Good morning, everyone and thank you for the opportunity to speak today.
I would like to begin by acknowledging that we are meeting on the lands of the Wurundjeri and Bunurong people of the Kulin Nation. I pay my respects to their country, to Elders past and present, and to their enduring culture.
My name is Brendan Thomas, and I am the Chief Executive Officer of AUSTRAC, Australia’s anti money laundering and counter terrorism (AML/CTF) financing regulator and financial intelligence unit.
Some of you will remember that when I stood here last year, the message was a little blunt.
At the time, AUSTRAC had just completed a campaign examining AML/CTF controls across the non bank lending sector, and the findings were clear: controls were poor, reporting was low, and the sector needed to lift its game.
This year, I’m pleased to say the tone is different.
You have made improvements.
We’ve seen an uplift in suspicious matter reporting, and we’ve seen businesses taking their AML obligations more seriously.
That shift matters.
It protects your organisations, it protects your customers, and it protects the integrity of Australia’s financial system. It also tells us the message is landing and the effort is having an impact.
If you look at the data, that picture becomes clearer.
Across this sector, we’ve seen suspicious matter reporting increase to almost 9,500 to date this year from around 8,500 reports in the same period last year, an uplift of close to 12 per cent.
We’ve also seen more businesses reporting, with the number of reporting entities lodging SMRs increasing by more than 20 per cent
We’d still like to see more businesses reporting to us and many in the sector are not reporting at all.
Today, I want to build on that progress that the non bank lending sector has made by outlining three key things:
1. The evolving threat landscape
2. What AUSTRAC is doing – strategically and operationally – to respond
3. What this means for you as non bank lenders, and how we can work together
Let me start with the big picture.
Australia is facing increasingly sophisticated, professionalised money laundering networks - groups that buy criminal proceeds from other syndicates and move them through multiple channels, jurisdictions, and financial products.
One of the big challenges we see are organised money laundering networks that are moving money in and out of Australia and in and out of different payment channels.
These networks are agile, global, and technologically enabled.
They are no longer loosely connected groups of opportunistic criminals.
They operate with corporate like structures, dedicated logistics teams, and specialised financial facilitators.
Many of them maintain global footprints, with nodes in Southeast Asia, the Middle East, Europe, as well as in Australia.
Their operations are supported by encrypted communications platforms, professional accountants, and technology specialists who understand how to exploit gaps in financial systems.
The volume of illicit money in the Australian economy is rising sharply. Two drivers stand out, drugs and illicit tobacco:
• When it comes to illicit drugs – The Australian Criminal Intelligence Commission (or ACIC) data shows the value of the drug market has increased significantly, costing the economy and estimated $19 billion in the 2023-24 financial year.
• When we talk about Illicit tobacco – the ITEC commissioner estimates that it cost Australia more than $7 billion in lost tax revenue in 2024-25 and estimates that organised crime groups are earning $4–7 billion in profits per year. That’s a huge amount of dirty money that wasn’t illicit money being laundered previously… now it’s moving through our economy and funding other types of crime.
This shift has profound implications for financial institutions.
When the volume of illicit funds increases, criminals diversify the channels they use to move and disguise those funds.
They look for institutions with lighter controls, faster onboarding, or higher transaction flexibility.
Non bank lenders, by virtue of their business models, can inadvertently become attractive entry points.
The challenge is not simply the scale of illicit money, but the speed at which it now moves and the creativity with which it is disguised.
For example, we are also seeing a rise in insider enabled fraud.
Former employees, contractors, and individuals with inside knowledge are helping criminal groups bypass controls.
This is no longer a theoretical risk; it is happening in major institutions today.
Insider threats are particularly dangerous because they undermine even the strongest technical controls.
A single compromised employee can override system safeguards, manipulate onboarding processes, or approve fraudulent documentation.
We’ve seen cases where insiders provided criminals with detailed knowledge of transaction monitoring thresholds, enabling them to structure activity just below detection levels.
This is why cultural integrity, staff vetting, and ongoing behavioural monitoring are becoming as important as traditional AML controls.
The criminal ecosystem is fragmenting - instead of one group controlling the whole operation, roles are now split across specialised players.
Drug syndicates outsource laundering. Fraud groups outsource mule recruitment. And dedicated money laundering networks operate as service providers.
Where a drug organisation once handled its own proceeds, it now focuses on selling drugs and hands off the laundering to specialists.
When we look to trends that are happening now - AI is accelerating both the scale and speed of financial crime:
• Synthetic identities
• AI generated identity documents
• Automated movement of digital currency
• AI driven fraud operations
We are now seeing AI tools capable of generating entire identity ecosystems – passports, payslips, bank statements, and employment histories – within minutes.
These synthetic identities are increasingly difficult to distinguish from legitimate ones, especially when paired with deepfake audio or video used to pass remote verification checks.
