The objective of the audit was to assess the effectiveness of the Australian Transaction Reports and Analysis Centre's (AUSTRAC) arrangements for processing financial intelligence, to assist domestic partner agencies and international counterparts in their operations and investigations.

Summary

Introduction

1. The Australian Transaction Reports and Analysis Centre (AUSTRAC) is Australia's anti-money laundering and counter-terrorism financing (AML/CTF) regulator and specialist financial intelligence unit (FIU). Through these two functions, the agency seeks to promote an environment that is hostile to money laundering, the financing of terrorism, major crime and tax evasion. In 2013–14, the budgeted expenses for each function are $29.6 million and $31.5 million respectively.1

2. AUSTRAC was established in 1989 under the Financial Transaction Reports Act 1988 (FTR Act)2 as a statutory authority within the Attorney‑General’s portfolio and its role was significantly expanded by the Anti‑Money Laundering and Counter‑Terrorism Financing Act 2006 (AML/CTF Act).3

3. Through its regulatory role, AUSTRAC oversees compliance with the requirements of the FTR Act and the AML/CTF Act across four industry sectors: banks and other lenders; non-bank financial service providers; gambling and bullion service providers; and money service businesses. A key requirement is that regulated entities4 provide AUSTRAC with specified financial transaction reports (FTRs).5 FTRs are required for all cash transactions of $10 000 or more, all international funds transfers, cross border movements of physical currency ($10 000 or more, or foreign currency equivalent), and bearer negotiable instruments (of any value) as well as suspicious activity by clients. A cost recovery regime applies to AUSTRAC’s regulatory functions6 and has been the subject of comment by the financial services industry.7 AUSTRAC considers however that reporting entities also obtain a benefit through being regulated.8 Complying with the requirements of the AML/CTF Act reduces the risk that a reporting entity will be used for money laundering or terrorism financing purposes.

4. In its role as a specialist FIU, AUSTRAC collates and assesses the FTRs provided by regulated entities and disseminates the resulting financial intelligence to its 39 domestic partner agencies (outlined in Appendix 3) to assist them in their investigations. AUSTRAC’s partner agencies include Australian Government law enforcement, national security, border security, revenue, regulatory and human service agencies, as well as state and territory law enforcement and revenue agencies.9 Arrangements with partner agencies are governed by Memoranda of Understanding (MOU). AUSTRAC’s cost recovery regime does not apply to the costs associated with the administration of its functions as an FIU.10

5. AUSTRAC also has relationships with international FIU counterparts. As a member of the Egmont Group11, AUSTRAC exchanges financial intelligence information with 65 international counterparts, with whom it has formal exchange agreements in place.

6. AUSTRAC’s operating environment is dynamic, shaped by changes in domestic policies and international standards, industry expectations, the introduction of new products and technologies and the emergence of new criminal threats and methodologies. These changes have increased the number of international funds transfer instructions, which has subsequently driven the growth in the number of FTRs in AUSTRAC’s data holdings. From 2007–08 to 2011–12, there has been an approximate 230 per cent increase in the total number of FTRs provided by regulated entities, from 18 million to over 59 million reports.12 AUSTRAC retains FTRs for lengthy periods and as at the end of February 2013, the agency held approximately 254 million FTRs.

7. In October 2012, AUSTRAC announced a reduction in staffing of 31 positions and the AUSTRAC CEO reviewed the Executive structure of the agency and reorganised the roles and responsibilities and reporting arrangements for some executives. AUSTRAC is now divided into two Divisions: Operations and Corporate. The Intelligence Branch, which is responsible for monitoring and analysing FTR data, producing intelligence products, and working with both domestic partner agencies and international counterpart FIUs, comes under the purview of the Operations Division.

Process for assessing FTRs and disseminating financial intelligence

8. Nearly all FTRs are transmitted electronically into AUSTRAC’s Transaction Reports Analysis and Query (TRAQ) database by regulated entities. As of 30 June 2012, AUSTRAC reported that 3266 authorised personnel of AUSTRAC’s domestic partner agencies had online access to the TRAQ database through the TRAQ Enquiry System (TES)13, with differing levels of access to this raw data, depending on their operational needs.

