Australia - Threat Assessment - 2021 1 of 57 Australia - �

“Don’t worry about the world coming to an end today. It’s already tomorrow in Australia” - Charles M Schulz

Section 1 - Executive Summary ...... Page 3

Section 2 - Country Information ...... Page 4

Section 3 - Country Ratings ...... Page 5

Section 4 - FCN Country Ratings ...... Page 7

Section 5 - Key Harms Summary ...... Page 8

Section 6 - Key Threats & Threats in More Detail ...... Page 9

Section 7 - Sanctions & Embargoes ...... Page 31

Section 8 - Terrorism & Terrorism Finance ...... Page 32

Section 9 - Money Laundering ...... Page 37

Section 10 - Response ...... Page 43

Section 11 - Detailed FATF Results ...... Page 50

Section 12 - Remittance Data ...... Page 51

Appendix 1- Threat Types Risk Ratings ...... Page 52

Appendix 2- Sources ...... Page 53

Endnotes ...... Page 54

This Global Threat Assessment for Australia 2021 is produced and published by Financial Crime News and all rights are reserved including copyright with Metriqa Limited. This GTA should not be used for commercial purposes without obtaining frst a licence or express permission from the publisher. Authors & Contributors are John Cusack, Ursula M’Crystal, Hannah Cusack & Sophie Giles.

Australia - Threat Assessment - 2021 2 of 57 Fraud: Fraud is thought to cost the Australian Australia � economy around AUS$6.3 billion per annum.3 The most common fraud types identifed are Section 1 - Executive Summary revenue and tax evasion, superannuation fraud, card and fnancial transaction fraud. Grey Lists: Australia is not listed by the US as a Country of Primary Concern in respect of ML & Slavery: US Traffcking in Persons4 Tier 1; FC, and is not listed by FATF, and the EU on Global Slavery Index: Low incidence of their “Grey” lists. 0.6-1000 and government response of “BBB.”

NRA: Australia has not published a National Sanctions & Terrorism: No Sanctions against Risk Assessment since 2011. It identifed the the country. Tier 1 (Higher Threat) PPI Index key predicate offences in Australia as “fraud, rating with a good controls score of 966/1,300. drug traffcking, tax evasion, people smuggling, Australia is ranked 74/138 and scored “Low” at theft, arms traffcking and corrupt practices”. 1 It 2.148/10,000 in the Global Terrorism Index. also suggested that the process of money Tax Evasion: The latest estimates produced by laundering is intrinsically an international the Australian Taxation Offce (ATO)5 suggest crime, with illicit funds being moved from that the tax gap in Australia is AUS$31 billion. It Australia to other nations. is estimated that 7% of overall tax revenue is Corruption: In Transparency International’s not collected by the ATO. 2019 CPI Australia ranked 11/198 with an Response & Resilience: Australia’s MER was overall score of 77/100. This was a rise in rank published in 2015, with a follow up report in from 12/198 in the previous year. 2018. Based on a simple scoring model Organised Crime: The Organised Crime in developed by FCN, Australia is rated at 65% Australia report (2017) by the Australian for technical compliance and 52% for Criminal Intelligence Commission2 identifed effectiveness. Taking key areas only, scores are serious and organised crime in Australia to be 37% and 42% respectively. “destructive, pervasive and complex.” It Overall Ratings: Australia is rated overall estimated that serious and organised crime “Moderate” Risk, scoring 52/100 for fnancial costs AUS$36 billion a year. crime by FCN. The trend is currently rated as Drug Traffcking: Based on wastewater “Neutral”. Threats are rated as “Moderate” at analysis, AUS$11.3 billion was spent on drugs 54/100 and Responses rated “Moderate” at in Australia during the year ending August 50/100. 2019. The drugs noted as most prevalent are methyl-amphetamine, cocaine, MDMA and FCN Rating: 52/100 Moderate Risk heroin. The cannabis market is also signifcant. Trend: Neutral

Australia - Threat Assessment - 2021 3 of 57 Section 2 - Country Information - �

People & Geography: Australia is made up of top exported goods were ores (35.9%), fve distinct areas or territories; Western mineral fuels (25.7%), gems and precious Australia, the Northern Territories, Queensland, metals (7.7%), meat (4.1%), inorganic South Australia, Victoria, and New South Wales chemicals (2%) and machinery (1.7%). The - in which the capital Canberra is. It has a biggest buyers of Australian goods are China population of 25.36 million, the majority of (43%), Japan (9%), the US (6.2%), South Korea whom live in urban areas such as Canberra, (6.2%), the UK (4.9%), India (3.4%), and New Sydney, and Melbourne. Australia boasts a Zealand (3.3%). Imports in 2019 to the value of wide range of bio-diversity with deserts, AUS$ 334,279 for refned petroleum, cars, rainforests, snow-capped mountains and crude petroleum, broadcasting equipment, highly fertile grass lands. First Australians lived delivery trucks with the biggest partners being on the continent for around 65,000 years China 25%, United States 12%, Japan 7%, before western colonisation, which began in Germany 5%, Thailand 5%7. the early 17th Century. It was claimed for Great Crime: Australia was 18th out of 128 in a Britain as a colony in 1770. ranking of the Worlds Safest countries8, which Recent History & Leadership: Whilst Australia is relatively high for the Asia Pacifc region. An has been independent of the United Kingdom estimated 4.7% (939,200 people) of the since 1901, it was not until 1983 that the Australian population experienced crime in Australia Act was passed, making Australian 2019-20.9 467,800 people experienced Law fully independent of the British parliament physical assault, 492,900 experienced face-to- and legal system. In 1999 a referendum to face threatened assault, and 238,100 make Australia a republic was defeated. The households experienced a break-in. The majority of governments in Australia have number of people in Australia experiencing tended to be elected for multiple terms, assault has been trending downwards for the testifying to general contentment. First last decade. Australian's remain marginalised, making up Finance: In recent decades, Australia has 28% of prisoners in Australia, whilst accounting become an internationally competitive, for 3.3% of the population. advanced market economy due in large part to Economy & Trade: Australia has the 5th economic reforms adopted in the 1980s and largest economy in the Asia Pacifc region with its location in one of the fastest growing a GDP of US$1.397 Trillion (2019) and regions of the world economy10. Australia is a government revenues of AUS$513.7 billion. major regional and global fnancial centre, and The Australian economy is dominated by the is one of the IMF’s 29 systematically important service sector; generating 62.7% of GDP and fnancial centres.11 In Australia12 99.5% of employing 78.8% of the labour force. people (over 15) have bank accounts, 59.7% Agriculture and resources contribute 3% and have a credit card, with internet users making 10% to GDP respectively. Australia has the payments online at 75.6%. Remittances global record for uninterrupted global growth inbound in 2017 were approx US$I.941 million with the March 2017 fnancial quarter marking (0.14% of GDP) according to the World Bank.13 26 years since the country had a technical For more details on remittances see Section 12 recession. Australia shipped A$404.562 billion below. worth of goods around the world in 2020.6 Its

Australia - Threat Assessment - 2021 4 of 57 3. Country Ratings & Country Risk Heat Map - �

Available information from leading sources produce almost 50 ratings for Australia, covering both threats and responses in fghting fnancial crime, sanctions, proliferation fnance and terrorism & terrorism fnance.

No. Threats Australia � No. Responses Australia �

1 GDP - Economic Size * Large Sized Advanced Economy 1 OECD - Global Forum * Compliant GDP per Capita US$1.3 trillion (1.01% Global GDP) on Transparency & Exchange Info for Tax Purposes

2 World Economic Forum * 89.8 (2019 - 18/141) 2 Global Slavery Index * BBB Security (OC, Terrorism, Homicides, Policing) (76.9/99.2/99/84.2) Country Response Rating (ratings from AAA, AA, A, BBB)

3 World Economic Forum * 76.9 (2019) 3 US Dept of State * Tier 1 Organised Crime (24/141) Traffcking in Persons

4 Numbeo Crime Survey 2020 41.36/100 4 Proliferation Index - PPI * 966/ 1300 72/133 (1 being the worst) Controls Good Controls score

5 US Inst Health Metrics and Evaluation 2018 469,432 (2017 - +38% since 1990) 5 Global Cybersecurity Index 0.89 Illegal Drug Dependency / Disorders * 2.23% (2017 - +0.1% since 1990) 2018 10/175 Number/Share

6 Transparency International (TI) Corruption 77/ 100 6 World Bank Regulatory Quality * 1.87 Perceptions Index* from WB Global Governance Indicators

7 TRACE 15/100 7 TI - Exporting Corruption * Moderate Bribery Risk Matrix Ranked 12th out of 194 Enforcement of the OECD Anti-Bribery Convention

8 Proliferation Index - PPI Tier 1 8 Freedom House 97/100 Threat * Highest Threat Level Freedom Index (2020) “free”

9 US Dept of State Not Included 9 Heritage Foundation 82.4/100 INCSR Vol I & Vol II * Economic Freedom Index (2020) “Free” 3rd out of 180

10 US Dept of State Included 10 Basel AML Index 3.84/10 Country Reports on Terrorism * 2020 124/141 (1 being the worst)

11 Global Slavery Index 0.6/1,000 11 FIU Egmont Member Interpol / Europol Egmont & Interpol GSI Incidence * Incidence of human traffcking Member

12 Global Slavery Index 15,000 12 Asset Confscations * Estimated below 1% No of estimated Modern Day Slaves Estimated numbers of modern day slaves over 1% of Criminal Proceeds

