Thanks you very much for the opportunity to speak with you this morning. Id like to acknowledge that we are here on the lands of the Gadigal people and I pay my respects to their country, elders and their heritage. 

AUSTRAC has a dual remit. We are Australia’s anti-money laundering and counter-terrorism financing regulator as well as Australia’s financial intelligence unit. Our regulatory and intelligence functions work hand in glove in safeguarding the Australian community and the economy. AUSTRAC collaborates with its partners by providing intelligence to support efforts to disrupt national security threats and criminal exploitation of Australia’s financial system.

Our aim is to deter, detect and disrupt financial crime. This helps to ensure we have a secure financial system; businesses that can operate on a crime-free level playing field and make it harder for criminals to keep funding and profiting off crime. I want to talk to you this morning about how we turn financial data into actionable intelligence, about how we are extending that through partnerships with the private sector and a little about how we are working with regional partners on multinational intelligence. 

But first I want to paint a picture for you of the extent of the problem we are facing. Transnational crime is increasingly complex and global in nature. The volume of crime associated with money laundering activities is enormously significant. Serious and organised crime is costing Australia more than $68 billion every year. Global estimates put the figure at more than $2 trillion that’s up to 5% of global GDP.  

In Australian if we just look at one type of crime, The value of domestic illicit drug market, its worth at least $12.5 billion dollars per year. Think about that, all that money is illicit, there’s not a penny of legitimate money there, therefore all of it is laundered every year through the Australian economy. That’s only one type of crime. We estimate tax fraud to range from between $1.8 and $6.3 billion a year, more than $2 billion in scam proceeds. I’m sure your all now familiar with the problem we are facing in Australian of illicit tobacco sales, we know there has been a up to 40% reduction in tobacco excise in the last decade which means that possibly something close to half the smoking population is now spending their money illegally. These aren’t local retailers just making a quick buck, they are international criminal syndicates that our intelligences shows us are involved in international narcotics and drugs trade and all kinds of human violence. 

This is a significant volume of illicit funds that then need to be laundered through our financial system, every single year. Every dollar laundered is a dollar reinvested in harm—harm to individuals, families, communities, and businesses. 

We’re not just dealing with crime networks anymore—we’re facing distinct money laundering organisations, that is organisations that just exist to launder money. They compete for contracts, probe our defences, and exploit any regulatory gaps they can find. They are specialist money launderers with every trick up their sleeves who bid against each other for work and look for holes in our financial controls so they can launder through them.  

This is a major threat to financial systems and to our national security, they aren’t always just criminal groups either, there are state actors in there for good measure. Australia’s geographical location means we are exposed to a number of threats, risks of exposure to the significant profits being driven out of industrial scale scam centres, illegal casinos and narcotics trafficking in South East Asia, the proceeds of corruptions from countries in the pacific and the increasing threat of narcotics trafficking through the pacific to Australia, all linked through regionally based organised crime and money laundering groups. The challenge is significant. 

AUSTRAC intelligence plays a critical role protecting our community and our economy. As Australia’s Money Laundering Regulator, we regulate over 19000 businesses and as financial intelligence unit, we collect hundreds of millions of points of data each year from the thousands of entities we regulate. Our financial intelligence analysts use that information to identify transactions linked to the most significant threats against Australia’s national security, and crimes including money laundering, terrorism financing, organised crime, child exploitation and tax evasion. 

Our financial intelligence makes a significant contribution to the national intelligence picture and supports investigations by our government partners at the federal and state levels. This includes active participation with national and multi-jurisdictional law enforcement, security and revenue protection task forces, and as a member of the National Intelligence Community. 

I’ll give you an example of where we’ve leveraged our intelligence capabilities to trace behaviour across entities involved in the illicit tobacco trade. AUSTRAC is part of the Illicit Tobacco Taskforce – we work with a number of other law enforcement agencies like the Australian Border Force and the Australian Federal Police, to track and disrupt the trade in illegal tobacco, which as I mentioned and we all know is a significant problem in Australia.

This trade has sparked a violent tussle, the so called ‘tobacco wars’ which have erupted between crime groups trying to control the trade. 

We are working to disrupt this harmful business. Our National Operations team was recently exploring an onshore syndicate identified as being involved in the importation, distribution and sale of illicit tobacco. AUSTRAC analysts began by interrogating data and information held within our databases. This data consisted of suspicious matter reports, transaction threshold reports and international funds transfer instruction reports.

Collectively, the reports told a story that revealed connections to organised crime, offshore suppliers, onshore distributors, points of sale, and storage locations. These reports allowed us to develop a financial ‘pattern of life’ that is the detail behind the criminal business model that funds its trade and allows profits to be distributed and moved offshore. We used that to inform operational taskforce members and enable operational activity.

An operation was then planned based on the intelligence we provided. A search warrant was executed and more than 1.5 million illegal cigarettes were seized. This resulted in a significant disruption to the criminal network.

