than A$140 million ($115 million). As well as disrupting organized crime activities, the ENTF is driving professionalism within the remittance sector to make it more resistant to organized crime. U.S. law enforcement agencies continue to work collaboratively with the ENTF.
AUSTRAC works collaboratively with Australian industries and businesses to promote their compliance with AML/CFT legislation. Australia has active interagency task forces, and consultations with the private sector are frequent. AUSTRAC signed four new financial intelligence exchange agreements in 2014, increasing the number of Australia’s exchange instruments with international counterparts to 72. Australian law enforcement agencies investigate an increasing number of cases that directly involve offenses committed overseas. Australia’s Criminal Assets Confiscation Task Force brings together agencies with key roles in the investigation and litigation of proceeds of crime matters. The task force identifies and conducts asset confiscation matters.
In May 2014, Australia announced changes to the way in which AUSTRAC would be funded. The government intends to replace the existing Supervisory Cost Recovery Levy, which funds the regulatory activities of AUSTRAC, with a new industry contribution that will fund both AUSTRAC’s regulatory and FIU functions. These contributions are expected to provide 70 percent of AUSTRAC’s budgeted operating expenditures in 2014-15, 90 percent in 2015-16 and 2016-17, and 100 percent from 2017-18 onwards.
2013–14 witnessed a notable increase in filings in the suspicious transaction report (STR) category ‘Refusal to show ID/complete cash transaction report,’ which can be attributed to the tightening of third-party currency transaction report (CTR) reporting obligations. Over the last two reporting years, the number of STRs filed with AUSTRAC increased approximately 45 percent. These increases reflect reporting entities’ increased awareness of events occurring overseas that are relevant to Australia.
In 2014, AUSTRAC completed Australia’s first classified National Risk Assessment on terrorism financing. A sanitized report titled “Terrorism Financing in Australia 2014” notes that Australia’s banking and remittance sectors are used more frequently than other channels to send funds to individuals engaged in foreign insurgencies and conflicts. Terrorism financing in Australia varies in scale and sophistication, ranging from organized fundraising by domestic cells which are part of a larger, organized international network, to funds raised by small, loosely organized, and self-directed groups.