9. In addition to providing online access to FTR data, AUSTRAC’s Intelligence Branch also analyses, evaluates and disseminates suspicious matter reports14 to partner agencies and produces more complex financial intelligence reports. These reports are based on its assessment of the data included in FTRs, and incorporate other information and analysis undertaken by AUSTRAC on specific targets and patterns of transactions.15 The preparation of a financial intelligence report can be triggered through a number of mechanisms. These include detections by AUSTRAC’s automated monitoring system (TargIT)16 and specific requests from partner agencies that may relate to an ongoing investigation. AUSTRAC also proactively disseminates financial intelligence that it considers may be relevant to a partner agency’s areas of interest, as well as information from other AUSTRAC business units and international FIUs.17

10. On the basis of AUSTRAC statistics, the number of financial intelligence reports produced by AUSTRAC has remained stable in the past five years, while disseminations have modestly increased.18 Since 2008–09, AUSTRAC has, on average, received 43 191 Suspicious Matter Reports19, and disseminated 54 113 of these reports annually. In each of the past five years, AUSTRAC has also, on average, produced 945 more complex individual financial intelligence products and disseminated 1374 intelligence products to both domestic partner agencies and international counterparts.20

Reported impact of disseminated intelligence

11. The impact of AUSTRAC’s financial intelligence on partner agency operations can be difficult to quantify, particularly for law enforcement agencies where investigations can take many years, and intelligence is gained from many sources. However, the Australian Taxation Office (ATO) and the Department of Human Services (DHS)-Centrelink report on the use and value of AUSTRAC’s financial intelligence to their agencies’ own operations and investigations. For example, in 2011–12 it has been reported that AUSTRAC’s financial intelligence had been used by the ATO in 3745 cases, resulting in an additional $252 million in revenue from tax assessments. Similarly, DHS-Centrelink reported using AUSTRAC intelligence in 973 cases and achieving total annualised savings of $3.1 million.21

IT database upgrade—Enhanced Analytical Capability

12. On 1 July 2010, AUSTRAC embarked on a change program to its intelligence systems. A total of $24 million has been provided to AUSTRAC over four years, including capital funding of $17.5 million for the Enhanced Analytical Capability project. This new capability is intended to provide more effective monitoring and detection of changes in financial activity, enabling more targeted and timely analysis to be produced.22

Audit objective and criteria

13. The objective of the audit was to assess the effectiveness of AUSTRAC’s arrangements for processing financial intelligence, to assist domestic partner agencies and international counterparts in their operations and investigations. The audit assessed whether AUSTRAC had:

  • established effective administrative arrangements to support the financial intelligence function;
  • established appropriate arrangements to analyse and disseminate financial intelligence, and obtain assurance as to the appropriate handling of financial intelligence by partner agencies and international counterparts; and
  • developed and applied sound processes for monitoring and reviewing the feedback provided by partner agencies as to the use and value of the intelligence disseminated.

14. The audit focused on the arrangements around the assessment of FTRs and dissemination of financial intelligence reports by AUSTRAC’s Intelligence Branch. Other activities relating to the financial intelligence function, such as AUSTRAC’s International Technical Assistance and Training team, and a detailed examination of the FIU’s current IT systems and databases were outside the scope of this audit.

Overall conclusion

15. AUSTRAC plays an important part in the fight against organised crime and in protecting the integrity of Australia’s financial environment. Its financial intelligence is intended to contribute to the operations of its partner agencies in combating money laundering, the financing of terrorism and other forms of serious and organised crimes. These crimes can range from tax and welfare fraud, drug related crimes, to threats to national security, including people smuggling.

16. AUSTRAC’s financial intelligence is highly valued by partner agencies for its contribution to their operations and management of risks.23 Through its systems, AUSTRAC provides partner agencies with near real-time access to financial transactions data, and is uniquely positioned to prepare financial intelligence based on its analysis of this data.

17. While AUSTRAC’s financial intelligence is highly valued both domestically and internationally, its effectiveness in terms of countering money laundering and the financing of terrorism and other forms of serious and organised crime is not readily quantifiable. Data on the impact of AUSTRAC’s financial intelligence on the operations of law enforcement agencies is limited. However, the ATO and DHS–Centrelink have reported using AUSTRAC’s financial intelligence in more than 2700 cases in 2011–12, resulting in savings of more than $255 million.