In another example, AUSTRAC’s financial intelligence has fed into a nationwide law enforcement operation that led to the identification of 90 scam victims and money mules, in this case money laundering through cryptocurrency Automatic Teller Machines also known as crypto ATMs. These ATMs can typically be found in convenience stores, petrol stations, vape shops and laundromats, these ATMs offered easy access to cryptocurrency, often with minimal identity verification. The ability to convert physical cash into digital currency and send it overseas within minutes, without meaningful oversight, made these kiosks ideal for illicit financial flows, including drug trafficking, scams and weapons purchases.

I established a Cryptocurrency Taskforce to focus on better understanding and controlling the risks of digital currencies. We used my legal powers to gain detailed transaction information from across these businesses. Intelligence Analysts from the Taskforce examined the profiles of the most prolific crypto ATM users in each state, based on the value of their transactions, and identified dozens of cases linked to scams or fraud. The findings are staggering. There is clear evidence of these machines being the channel for major international scams and money mule activity, with more than one in ten transactions being illicit. 

The Taskforce referred the cases to relevant law enforcement agencies across federal, state and territory police and led to a joint operation focused on protecting Australians from illicit crypto ATM activity.

As a result of these referrals, police contacted 90 individuals and identified the majority as scam victims or money mules who had been coerced into moving dirty money through crypto ATMs.  

Disturbingly our law enforcement partners found that almost all of the transactions we referred involved victims rather than criminals. We came across a woman in her 70s who had deposited more than $430,000 into crypto ATMs after falling victim to romance and investment scams. Tragically, she has no way of recovering that life changing amount of money.

Sadly, she’s not the only one. The taskforce identified another woman in her 70s who was conned after seeing what she thought was a legitimate advertisement about a trading firm offering a sizeable return on investment. She lost over $200,000.

Worse still, we have seen scammers coercing victims into becoming money mules. They convince people to launder funds in exchange for false promises to return lost money. We’ve seen $300,000 in life savings vanish, only to have the victim unknowingly launder money for the same criminals who scammed them.

We’ve also seen just as recently as last month, New Zealand announcing a nationwide ban on crypto ATMs. As a result of the work of the Taskforce and AUSTRACs financial intelligence, we recently implemented stricter regulations on crypto ATM operators in Australia.

I want to share one last example with you on how intelligence produced by professionals such as yourselves can have real and lasting impacts. AUSTRAC in conjunction with the Australian Federal Police worked with the financial sector to shut down more than 500 Australian bank, financial services and digital currency accounts linked to offshore organised criminals sexually extorting Australian teenagers.

As part of the AFP-led Operation Huntsman, AUSTRAC contributed financial intelligence to help the AFP to target Australian-based, sextortion bank accounts, which are sending money from distressed victims to offshore syndicates.

In layman’s terms, sextortion involves the coercion of child victims into sending sexualised images and payments to offenders online through the offender pretending to be another young person.

Criminals offshore, pretending to be teenagers, are connecting with Australians online and asking for naked images and videos.

Once some images are shared, predators are demanding victims pay to keep them from being shared publicly or with family or friends.

Operation Huntsman led to disruptive action against more than 100 people operating over 500 Australian bank accounts involved in moving money to the offshore criminals.

AFP intelligence, covert online operatives and AUSTRAC are targeting criminals in Australia and offshore to ensure they face a hostile online environment, taking away their ability to move money offshore often gained through targeting and exploiting Australian children.

AUSTRAC is also part the AFP-led Criminal Assets Confiscation Taskforce, or CACT which brings together AFP, AUSTRAC, the Australian Criminal Intelligence Commission and Australian Taxation Office to deprive persons and criminal groups of the proceeds, instruments and benefits of their offending. The CACT has successfully restrained homes and assets, including furniture, appliances from criminals who have been selling and, or producing online child abuse materials. This is a powerful way financial intelligence is helping law enforcement identify assets, freeze funds and break criminal business models.

In AUSTRAC we are also seeing the fantastic potential of partnering with the private sector in developing financial intelligence. AUSTRAC is home to the Fintel Alliance, a world leading public-private partnership, which brings together experts from a range of financial organisations involved in the fight against money laundering, terrorism financing and other serious crime.

Let me tell you a little about how it works. It’s overseen by a board co-chaired by AUSTRAC and the banking sector. Its staff are co led by an AUSTRAC Director and a Director employed with us from the ANZ Bank. Over 30 Analysts from financial institutions work with AUSTRAC intelligence staff together in AUSTRAC premises jointly looking at financial data, and insight. They work on specific targets, they examine areas of vulnerability and provide intel directly to law enforcement or operational advice back to financial institutions. Through our Fintel Alliance, we partner with major banks, remittance service providers, gambling operators, digital currency exchanges as well as law enforcement and government agencies to identify and disrupt emerging and serious threats.

A great example of its work, last year AUSTRAC Intelligence began looking in detail at money mules accounts, these are false bank accounts criminals use to launder illicit money. We had identified a problem with foreign students, when they had finished their Australian studies, selling their bank accounts to organised crime before returning to their original country. A legitimate student account has suddenly turned into a money mule account. Through analysing transaction data the intelligence analysts at the Fintel Alliance were able to determine the indicators that show when a student account has turned into a mule account. With this insight we published a financial crime guide on this, and the banks were able to build those patterns into transaction monitoring programs that pick this behaviour up quickly much more quickly and be able to intervene before much harm is done. Last year they closed more than 14000 of those accounts.