13 US Dept of Labor Not Included 13 Country National Risk Assessment * 2011 Child Labour

14 Global Terrorism Index * “Low” Impact 14 Financial Information Sharing Partnership Austrac Fintel Alliance GTI - Impact 2020 2.148

15 IOM Migration E - 598.8 thousand / I - 7.7 million 15 Environment Performance Index 21/180 2020 Score 74.12

16 Illegal Unreported and Unregulated (IUU) - 1.91/5 16 Government Spending on Law & Order * 1.81% of GDP (2019) IUU Fishing Index * 139/152

17 EU Listing of Countries for Illegal Fishing No 17 Know Your Country 69.78/100 Country Money Laundering Index 122/245 (1 being the best)

18 US DoS - Wildlife Traffcking * Not Included 18 European Union * Not Included Focus / Countries of Concern Third Country Grey List

19 EUIPO & OECD Counterfeit Goods * 0.125% 19 FATF Standards 65% Propensity of Exports 40 Recommendations*

20 UNODC Thefts 2,460 20 FATF Standards 52% Per 100,000 people * 11 IO’s on Effectiveness*

21 EU List of None Co operative Jurisdictions Not Includec 21 FATF Standards 37% for Tax purposes Core 10 Recommendations *

22 Global Financial Integrity Advanced Country 22 FATF Standards 42% Illicit Financial Flows* Core 4 IO’s on Effectiveness *

23 Fund For Peace 19.70 23 FATF Counter - Measures * No Fragile States Index Strategic Defciencies List

* Indicates the information is included in the FCN Country Index

Australia - Threat Assessment - 2021 5 of 57 Section 3 Continued - Threats & Responses Rating Scorecard

The Country Dashboard RAG ratings are established based on the FCN Threats and Responses Rating Scorecard - 2021, set out below.

Threats Responses

No Higher Moderate Lower No Lower Moderate Higher

1 >US0.5 trillion >US$100 billion - 0.5 trillion

2 <50 >50 - <75 >75 2 “CC” “C” “D” “CCC” “AAA” “AA” “A” “BBB” “BB” “B”

3 <50 >50 - <75 >75 3 Tier 3 Tier 2 & T2 Watchlist Tier 1

4 >60 >40 - 60 <40 4 T3 <360 Controls / 1,300 T3 >360-425 Controls /1,300 T3 >426 Controls / 1,300 T2 <426 Controls /1,300 T2 >426-650 Controls /1,300 T2 >650 Controls /1,300 T1 Country <650/1,300 T1 650-975/1,300 T1 >975/1,300

5 >1% >0.75% - 1% <0.75% 5 <0.33 >0.33- 0.66 >0.66

6 <40 40 - 59 60 - 100 6 <0 - -2.5 0-1 >1 -2.5

7 >55 38 - 55 <38 7 Little of No Enforcement Limited/Moderate Enforcement Active Emforcement

8 Tier 1 Tier 2 Tier 3 8 <40 Between 40 - 70 >70

9 Included N/A Not Included 9 O - 59.9 Mostly Unfree/ 60 - 69.9 Moderately Free 70 - 100 MostlyFree/Free Repressed

10 Included N/A Not Included 10 >7 6 - 7 <6

11 >5% >2% - 5% <2% 11 No N/A Yes

12 >1 million >50,000 - 1 million 1% - 5% of est criminal >5% of est criminal proceeds proceeds

13 >10% child labour (4-15 >5% - 10% child labour (4-15 <5% child labour (4-15 ages) 13 No Yes >3 Years Old Yes <3 Years Old ages) ages)

14 >4 -10 >2 -4/10 0-2/10 14 No N/A Yes

15 >US0.5 trillion >US$100 billion - 0.5 trillion 60

16 >2.4 2 - 2.4 <2 16 < 1.5% of GDP >1.5% - 2% of GDP over 2% of GDP

17 Yes Red Card Yes Yellow Card No 17 <50 50-70 >70

18 Focus Countries N/A Not Included 18 Included N/A Not Included

19 >0.3 >0.2 - 0.3 <0.2 19 <50 using FCN Scoring Model Between 50 - 75 using FCN >75 using FCN Scoring Model Scoring Model

20 >1,500 >783 - 1,500 <783 20 <50 using FCN Scoring Model Between 50 - 75 using FCN >75 using FCN Scoring Model Scoring Model

21 Listed Red Listed Amber Listed Green / Unlisted 21 <50 using FCN Scoring Model Between 50 - 75 using FCN >75 using FCN Scoring Model Scoring Model

22 Above 20% of Trade Between 10 - 20% of Trade Below 10% of Trade 22 <50 using FCN Scoring Model Between 50 - 75 using FCN >75 using FCN Scoring Model (with 36 Advanced (with 36 Advanced (with 36 Advanced Economies) OR Scoring Model Economies) OR Economies) OR 1 of 36 Advanced Economies 1 of 36 Advanced Economies 1 of 36 Advanced Economies

23 >80 - 120 >60 - 80 <60 23 No N/A Yes

* Indicates the information is included in the FCN Country Index

FCN Scoring Model

Risk Score Risk Rating Risk Score Risk Rating Risk Score Risk Rating Risk Score Risk Rating Risk Score Risk Rating

High Moderate Moderate Threat Low Moderate High Threat 20 - 39 Threat Moderate Threat Low Threat 1 - 19 Low Response Low Moderate 40 - 59 Response 60 - 79 Moderate High 80 - 100 High Response High Risk Response Moderate Risk Response Low Risk Moderate High Risk Low Moderate Risk

Australia - Threat Assessment - 2021 6 of 57 4. Financial Crime News (FCN) Country Ratings - �

From all the available information collected and results summarised in Section 3 above, 20 plus ratings have been selected, covering a broad base of threats and responses in fghting fnancial crime, sanctions, proliferation fnance and terrorism & terrorism fnance. The results make up the FCN Country Threat / Response & Overall Risk scores for Australia.

FCN Final Ratings - Australia �

Financial Crime News 54/100 Financial Crime News “Moderate” Risk - 52/100 Threat Rating “Moderate” Threat Financial Crime Rating

Financial Crime News 50/100 Trend Neutral Response Rating “Moderate” Response

Australia - Threat Assessment - 2021 7 of 57 Section 5 - Key Harms Summary - �

The harms that result from the realised threats • Child abuse and exploitation is increasing faced by Australia from crime, ML, proliferation in Australia, with statistics suggesting a fnance and terrorism remain substantial, and child is abused somewhere in the country warrant a substantive continued response. every 15 minutes.

These harms (see Section 6 for details) include • Reports suggest that there are an estimated 15,000 victims of modern slavery • 4.7% of Australian’s experiencing crimes crimes in Australia, however this fgure is against the person every year.14 considered conservative. • 8.4% of households experienced some • It is estimated that 10% of timber imports kind of property theft, including 54,400 into Australia come from high-risk sources reports of motor vehicle thefts. every year. This equates to approximately • In 2019 there was a combined fnancial loss AUS$800 million of illegal timber. Timber of AUS$ 634 million to scams reported. logged illegally in Australia is considered There were 167,797 scams reported to be rare. collectively. • In the last 10 years there have been 8 terror • 25% people on average around the world incidents, resulting in 14 deaths and 16 regularly pay bribes to public offcials, injured. however in Australia this statistic is around • The annual social and economic cost of 3%. serious and organised crime was last • 1 in 20 Australian’s has a drug addiction or estimated to be AUS$36 billion per year. substance abuse problem. This equates to AUS$1,561 out of every Australian’s pocket, and adds 6.3% to the • In 2018, 2070 deaths were recorded as cost of living. drug over doses. • Estimated losses in tax revenues, amount • Goods piracy, cheating legitimate to AUS$31billion. This amounts to businesses from earnings, through approximately 1/15th of total government intellectual property theft AND, through spending in 2019. substandard goods passed off to consumers as high quality premium brands.

Australia - Threat Assessment - 2021 8 of 57 Section 6 - Key Threats Summary - �

In this Section 6, estimates for costs, losses and Based on these fgures the estimated value of or proceeds from crime are set out below, from criminal proceeds is at least A$65 billion sources and information contained later in this (US$50 billion). Section 6 below, for example: Nevertheless, based on estimates from FCN’ • Corruption at A$12 billion (US$8.37 billion) GTA 2019, global proceeds of criminal activity a year (2012-2018) are estimated at US$5.8 trillion16, or 6.7% of global GDP based on a bottom up assessment • Illicit drug spend in Australia (2019).15 of criminal markets, (including 3% of GDP for AUS$11.3 billion (US$8.6 billion). fraud) for 2018. In all fraud could be around • Tax Gap at A$31.2 billion (US$23.76 billion) 43% of criminal proceeds, with estimates of (2017-18), including cigarette smuggling goods piracy around 34%, drug traffcking which generates excise tax losses estimate at around 10%, theft around 5%, green crimes up A$123 million (US$93.65) (2020/21) to 4%, human traffcking around 3% & smuggling around 1.5%. It is also estimated • Counterfeit Goods from imports at A$3.68 that these crimes are carried out by using billion (US$2.8 billion) (2019) cyber techniques, which is estimated to be

• Human Traffcking at A$427 million potentially up to 27% of proceeds. (US$327 million) (2018) A much earlier study from the UNODC

• Fraud costs at A$6.3 billion (US$4.8 billion) published in 2011, concluded core fnancial (2013-14), including Card Fraud at A$464 crime (excluding fraud) estimated criminal million (US$353 million) (2019) proceeds at US$2.1 trillion or 2.5% of Global GDP. Based on the UNODC study if applied to Organised Crime (costs) to be between • Australia it would generate an estimate of A$23.8 billion - A$47.4 billion (US$18.12 US$32.5 billion for criminal proceeds, whereas billion - US$36 billion) including up to A$9.6 the 6.7% of GDP estimate would generate billion (US$7.31 billion) attributable to illicit US$87.1 billion (A$114 billion). drugs and A$8.6 billion (US$6.55 billion) to organised fnancial crime), conventional Taking the A$65 billion (US$50 billion) crimes committed as a consequence of fgure, proceeds available for laundering can serious and organised crimes (up to A$6.5 be estimated at A$50 billion (US$38 billion), billion/US$4.95 billion) and prevention and and organised crime proceeds are estimated response costs (up to A$15.9 billion/ at A$30 billion (US$23 billion). US$12.11 billion).

