Australian Transaction Reports and Analysis Centre

Australian Transaction Reports and Analysis Centre (AUSTRAC) is an Australian government financial intelligence agency set up to monitor financial transactions to identify money laundering, organised crime, tax evasion, welfare fraud and terrorism financing.[3] AUSTRAC was established in 1989 under the Financial Transaction Reports Act 1988.[4] It implements in Australia the recommendations of the Financial Action Task Force on Money Laundering (FATF), which Australia joined in 1990.

Australian Transaction Reports and Analysis Centre
Agency overview
Formed1989
HeadquartersLevel 2, 4 National Circuit, Barton, Australian Capital Territory
Employees312 (As of 2017-2018)[1]
Minister responsible
Agency executive
  • Nicole Rose PSM, Chief Executive Officer [2]
Websiteaustrac.gov.au

AUSTRAC's existence was continued under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) (AML/CTF Act).[5] The AML/CTF Act came into effect on 12 December 2006,[6] and extended the existing monitoring regime to cover terrorism financing and listed terrorist organisations. Under Division 103 of the Criminal Code Act 1995 (Cth), it is illegal to finance terrorism.[7] The Attorney-General's Department maintains a list of outlawed terror organisations. In 2014 AUSTRAC released a report, Terrorism financing in Australia 2014, which says, "Terrorism financing poses a serious threat to Australians and Australian interests at home and abroad."[8]

AUSTRAC is a member of the Egmont Group of Financial Intelligence Units and an observer in the Camden Assets Recovery Interagency Network and is a member of FATF and the Global Forum on Transparency and Exchange of Information for Tax Purposes. It is also a member of the Asset Recovery Interagency Network Asia Pacific.

Certain classes of financial services are required to be reported to AUSTRAC, in particular bank cash transactions (i.e., notes and coins) of A$10,000 or more, as well as suspicious transactions and all international transfers. Reports to AUSTRAC must be made within 10 business days.[9] The information that AUSTRAC collects is available for use by law enforcement, revenue, regulatory, security and other agencies.

Operation

"Reporting entities" are required to report transactions to AUSTRAC. Transactions which must be reported include:

  • cash transactions of A$10,000 or more, or foreign currency of that value,
  • international funds transfer instructions, either into or out of Australia, of any amount, and
  • suspicious transactions of any kind, being transactions the dealer may reasonably suspect of being part of tax evasion or crime, or might assist in a prosecution.

Australia's cash controls require travellers to report to AUSTRAC when they carry $10,000 or more (or equivalent in a foreign currency) of cash (or equivalent) into or out of Australia, which can be done on forms available from the Border Force at airports and sea ports. The Border Force attempts to detect evasion of this requirement. Airlines are not liable for what their passengers carry. Cross-border movement of bearer negotiable instruments of any amount must also be reported if requested by a Border Force or police officer.

It's an offence under the Act for anyone to split a transaction into two or more parts with a dominant purpose of avoiding the reporting rules and thresholds.

Certain classes of transactions are exempt, or may be exempted on application. For example, established customers transacting amounts typical of their lawful business, such as for payroll, or retail or vending machine takings, etc. Motor vehicle traders are specifically not eligible for exemption, as are boats, farm machinery and aircraft traders.

Under the Freedom of Information Act 1982, any person can access records held by AUSTRAC, subject to certain exemptions.[10][11]

Reporting entities

Entities which are required to report transactions to AUSTRAC are called "reporting entities", which are specified in the AML/CTF Act. These entities deal in cash, bullion, cryptocurrencies and financial transactions, and include:

  • banks and similar financial institutions, such as building societies
  • corporations
  • insurance companies and intermediaries
  • securities dealers, such as stock brokers
  • unit trust managers and trustees (but cash management trusts transacting only by cheque or similar are exempt)
  • traveler's cheque or money order issuers
  • cash carriers and payroll preparation businesses
  • casinos
  • bookmakers, including totalisator agencies
  • bullion dealers
  • solicitors, acting on their own behalf (e.g., their trust fund, or originated mortgages)
  • Digital Currency exchange providers [12]

Identification

Reporting entities must identify their customers using the 100-point check system. Accounts may only be opened, but can only be operated (i.e., withdrawals made) by an identified customer; an unidentified customer is blocked from making withdrawals. Generally identification can be transferred from one account to another, so that for instance a person once identified does not need to produce documents again when opening a second account at the same institution.

For banks and similar reporting entities, identification requirements are determined by a risk-based approach, which may differ for each reporting entity.