18. AUSTRAC has well established and sound arrangements for processing and disseminating its financial intelligence. AUSTRAC regularly seeks the advice of its partner agencies as to their priorities for financial intelligence, and is continually refining its approach to analysing and disseminating its intelligence to meet their requirements. The agency has mature arrangements to process assessments, and disseminate financial intelligence reports to domestic partner agencies and international counterparts. A sound quality assurance mechanism is also in place for all financial intelligence reports. However, there is room to strengthen the administration of the financial intelligence function. In particular, improvements could be made to: the arrangements for monitoring access to, and further dissemination of, AUSTRAC’s data by partner agency personnel; workload management; and performance reporting. In addition, attention needs to be given to the long–term contingency management of the agency’s IT infrastructure (data centre). In this regard, the Government announced as part of the 2013–14 Budget that it will invest $16.1 million over four years to establish a new off‑site data centre.

19. AUSTRAC has in place MOUs with each of its partner agencies, and exchange agreements with international counterparts which clearly set out respective obligations for all parties in respect of the exchange of financial intelligence. Appropriately, the MOUs set out arrangements in respect to AUSTRAC and partner agencies’ obligations in safeguarding AUSTRAC’s financial intelligence. At present, assurance as to partner agency compliance in this regard is provided by way of a letter from the partner agency to AUSTRAC. These arrangements would be enhanced by AUSTRAC exercising its right to periodically review access to, and further dissemination of, AUSTRAC’s data by partner agency personnel.

20. With over 59 million FTRs being provided annually, AUSTRAC is faced with the challenge of maintaining assessment throughput and prioritising key assessment types. A workload queue (backlog) developed for two key financial intelligence assessment types, and agreed processing times were not being met.24 Management reporting did not provide adequate visibility as to the extent, and reasons for the development of the workload queues or for performance against agreed processing times. AUSTRAC has advised that its Enhanced Analytics Capability Project is intended to improve administrative arrangements including internal reporting.

21. AUSTRAC has arrangements to monitor and review feedback provided by partner agencies about the intelligence it disseminates. However, these arrangements are not yielding useful management information because of the low rates of feedback being returned by partner agencies. Reviewing its approach to gathering structured feedback from partner agencies would assist AUSTRAC to better report the use and value of its financial intelligence.

22. In addition, AUSTRAC’s approach to measuring and reporting its performance provides only limited insight into whether it is meeting the objectives of the FIU and the impact of the program overall. Reviewing the performance indicators and setting appropriate targets would provide greater assurance and transparency to its public reporting.

23. The ANAO has made three recommendations that are directed towards improving AUSTRAC’s arrangements for processing financial intelligence to assist domestic partner agencies and international counterparts in their operations and investigations. The recommendations relate to: strengthening administrative arrangements in relation to periodically reviewing access to, and dissemination of, AUSTRAC financial intelligence; improving management of the assessment of financial intelligence; and providing greater assurance and transparency to AUSTRAC’s public reporting of performance against program deliverables and key performance indicators.

Key findings by Chapter

Administrative Arrangements (Chapter 2)

24. The roles, responsibilities and accountability arrangements within AUSTRAC’s Intelligence Branch are well defined. The ANAO’s review of the Intelligence Branch business plans and risk reporting shows that, with one exception, risks indicated in the plans align with the agency’s identified corporate risks. AUSTRAC’s corporate risk plans appropriately identify a key agency-wide risk relating to the impact of a potential failure of the agency’s IT infrastructure (data centre). However, this risk is not apparent in the Intelligence Branch’s business and risk planning and reporting framework.

25. Given the dependency of the Branch on the IT systems infrastructure to deliver financial intelligence to its partner agencies, AUSTRAC’s arrangements to manage this risk should be appropriately reflected in its operational planning framework. Other risks relating to changes in resourcing or the priorities of partner agencies that could affect the acceptance of AUSTRAC’s financial intelligence disseminations were also not included in the Intelligence Branch risk planning.

26. The ANAO examined AUSTRAC’s MOUs with seven of its key domestic partner agencies. The MOUs provide a broad and generally comprehensive framework for the exchange of financial intelligence between AUSTRAC and its partners. Breaches have, however, occurred in the past where partner agencies have detected inappropriate use of AUSTRAC data by their employees. To date, AUSTRAC has not exercised the right to view the required audit log of AUSTRAC information that has been disseminated to other agencies, or requested an audit of online access to AUSTRAC information by partner agency officials. AUSTRAC advised that the MOUs are in the process of being reviewed to maintain their currency. In light of the current review, there would be benefit in the accountability clause which addresses the arrangements to periodically review access to, and further dissemination of, AUSTRAC’s data by partner agency personnel, being subject to closer scrutiny, given the sensitivity of the information.

