AUSTRAC Report Reveals Traditional Methods and Digital Currencies as Key Money Laundering Risks in Australia

AUSTRAC has recently released two comprehensive national risk assessments that provide important insights into money laundering and terrorism financing in Australia.

They collaborated with national intelligence, law enforcement, regulatory agencies, industry, and international financial intelligence units to undertake this risk assessment.

AUSTRAC CEO Brendan Thomas stated that these reports emphasize that traditional methods like cash, banks, luxury goods, real estate, and casinos remain prominent channels for laundering illicit funds, despite the rise of digital currencies. He highlighted the $12.4 billion domestic drug market as a significant source of illegal funds that need laundering annually.

Challenges in Identifying Financial Crime with Modern Technology

Technological advances like instant payment systems and artificial intelligence have complicated financial crime detection. Yet, traditional methods still dominate, with major banks being particularly vulnerable to terrorism financing due to their extensive reach and infrastructure.

The reports also reveal that smaller banks might become more exposed to terrorism financing risks as larger banks strengthen their defenses. Retail banking, remittance services, and cash exchanges are identified as primary avenues for moving terrorist funds, often to overseas organizations. Despite this, major banks are investing extensively in anti-money laundering (AML) and counter-terrorism financing (CTF), giving essential information to authorities.

Extremist groups increasingly use social media and crowdfunding platforms to raise funds. The studies also highlight areas not covered in the current AML/CTF framework, such as legal and real estate, which criminals frequently exploit. The Financial Action Task Force (FATF) has recently published a horizontal review of gatekeepers’ technical compliance related to corruption. The report highlights that Australia has lagged in AML compliance for designated non-financial businesses (DNFBPs), indicating the need for improved measures and oversight to reduce corruption and money laundering risks.

New Government Reforms to Expand AML/CTF Laws in High-Risk Industries

The government’s proposed reforms aim to extend AML/CTF legislation to the high-risk areas, thereby enhancing the fight against financial crime. Thomas encouraged businesses to understand their exposure to these risks and implement necessary AML/CTF measures, as these insights will support law enforcement in combating serious and organized crime.