Australia - Threat Assessment - 2021 9 of 57 Section 6 Continued - Key Threats in Detail - �

In this Section 6, the most important criminal published over the last few years. See chart markets, are assessed and summarised. above.

6.1 National Risk Assessment: Australia has Austrac has more recently identifed in its yet to publish a formal National Risk 2019-20 Annual Report, offences such as Child Assessment (NRA). Nevertheless, the Australia Exploitation, Cyber Crime, Illicit Tobacco, Transaction Reports and Analysis Centre and Environmental Crimes as crimes that are (AUSTRAC) produced a major report - “Money generative signifcant criminal proceeds.18 Laundering in Australia in 2011”.17 In the According to the Austrac 2011 Report, money Austrac 2011 report it states that the most laundering in Australia has become the common predicate offences for money specialist skill set of specifc organised crime laundering were “Fraud, Drug Traffcking, Tax syndicates. These groups are based both Evasion, People Smuggling, Theft, Arms domestically and overseas, and provide Traffcking, and Corrupt Practices.” “specifc money laundering services to domestic and international crime groups Australia Risk Assessments �

Year Assessment operating in Australia.”

2020 Junket tour operators in Australia The professionalisation of money laundering in 2019 Mutual banking sector Australia has become increasingly useful to 2018 On-course bookmakers - ML and TF those looking to launder funds, as the OC 2018 Travellers cheques - ML and TF

2017 NPOs - Ml and TF environment has become “internationalised”.

2017 Terrorism fnancing (NPOs) The 2011 report writes “There is almost always 2017 Stored value cards - ML and TF an international component to the money 2017 Remittance corridors - Australia to Pacifc Island - Ml and TF laundering cycle for major crime groups 2017 Securities and derivatives sector - Ml and TF

2016 Financial planning sector - ML and TF operating in Australia.”

2016 Superannuation sector - Ml and TF The key avenues for money laundering in 2016 TF regional risk assessment

2015 Real estate - strategic analysis brief Australia - as identifed by AUSTRAC in the 2015 De-risking of remittance businesses - strategic analysis brief 2011 report are: “the banking system, money Source: https://www.austrac.gov.au/business/how-comply-and-report- guidance-and-resources/guidance-resources/risk-assessments? transfer and alternative remittance systems … feld_industries_target_id=All&feld_guidance_topics_target_id=All&page=1 the gaming sector, and high value goods. …

These offences are known to be part of wider Less visible channels or enablers include serious organised crime (OC) activity. Some professional advisers, legal entity structures, individual risk assessments have been cash intensive businesses, electronic payment systems, cross-border movement of cash and

Australia - Threat Assessment - 2021 10 of 57 bearer negotiable instruments, international Index 2019, under Pillar 1 Institutions, trade and investment vehicles.” These sectors Australia’s24 rating for “Security” is 89.8/100 are highly vulnerable to being utilised for ranked 18 out of 141. laundering money.

6.2 FATF: The last Mutual Evaluation Report (MER) of Australia was conducted by the FATF in 201519 with a Follow Up Report (FUR) in 201820. It stated that the predicate offences that generate the largest amount of illicit proceeds investigated by authorities were This overall score is made up of scores for drug traffcking, fraud and tax evasion. organised crime at 76.9 (ranked 24/141), Based on data from 2009, organised crime was homicide at 99 and ranked 26/141, terrorism estimated to cost the Australia economy 1.5% incidence rate 99.2/100 (ranked 89/141) & of GDP in 2009. Based on the current GDP of police service reliability at 84.2/100 and Australia this would account for almost 21 ranked 15/141 (in all cases higher scores are billion dollars. This is, however, considered a better). conservative estimate. China, Hong Kong,

Macao, Singapore and the United Arab 6.5 Corruption: According to Transparency Emirates were seen as “major source, International’s (TI) Corruption Perceptions destination, and/or transit jurisdictions for Index (CPI) 202025, Australia was ranked proceeds of crime laundered into and out of 11/198, with an overall score of 77 out of 100. Australia”. Australia has maintained this score since 2017.

6.3 Crime Rates: Australia is considered the 18th safest country out of 128 in the 2019 Global Finance ranking (weighing factors war and peace, personal security, and natural disaster risk).21 The Numeo Crime Survey ranks Australia globally as 72/133 (with 1 being the worst) and 41.36/100.22 Australian crime rates have been rising at incremental levels over the Australia’s CPI ranking has seen some last few years. The number of victims to fuctuation in the last 10 years. In 2012 robbery in Australia has gone from 8,968 in Australia was ranked as 7th in the world on the 2015 to being 11,775 in 2019.23 Corruption Perceptions Index, but it had fallen to 13th by 2016. Since then, it has slowly been 6.4 Security: According to the World climbing, but still remains outside the top 10. Economic Forum’s Global Competitiveness The 2017 Organised Crime in Australia

Australia - Threat Assessment - 2021 11 of 57 Report26 (2017 OC Report) conducted by the of corruption can receive a maximum penalty Australian Criminal Intelligence Commission of 10 years’ imprisonment and/or a fne of up suggests this is due to “a number of well- to AUD 1.1 million. For a business, the penalty publicised instances of corruption in sport as is a fne of up to AUD 17 million, three times well as publicity generated by several recent the value of the obtained undue beneft, or anti-corruption agency and royal commission 10% of the annual turnover of the company investigations into criminality and workplace during the period in question. Australian misconduct.” political parties commonly receive gifts and hospitality, but there is little information Research published in 2018 by the Australia available on gifts and hospitality in the private Institute27 estimates the effects of rising sector." perception of corruption in Australia since 2012 could have reduced Australia’s GDP by The report by GAN states that the chances of A$72.3 billion, or 4% (A$12 billion a year). encountering corruption in Australia is low, however the 2017 OC Report suggests that The 2020 TRACE Bribery Risk Matrix28 rates public sector corruption plays a role in Australia at a “low” risk level, with an overall enabling organised crime.30 Whilst there is score of 15 and a rank of 12 out of 194. This limited evidence as to the spread of corruption score places Australia in a similar scoring in the public sector, there are certain areas of range as Iceland, Canada, and Estonia. the public sector that are more vulnerable to According to the GAN Risk and Compliance corruption than others. “Areas of the public Portal’s report on corruption in Australia (last sector considered most at risk of corruption by updated April 2020)29 the risk of corruption in serious and organised crime include the country is “low”. It provides the view that procurement across all levels of government, “Corruption is not an obstacle to business in frontline agencies, and new agencies without Australia, which is known for its well- established anti-corruption practices.” functioning and independent judiciary, According to a poll on the “Perceptions of transparent regulatory climate and overall low corruption and ethical conduct" conducted by levels of corruption. However, corruption risks the Australian National University in 2012, less exist in relation to foreign bribery and the than 1% said that they, or a family member, mining industry. The Criminal Code covers had experienced corruption in the preceding bribery of foreign and domestic public offcials, fve years. At that time, 43% felt corruption in while each of Australia’s states and territories Australia was on the rise with the media, trade has its own anti-corruption provisions. Public unions and political parties considered the sector and private sector bribery are most corrupt. The police, armed forces and the addressed, and both individuals and public service were considered the least companies can be targeted. Persons convicted corrupt.

