STRENGTHENING THE FIGHT AGAINST MONEY LAUNDERING AND PEOPLE SMUGGLING
24 April 2010
Media Conference - AFP Headquarters, Sydney
Subject: Strengthening the Fight against Money Laundering and People Smuggling
BRENDAN O'CONNOR: Good morning. It's good to be here in Sydney. I'm here with John Schmidt, the chief executive officer of AUSTRAC.
In 2008 - in fact in December 2008 in his inaugural national security statement, the Prime Minister recognised that organised crime is not only a growing concern for Australia, and one the Government is determined to combat, but also that it's intrinsically linked to our national security.
Late last year, in response to the national security statement, the Attorney-General, Robert McClelland, and I launched the Commonwealth Organised Crime Strategic Framework. This framework is designed to ensure Commonwealth intelligence, policy, regulatory and law enforcement agencies are working together to prevent, disrupt, investigate and prosecute organised crime. I'm here today to talk about our next steps in the fight against organised crime.
Money is the lifeblood of organised crime. If we stop the flow of money, we can cripple organised syndicates. In front of me is $9 million of cash, seized by the Australian Federal Police after an investigation into links between organised crime and remittance dealers.
This could not have been achieved without the criminal and financial intelligence gathered by the Australian Crime Commission and AUSTRAC. This seizure underlines the importance of cooperation in our fight against organised crime. It's also a sign of why we need to make sure we have a strong regulatory regime for our remittance sector.
We must ensure that this valuable service, often used to send money to families and friends, cannot be misused to support criminal activity. A strong, new regulatory regime is needed so that remittance dealers who help criminals, such as people smugglers and drug traffickers, to launder funds can be deregistered.
The remittance sector is recognised by the international anti-money laundering and counter-terrorism financing community, and domestically by law enforcement and national security authorities, as being vulnerable to money laundering and terrorism financing.
Australian law enforcement authorities are aware that some international cash transfer services provided by remittance dealers are used by individuals in Australia to pay the organisers of people smuggling ventures.
Following the money trail is critical to detecting and disrupting crime groups, including those involved in people smuggling. Stronger regulation is needed to ensure more reliable financial intelligence so we can follow the money.
The Government is consulting the sector to develop a fair and workable registration regime that ensures the community can access an effective remittance sector, whilst maintaining misuse - whilst minimising, I'm sorry, misuse of the services.
I encourage everyone with an interest to be involved in the consultation process. Key to that consultation process is a discussion paper I'm releasing today.
The discussion paper follows the announcement on 16 April that a new regulation would give the AUSTRAC CEO power to deregister those remittance dealers who pose a money laundering, or a terrorism financing risk.
The Government has been interested in examining the remittance sector for some time. Because of that interest, I'm able to release today an Australian Institute of Criminology report on money laundering and terrorism financing risks posed by alternate remittance dealers in this country.
This report helps us understand why the remittance sector is so important to our community, and also helps us understand how the sector can be regulated to prevent abuse.
I'll conclude by reminding you that it is money, such as the $9 million before you, that feeds and sustains organised crime. Agencies such as the Australian Federal Police, such as the Australian Crime Commission and AUSTRAC working together, their job made easier through tougher regulatory regimes, are cutting the money flow to organised syndicates which will in the end reduce crime.
Thank you very much. I might just ask John Schmidt to say a few words and I'm happy to answer any questions.
JOHN SCHMIDT: Thank you, Minister.
As you'd be aware AUSTRAC is Australia's financial intelligence unit and anti-money laundering and counterterrorism financing regulator. We usually deal in data moving through our computer systems. It's unusual to see the actual cash, so that's something unusual for us.
This money was seized last month following raids by the AFP, the result of a joint investigation by the AFP, Australian Crime Commission and AUSTRAC into a number of money remitters based in Sydney. This cash represents two things: the presence and persistent threat of money laundering in the country; and also the powerful capacity of joint agency efforts to disrupt these types of serious crimes. In the case of this money, remittance businesses are alleged to have laundered proceeds of crime.
Following initial analysis by the Australian Crime Commission early last year, AUSTRAC provided staff to support the AFP money laundering team to investigate the remitters allegedly involved in this matter. It involved the movement of large volumes of cash.
Further analysis and cooperation between AUSTRAC and the AFP led to search warrants being executed and the money being seized. A number of people have been charged and are currently before the courts.
People don't get into crime, as the minister's indicated, just for the fun of it. The aim, obviously, is to make money. Removing such a large amount of money from the criminal economy demonstrates the effectiveness of targeted, intelligence-driven operations and highlights the benefits of a cooperative approach to disrupting money laundering activity.
