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2020-21 AT AUSTRAC

The past year has been one of transformation for AUSTRAC. Despite the challenges posed by the ongoing COVID-19 pandemic, AUSTRAC has leveraged the benefits of our dual function as Australia’s financial intelligence unit (FIU) and anti-money laundering and counter-terrorism financing (AML/CTF) regulator to evolve and ensure we are fit-for-purpose for the future whilst continuing to deliver positive outcomes in protecting the Australian community and securing Australia’s financial system.

Through this year, AUSTRAC has raised awareness of the harm money laundering poses to the community, disrupted serious and organised crime, supported our regulated population detect and counter criminal exploitation of the financial system, and contributed to significant multi-agency operations and task forces.

Response to COVID-19

Adapting to the challenges posed by the COVID-19 pandemic, including through recognising the benefits flexible work arrangements provide to our geographically diverse workforce, we have been able to continue to meet the expectations of the Australian community in safeguarding the financial system and deliver strong operational results. We strive to remain an employer of choice and against the backdrop of restrictions, stay-at-home orders and varying return-to-work stages across our offices, we have embedded flexible work arrangements within our workplace culture. Meeting the needs of our diverse workforce, we have provided employees with flexibility and balanced their wellbeing and productivity with innovation and collaboration benefits that face-to-face interactions in the office brings.

Unfortunately, the COVID-19 pandemic has brought out elements of society that try to take advantage of the range of support payments implemented by the Government. Working with a range of non-traditional partners such as Services Australia and the National Disability Insurance Agency, AUSTRAC information facilitated the identification and disruption of fraudulent claims and requests for assistance. Over the coming year, we will continue to support the Australian community, particularly those more vulnerable, during this time of hardship, supporting our partners in delivering payments to those that genuinely need them, whilst delivering guidance and support to our regulated population to ensure they continue to meet their AML/CTF obligations.

Fighting financial crime with domestic and international partners

AUSTRAC remains a trusted, reliable and valuable partner to law enforcement and National Intelligence Community agencies. Through our specialist advice and experience, we provide a unique perspective to law enforcement and national security operations. The cooperation, collaboration and commitment AUSTRAC has with industry, government and international partners has driven AUSTRAC’s operational outcomes this year. Through our collaborative efforts, AUSTRAC’s unique and valued intelligence and regulatory information has assisted our partners in combatting a large number of threats to the Australian and international community.

AUSTRAC provided unique, specialist, multi-disciplinary capabilities in support of Operation Ironside – the Australian component of a long-term, international, covert investigation into organised crime using encrypted communications, resulting in over 200 arrests and the seizure of more than 3 tonnes of drugs, 100 weapons and in excess of $44.9 million in cash at the time of reporting. In addition to AUSTRAC’s specialist expertise, industry and government partners within AUSTRAC’s public-private partnership, Fintel Alliance, provided unique real-time insights that assisted in the identification of a large value of assets that would otherwise have gone undetected.

Fintel Alliance continues to be the world class in protecting Australians and highlights the unique nature of AUSTRAC’s dual role as regulator and FIU. In 2020-21, Fintel Alliance demonstrated enhanced collaboration by acting as the lynchpin in a child sexual abuse investigation in the Philippines by identifying the flow of funds from Australian citizens to disrupt child sexual abuse occurring there. This contribution by Fintel Alliance was directly responsible for the rescue of victims of child sexual abuse.

We have continued solidifying our relationships with international partners despite challenges posed by travel restrictions. We have worked with our Pacific Island partners to provide them training and resources to improve their AML/CTF capabilities, and AUSTRAC received funding for the ongoing deployment of officers to Kuala Lumpur, Washington, London, and Guangzhou. We will continue building on the strong relationships with our global partners, particularly those in the Asia-Pacific and Five Eyes, to deliver positive strategic and operational outcomes for Australia.

Deterring non-compliance through successful regulatory and enforcement actions

The severe consequences facing businesses who fail to comply and appropriately manage their money laundering and terrorism risks were clearly demonstrated through AUSTRAC’s enforcement activities this year. Following Westpac’s admission of breaching the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act) on over 23 million occasions, the Federal Court of Australia ordered a civil penalty totalling $1.3 billion—the highest civil penalty in Australian history. The magnitude of the penalty illustrates the seriousness of the risks posed by criminal exploitation of Australians and Australian businesses, and the importance of regulated businesses serving as the first line of defence against criminal abuse of our financial system. It is imperative we engage with and ensure our Industry partners are in lockstep with, AUSTRAC’s fight against financial abuse.

In addition to the outcomes achieved through successful civil penalty proceedings in 2020-21, AUSTRAC drew upon various regulatory interventions and enforcement powers to address non-compliance and encourage the appropriate management of money laundering risks by our regulated population. We have also ensured our regulatory outreach and education programs foster a culture of understanding and voluntary compliance to reduce the need for us to utilise the regulatory and enforcement powers we have.

Whilst deterrence of non-compliance is required, we also understand the AML/CTF Act is complex and difficult to understand. This year we commenced our legislative reform program that seeks to strengthen and simplify Australia’s AML/CTF regulatory regime. These reforms make compliance obligations clearer, and help protect businesses and the community from the harms of money laundering, terrorism financing and other serious crimes.

Investing in uplifting our capabilities for improved regulatory outcomes

AUSTRAC has benefited from a $104.9 million injection of funding to strengthen our capacity to combat serious financial crime and to protect Australia’s financial system from criminal activities. We are using this funding to deliver a modern, industry reporting and engagement system and bolster our expert regulatory and enforcement staff to more proactively target and treat non-compliance amid the large and increasing numbers of reports submitted to the agency by industry.

The development of the new industry reporting system will result in AUSTRAC’s more than 16,000 reporting entities being able to more easily submit reports and comply with their AML/CTF obligations. The system is being developed in close consultation with our reporting entities as we ensure user needs are at the centre of the system design and build.

Looking ahead

The year ahead is an exciting one for AUSTRAC, as we continue the implementation of our capability uplift to support our industry partners in meeting their AML/CTF obligations, consider opportunities for further legislative reform to simplify the AML/CTF Act, and continue to provide our unique expertise to our private and public partners, both in Australia and overseas.

I am proud of the professionalism and resilience AUSTRAC staff have demonstrated during these uncertain and disruptive times, having remained committed to AUSTRAC’s mission and delivering such meaningful outcomes to protect Australia’s financial system.

Nicole Rose PSM
Chief Executive Officer