Australia - Threat Assessment - 2021 12 of 57 6.6 Organised Crime: According to the and organised crime is considered a key Parliament of Australia organised crime costs determinant of signifcant changes in the the country between AUS$23.8 million and criminal landscape into the future. The impact AUS$47.4 billion31“. The costs are spread of the availability of technology can already be across direct serious and organised crimes (up seen in multiple crime types, with greater to $25.0 billion—including up to $9.6 billion instances of technology-enabled fraud in the attributable to illicit drugs and $8.6 billion to areas of online banking, trade, superannuation organised fnancial crime), conventional crimes and identity crime. The ability to target committed as a consequence of serious and individuals remotely from any location in the organised crimes (up to $6.5 billion) and world is attractive to serious and organised prevention and response costs (up to $15.9 crime groups, who actively use technology to billion).” target the fnancial sector, to undertake online trading of illicit goods via the darknet, and to According to the Australian Institute of commit acts of child sexual exploitation (CSE) Criminality, organised rime groups (OCGs) in through online grooming and distribution of the country are typically, "heavily involved in child exploitation material (CEM). The growing domestic and global illicit drug markets, as well availability and usage of the internet has also as fraud, smuggling (goods and people), increased access by organised crime to violence and intimidation, corruption, money vulnerable individuals.” laundering, frearms offences, cybercrime, and environmental crime. These offences can be The report also identifes money laundering highly sophisticated, so organised crime and professional facilitators to be key enablers groups rely on trusted networks to plan and to OCGs. These enable OCGs to operate and implement their crimes.”32 commit crime whilst avoiding detection by law enforcement. The 2017 OC Report stated that “transnational serious organised criminal groups have had a Outlaw Motorcycle Gangs (OMCGs) are signifcant impact on crime markets in Australia prominent in the Australian organised crime in the past two years”. These groups have been landscape. A report by the Australian Institute bolstered thanks to the development of of Criminology identifed these groups as technology and digital infrastructures as key having “high levels of involvement in enablers. methamphetamine production and distribution, illicit frearms traffcking, tax OCGs have rapidly adopted these evasion and money laundering, as well as technological developments, which has had a serious violent crime”. 33 There are signifcant impact on the organised crime approximately 39 OMCGs active in Australia environment in Australia. “The use of (according to a 2013 study) with 3,300 technology and digital infrastructure by serious ‘patched’ members. Some of the more well

Australia - Threat Assessment - 2021 13 of 57 known OMCGs are the Hells Angels, lucrative, with growing demand for a wide

Comancheros, Bandidos and Notorious.34 The variety of substances. Poly-drug use remains tensions between these groups have at times a feature of the market, with some serious and overfowed with incidents such as the ‘Milperra organised crime groups capitalising on the Massacre’ in 1984. demand for multiple drug types by importing, cultivating, manufacturing and/or traffcking Non-OMCGs are also prevalent in Australia. several drug types simultaneously. … Serious Gangs generally operate in large cities and organised crime plays a fundamental throughout Australia. Some of these groups role in the manufacture, cultivation, are smaller, more typical street gangs, who are importation and distribution of illicit drugs often involved in drug traffcking and trade. in Australia.” These groups are often based in a specifc area of a city and are known to perpetrate The illicit drug market in Australia has been ‘gangland’ murders for territory. Family based changing and developing along the same organised crime groups - such as the Moran’s trends as the global drug market. “The and Williams in Melbourne - are well known to Australian illicit drug market is best seen as a be involved in a wide range of criminal activity, component of the global market. The internet such as the illicit drug trade, prostitution and and darknet have enabled the rapid armed robberies. expansion of the global drug market, with users able to access drugs, information about The Calabrian ‘Ndrangeheta have been able availability and purity of new drugs, and to establish a foothold in Australia, with a great manufacturing manuals online. This has meant deal of control over the fresh food industry. that trends in drug use observed in Europe, There are also organised crime groups with Canada and the United States (those markets their roots in Russia, Vietnam, China, Colombia most similar to the Australian market) are now and the Middle East all known to be active in very quickly replicated in Australia. Fentanyl Australia. usage has been widely reported as an 6.7 Drug Traffcking: Based on wastewater emerging trend overseas and has been analysis, AUS$11.3 billion (US$8.6 billion) was recently observed in Australia. Increased spent on drugs in Australia during the year cocaine supply and use in the United States is ending August 2019.35 The drugs noted as predicted and may have fow-on effects in most prevalent are methyl-amphetamine, Australia.” cocaine, MDMA and heroin. The cannabis In the FATF’s 2015 MER, it stated that; market is also signifcant. Of this, A$8.63 “Australian drug markets are said to be some of billion was spent on methylamphetamine. the world’s most proftable and most drugs According to the 2017 OC Report, “The can be obtained. They are a serious and Australian illicit drug market remains highly growing issue. In 2012-13, drug seizures and

Australia - Threat Assessment - 2021 14 of 57 arrests were at record or decade highs for • Hallucinogens - 1.6% (up from 1.6% in nearly all drug types. Cannabis dominates 2016) domestically, but the drugs of greatest concern • Inhalants - 1.4% (up from 1% in 2016) are amphetamine-type stimulants. Drug traffcking in Australia is linked to transnational • Ketamine - 0.9% (up from 0.4% in 2016) organised crime groups, particularly from • Pharmaceutical drug use for non- South East Asia and South America.” medical purposes - 4.2% (down from 4.8% The Australian Criminal Intelligence in 2016) Commission’s (ACIC) most recent Illicit Drug • Pain Killer and Opioid use for non- Data Report (2018-19)36 stated that there were medical purposes - 2.7% (down from 3.6% 153,377 drug arrests in that year. This was as in 2016) well as 112,474 drug seizures, resulting in 26.6 tonnes of drugs being seized. The traffcking of According to the Australian Institute of Health drugs into Australia has shifted away from a and Welfare there were 1,740 drug induced larger number of smaller amounts being deaths in 2018.39 This is an incidence of traffcked, to a smaller number of larger around 7.0 per 100,000 population. This is one amounts. This is true across almost all drug of the highest incidents on record but still types, with less detections of drugs being lower than that in 1999 when there was an imported, but larger amounts. incidence of 9.1 per 100,000. Opioid’s accounted for the largest number of these According to the 2019 National Drug Strategy deaths with 1,123 in 2018. Household Survey37, 43% of Australian’s had illicitly used a drug in their lifetime, and 16.4% Whilst it is not the most widely used drug, the had in the last 12 months. The statistics methyl-amphetamine market is considered suggest that drug use in Australia is on the rise by the Australian Criminal Intelligence with only 13.4% having recently used drugs in Commission to pose the highest risk to 2007, and 15.6% in 2016. Illicit drug use was Australia.40 The use of methyl-amphetamine most prevalent in the most advantaged areas. has been on the rise in recent years, particularly crystal methyl-amphetamine. In 2019 the most common illicit drugs used by Australians in the preceding 12 months were38; The amount of Amphetamine-Type Substances (ATS) - of which methyl-amphetamine is one - • Cannabis - 11.6% (up from 10.4% in 2016) seized at the Australia border increased and • Cocaine - 4.2% (up from 2.5% in 2016) was the highest on record between 2018-19.41 This, as well as other indicators, suggests that • Ecstasy - 3% (up from 2.2% in 2016) the market for these drug types is expanding. Based on waste water analysis, the

Australia - Threat Assessment - 2021 15 of 57 consumption of ATS grew across the country, being the second highest on record. South both in rural and urban areas. Africa was the primary embarkation point for cocaine entering Australia. The majority of methyl-amphetamine is believed to be produced internationally and 6.8 Human Traffcking: Since 2015 there has imported into Australia. It is, however, the main been a rise in the number of human traffcking drug domestically produced in clandestine and modern slavery referrals to the Australian laboratories. Federal Police (AFP). 43 According to the AFP, “Australia is primarily a destination country for The cannabis market in Australia looks to people traffcked from Asia, particularly largely be following global trends, and Thailand, Korea, the Philippines and indicators suggest it is a large and relatively Malaysia” stable market. In the decade preceding 2019, cannabis detections at the Australian border The most recent report by 2017 OC Report increased by 666%. The amount of cannabis highlighted human traffcking and slavery as detected in 2018-19 was 1,811.7kg - an being of concern.44 However, when compared increase of 212%.42 The USA is the largest to global trends, “incidents of human embarkation point for import of cannabis into traffcking and slavery in Australia remain Australia. uncommon. This is likely explained by a range of factors including strong migration controls, The supply and demand for heroin suggests workforce regulations, law enforcement and that the market for the drug is relatively low in compliance programs as well as Australia’s Australia, but has experienced some smaller geographical isolation. … The extent of human growth. Whilst Afghanistan is the largest traffcking and slavery is diffcult to quantify and producer of opium globally, the majority is likely to be under-reported. Successful detected entering Australia was from South prosecutions are limited, due both to the East Asia, with Myanmar dominating the complexity of such investigations and the market. The opium from the region is by and reluctance of victims to speak out. Victims of large traffcked through Malaysia en route to sexual exploitation have historically dominated Australia. Waste water analysis suggests there referrals for investigation in Australia. Referrals has been a small increase in the use of heroin of forced marriage and labour exploitation in in Australia, but it is still low relative to the the construction, hospitality and domestic consumption of methyl-amphetamine. service industries have increased and now The majority of the cocaine in Australia comes outnumber referrals relating to sexual from Colombia, which is the worlds largest exploitation. The AFP received 169 human producer of the drug. Indicators suggest that traffcking referrals in 2015–16, 130 of which the supply and demand for cocaine is on the related to forms of exploitation outside of the rise, with the amount detected at borders sex industry.”