AUSTRAC has an excellent relationship with the AFP and the Australian Crime Commission and their state and territory counterparts. Money laundering is a highly adaptive and complex crime which harms business and the community, large and small. The remittance sector in particular is vulnerable to exploitation.
AUSTRAC will continue to support the AFP and our other partner agencies to combat serious crimes and to protect the integrity of our financial system from those who seek to abuse it for criminal ends. In this context, I look forward to entering into consultation in conjunction with the Commonwealth Attorney-General's department, with industry, and other interested parties regarding proposals to strengthen the current remitter registration regime which are outlined in the discussion paper which is being released today.
Thank you.
QUESTION: Can you explain simply, where did this money come from?
BRENDAN O'CONNOR: Well, as we've made it clear, this is a result of the investigation by the Australian Crime Commission, AUSTRAC and indeed, ultimately, seized by the Australian Federal Police. This is, in fact, in relation to a matter that goes to remittance dealing and also organised crime. But because the actual money itself is still subject to court matters, I can't go to the specifics.
I can say, of course, it's been seized as a result of the very good work of our law enforcement agencies, and indeed out intelligence agencies.
QUESTION: Sorry, remittance? What do you mean exactly by remittance?
BRENDAN O'CONNOR: Well, remittance dealers - alternate remittance dealers are those bodies who provide an opportunity for people to send money overseas. Of course, overwhelmingly, this sector does a very good job, a very good community function for people who are seeking to send money to friends and family. However, we have concern about those alternate remittance dealers, very much in the minority, who may be used improperly, for improper purposes.
QUESTION: So, like Western Union? Is that the type?
BRENDAN O'CONNOR: Now, Western Union and other reputable remittance dealers, of course, are in this sector. We're concerned about those alternate remittance dealers who are not up to a sufficient standard and that's why I've announced the need for us to bring in further regulation in order to ensure we have a - we have an acceptable standard when people register to be remittance dealers.
Now, we've said we'll consult with the sector. Effectively what it means, for example, at the moment you're able to register as a remittance dealer and that's the only requirement of a prospective dealer. What we want to ensure is that there are some conditions that may apply for people to be registered so that their criminal history, if they have any, the - any history of insolvencies, can be reported before registration can occur.
Also, since 16 April we've allowed for the CEO of AUSTRAC, John Schmidt, to determine whether in fact a remittance dealer should be deregistered.
So this is about providing better regulation so that we can ensure that this sector, which does a very good job, is not vulnerable to organised crime.
In relation to the announcements recently about people smuggling activities, we've said we are aware that there have been people that have provided support to people smuggling activities through the use of remittance dealers, and that's why we need a higher standard of regulation, a higher standard of those that are going to be remittance dealers in order to prevent the likelihood of a crime being committed.
QUESTION: What was the allegation involved in this money? Is it a single group, and what are the charges that they're…
BRENDAN O'CONNOR: I can't go directly to the actual money that's been seized. But this is a great example of the Australian Federal Police working with the Australian Crime Commission and AUSTRAC and other agencies to seize money because we know the only way we're going to dismantle organised crime is stop the money flow.
Today is all about is providing an example about seizing the money, stopping the lifeblood of organised crime.
And therefore I'm here to commend the efforts of the Australian Federal Police, AUSTRAC and the Australian Crime Commission.
QUESTION: John, you spoke about how - you said several people have been charged. How many people have been charged?
JOHN SCHMIDT: I understand - I think it's three or four, I'm not sure, but the matter is before the court at the moment.
QUESTION: And over what period? How recent?
JOHN SCHMIDT: I think - well, the… I'm not sure. The matter is [indistinct] currently before the court.
QUESTION: So is the issue here that people are registering as these remittance dealers and then committing the crime themselves or…
JOHN SCHMIDT: It's a good point. There's a combination of situations that can arise. A person can be unwittingly used to transfer funds overseas which are related to crime, and they may have no knowledge. On the other hand, there are cases, and there certainly are cases, which have been investigated and continue to be investigated where some remittance dealers are active participants engaged in structuring payments in such as a way as try to avoid detection and assisting criminals to get money in and out of Australia in pursuit of criminal activities.
QUESTION: John, where do you believe this money was headed?
JOHN SCHMIDT: I'm sorry, I don't know, I don't have…
QUESTION: So you've intersected this as part of a major investigation?
JOHN SCHMIDT: No, no, no, the AFP and Australian Crime Commission. We're not a law enforcement agency.
QUESTION: I realise that.
JOHN SCHMIDT: Yeah, we provide the intelligence and it wouldn't be appropriate for me to comment on details of where the money is going to. Other investigations may currently still be in train.
QUESTION: Is it drug money or is it rebirth cars? I mean, can anybody give us that?
JOHN SCHMIDT: It's not appropriate for me to comment on the operational issues.
QUESTION: When will the people appear next in court so we can follow it up?