27. Similarly, the accountability clauses in AUSTRAC’s international exchange agreements are based on a standard format and seek to provide a framework to protect financial information disclosed to overseas counterparts. The 10 international exchange agreements that the ANAO examined did not contain a specific clause requiring the reporting of breaches to the agreement. AUSTRAC advised that the exchange agreement template now includes specific clauses that relate to the reporting of known unauthorised disclosures and consequences.

Processing of assessments and disseminations (Chapter 3)

28. In 2011–12, AUSTRAC produced 847 financial intelligence reports on matters of interest to partner agencies and disseminated 1513 financial intelligence products to them for further investigation.25 These reports incorporate AUSTRAC information and include analysis undertaken by the agency on specific targets and patterns of transactions, money laundering and terrorism financing typologies, and strategic assessments.26 The ANAO examined the workload management and quality assurance mechanisms in place for the six types of financial intelligence assessments that include: TargIT (AUSTRAC’s automated monitoring system) assessments; suspicious matters and suspect transaction reports (SMRs/SUSTRs); international exchange of information; partner agency requests; strategic intelligence reports; and data mining. The ANAO observed that there are appropriate arrangements to process assessments, and disseminate these reports. In addition, a sound quality assurance mechanism is adopted for all financial intelligence reports. Various delegations are in place to review reports prior to dissemination for accuracy and consistency. However, workload management could be improved.

29. The increase in FTRs obtained from reporting entities, as well as the level of in-depth analysis and risk assessment that needs to be applied across these reports has affected workloads for both TargIT assessments and SMRs/SUSTRs. Although there is continuous risk assessment of FTRs, and precedence is given to reports that are of a higher priority, backlogs increased, particularly for SMRs/SUSTRs. AUSTRAC did not have the capacity to assess all reports that related to specified key risks (business rules).27

30. Agreed processing times were not met for TargIT and SMR/SUSTRs assessments in 2011–12. Internal monitoring and reporting to management in relation to the financial intelligence workload have not been consistent. For example, the TargIT workload is monitored by the TargIT team. However, there is no consistent, structured reporting to management of the actual workload, unassessed hits on hand (including the significance or priority), and its effect, if any, to operations. As with the workload queues, internal reporting to management on processing times could be improved.

31. There has been varied management reporting on the processing times for the assessment and dissemination of relevant financial intelligence. Processing times are defined for requested and proactive TargIT assessments, with requested disseminations to be processed within 10–15 working days, and proactive disseminations within 10–30 working days. However, there is no documented, consistent internal reporting as to how long the TargIT assessments are taking to process against these timeframes. Management reporting focuses on the number of actual disseminations, presented as a percentage of the planned disseminations. By contrast, performance against the processing target for SMRs/SUSTRs was reported to management but the reasons why the processing target are not being met were not documented.28 To assist management in making informed decisions about resourcing or reconsidering the agreed timeframes—it would be beneficial to formally document the reasons why processing targets are not being met.

32. AUSTRAC advised that the Enhanced Analytics Capability Project is intended to enhance the database interface, refine business rules (for SMRs/SUSTRs) or clauses (for TargIT assessments) and improve other administrative arrangements including internal reporting.

Feedback, Performance Measurement and Reporting (Chapter 4)

33. Feedback from partner agencies is important in gauging the impact of AUSTRAC’s financial intelligence, particularly with regards to the use and value of the intelligence AUSTRAC disseminates. AUSTRAC employs a number of methodologies for engaging with partner agencies to identify their needs and requirements. Arrangements are in place to obtain feedback from agencies about the specific contribution of AUSTRAC’s financial intelligence to their operations and investigations. These arrangements included acknowledgement receipts and feedback forms on individual disseminations and more general quarterly feedback reports on the usefulness of AUSTRAC information. For the period 2011–12, the return rate of acknowledgement receipts and feedback forms was 16 per cent, with only 242 acknowledgement receipts and feedback forms returned by domestic partner agencies for 1513 intelligence disseminations. Some AUSTRAC officers and partner agencies advised that they saw little value in the forms, and AUSTRAC’s analysis of those forms that were returned was poor.

