Launch of AUSTRAC financial crime report
29 June 2010
Australian Federal Police, Brisbane
Topics: AUSTRAC financial crime report
BRENDAN O'CONNOR: Can I acknowledge the traditional owners of the land on which we meet, pay my respects to the elders both past and present. I'm here today with AUSTRAC acting chief executive officer John Visser and also Brian McDonald, Commander of the Australian Federal Police.
I'm here to launch a very important report by our financial intelligence agency, AUSTRAC. This report is a very important one for businesses in Australia and indeed for the Federal Government. The Federal Government recently created an organised crime strategic framework so that we can combat organised crime effectively.
We need to use the good resources of the Australian Federal Police, the Australian Crime Commission, AUSTRAC and other agencies to combat organised crime and we need to engage the private sector as partners in combating organised crime.
Organised crime costs our community $15 billion each year. That is a huge waste and cost to every Australian and for that reason, we want our agencies working hard to dismantle such syndicates.
What we do know is if we have a good partnership with businesses, we're able to gather information that will allow our financial intelligence agencies and law enforcement agencies to tackle serious and organised crime. What we do know is if we can stop the money flow, we can cripple criminal syndicates. For that reason, this report is very important because what it underlines is when we have the full co-operation of businesses of Australia, working closely with Commonwealth agencies, we can dismantle such syndicates. We can effectively detect and disrupt serious criminal activity.
This report, particularly going to the case studies, underlines the need for businesses to report certain conduct by consumers, by indeed their own customers.
What we know it is sometimes the smallest of information that businesses provide can indeed be used effectively by AUSTRAC, by the Australian Federal Police.
Today we have some examples of things that have been detected and obtained by the Australian Federal Police in seizures. We can't go to those individual matters because they are subject to court proceedings. But the case studies that are outlined in this report underline how important it is for businesses and Commonwealth law enforcement agencies and our intelligence agencies to work together to tackle serious and organised crime.
I might now ask the acting chief executive officer of AUSTRAC to say a few words and after that he or I will happily take some of your questions.
JOHN VISSER: Thank you Minister. As the Minister has pointed out, in its role as the country's financial intelligence unit, AUSTRAC provides financial data and intelligence to state and federal government agencies.
To give you some idea of the volumes involved in the last financial year, AUSTRAC received more than 19 million transaction reports from businesses, or about 76,000 reports on a daily basis. From this, our agency disseminated more than 43,000 suspicious transaction and suspicious matter reports to partner agencies. AUSTRAC also disseminated financial intelligence assessments to partner agencies on 1,390 occasions.
These agencies, which include the Australian Federal Police and the Australian Crime Commission, use this information as part of their investigations into a range of serious crimes.
Examples of these crimes are shown here in front of me, or the tools of those crimes, and are detailed in this report we are launching here today: the AUSTRAC Typologies and Case Studies Report 2010.
The report has been compiled from real Australian cases and reveals some of the methods used by criminals to commit offences such as money laundering, fraud and drug trafficking. The report also details emerging threats businesses should be aware of to protect their services against criminal infiltration.
To understand the range of crimes I'm talking about, some of the cases from this report include how information submitted to AUSTRAC helped expose an Australian who was laundering the proceeds of child pornography. How a syndicate attempting to import a shipping container with 4.4 tonnes of ecstasy tablets, with a street value of $450 million, was intercepted. How a pharmacy linked to a motorcycle drug gang received cash deposits worth $1.1 million in just 15 months. And how, after falling in with Nigerian fraudsters, an Australian admitted to carrying a suitcase stuffed with cash overseas to be laundered.
Now the message I want to get across is that these are not just scenarios. These crimes really happened. To reiterate what the Minister said, Australian businesses need to be aware that the smallest piece of information in a report they submit to AUSTRAC may be the final piece in the puzzle of a law enforcement investigation.
This connection, the joint effort between business and the government, is represented on the tables in front of me, and with this valuable report. It can be as simple as a bank teller completing a report about the suspicious behaviour of a customer or an irregular transaction.