Australia - Threat Assessment - 2021 16 of 57 This same report also states that modern and, to a lesser extent, Eastern Europe and slavery and human traffcking (MSHT) in Africa, migrate to Australia to work legally or Australia is not generally operated by large illegally in a number of sectors, including scale organised crime, unlike global trends. commercial sex. After their arrival, traffckers “Small opportunistic crime groups are more compel some of these women to enter or likely to be involved in human traffcking and remain in commercial sex in both legal and slavery offences in Australia than large illegal brothels, as well as massage parlours organised crime groups, and typically use and private apartments.” overseas family and business contacts to recruit The TIP Report does highlight some issues with and facilitate the movement of people. Victims reporting and monitoring of MSHT in Australia, often share similar cultural, language, particularly in rural areas. “An NGO reported employment and socio-economic backgrounds severe lack of monitoring and enforcement with offenders.” of labor laws in rural parts of Australia, However, this view of MSHT is at odds with the heightening risks of forced labor. Domestic global perspective of the situation in Australia. workers within Australia, especially in the state The US State Department’s Traffcking in of Western Australia, those lacking a contract, Persons Report (TIP) categorises Australia as or residing within diplomatic households Tier 1 country. It states that MSHT is remained extremely vulnerable to widespread in Australia. It is prevalent in every exploitation due to the lack of clear state and territory in Australia, working across a protective oversight mechanisms relevant to number of sectors.45 "Unscrupulous employers these populations." and labor agencies subject some men and According to the Global Slavery Index 201846 women from Asia and several Pacifc Islands on any given day in 2016 15,000 people were who are recruited to work temporarily in living in conditions of modern slavery in Australia to forced labor in agriculture, Australia. This is a prevalence of 0.6 victims of cleaning, construction, hospitality and modern slavery per every 1000. Australia is tourism, and domestic service. An one of a list of 12 G20 countries defned as investigation by the Fair Work Ombudsman “not taking action” by the Global Slavery Index. found some fraudulent foreign contracting Australia is ranked 25/28 (lower rankings being companies exploit farm workers in bonded better). The GSI gives the Australian labor.” Government a good response rating of “BBB”. MSHT for the purposes of sexual exploitation is Based on fgures from the GTA47, estimates for also an issue in Australia. “Traffckers exploit a human traffcking can be up to 3% of criminal small number of children, primarily teenage proceeds. Alternatively according to the Australian and foreign girls, in sex traffcking International Labor Organisation48 in 2015 within the country. Some women from Asia

Australia - Threat Assessment - 2021 17 of 57 annual profts for victims varied based on the on 79 countries was 105 robberies per form of exploitation involved, with the most 100,000 people51. proftable being sexual exploitation at 6.10 Arms Traffcking: Australia has relatively US$21,800 per victim. These estimates will be stringent gun ownership laws, with stringent higher in advanced and more prosperous background checks, and mandatory safety economies. Based on 15,000 sexually training courses before ownership.52 There are exploited victims, estimated proceeds of also restrictions on the types of gun a person US$327 million could be generated. can own, how many they can have and where 6.9 Theft and other Acquisitive Crime: you can buy them. These stringent restrictions - According to the Australian Bureau of called the “National Firearms Agreement” - Statistics49, in 2019 there were 11,775 victims were brought in after the horrendous mass of robbery in Australia, marking a 16% shooting at Port Arthur in 1996, which left 35 increase on the following year. This was the dead and many more injured.53 With these 4th consecutive year in which there was an more stringent restrictions, an illicit market increase since 2012. An increase was seen developed for arms. across all states with the highest increase in The last major report into the illicit frearms Victoria where robbery was up by 29%. 51% of market in Australia was conducted by the ACIC robberies occurred at community locations, in 2016.54 According to the report, there are and almost half were unarmed (51% unarmed, around 260,000 illicit frearms in the domestic 49% armed). The majority of these were at Australian market. However, “the exact extent knife point (46% of all armed robberies) as of the illicit frearms market in Australia opposed to involving a frearm (12% of all cannot be determined as no historical data is armed robberies). available on its size prior to the implementation Motor vehicle theft also rose, with 58,021 of the National Firearms Agreement (NFA) of victims in 2019 - a rise of 9% on the previous 1996. The United Nations Offce on Drugs and year. Crime (UNODC) estimates the global illicit market contains the equivalent of According to UNODC statistics, the number of approximately 10 to 20 per cent of the number thefts from 2010 to 2016 in Australia has of frearms in the licit market.1 If this ratio is remained above 2000. Theft rates went from applied to Australia’s illicit frearm market, it 2,224 per 100,000 people in 2010 to 2,460 in would contain somewhere between 300,000 201650” The average for 2016 based on 74 and 600,000 frearms.” countries was 783 thefts per 100,000 people. Robbery cases in Australia in 2017 were 39 per According to the report, the Australian illicit 100,000 people. The average for 2017 based arms market is generally supplied via one of three methods:

Australia - Threat Assessment - 2021 18 of 57 • “Theft from licensed individuals and frearm attempts to manufacture such frearms in dealers, including suspected staged theft Australia. Of those identifed, none were the domestic manufacture and assembly of functioning when detected by police.” frearms; The illegal import of frearms seems to account • The illegal importation of undeclared for a relatively low percentage of illicit arms in frearms and frearm parts; and Australia.

• Failure to record or reconcile the interstate The 2017 OC Report55 advised that the movement of frearms.” traffcking of illegal frearms is a long term issue and remains a concern. Their use and Theft appears to be the most common way in distribution is a “serious threat and safety which frearms enter the illicit market. These concern to the Australian community”. are often stolen from homes or from gun Intelligence suggests that arms traffcking is shops, and then traffcked onwards. According not the monopoly of one OCG, but that to the report, the number of arms thefts is numerous groups are likely involved. trending upwards in more regional or isolated locations. Isolated homes are more vulnerable 6.11 Illicit Tobacco Traffcking: AUSTRAC to arms theft as such properties are more likely recently identifed the traffcking of illicit to yield a higher number of frearms. Whilst the tobacco into Australia as a key issue for law assumption is that these weapons are likely enforcement.56 It also featured in the 2017 OC stolen by OCGs, or end up in the hands of Report.57 According to the report, the illicit OCGs, the actual statistics around this are tobacco market is deeply entrenched with unknown. serious and organised crime groups. This is both in the importing and domestic Illicit arms produced domestically are also an production of illegal tobacco. issue in Australia. “Firearms such as single-shot pen guns, key ring guns and submachine guns are still believed to be illicitly manufactured in Australia. … The ACIC and other law enforcement agencies have assessed the current threat of 3D printing of frearms as low. Currently, the technology does not commercially enable the mass production of According to the Australian Taxation Offce, printed components that match the since 2016, 411,000 kilograms of illicit reliability and cost-effectiveness of factory- tobacco have been seized and destroyed in produced frearms. Since instructions to Australia.58 Had that amount gone to market, it produce a 3D printed frearm were published would have amounted to AUS$432 million online, the ACIC has identifed only three

Australia - Threat Assessment - 2021 19 of 57 lost in unpaid duties. The estimated overall 2019/20, around 21,000 counterfeits, with a tobacco tax gap (that being the gap between nominal value of $1.6 million, were detected in tax paid on tobacco products, and the circulation. This corresponds to around 13 estimated overall fgure) is 6%. This equates to counterfeits detected per million genuine approximately AUS$822 million. With OGCs banknotes in circulation”. In June 2020, so heavily involved in the illicit tobacco market, Queensland Police reported62 that “Police have it is likely that this money went to fund further seen an increase in a series of counterfeit criminal enterprises, or be laundered. currency offences across the South Brisbane area recently. These incidents have primarily The majority of imported illicit tobacco are involved counterfeit $50 or $100 notes and believed to come from the United Arab have been used in an attempt to pay for goods Emirates, Malaysia, Indonesia and Singapore. or services”. Police reportedly63 also issued a 6.12 Counterfeit Goods: According to the warning of suspicious AUS$100 banknotes Trends in Trade & Pirated Goods Report 201959 with foreign text printed on them in by the EUIPO & OECD, 3.3% of world trade in September 2020. These notes were found in 2016 was made up from trade in counterfeit the west of Melbourne, Horsham, Ararat, goods. Whilst Australia is estimated as having Northern Grampians, and Queensland. a low propensity to export counterfeit 6.13 Cybercrime: Cybercrime in Australia - as products with a score of 0.125/1 (2016) with anywhere in the world - is transnational, and export trade to the rest of the world, it the 2017 OC Report64 states that the majority nevertheless is expected to be involved in of cybercrime committed against Australians signifcant counterfeit imports. comes from abroad. The majority of Based on total imports in 2019 of US$209 cybercrime originates in Russia or Eastern billion60 41.15% (US$86 billion) comes from Europe, and is generally committed by developing countries, which considered “temporary networks of people who higher risk for exporting counterfeit goods, collaborate but may live in geographically (China 25.2%, Thailand 4.8%, Malaysia diverse locations.” The globalised nature of 3.55%,Vietnam 1.9%, Taiwan 1.7%, India cybercrime, makes it inherently more complex 1.53%, Indonesia 1.51%, Bangladesh 0.38%, to investigate, or to secure any kind of Turkey 0.35% & Hong Kong 0.23%). Estimated conviction. counterfeit imports into Australia represent The Asia-Pacifc Region is particularly 3.3% or US$2.8 billion. vulnerable to cybercrime, with countries 6.12 Counterfeit Currency: According to the losing a third more in business revenues to Australian Government Transparency Portal61, cybercrime than those in Europe or North “The level of counterfeiting in Australia remains America.65 relatively low by international standards. In

