1.1.1. Monitoring Profiles
Over the reporting period 28 profiles were active, with four new monitoring profiles implemented by AUSTRAC’s Intelligence Division and many updates made to existing profiles. Reporting entities (REs) are legally required to provide AUSTRAC with transaction data, including the following:
- International Funds Transfer Instructions (IFTIs) – international transactions to or from Australia;
- Threshold Transaction Reports (TTRs) - any cash transaction over $10,000 limit;
- Cross Border Movement (CBMs) – reporting cash movement across the Australian border;
- Suspicious matter reports (SMRs) – bank generated reports that advise AUSTRAC of potentially criminal behaviour.
With more than 16,000 REs obliged to provide these reports, AUSTRAC received 167 million reports last financial year. AUSTRAC uses profiles to monitor these reports, estimating risk to the financial system and identifying entities (people or companies) of interest which trigger alerts when identified.
Monitoring profiles refer to an automated algorithm created by AUSTRAC data scientists to detect potentially criminal activity. These profiles are based on existing trends in money laundering, terrorism financing and organised crime transaction data. The transaction data feeds into the AUSTRAC system, and if the data meets the requirements of one of our profiles then an alert is generated.
Fintel Alliance operations provide great examples of monitoring profiles being effectively utilised for operational outcomes. During the reporting period the Fintel Alliance effectively used profiles to discover data which indicated criminal activity related to environmental crime, child sexual exploitation, scam activity, and fraud against the Commonwealth. The analysis resulting from the profile collection allowed for substantial law enforcement activity to take place both in Australia and overseas to prevent criminal offending and exploitation of the financial system.
AUSTRAC measures and monitors these profiles on a continual basis – making regular adjustments - to ensure they remain accurate, contemporary and efficient, by minimising false positives and staying ahead of changes in money laundering trends. Profiles are activated and deactivated in accordance with the strategic priorities of AUSTRAC and the rapidly changing nature of the criminal landscape. This enables AUSTRAC to make accurate intelligence assessments on new and emerging threats and to effectively work with law enforcement partners through the sharing of this intelligence.
Regulatory function use of profiles
AUSTRAC’s monitoring profiles also supported our regulatory work during the reporting
period, in particular:
- Profiles have supported the identification of non-compliance by REs, enabling remediation of issues following engagement by AUSTRAC with the RE. For example, during the reporting period, AUSTRAC assessed 1,592 monitoring alerts, in accordance with its standard procedure for assessing and responding to actual or potential non-compliance. As a result of this, AUSTRAC issued 35 warning letters to REs and escalated 22 matters for further assessment.
- The use of monitoring profiles also resulted in more than 260 REs being removed from the Reporting Entity Roll, therefore ensuring the integrity of the reporting roll. Maintenance of the reporting entity roll is a requirement of AUSTRAC under Part 3A of the Anti-Money Laundering and Counter- Terrorism Financing Act 2006 (AML/CTF Act), with all providers of designated services to be entered on the roll.
1.1.2. Actioning monitoring alerts
For the period of 2020-21, 72 per cent of Intelligence Division monitoring alerts were actioned - that is assessed and either referred to a partner agency or closed - by AUSTRAC. Divisional prioritisation around thematic activities and resourcing allocations determines which alerts are actively managed by the Intelligence Division.
Whenever there is a match on a monitoring profile, an alert is generated and referred to triage analysts within AUSTRAC. From that point our highly skilled analysts review the information in the alert to see if it is a false positive or genuine match. If the match is genuine, the triage analyst conducts preliminary research on the alert, before referring it to an operational team for detailed investigation. If the match is a false positive, the alert is closed. This process is otherwise known as actioning.
