AUSTRAC’s role in the fight against financial crime
To help combat the growth of money laundering over the past several decades, Australia created a dedicated government department, the Australian Transaction Reports and Analysis Centre. This centre, opened in 1989, is commonly referred to as AUSTRAC and is located in Sydney. It primarily focuses on preventing organised crime, money laundering, terrorist financing, and welfare fraud.
Almost all Australian financial institutions and organisations that handle large sums of money are legally required to report certain transactions to the government. AUSTRAC processes and investigates these reports, as well as keeps tabs on certain clients and accounts. If a transaction involves an amount over A$10,000 or the equivalent in foreign currency, the financial institution handling the transaction must immediately file a report to AUSTRAC. Additionally, if international funds are transferred in or out of Australia, or if a transaction simply appears to be suspicious, financial institutions must also file a report regarding these transactions. If the financial institution fails to file a report on a transaction that turns out to be related to financial crime, either directly or indirectly, the institution can face extensive legal repercussions, including fines, and officers can face jail time.
Certain AUSTRAC regulations must be followed by individuals as well as institutions. For instance, if a person is bringing A$10,000 or more in or out of Australia, they must declare these funds to AUSTRAC and file explanatory paperwork. If AUSTRAC finds that a person or multiple people are purposefully splitting up transactions in order to avoid filing reports and paperwork, it can impose extensive legal penalties upon violators. But it is important to note that not all funds must be reported, and that there are certain specific exceptions. An example of one exception would be a well-known businessman transferring funds pertaining to his company in a manner that is normal for his account.
Banks are not the only financial entities that must abide by AUSTRAC’s regulations. Corporations, casinos, insurance companies, money order firms, and bookmakers are all required to do so as well. All of these financial institutions must follow a certain system when creating accounts for new customers in order to prevent financial crime. Proper identification must always be obtained before transactions are carried out, and KYC protocols should be completed as well. If, at any time, it is suspected that a client is not who she or he claims to be, the institution must immediately file a report and start diligently monitoring the customer’s account. Lying about your identity when opening an account with a financial institution is a federal offense in Australia with penalties of up to 2 years in prison.