Australia - Threat Assessment - 2021 20 of 57 The Australian Cyber Security Centre’s (ACSC) reports on tax gaps. In their 2019-2020 most recent Annual Cyber Security Threat report69 they wrote; "For 2017–18, we estimate Report covers incidents from from July 2019 - the overall net tax gap to be 6.9%, or $31.2 June 2020.66 During this period there were billion, meaning the ATO received more than 59,806 cybercrime incidents reported, which 93% of tax revenue it expected to collect, the is an average 164 reports per day, or 1 every bulk of which was collected voluntarily. We are 10 minutes. In terms of the cost of cybercrime; also publishing the three-year trend as a part of “The Australian Competition and Consumer our ongoing commitment to provide more Commission’s (ACCC) Targeting Scams 2019 transparency into the operation of the tax and report, identifed Australians lost over $634 superannuation systems. The three-year trend million to scams in 2019. While the true cost shows the net tax gap declining in each of of cybercrime to the Australian economy is the past two years, from 7.7% in 2015–16, diffcult to quantify, industry estimates have to 7.2% in 2016–17 and 6.9% in 2017–18.” previously placed cyber security incidents as One of the key tax avoidance methods high as [AUS]$29 billion annually.” identifed by the ACIC is fraudulent phoenix The 2017 OC Report67 states that the activity, which is defned in the 2017 OC cybercrime risks in Australia are from; Report70 as “the deliberate liquidation of a “ransomware, credential-harvesting company in order to avoid paying creditors, malware, and distributed denial of service taxes and employee entitlements. Once a (DDoS) extortion. Computers and devices of company has been liquidated, the perpetrators private individuals and commercial entities as transfer the remaining assets to a new entity well as government systems are all at risk from and continue to operate the same or a similar cybercrime.” business under a new name, retaining the same ownership.” According to the report, this 6.14 Tax Evasion/Fraud: The 2017 OC Report type of activity costs the Australian economy in Australia states that revenue and tax fraud around AUS$3.2 billion each year. range from “failing to report income in order to avoid taxation obligations, to the use of ACIC intelligence71 suggests that professional complex offshore secrecy arrangements, also enablers are key in facilitating offshore tax to avoid tax. The use of professional facilitators evasion, as such an operation often requires continues to be a key enabler of revenue and specifc skills and knowledge. Moving funds taxation fraud, most notably in fraudulent offshore for the purposes of tax evasion is a phoenix activity, offshore tax evasion and the key issue in Australia, and over 1000 abusive use of trusts."68 Australians were implicated in the Panama Papers in 2016. 80 of these names were The Australian Taxation Offce (ATO) is the matched with the ACIC’s criminal intelligence government organisation that publishes

Australia - Threat Assessment - 2021 21 of 57 holdings, and several were on the national According to the Australian Competition and criminal target list. Consumer Commission (ACCC), Australians reported losing over AUS$634 million to 6.15 Fraud: Fraud is thought to cost the fraudulent scams in 201974. This was an Australian economy around AUS$6.3 billion increase of 30% on the previous year, when (2013-14).72 AUS$489 million was reported as lost, even The 2017 OC Report73 wrote that fnancial though 5% fewer reports were made.75 crime and fraud are, “diverse in nature and Scamwatch is run by the ACCC to provide scale, and in the level of harm they cause. The consumers and businesses with information for modern globalised economy and advances in recognising, avoiding and reporting fraud. technology create new opportunities for They also publish statistics based on the organised crime to exploit vulnerabilities for crimes reported to them, however it is illicit proft. The expansion of serious and believed that only around 13% of victims make organised crime into the fnancial sector poses a report. In 2020, 216,086 reports of fraudulent a signifcant risk to the integrity of the activity were made to ScamWatch76; of these Australian economy, fnancial markets, 10.6% reported fnancial losses. These fnancial regulatory frameworks and revenue losses equated to AUS$175,667,560. The collection. This risk is particularly salient in the scams that lost the largest amounts of money current economic environment, where damage in 2020 were: to fnancial markets, government revenue base and the savings of private individuals can have • Investment scams - AUS$65,803,782; far-reaching implications.” • Dating & romance scams (‘Catfshing’) - The report also states that it is diffcult to AUS$38,916,120; and estimate the extent of the impact fraud has had • False billing - AUS$18,464,903. on the Australian economy, due to “the intermingling of licit and illicit fnancial 6.15.1 Investment and Financial Market transactions”. The report does, however, state Fraud: In the 2017 OC Report,77 the ACIC that OCGs are likely heavily involved in stated that it was likely that both domestic and committing fraud, due to the level of expertise transnational organised criminal groups are often required.. involved in investment and fnancial market fraud. The ACIC defnes investment and The three most impactful types of fraud were fnancial market fraud as referring to; highlighted by the ACIC as being investment and fnancial market fraud, superannuation • “Fraudulent investment schemes, such as fraud, and card fraud. boiler-room fraud and Ponzi schemes;

Australia - Threat Assessment - 2021 22 of 57 • Manipulation or exploitation of the scams such as ‘pump and dump’ schemes, legitimate share market to artifcially raise which involve the use of false and misleading or lower the price of securities; and information to generate investor trading interest to artifcially ‘pump’ up the price of a • Exploitation of fnancial market securities to company’s shares—normally a fraudulent or low commit fraud or launder the proceeds of value company. As more people invest, the crime - for example, off market share share price increases and the scammers then transfers and fraudulent share schemes.” sell or ‘dump’ shares at the peak of the price The ACIC published a report into Serious rise, giving them a considerable proft while Financial Crime in Australia in 2017.78 It stated causing the value of the shares to fall, leaving that Australia is particularly vulnerable to this investors with shares that are either worthless type of fraud, due to its highly attractive nature. or valued at a fraction of the purchase price.” The report states this is because “of its The exploitation of fnancial securities have comparatively stable economy, Australian also been found to be particularly proftable investors’ high subscription to share purchases, methods of fraud for OCGs. This is often done the perceived lower risk of detection and through fraudulent share schemes - boiler- substantial illicit profts to be made.” room fraud - often in order to launder the Fraudulent investment schemes are regularly proceeds of crime. used by OCGs, and often provide a screen of 6.15.2 Superannuation fraud: seeming legitimacy, making them signifcantly Superannuation is the dominant pension more effective. The report states that OCGs system in Australia, with employers mandated use aggressive telemarketing strategies, by government to pay in a certain percentage professional looking website, and well- of wages per each employee. The produced advertisement materials such as superannuation market in Australia is brochures to make these fraudulent schemes regulated by the Australian Prudential seem legitimate. Regulation Authority (APRA), and has There are several different schemes that are jurisdiction over funds in all sectors, from used by scammers, with he most common corporate to public sector funds. There are being "sports betting and gambling systems, also self-managed superannuation funds securities schemes, superannuation schemes (SMSF) which are regulated by the Australian and foreign exchange trading.” Taxation Offce.

OCGs have also been known to “manipulate The complex nature of superannuation funds or exploit the legitimate share market for makes them an attractive target for OCGs. The signifcant fnancial gain. One way of doing ACIC Serious Financial Crime Report (2017)79 this is through share market manipulation stated that these types of funds are vulnerable

Australia - Threat Assessment - 2021 23 of 57 to “theft of contributions and fund assets, from April the 20th 2020 till the 30th of fraudulent fund investments, non-existent December. This would allow Australians to schemes and excessive fees charged by access up to AUS$20,000 from their funds tax advisers.” Self-managed superannuation funds free.80 The scheme was widely used by are particularly vulnerable to fraud committed Australian’s during the pandemic, however by OCGs and other criminals. All there was a 323% increase in the number of superannuation funds have become more superannuation fund related scams reported vulnerable due to the advent of technology to the ACCC.81 Whilst not all of these were and cybercrime, making identity crime easier directly linked to the “Hardship Early Access to commit. Scheme”, it is likely that the increased freedom around accessing these funds was a APRA-regulated superannuation funds are contributing factor. vulnerable through criminals hacking individuals computers and stealing personal 6.15.3 Card Fraud: The 2017 Serious identity information to fraudulently transfer Financial Crime Report published by the money fro their superannuation funds over to ACIC82 defnes card fraud as “the fraudulent illegitimate SMAFs that the criminal is able to acquisition and/or use of debit and credit cards access. or the card details. Card fraud may involve fraudulent applications, the theft of cards or One of the more serious and common forms of card details, skimming of card details at superannuation fraud are early release scams. automatic teller machines (ATMs), production According to the 2017 Serious Financial Crime of counterfeit cards, and phishing and hacking in Australia Report, “criminal entities offer to obtain card details.” super members access to their funds before the legal release age. Promoters of these illegal Card fraud in Australia has been trending super scams often target people seeking debt downwards for the last 18 months. The relief, unemployed people and those from non- Australian Payments Networks Payment Fraud English-speaking backgrounds. Victims’ Report83 links this decrease to heightened superannuation funds are rolled into a vigilance in the sector, as well as the CNP legitimate or illegitimate SMSF and are then (Card Not Present) Fraud Mitigation stolen by the fraudster, or access to the funds is Framework, “a whole-of-industry approach to given to victims after a substantial fee is tackling fraud, and a key step in further withdrawn for the criminal.” stimulating the uptake of secure technologies such as real-time monitoring, machine learning, During the COVID-19 crisis the Australia tokenisation and strong customer Government allowed citizens to apply to authentication.” withdraw from their ‘supers’ to help those facing fnancial hardships. The scheme ran

Australia - Threat Assessment - 2021 24 of 57 The most prevalent type of card fraud is ‘card- 6.16 Environmental “Green” Crimes: not-present’, which in 2019 cost Australian’s According to the Environmental Performance AUS$402.6 million and accounts for around Index86 2020, Australia scores 74.12/100 and is 87% of all card fraud.84 In 2019, CNP ranked 21/180 countries. transactions increased by 16%, with AUS$220 According to the Stopping Illegal Traffcking of billion being spent this way. Over this same Australian Wildlife Financial Crime Guide in period CNP fraud decreased by almost 18% 202087 (2020 Australia Wildlife Report) it is on the previous year, going from AUS$489 illegal for individuals or businesses in Australia million in 2018, to AUS$402.6 million in to trade Australian native animals to overseas 2019. markets. “There is signifcant fnancial motivation for criminals to illegally export Australian wildlife for the overseas exotic pet trade. Organised criminals are attracted to the Australian illegal wildlife trade by large profts and lower penalties compared to smuggling illicit substances. Intelligence collected from wildlife traffcking operations show the international black- market prices for Australian reptiles can be more than 28 times the domestic price. Australian native reptiles are overwhelmingly the most commonly traffcked Australian native live animal”.