CASE STUDY: SERIOUS FINANCIAL CRIME TEAM
The Serious Financial Crime (SFC) team has alerts set across our monitoring profiles, which aim to identify suspicious activity that may be of interest to our partners. This includes members of the multi-agency Serious Financial Crime Taskforce (SFCT) and Black Economy Standing Taskforce (BEST). As a result of SMR triaging, AUSTRAC’s SFC team was alerted to suspicious activity connecting two previously unconnected high risk companies operating in the gold bullion sector.
Preliminary analysis identified a recurring, ongoing pattern of suspicious activity linked to the primary company, which was previously identified as being of interest to our law enforcement partners. Further analysis determined the recent link between the two companies accompanied a significant spike in the suspicious activity. The SFC deemed this to be of particular interest to our partners and proactively disseminated a Tactical Intelligence Report (TIR) to partner agencies, including ASIC and NSW Police Force. In response to the product, positive feedback was received from ASIC, who indicated the report identified previously unknown information and links.
This product was an example of the value of proactive work – identifying previously unidentified intelligence and connections, utilising AUSTRAC’s unique capabilities.
1.2 Increased information sharing.
1.2.1 Number of exchanges of financial intelligence, both incoming and outgoing, with AUSTRAC’s counterpart international financial intelligence units.
AUSTRAC increasingly provides financial intelligence to international partners.
AUSTRAC Corporate Plan 2020-24 p25; Portfolio Budget Statements 2020-21, Program 1.1. p197
During the reporting period, AUSTRAC undertook approximately 1,200 exchanges of financial intelligence, both incoming and outgoing, with our counterpart international financial intelligence units (FIUs).
While AUSTRAC has continued to share financial intelligence with partner FIUs, COVID-19 and the conclusion of an International Exchange Working Group in recent years has reduced the volume of incoming information received by AUSTRAC. Changes in the geopolitical environment, in particular a somewhat lessening of the focus on Islamic State of Iraq and the Levant (ISIL) foreign fighters and thus
a reduction on the reporting by AUSTRAC and other FIUs on this and related topics, have led to a decrease in the overall number of exchanges on those of last year (continuing a trend over the past few years). Noting the number of incoming exchanges is outside of AUSTRAC’s control, this decrease has driven this year’s result of Not Achieved. In developing performance measures for 2021-22, AUSTRAC has considered it not practicable to set a target for this measure given the limited control AUSTRAC has over the number of incoming exchanges initiated by our international counterparts (see AUSTRAC Corporate Plan 2021-25).
Over the past year AUSTRAC exchanges have remained largely consistent crime typewise, with money laundering, fraud, national security, drugs and corruption being regularly reported on.
For the purposes of this measure, an exchange is defined as the transfer of AUSTRAC information and/or intelligence to a partner FIU – and vice versa – through the Egmont secure sharing platform or other agreed mechanisms where the partner is not a user of the Egmont secure sharing platform. The information shared consists of raw data, value-added intelligence products, and joint projects.
AUSTRAC has an important role sharing financial-related information with domestic and international partners. AUSTRAC, as Australia’s FIU and financial crime specialist, frequently exchanges information with international partners to obtain a robust understanding of financial crime in Australia and offshore. A breakdown of financial intelligence exchanges by country can be found in Our year in review 2020-21.
Through the establishment and use of Memorandums of Understanding (MoUs) and the use of the Egmont Group of Financial Intelligence Units (Egmont Group), AUSTRAC actively engages in international exchanges of information and intelligence produced by AUSTRAC. This formal exchange function allows AUSTRAC to proactively share pertinent financial information to partner FIUs in a
secure manner. AUSTRAC may also receive information via this exchange process that is relevant to Australia and the work of its law enforcement and national security agencies.
MoUs formalise the terms of the relationships between AUSTRAC and the relevant partner agency and establish the framework for the exchange and handing of information. In order to facilitate exchanges, AUSTRAC makes extensive use of MoUs to build relationships with domestic and international partners across the public and private systems. As at the end of the reporting period, AUSTRAC had 102 active MOUs with international partners, up from 98 in 2019-20.