34. For the period 2011–12, the ANAO analysis showed that a total of only eight quarterly feedback reports were provided to AUSTRAC by its 39 partner agencies. While all eight reports provided positive feedback, the majority (five) were of an operational nature, detailing the specific outcomes of individual assessments. Only three reports, all from the ATO29, provided the more general statistical and qualitative feedback expected from the quarterly reporting process. AUSTRAC advised the ANAO that, from July 2012, other feedback mechanisms such as a new domestic request form, a single feedback form, and the ‘reason for access’ function replaced the quarterly feedback reports.30

35. The ANAO consulted with seven of AUSTRAC’s key domestic partner agencies31 regarding AUSTRAC’s relationship management, financial intelligence products and support. The responses that the ANAO received were overwhelmingly positive. AUSTRAC is viewed as a key support to its partner agencies, and is able to give near real-time information or updates on national security issues, and provide intelligence products that are unique. Partner agencies advised that, internationally, AUSTRAC is a highly regarded FIU.

36. Only three of the seven partner agencies that the ANAO consulted (ATO, DHS–Centrelink and Customs and Border Protection) have sought to quantify the use and value of AUSTRAC’s financial intelligence to their own agency’s operations or investigations. The ATO and DHS–Centrelink have reported using AUSTRAC’s financial intelligence in more than 2700 cases in 2011–12, resulting in savings of more than $255 million. In 2012, Customs and Border Protection started quantifying the number of cases (or agency investigations) that are linked to AUSTRAC financial intelligence. Other agencies, particularly the law enforcement partner agencies, such as the Australian Federal Police, Victoria Police and the Australian Crime Commission consider that they could not immediately ascertain if an AUSTRAC financial intelligence report or assessment contributed to, or was the catalyst for, an investigation resulting in a prosecution, as it could take months, if not years, for these matters to be resolved.32

37. AUSTRAC’s program deliverables and key performance indicators (KPIs), as set out in its Portfolio Budget Statements (PBS), have changed over time to reflect the priorities, and the challenges, of the FIU. The ANAO assessed AUSTRAC’s reporting of its performance in the Annual Report against the FIU deliverables and KPIs.

38. AUSTRAC’s program deliverables adequately capture the FIU’s major activities. AUSTRAC has also developed three KPIs that are intended to enable the measurement and assessment of the achievement of FIU’s program objective in support of its respective outcomes. Collectively, while the three KPIs were relevant to the FIU program objective, they only addressed two of the four specified activities.33 Consequently, the activities relating to ‘identifying emerging money laundering and terrorism financing trends’ and ‘providing partner agencies access to, and support in the use of, AUSTRAC databases’ are not addressed in the KPI framework.

39. In addition, the performance targets for the FIU’s KPIs were not included in AUSTRAC’s PBS, and only disclosed when reporting performance in its Annual Reports. It is generally accepted better practice that targets be included in the PBS to provide transparency and accountability, particularly to assist in Parliamentary scrutiny. AUSTRAC advised that it is planning to review the FIU’s KPIs. In conducting this review, it would also be appropriate for AUSTRAC to focus its KPIs on the impact of its FIU program by aligning the indicators with the program objective, and setting appropriate performance targets.

Summary of agency response

40. The full proposed report was provided to AUSTRAC for comment. The agency’s full response to the audit is at Appendix 1. Its summary response is as follows:

AUSTRAC welcomes the ANAO audit report on the administration of the agency’s financial intelligence function. The report notes the unique contribution which AUSTRAC’s financial intelligence makes to our domestic and international partners in combating money laundering, terrorism financing and other serious crime. Further, the report notes that the agency has mature arrangements to process assessments and to disseminate financial intelligence reports to domestic partner agencies and international counterparts, and that there is a sound quality assurance mechanism in place for its financial intelligence reports.