The reports they submit to AUSTRAC are of crucial importance and can lead to arrests, convictions and seizures. I'm proud of the work that AUSTRAC does to publish a series of typologies reports. It is important to illustrate and highlight the very real face of money laundering and terrorism financing. Even more important to demonstrate to business what a crucial role it plays in the fight against these crimes. Today AUSTRAC has published a number of typologies reports. I'd encourage business in the financial sector, gaming, bullion and remittance services industries to read the latest report which is now available from the AUSTRAC website. Finally, all case studies within the report were sourced from and approved for publication by AUSTRAC's law enforcement and regulatory partner agencies.
I'd like to acknowledge the important contribution these agencies have made to the typologies report series and I'd like to thank you for your time.
BRENDAN O'CONNOR: Okay, any questions?
JOURNALIST: Which businesses are vulnerable?
JOHN VISSER: The AML/CTF Act covers a range of businesses. In the financial sector: banks, building societies, credit unions, the gaming sector, casinos, bookmakers and so forth. All of the industries regulated under the Act are being regulated under the Act because they are vulnerable to money laundering in one sense or another.
JOURNALIST: Have there been any particularly unusual or new ways of laundering that have emerged in recent times?
JOHN VISSER: You'll find in the report there's a section on emerging technologies which are vulnerable, which have some susceptibility to be used for laundering purposes. Mobile technologies, mobile phone technologies where money can be exchanged between people, debit cards which can be carried offshore in a pocket.
There are a whole range of e-commerce type currencies, e-currencies that can go through the internet, those types of transactions. Anything that can involve the movement of value from one person to another person, or from one place to another place with a certain level of anonymity is vulnerable to money laundering.
JOURNALIST: Are these cases sort of the smaller fish or have authorities been able to catch some bigger players?
JOHN VISSER: Well some of the cases are quite significant. The ecstasy case, for example, is a huge amount of money that, where action by law enforcement agencies using financial intelligence were able to intercept that before the money - proceeds of crime, were actually generated. So, I mean, it's getting one step ahead of the game where law enforcement agencies are proactively able to use financial intelligence to investigate predicate offences as well.
JOURNALIST: You mentioned a figure of it's costing the community $15 billion a year. Is there a trend to that figure? Is it going up a lot?
JOHN VISSER: The figure is a figure that the ACC regularly use. It's the cost of organised crime. In terms of the actual amount of crime, proceeds of crime laundered in and through Australia, it's very difficult to get an accurate estimate. Academic studies, for example, would suggest a figure, something there, between $4.5 billion and $6 billion laundered in and through Australia annually. But by its very nature, money laundering is a secretive business. So getting an accurate figure on the actual amount of money laundered is a difficult task.
JOURNALIST: Now does the report cover crimes that are, I guess, based offshore or as well as Australian?
JOHN VISSER: Organised crime is an international phenomenon. We have agreements in place with over 40 countries to exchange financial intelligence. The Federal Police also have an active liaison network working globally. So because of the international nature of organised crime...
QUESTION: So most of it is from overseas?
JOHN VISSER: Well it's an element; it's always an element. I mean, some of the biggest threats come from overseas-based crime groups. Australia is an active market, it's a wealthy economy, and clearly it is attractive to organised crime. But we do have very good intelligence exchange arrangements in place with counterpart financial intelligence units and, as I said, the police also have their exchange arrangements in place.
JOURNALIST: Is the work your organisation does, is that now the most effective way of targeting organised crime as opposed to the sort of more methodical ways of investigating?
BRENDAN O'CONNOR: AUSTRAC is critical because what we know is we need intelligence-led approaches to organised crime. So the Australian Crime Commission is a very important intelligence agency and AUSTRAC is the premium financial intelligence agency. So AUSTRAC, the Australian Crime Commission working with the Australian Federal Police, are indeed the critical agencies that combat serious and organised crime in this country and beyond.
These crimes are increasingly transnational, so we have to work very closely with our law enforcement friends and intelligence agencies in the region and beyond that.