Criminals are also deploying AI driven bots that monitor exchange rates, transaction fees, and blockchain congestion to optimise the movement of illicit funds in real time.
Criminals are using AI to move money faster than humans can detect it.
But the good news is: we’re deploying AI too.
AI is transforming the fight against financial crime.
AUSTRAC is using AI and large language models to:
• Analyse suspicious matter reports
• Detect patterns at scale
• Identify emerging typologies
• Provide faster feedback to industry and referrals to law enforcement
Financial institutions are using AI to:
• Detect behavioural anomalies
• Identify scams in real time
• Close accounts at scale
• Intervene before transactions occur
The smarter use of AI will enable us to intervene in potential criminal transactions much faster and at a larger scale.
This technology in increasingly being used globally in AML programs to identify anomalies in behaviour. Helping stop fraud in real time, identifying online child abuse as it happens.
These subtle patterns can reveal when an account is being controlled by someone other than the legitimate customer, or when a victim is being coached by a scammer.
Combined with AI driven anomaly detection, these tools offer a powerful new layer of protection.
This is the future – and it’s arriving quickly.
Many of you will have seen reporting on a significant mortgage fraud issue identified within the lending sector.
At a high level, CBA detected irregularities in their mortgage applications and shared that intelligence through the Fintel Alliance. When tested more broadly with nine of the other largest lenders, it pointed to a wider exposure across parts of the market.
What we’re seeing is not a single scheme or network, but recurring patterns of behaviour - where the lending system is being misused through false or misleading information.
The underlying drivers are still being worked through, but early indications suggest this is primarily a fraud issue, rather than a clear or consistent picture of organised financial crime. So we are seeing legitimate referral channels being used to commit fraud. Where controls may be weak because of historical trusted relationships and client volume.
What is clear is this:
• This is not isolated to one institution.
• It reflects vulnerabilities in how information is verified.
• Traditional controls are being tested in new ways.
Importantly, this issue is distinct from broader work on criminal use of real estate. The behaviour we are seeing here is centred on access to credit, rather than the movement of illicit funds.
This matters for you because:
• The same risks can exist beyond the major banks.
• Exposure is driven by system design, not just bad actors.
• Strong verification and ongoing monitoring remain critical.
We are continuing to work with our partners to better understand the issue, clarify responsibilities, and identify where further action may be required.
Another trend we are seeing is micro money laundering which involves small, frequent transactions across multiple businesses designed to evade detection.
These patterns are almost invisible at the individual level, but when we analyse them in bulk through Fintel Alliance, they become clear.
This is exactly why data sharing matters.
Moving from crime to new regulatory responsibilities.
From 31 March, changes to AML/CTF laws took effect and made some important changes to the AML regime in Australia.
These include:
• updated risk assessment requirements, that place risk at the heart of the scheme
• a revised AML/CTF program structure
• mandatory chief money laundering officer roles, now a statutory role
• stronger expectations around governance and oversight.
We expect boards and senior executives to be able to articulate their organisation’s money laundering risks, not just its compliance obligations.
This means understanding how your products can be misused, how your distribution channels create exposure, and how your customer base intersects with known criminal typologies. It means properly understanding the risks your business is exposed to and matching your controls to those risks.
It also means ensuring your AML/CTF program is not a static document but a living framework that evolves with your risk environment.
It means ensuring that the Chief Money Laundering Officer has the right experience, the right resources and the right level of influence to perform their job.
It means boards and senior executive properly assuring themselves that their programs are dong what they expect them to do and being fully across their risks.
There is power in partnerships.
And one of the most successful public private partnerships we have is the Fintel Alliance.
In the last year the Fintel Alliance has done many things, including:
• uncovered widespread mortgage fraud across the banking sector
• identified micro money laundering networks
• helped locate and extradite a Vietnamese fugitive
• identified paedophiles in Australia and overseas and worked with law enforcement to help catch them
• built shared data sets that reveal risks no single institution can see.
Without the alliance we wouldn’t be able to understand those risks.
By combining financial data from banks, industry and government through Fintel Alliance, we can often provide actionable leads for law enforcement that support community safety on the ground.
We are now exploring how to expand Fintel Alliance to include more non bank lenders and tranche 2 entities. You will hear more about this over the coming year.
Let me close with this.
Last year, the message was tough because it needed to be. This year, the message is different: you have improved, and it matters.
But the threats are evolving faster than ever:
• AI enabled fraud
• Global laundering networks
• Insider threats
• Micro money laundering
• Professionalised criminal ecosystems
Your sector, non bank lending, is now firmly in the sights of these networks.
The good news is that we are better equipped than ever before.
Through stronger regulation, cooperative compliance, smarter technology, and deeper public private partnerships, we can protect Australia’s financial system together.
Thank you for your commitment, your collaboration, and your continued efforts to strengthen financial integrity.