We have recently supercharged that partnership with more staff and tech to harness the power of large data sets to get better financial intelligence. With the private sector we have established what we call the Collaborative Analytics Hub. We started this great level of collaboration last year when we held a dedicated week of action. Fintel Alliance partners from Australia’s four largest banks worked together with AUSTRAC and the AFP to combine data on cash deposit transactions under the $10,000 reporting limit. They used the new Collaborative Analytics Hub which enabled them to share their data and analyse it on one common platform, more than 56 million data points.

In just a week, AUSTRAC intelligence analysts, analysts from the banks, and analysts from the AFP interrogated that data and uncovered money laundering networks and methods that were not visible to any one organisation on their own. Using the combined data sets and new software, we were able to see things that were just not visible before. We identified criminal networks now subject to law enforcement action and weaknesses in the financial system that we can fix. It also highlighted some new money laundering methodologies. This shows the power of intelligence, partnerships and collective effort.

Following on from this, we held another Week of Action last month, once again bringing together intelligence analysts from AUSTRAC, the big four banks and other members of our Fintel Alliance to analyse high risk cash patterns across various sectors, as well as to highlight criminal ‘cluster’ zones for potential referral and assessment by our law enforcement partners.            

Fintel Alliance also recently launched a campaign on ‘scambling’, a practice where unlicensed online gambling platforms advertise on social media and trick people to visit a scam website to participate in gambling.

Regional and remote Aboriginal communities are being targeted in this scam and Fintel Alliance is working with police, banks and other industry partners to raise awareness of ’scambling’, to minimise harm to vulnerable Australians.

Through Fintel Alliance, AUSTRAC is facilitating stronger partnerships above and beyond its intelligence-gathering powers and these partnerships have resulted in tangible outcomes that AUSTRAC will produce on a larger, more dedicated scale.

AUSTRAC’s intelligence capability is also deeply integrated with and enabled by our international partnerships. Through our international work, our partnerships and our small network of outposted staff we coordinate our activities to target financial crime networks that threaten Australia, help bolster our national security and improve the capability of our neighbours in the pacific and South East Asia to help reduce the threat to us in Australia.

Our international work is enabled by overseas-posted staff, international networks and our strong presence in regional and international forums such as the Financial Action Task Force, the Egmont Group of FIUs and the Asia Pacific Group on Money Laundering.

AUSTRAC delivers international programs to financial intelligence units and other AML/CTF authorities about threats in the Pacific and South East Asia regions. Our programs improve regional capacity to detect, combat and disrupt rising serious financial crime and national security.

We deliver tailored activities including training staff, workshops, forums and exchange programs. We also partner with financial intelligence units on IT systems upgrades and typologies development. In fact we developed and have provide the IT system used by all financial intelligence Units throughout the Pacific

I’d like to share with you a successful initiative we coordinate within our Pacific Financial Intelligence Community, called Multilateral Intelligence Projects, or ‘MIPs’.

MIPs are joint analytical exercises where AUSTRAC financial intelligence analysts work with peers from two or more Pacific financial intelligence units to share information, conduct joint analysis and develop intelligence reports with actionable leads for partner agencies.

In addition to building analytical capability within the Pacific and contributing towards operational outcomes, the MIPs also provide an opportunity to strengthen AUSTRAC’s international intelligence partnerships.

Our 2023 MIP focused on transnational corruption, which combined the priorities of the South East Asian and Pacific regions, with Malaysia and Solomon Islands joining Australia for an analyst exchange. During this MIP, analysts from AUSTRAC worked side by side with analysts from regional financial intelligence units to detect and map illicit activity in the region.

Combing the expertise and resources of multiple financial intelligence units significantly enhanced our ability to trace the funds flows across the region, filling each unit’s visibility gaps. Their investigations uncovered corporate malfeasance and a kickback scheme in a regional company.

As a result, the analysts produced a joint intelligence report which was shared with law enforcement agencies and intelligence partners across the region.

Last year we conducted further MIPs across pacific countries and we are currently conducting our second on for 2025. The outcomes are incredibly strong, leading to law enforcement action and building cohesion across our neighbours.

Conclusion

Money Laundering and Illicit finance are significant problems not only driving Australian crime but undermining our national security and our regional stability. AUSTRAC is uniquely placed to use data and insight from our financial system to understand this crime and develop actionable intelligence to combat it. That intelligence isn’t just leading to arrests but to changes in the financial system itself.

We are showing the power of partnering with the private sector on sharing data, building cohesive capacity, sharing insight and developing joint products. The potential is incredible and the results we are seeing are showing how we can use that power to combat serious crime. Further our partnerships with our regional neighbours not only strengthen them but further protect us from regional serious crime threats and better protect our economy.

We all have a part to play in using our specialist intelligence skills and abilities to have real impact and to fight financial crime.