It's an offence to open or operate an account with a reporting entity under an alias or false name, punishable by a fine or up to 2 years imprisonment.

Other agencies

The information that AUSTRAC collects is also available to a large number of government agencies, including:

Breaches

One prominent attempted evasion of the AUSTRAC rules took place ahead of the Dutch takeover of TNT (see TNT N.V.) in 1999. Simon Hannes was an executive at Macquarie Bank, which was advising TNT, and he bought about $90,000 of TNT call options under the name "Mark Booth" to profit when the bid was announced. He was convicted of insider trading but also of two offences under the Financial Transactions Reports Act since he had made multiple cash withdrawals and deposits each just under the $10,000 threshold, apparently to avoid that reporting. His sentence for those transactions was 4 months jail.[13][14]

In March 2017, AUSTRAC fined Tabcorp Holdings Limited $45 million for breaches of anti-money laundering and counter-terrorism financing laws. Tabcorp were found to have failed to make reports of suspicious behaviour on 108 occasions over more than five years. In the agreed facts put forward to the Federal Court by AUSTRAC and Tabcorp, Tabcorp directors were not made aware of any significant deficiencies in the company's AML/CTF program, until such matters were raised directly with Tabcorp by AUSTRAC, in 2014. [15][16]

On 3 August 2017, AUSTRAC took action against the Commonwealth Bank alleging that it did not report cash transactions over $10,000 within the required 10 business day period, or at all. The alleged breaches involved over 53,700 transactions over $10,000 through a type of ATM that allowed anonymous cash deposits up to $20,000.[9] In June 2018, the Commonwealth Bank agreed to pay a $700 million fine to settle the action, with CBA admitting to a host of breaches, including that millions of dollars were laundered through its ATMs by criminals including drug and firearms importers and that CBA failed to properly file more than 53,000 reports to Austrac over cash deposits of more than $10,000 in its ATMs. CBA also admitted that 149 “suspicious matter reports” were filed late, or not at all.[17]

In November 2019, AUSTRAC took action against Westpac alleging "systemic non-compliance" with AML/CTF 23 million times and covering $11 billion of transactions, involving the failure to properly vet thousands of transactions that could be linked to child exploitation and live child sex shows in the Philippines and other parts of south-east Asia.[18]

A Crown Resorts executive authorised the transfer of $500,000 to a drug trafficker and nightclub operator in January 2017, which was not reported to AUSTRAC for a year.[19]

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See also

References
  1. "2017-2018 AUSTRAC Annual Report" (PDF). Australian Transaction Reports and Analysis_Centre. 18 October 2018. Retrieved 12 June 2019.
  2. http://www.austrac.gov.au/about-us/austrac/ceo-and-executives
  3. "AUSTRAC at a glance". Archived from the original on 28 August 2016. Retrieved 25 November 2015.
  4. Financial Transaction Reports Act 1988, at ComLaw
  5. "Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth)".
  6. "Anti-Money Laundering and Counter-Terrorism Financing Bill 2006". parlinfo.aph.gov.au. Commonwealth of Australia. Retrieved 21 June 2015.
  7. Criminal Code Act 1995 (Cth) s 1.1, Criminal Code Act 1995 (Cth). Retrieved 20 January 2015.
  8. "Terrorism financing in Australia 2014". AUSTRAC. 2014. Retrieved 19 April 2015.
  9. Clancy Yeates (3 August 2017). "Austrac alleges CBA in 'serious' breach of money laundering act". The Age. Retrieved 19 August 2017.
  10. Freedom of Information Guidelines page at AUSTRAC web site
  11. Freedom of information Act 1982 (Cth) (Report).
  12. https://www.austrac.gov.au/business/industry-specific-guidance/digital-currency-exchange-providers
  13. Simon Hannes sentenced: two and a half years jail Archived 21 July 2005 at the Wayback Machine, press release by the Australian Securities and Investments Commission on 13 December 2002
  14. R v Hannes (2002), Supreme Court of New South Wales report, at AustLII
  15. "Tabcorp fined $45 million for breaching money laundering, terrorism financing laws".
  16. "CHAIRMAN'S ADDRESS AND MANAGING DIRECTOR AND CHIEF EXECUTIVE OFFICER'S ADDRESS" (PDF).
  17. The Age, 4 June 2018, CBA to pay record $700m to settle money-laundering case
  18. The Age, 20 November 2019, Westpac accused of 23 million breaches by money laundering watchdog
  19. Crown Resorts executive authorises transfer to drug trafficker
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