What we do know is organised crime is becoming increasingly more sophisticated, more international by nature. One of the downsides - not too many downsides, but one of the downsides - of the cyber world is the threats we have to our financial transactions, our financial world. And so we have to be very much vigilant. And AUSTRAC - and it is harder for John to say, although he shouldn't be too modest - AUSTRAC is playing an increasingly important role in detecting financial transactions that lead to criminal activity.
And it really is, in the end, the cooperation that we need from the business community, working closely with Commonwealth agencies, that will in fact detect such criminal activity. So to answer your question, it is increasingly a problem and AUSTRAC play a critical role with those other agencies of the Commonwealth and, indeed, agencies of state governments as well.
JOURNALIST: Can I just follow up on that? You say that this way of detecting or combating or targeting organised crime is now the most important way?
BRENDAN O'CONNOR: I think you have to have an array of weaponry against organised crime. What we do know is though, of course, that if we have an effective way of assessing financial intelligence - and I believe AUSTRAC is one of the best agencies in the world to do that.
In fact, other countries come here to actually assess the way in which AUSTRAC operate because they've got a very effective approach to detecting financial intelligence that is involved in money laundering and even terrorism financing.
So it is a very important agency. But to say is it the most important, well, we need an array of weaponry and that means we need effective law enforcement and, indeed, intelligence gathering, but including the intelligence gathering of the Australian Crime Commission.
We just announced a Fusion Centre that is going to be situated in the Australian Crime Commission. That will have AUSTRAC officers, Australian Federal Police officers, the Australian Crime Commission officers, and indeed Australian Taxation Office and other agencies working together to combat organised crime. That's what we need.
So the Government is very much focused on ensuring we have an integral approach to combating these threats to the Australian community.
JOURNALIST: Is there any reason that you decided to launch the report here in Queensland?
BRENDAN O'CONNOR: Look, Queensland, Brisbane have the same problems as every other part of the country. This is a major city; therefore, you know, there will be threats here as there are in Sydney and Melbourne and other parts of Australia.
But happy to do it here. It's a very important part of the country, it's a warmer climate - I like that. Don't get to come up here as often as I'd like. But can I say to you it's a national problem, it's a national threat, and AUSTRAC is doing a fantastic job in combating organised crime. And this report underlines how critical it is that businesses work very closely with the Federal Government to fight organised crime.
JOURNALIST: Would you say that criminal rings are just getting smarter or are they capitalising on a bit of community complacency and naivety. There's a case in here of an elderly couple who fell for the Nigerian bank scam and sent 500 grand overseas. Like, that's just stupidity really.
JOHN VISSER: Yeah, I won't comment on the thinking behind the people that were the victims of that crime. But certainly in response to your question, one thing we know is that organised criminals are very adept at changing their behaviour in response to actions taken by authorities. So we need to remain constantly vigilant to these changes in behaviours. And given the flexibility in the financial system, those changes can occur very quickly.
So the reporting regime under the AML/CTF Act enables us to monitor the activity across the entire database and try to detect these things as the changing patterns emerge and get that intelligence out to our partner agencies. So yes, they adapt very quickly.
JOURNALIST: And does AUSTRAC have like a hotline or how do businesses make a report?
JOHN VISSER: There is a hotline for reporting suspect matter reports. Over 95 per cent - over 99 percent of our reports come in electronically, directly from the financial sector. They're available for use by law enforcement generally within 24 hours of the transaction having occurred. So it's very timely information that can be used by our partner agencies.
JOURNALIST: So how long have you guys been doing what you do?
JOHN VISSER: Close to 20 years, over 20 years now I think. It's been a significant amount of time. And I'm very pleased to say that in the last five years or so the appreciation of the value that comes from financial intelligence amongst Commonwealth agencies and state agencies has increased significantly, and there's some proof of the benefits coming from the types of cases that they're cracking at the moment.
JOURNALIST: And is this an annual report?
JOHN VISSER: Yes, it's an annual report. We would like to, in the future, also get some information from industry who are also victims of crime from their own employees, embezzlement and so forth. So we'd like to get some information from them, how their obligations under the Act contributes to them dealing with crimes committed against their own agencies.