Card skimming continues to be an issue, but Reptiles, such as lizards, turtles and snakes not to the same scale as CNP. Australian cards appear to be the most traffcked animals with being skimmed or counterfeited in Australia international buyers likely to be from Asia, with has decreased signifcantly in recent years - a large proportion coming from China, Hong with AUS$25.8 million lost this way in 2016, Kong and Taiwan. compared to AUS$10.5 in 2019. There has OCGs “use online applications to also been a sharp decrease in fraudulent card communicate, and use social media platforms abuse of Australian cards abroad, falling from to advertise animals for sale”. There will AUS$33.5 million in 2016, to AUS$6.3 million payments between parties in respect of in 2019. The Australian Payment Network “obtaining animal trading permits and attributes this signifcant drop due to the advertising animals for international sale. With introduction and mass roll out of chip payments for different services at the core of technology85. the illegal wildlife traffcking cycle, fnancial

Australia - Threat Assessment - 2021 25 of 57 intelligence is critical to detecting and Australia scores 1.91/5 overall on the 2019 IUU stopping this activity”. Money mules and use of Fishing Index88, measured against vulnerability, postal packages are known to be used for prevalence and response (1 = good/strong; 5 payment. Some other key fnancial indicators = bad/weak. Australia has a 3.00 vulnerability included in the report are: score but a 1.58 response score, and ranked 138/152 countries. Australia is considered to • Amounts paid for animals can vary, have one of the best responses to IUU fshing depending on the species and the number globally. of animals purchased;;. 6.17 Murders and Kidnapping: According to • Lizards, when illegally traffcked can sell for Global Economy statistics, In 2011, 2012 and $1000-$20,000, compared to $100 - $400 2013, Australia recorded 1 homicide, per when legally traded; 100,000 people. Since then there has been • International and domestic payment details slight declines with the rate in 2017 being may reference the animal species recorded as 0,8 per per 100,000 people89. purchased and can be used for generating The kidnapping rate in Australia has remained profles and monitoring fnancial activity; relative low from 2010, dropping from 19,1 • International and domestic payment details cases per 100,000 population in 2008 to 15,7 may reference the role of the individual in 2009. A dramatic drop to 2,8 per 100,000 being paid population with the highest 3,o only reached in 2011. The 2017 rate was 2,0 per 100,000 • Payments can be made to individuals, pet/ population90. animal related businesses or to family members/associates; and 6.18 People Smuggling: Combatting People Smuggling gained importance and became a • IP addresses and network port numbers can priority in Australia following the arrival of assist with identifying the location of approximately 38,000 asylum seekers by offenders. boat91 and over 300 confrmed deaths at sea in • Payments for animal related goods and the years 2009–201392. services, such as equipment and freight; The Government established Operation Offenders can have a variety of roles in a Sovereign Borders (“OSB”) to interdict illegal wildlife traffcking network, including: immigration into Australia which operates Coordinator; Courier; Domestic trader; Driver/ through military-led border security transport; Money mule; Overseas trader; and agencies. The stated aim of OSB is to “combat Poachers. people smuggling, prevent illegal migration to Australia, and deter people from attempting unsafe journeys on people smuggling boats.”

Australia - Threat Assessment - 2021 26 of 57 Under OSB, any asylum seeker who attempts According to the Australian Strategic Policy to reach Australia (inclusive of the mainland Institute95 in a report in 2017 the available and its territories) by boat is automatically information “reveals that Thailand, Malaysia transferred to offshore detention facilities on and Indonesia are hubs for global people- the Republic of Nauru or Papua New Guinea’s smuggling networks”. Particular migratory Manus Island—both remote islands in the routes that involve Australia include: Pacifc—where their asylum claims are • Iran/Iraq - Jordan - Malaysia - Indonesia - processed. Since 2013, successive Australian Australia governments have declared that asylum seekers who arrive by boat “will never be • Sri Lanka - Indonesia - Australia resettled in Australia.” • Myanmar - Thailand - Malaysia/Indonesia - Since 2012, there have been an estimated Australia 4,000 refugees and asylum seekers93, • Afghanistan - Pakistan - Malaysia - Indonesia - including children, sent to Manus and Nauru Australia for processing. Many have waited more than fve years for their asylum claims to be 6.19 Online Child Sexual Abuse & processed and to be resettled. Refugees and Exploitation (CSAE): There has been an asylum seekers detained on Manus and Nauru increase in online streaming of CSAE which are overwhelmingly from Iran94, followed by can be categorised as both a form of Human “claimed stateless,” Pakistan, Afghanistan, Sri Traffcking but also cybercrime. CSAE globally Lanka, Iraq, Somalia, Bangladesh, Sudan, is estimated in the tens of millions of images Lebanon, India, Nepal, “other,” Myanmar, and and has been facilitated by developing Syria. technology and the expanding reach of the internet. Access to technology has made it OSB has received considerable criticism, with almost effortless for offenders to network and some questioning the legality of some enable the exploitation of children. In addition, practices such as intercepting boats in the work of law enforcement may have international waters and towing boats back to discouraged some offenders from undertaking their port of departure. The UNHCR has contact sexual abuse, including travelling to accused Australia of violating international other countries to undertake such abuse, as human rights obligations by forcibly returning well as the restrictions due to Covid 19. Whilst asylum seekers to their country of origin, it’s not clear to what extent OCGs are involved potentially putting their lives in danger. In in online streaming of CSAE it is possible that Australia, there has been criticism of the organised activity differs from disorganised secrecy surrounding OSB operations, activity due to a higher volume of funds particularly boat turn-backs, and detention in movement. While it is noted that a lack of large offshore facilities.

Australia - Threat Assessment - 2021 27 of 57 profts means wide-scale involvement of OCGs use of innocent payment descriptions is likely to be limited, there is some evidence (including ‘accommodation’, ‘school’, ‘uniform’, of criminal business structures in developing ‘medical bills’) and payments for access to a countries exploiting the commercial virtual private network (VPN), other encryption opportunities presented by online streaming software and live streaming software. It is of CSAE96. According to the NCA, “the important to note these are intelligence-based remittance of payments related to CSAE mainly indicators fagged for law enforcement occurs through MSBs and internet payment agencies to conduct further investigation. providers. However, some payments are Research suggests the cost of viewing live observed via banks, as modern payment streaming in the Philippines is often low (Masri platforms and fntech products are often linked 2015), due to the poverty of those who to traditional bank accounts. We see the use of provide the services (some reports suggest online money transfer platforms, as well as parents allowing access to young girls for €2 some remittance services paid for in cash. per day). One NGO suggested payment There are limited examples of the use of virtual amounts for a CSA live streaming session currencies. The general pattern for payments is usually ranged from A$14–A$57 Australian. upfront before the material is streamed, refecting the fnancial incentive for facilitators.” For more details on CSAE including the involvement of Australia, see the Egmont At any one time, there is an estimated 750,000 Group’s Report on Combatting Child Sexual individuals estimated to be looking to connect Abuse & Exploitation 202098. with children across the globe for sexual purposes online97. A study by the Australian 6.20 Emerging Threats - Covid 19: Whilst Institute of Criminality in 2020 published organised crime benefts from a growing details of research into a data set of Australians economy, they can also beneft when identifed who viewed live streaming of child economies experience signifcant downturns, sexual abuse in the Philippines, including and as they benefted from the last economic looking to their fnancial transactions. crises in 2008, there are concerns that the crises created by Covid 19 may also beneft The results showed that these individuals were organised crime. Transparency International likely to be aged in their 50s or 60s and the (TI)99 warns that “as with previous economic majority (55%) had no criminal record (10% crises, organised criminal groups will likely be had a sexual offence recorded in their criminal in possession of large deposits of illicit money history).Indicators identifed were: small at their disposal”. Some OCGs have sought to transactions between A$15 and A$500, no use COVID-19 by exploiting the economic identifable pattern in transactions, no work or issues associated with the pandemic and use family links to countries to which a suspect was this to launder illicit funds through cash sending funds, travel to high-risk destinations,

Australia - Threat Assessment - 2021 28 of 57 intensive businesses as well as investment in Malicious Cyber Activity101, which includes the real estate and construction sectors. incident statistics and case study examples. The report provides useful information and “FATF has warned about the risk of criminals reports in April 2020 that “On average each misusing companies to pose as legitimate month, the ACSC receives about 4,400 businesses seeking fnancial assistance to cybercrime reports through ReportCyber, and conceal and launder illicit proceeds” and also responds to 168 cyber security incidents. Since that “stimulus measures such as loan schemes 10 March 2020, the ACSC has: may risk being abused by criminals to launder funds”. FATF have also reported that, “the lack • Received more than 95 cybercrime reports of transparency and oversight in emergency (approximately two per day) about procurement have created plenty of Australians losing money or personal opportunities for bribery, kickbacks and bad information to COVID-19 themed scams contracting. There are high risks of the and online frauds, increased misuse and misappropriation of • Responded to 20 cyber security incidents public funds and consequent money affecting COVID-19 response services and/ laundering”. or major national suppliers in the current In 2020, Australia participated in developing a climate, and publication100 for chartered professional • Disrupted over 150 malicious COVID-19 accountants as part of a working group formed themed websites, with assistance from by the International Ethics Standards Board for Australia’s major telecommunications Accountants (IESBA). “Professional accountants providers, Google and Microsoft. should be aware that the changing risks for society beyond the obvious health and Cybercrime actors are registering COVID-19 economic challenges of COVID-19 include themed websites to conduct widespread increased MLTF and cybercrime activities. phishing campaigns that distribute malicious Times of disruption, such as the current software (malware) or harvest personal pandemic, bring with them a need for information from unsuspecting Australians. The accountants to exercise a heightened alertness Australian Signals Directorate is committed to to global, jurisdictional and sector risks of MLTF protecting Australians from malicious cyber and cybercrime when carrying out professional activity during this diffcult time, including by activities and reference should be made to striking back at these cybercriminals operating relevant and local sources for fnancial offshore”. intelligence and cyber security information”.