Having said this, the report also finds that there is room for AUSTRAC to strengthen the administration of its financial intelligence function. The recommended actions contained in the report provide valuable guidance on further measures to enhance the agency’s governance and operational procedures. AUSTRAC agrees with the report’s recommendations and notes the following:

  • In the 2013-14 budget, the Government announced funding of $16.1 million over four years for AUSTRAC to establish a new off-site primary data centre. Commissioning of the new data centre will occur during the 2013-14 financial year and it is expected to be fully operational by 30 June 2014. The new data centre will greatly enhance the security and resilience of AUSTRAC’s critical data assets.
  • AUSTRAC’s work program for 2013-14 includes the review and re‑negotiation of MOUs with its domestic partner agencies. Updated MOUs, combined with the introduction of enhanced audit and security measures under the agency’s new Enhanced Analytical Capability (EAC) system, will significantly improve the overall framework for protecting AUSTRAC information and monitoring the use of that intelligence by partner agency personnel.
  • AUSTRAC is to conduct a review of selected partner agencies’ records relating to the further dissemination of AUSTRAC information by those agencies.
  • The new EAC system will provide more sophisticated tools for managing and analysing the large data volumes which AUSTRAC receives. Limitations in AUSTRAC’s existing ‘legacy’ analytical systems have constrained its ability to process growing data volumes and meet increasing demands for more sophisticated intelligence products. EAC will also give AUSTRAC the capability to establish new performance targets for monitoring, and reporting on, the processing of data and generation of intelligence assessments.
  • To reflect the recent bringing together in one business division of the agency’s intelligence, compliance and supervision functions, AUSTRAC is to review its standard operating procedures (SOPs). This review will take into consideration observations regarding these SOPs made by the ANAO in its report.
  • AUSTRAC will conduct a client survey to gather partner agency feedback on the use, value, quality and relevance of its financial intelligence.
  • AUSTRAC is currently undertaking a review of the key performance indicators and targets for both its intelligence and regulatory functions. A particular focus of this review will be the development of performance indicators which reflect the intelligence contribution AUSTRAC provides to its domestic and international partners.

Recommendations

Recommendation No.1

Paragraph 2.55

To gain assurance that obligations to safeguard AUSTRAC’s financial intelligence are being met, the ANAO recommends that AUSTRAC reviews the accountability clauses in its agreements with partner agencies, and takes steps to exercise its rights to periodically review access to, and further disseminations of, AUSTRAC data by partner agency personnel.

AUSTRAC response: Agreed

Recommendation No. 2

Paragraph 3.60

To improve the assessment of financial intelligence, the ANAO recommends that AUSTRAC:

  • establishes, and monitors performance against, processing time targets for requested financial intelligence reports; and
  • monitors and reports on processing backlogs for key financial intelligence assessment types, with a particular focus on drawing management attention to delays in assessing higher priority financial transaction reports.

AUSTRAC response: Agreed

Recommendation No.3

Paragraph 4.41

To provide greater assurance and transparency in public reporting, the ANAO recommends that AUSTRAC:

  • reviews its approach to gathering structured feedback from partner agencies and considers alternatives for measuring the use, value, quality and relevance of AUSTRAC’s financial intelligence; and
  • develops appropriate key performance indicators and targets to measure whether the objectives of the FIU program are being met and regularly report against these.

AUSTRAC response: Agreed

Footnotes

[1] Attorney-General’s Portfolio Budget Statements 2013–14, p. 250.

[2] The agency was established as the Cash Transaction Reports Agency, and was changed to its present name in 1992.

[3] Both Acts were extended and amended through the Combating the Financing of People Smuggling and Other Measures Act 2011.

[4] ‘Regulated entities’ is a term used by AUSTRAC to refer to both ‘reporting entities’ (as defined in section 5 of the AML/CTF Act) and ‘cash dealers’ (as defined in section 3 of the FTR Act), as entities may have obligations under both Acts.

[5] The report types are summarised in Appendix 2.

[6] The AUSTRAC regulatory cost recovery model was announced as part of the 2010 Budget. Three separate pieces of legislation were introduced and passed by the Parliament enabling cost recovery from the 2011–12 financial year: AUSTRAC’s Supervisory Cost Recovery Levy Act 2011; AUSTRAC Supervisory Cost Recovery Levy (Collection) Act 2011; and AUSTRAC’s Supervisory Cost Recovery Levy (Consequential Amendments) Act 2011.

[7] Australian Financial Markets Association Ltd. Annual Report 2011, p. 5.

[8] AUSTRAC, Cost Recovery Impact Statement (January 2012), for the reporting period 1 July 2011 to 30 June 2012.

[9] AUSTRAC Annual Report 2011–12, p. 12.

[10] ibid.

[11] The Egmont Group was established in 1995 by a group of FIUs that met at the Egmont Arenberg Palace in Brussels, to set-up an informal group for international co-operation. Now known as the Egmont Group of FIUs, they meet regularly to find ways to cooperate in the areas of information exchange, training and the sharing of expertise. The Egmont Group has a current membership of 131 FIUs.