JOHN SCHMIDT: I don't know. They're before the court at the moment.
QUESTION: Oh, okay. So someone has turned up to the remittance dealer on Parramatta Road or wherever with a truckload of cash, saying, can you send it to my friend in Syria? Is that the sort of scenario we're talking…
JOHN SCHMIDT: That - not talking about this particular case, but that can be one scenario where people turn up with large volumes, bag loads of cash, and are looking for ways to get it out of the country. And they can split it up into a series of transactions to a range of people overseas, to one individual overseas. They structure it to try and make it a small amount to slip under the radar detection system we've got. And remittance dealers are one of the avenues that they're using to do that.
QUESTION: Well, can you tell us at least whether all of this was one transaction or is this, like, 50 transactions?
JOHN SCHMIDT: This money, as I understand it, hadn't left the country so I'm not sure how they would have transacted the business or how they planned to transact that business.
QUESTION: So it hadn't got to the remittance dealer yet?
JOHN SCHMIDT: I understand it was seized as part of the investigation into the remittance dealers. I'm not sure exactly…
QUESTION: Seized from the remittance dealers?
JOHN SCHMIDT: I'm not 100 per cent sure.
QUESTION: Does the minister have…
BRENDAN O'CONNOR: We can provide that information in terms of the detail.
I think it's very important to make the point that this is about ensuring that the public understands how important it is for our agencies to work together to seize such assets in relation to organised crime.
This is also about ensuring that we have a proper regulation in place to ensure that remittance dealers, either wittingly or otherwise, are not involved in organised crime.
And, in relation to people smuggling activities, we've made clear we are concerned this sector has been used in a way that is improper and in some cases unlawful, and we want to ensure that we continue to have our agencies - AUSTRAC, the Australian Crime Commission, the Australian Federal Police, and others - work together to cut the money flow from organised crime because, as we know, money is the lifeblood of crime. And if we can stop the flow we can cripple the criminal syndicates.
QUESTION: When and where did the…
QUESTION: Are you undertaking to actually get some of the background of this on…
BRENDAN O'CONNOR: I'd be happy to do that.
QUESTION: …so we can contextualise this story.
BRENDAN O'CONNOR: Sure, happy to do that.
QUESTION: Can you say when and where the raids happened?
BRENDAN O'CONNOR: All I can say is this is the result of the raids by the AFP in seizing these assets. We're happy to talk about the detail beyond that when we're in a position to do so.
As John said, these matters are before the court and we do not want those court proceedings in any way jeopardised.
QUESTION: But can you tell us did the raids happen last week, three weeks ago…
BRENDAN O'CONNOR: As I've said to, we'll put this in further context.
But can I say we will ensure we'll do so without in any way jeopardising the proceedings of the court.
QUESTION: John, the informal - how shall I call it - it's not zakat is it, that's a different [indistinct]. The Muslim informal remittance dealing process…
BRENDAN O'CONNOR: Hawala is one of the examples.
QUESTION: Hawala, okay.
BRENDAN O'CONNOR: Yep.
QUESTION: Is this the sort of grouping that you are trying to regulate that, with these latest regulations?
BRENDAN O'CONNOR: The remittance - the nature and scope of remittance dealers varies. So you have the very big end of town, you have your Western Unions and Australia Post offers these services as well, right down to one-man shows acting as remitters in a grocery shop in a suburb of Sydney. So there are some very formal, informal remittance arrangements and then the very ancient, I suppose, approach to money remittance which is hawala.
They're all required to be registered and we have, I think in the last 12 months we've actually increased the number of registrations by about 12 per cent. There will always be a small section of the community who we are trying to bring into the registration fold.
The smaller organisations may be more exposed to risk of being infiltrated by criminal activities. The expectation would be that the remitters who are part of the more major mainstream networks have internal risk assessment and fraud controls which would make that more difficult.
But there are - there is a particular vulnerability in some of the small remittance dealers.
QUESTION: Now, this discussion paper, we've got it here today?
BRENDAN O'CONNOR: Sure, we'll have it - yep.
QUESTION: And can you summarise the key recommendations…
BRENDAN O'CONNOR: This discussion paper is in order to allow the remittance dealer sector come back to the Government about what they need for us to consider in relation to the regulations. So it's a very open-ended discussion paper providing, I guess, the arguments for and against regulation.
And what we want the remittance dealing sector to do is to get back to us as soon as possible.
We need to move on this very quickly. These are - this does concern the Government.
We want to make sure we've got sufficient regulation in place to prevent remittance dealers being involved in any way with organised crime.
And the way we can do that is provide an acceptable standard and ensure we have better regulation, better accountability, better transparency which will be able to track the money flow.
BRENDAN O'CONNOR: Thanks very much.