[12] Over this period, for example, the number of reported international funds transfer instructions grew from under 15 million to over 53 million.

[13] During 2011–12, authorised personnel logged on to TES on 183 741 occasions and conducted 1 996 116 searches. AUSTRAC Annual Report 2011–12, p. 60.

[14] Suspicious matter reports were introduced in December 2008 and, for most entities, SMRs have replaced suspicious transaction reports (SUSTRs), which are submitted by entities regulated under the FTR Act.

[15] ibid, p. 66.

[16] TargIT is a rules based system that uses ‘clauses’ (financial profiles) to identify particular types of suspicious financial activity. A TargIT clause can be triggered by names, bank account details or other identifying fields.

[17] ibid.

[18] Disseminations reported in any given year may include financial intelligence reports that were produced in previous years.

[19] Suspicious Matter Reports are reports submitted by a reporting entity when it forms a reasonable suspicion that a financial transaction relates to an offence, tax evasion or the proceeds of crime.

[20] AUSTRAC usually disseminates more reports than it produces each year, as individual reports may be disseminated to more than one partner agency.

[21] In 2011–12, AUSTRAC reported that another 305 significant investigations were reportedly undertaken by AUSTRAC’s other law enforcement, human services and revenue partner agencies.

[22] Budget Paper 2 2010–11, p. 315.

[23] Feedback from seven of AUSTRAC’s key domestic partner agencies regarding AUSTRAC’s relationship management, financial intelligence products and support was overwhelmingly positive. The seven partner agencies consulted by the ANAO were: the Australian Crime Commission; Australian Federal Police; Australian Taxation Office; Australian Security Intelligence Organisation; Customs and Border Protection; Department of Human Services–Centrelink and the Victoria Police.

[24] For example, the TargIT workload queue (backlog) grew from 130 unassessed detections from the monitoring system in February 2011 and reached its peak in August 2011 when 16 461detections were yet to be assessed. Similarly, in 2011–12, there were 9214 SMRs/SUSTRs unassessed.

[25] AUSTRAC Annual Report 2011–12, p. 66.

[26] ibid.

[27] AUSTRAC advised that there are ongoing refinements and measures employed by the agency and partner agencies to mitigate the risk of not assessing high value SMRs and SUSTRs. Designated partner agencies also have access to SMRs/SUSTRs.

[28] From June 2011 to January 2013, only 57.7 per cent of SMRs/SUSTRs, on average, were processed within five working days, against a target of 90 per cent. However, management reporting did not include the reasons for failure to meet this target.

[29] In 2011–12, the ATO provided three of their own Austracking newsletters to AUSTRAC, in place of the quarterly feedback reports. These newsletters detail the use and value of AUSTRAC financial intelligence to the ATO.

[30] AUSTRAC advised that the main purpose of the new ‘domestic request form’ is to provide a structured template for partner agencies to make a formal request for AUSTRAC analysis, and to provide all the information that AUSTRAC requires to conduct such analysis (including a general overview of the case, such as the crime type) and the agency point of contact details. The ‘single feedback form’ is used to gather information on the quality of the written intelligence products produced by AUSTRAC analysts. It is also a mechanism by which AUSTRAC receives information on partner agency investigations that have been supported by AUSTRAC, including any charges or convictions obtained. The ‘reason for access’ function is intended to provide a better ability to monitor and audit searches conducted by users of the AUSTRAC database.

[31] The seven partner agencies were: the Australian Crime Commission; Australian Federal Police; Australian Taxation Office; Australian Security Intelligence Organisation; Customs and Border Protection; Department of Human Services–Centrelink and the Victoria Police.

[32] AUSTRAC advised that while law enforcement agencies find it difficult to quantify operational matters which involve AUSTRAC information, they have provided examples for publication, in the yearly Typologies and Case Studies on how AUSTRAC information ‘fed into successful operations’.

[33] The activities that were covered by the KPIs were: ’identifying, monitoring and assessing financial transaction reporting to support partner agency and AUSTRAC regulatory priorities and interests’ and contributing to international efforts directed at AML/CTF, including the international exchange of information with counterpart financial intelligence units and capacity building assistance for financial intelligence units in Africa, the Asia-Pacific region and elsewhere’.