Australia’ s Cyber Security Centre (ACSC) published a Threat update: COVID-19

Australia - Threat Assessment - 2021 29 of 57 Section 6 - Key Threats Continued including Country Risk - �

In this Section 7 the key threats are continued focussed on areas of Australia considered at high risk as well as threats from third countries.

Australian States by Other Theft Crime Rates by Australian Bureau of Statistics

Western Australia (3.4%), Tasmania (3%), Capital (3%), Northern Territories (3%), South Australia (2.5%), Victoria (2.1%), Queensland (2%), & New South Wales (2%)

Australia - Threat Assessment - 2021 30 of 57 Section 7 - Sanctions & Embargoes - �

In this Section 7, the focus is on Sanctions and Democratic Peoples Republic of Korea (DPRK). Embargoes threats. Nevertheless, Australia “is committed to enforcing strictly sanctions against the DPRK 7.1 Sanctions & Embargoes: There are no adopted by the UN Security Council”106 and comprehensive sanctions and or embargoes has also implemented its own autonomous targeted towards Australia. sanctions against the DPRK. The Australian Australia applies sanctions and embargoes Department of Foreign Affairs and Trade states that target a signifcant number of countries, that these sanctions will remain in place until regimes, sectors, entities and individuals. For the DPRK takes clear steps towards example, fnancial sanctions cover:102 Central denuclearisation. There is no bilateral trade African Republic, Counter-Terrorism, between the two nations. Democratic Republic of the Congo, Guinea- 7.1.3 Syria: According to Trading Economics, Bissau, Iraq, ISIL (Da’esh), Al-Qaida, Lebanon, imports and exports rom Syria in Australia Mali, Somalia, South Sudan, Sudan, the Taliban, remained unchanged at 0 AUD Million in Yemen, DPRK, Iran, Libya, Syria, the Former February from 0 AUD Million in January of Federal Republic of Yugoslavia, Myanmar, 2021107. Russia/Ukraine, Zimbabwe. 7.2 Embassies: Australia has an embassy108 in A comprehensive list of sanctioned individuals Iran, but not in Cuba, Syria or the DPRK. Cuba, and entities can be found by accessing the and Iran have embassies in Australia, however Australian Government website.103 Syria and the DPRK do not. 7.1.1 Iran: Australia has a “long-standing”104 7.3 OFAC Lists: There are 6 entries, made up bilateral relationship with Iran, which includes of 3 persons and 3 entities listed by the US trade. In 2017-18 the goods and services trade Treasury’s Offce of Foreign Assets Control with between Iran and Australia was worth addresses in Australia.109 AUS$572 million. Iran is traditionally one of the leading export destinations for Australian 7.4 Proliferation: According to the Peddling wheat, as well as wool and meat.105 Peril Proliferation Index, Australia is a Tier 1 country110 (highest threat), but is ranked 5th 7.1.2 North Korea: Australia maintains a best out of 55 Tier 1 countries with a good limited diplomatic relationship with the controls score of 966/1,300.

Australia - Threat Assessment - 2021 31 of 57 Section 8 - Terrorism and Terrorism Finance - �

In this Section 8, the focus in on Terrorism travelled to Iraq or Syria for the purposes of threats and terrorism fnance. partaking in terror activities since 2012. “The government estimates that about 80 8.1 Terrorism/Extremism: Australia is ranked Australians are currently in Syria/Iraq and have 74/138 and rated at “low” with a score of fought for or supported ISIS or similar groups. 2,148/10,000 on the Global Terrorism Index111. Australian authorities are aware of 66 The current threat of terror in Australia is Australians in al-Hawl refugee camp in Syria. currently rated by Australian National Security Australia repatriated eight children from Syria Advisory System as “Probable”, with is level 3 in June.” on the 5 level ranking system.112 The key The report stated that “In 2019, Australia terror threat concerns in Australia are Islamist strengthened CT laws, investigated and extremist terror, as well as other violent disrupted suspected terrorist plots, and ideologies, such as far right extremist neo- maintained high levels of cooperation with the Nazism. Neo-Nazism is on the rise in Australia; United States and other international partners. an extreme right wing lone actor in Melbourne Australia played a major role in the Global was convicted of terror offences in 2019, and Coalition to Defeat ISIS and was a leading an Australian right-wing extremist plead guilty contributor to the Coalition’s military support, to the mass shooting in Christchurch, New humanitarian assistance, and efforts to disrupt Zealand in March 2019. FTFs. Australia was endorsed as a co-chair of Australia has experienced 14 deaths and 16 the GCTF CVE Working Group for a second injured from terrorist attacks between 2010 - term from 2019-2021. At the end of 2019, 2020, and 8 incidents.113 Australia’s National Terrorism Threat Advisory System remained at “Probable,” the third- According to the US State Department Country highest level on a fve-level scale. The Reports on Terrorism (2019)114, Australian law Australian Security Intelligence Organization’s enforcement had conducted 16 major counter 2019 annual report found that “Islamist terror disruption operations since Australia. extremism” remained the principal source of These were all to target “potential or imminent terrorist threat for Australia and reported an attacks in Australia”. A further 98 people have increase in REMT, which Australia calls “extreme been charged with terror offences as a result right-wing terrorism,” in recent years.” of 44 counter-terror operations in Australia. At that time Australian security agencies had According to the Australian National Security identifed 230 Australian citizens who had Advisory, terror attacks in Australia are likely to

Australia - Threat Assessment - 2021 32 of 57 be conducted by a single person or a small [terrorism fnancing] risk is largely infuenced group, and using simple attack by international tensions and conficts, in methodologies. “Any attacks planned in particular Syria and Iraq. The main domestic Australia for at least the next 12 months are risks involve small-scale collection and use of likely to use weapons and tactics that are low- legitimate and illegitimate funds by cost and relatively simple . These include domestic cells aligned with or sympathetic to basic weapons, explosives and frearms. Basic radicalised Islamic jihadist groups abroad, for weapons are everyday objects , such as knives the purposes of committing domestic terrorist and vehicles that do not need special skills to acts.” use as weapons . Explosives remain a favoured “The most signifcant emerging TF risk is the terrorist weapon ; frearms can be acquired by potential for groups as well as other terrorists through both legal and illicit individuals to send money, directly or channels, and have previously featured in indirectly, or raise money for, or otherwise Australian terrorist attacks.” support Australians travelling to conficts zones The OSAC 2020 Crime and Safety assessed abroad (especially Syria and Iraq) to support Sydney, Perth, Canberra and Melbourne all as foreign terrorist groups and terrorist acts, both being a MEDIUM threat locations for a terror abroad and domestically. In this context, the threat. The report wrote “There have been primary destinations for current TF fows from seven terrorist attacks and 15 disrupted Australia were understood to be Syria and Iraq, plots in Australia since 2014. ISIS leadership with the funds often passing through other has repeatedly identifed Australia as a jurisdictions en route. Some Australians have desirable target. The potential return of funded travel for themselves from legitimate dozens of Australian foreign fghters continues sources to fght in confict zones, and some to pose a long-term risk, while homegrown funds have also been raised through abusing extremists with basic, readily available weapons registered and informal “pop-up” charities may be the greatest near-term threat. Active linked to humanitarian fund-raising.” shooter incidents and vehicle attacks at According to the Terrorism Financing in mass gatherings continue to be of high Australia Report 2014, published by Austrac116, concern to law enforcement. Most recent “Terrorism fnancing is largely motivated by terrorism-related incidents have involved international tensions and conficts. young, homegrown Australian extremists Communal and sectarian links between groups infuenced and inspired online.” overseas and individuals in Australia drives 8.2 Terrorism Finance: According to the Australian involvement in terrorism fnancing. FATF’s 2015 Mutual Evaluation Report115 the Use of conduit countries. In recent cases, terrorism fnancing risk is mostly infuenced by those sending funds out of Australia for wider international trends and tensions. “TF

Australia - Threat Assessment - 2021 33 of 57 terrorism fnancing tend to use conduit In Australia, the banking and remittance countries rather than send the funds directly to sectors are used more frequently than other high-risk jurisdictions. This makes it more channels to send funds to individuals engaged diffcult for fnancial institutions to link the in foreign insurgencies and conficts, some of international funds transfers directly to whom are also suspected of engaging with terrorism fnancing. Conduit countries may also terrorist groups. … be used in an attempt to evade United Nations Online payment systems may be used to Security Council sanctions and Australian collect donations and transfer funds to autonomous sanctions. extremists in Australia and overseas. The use of Commingling legitimate funds with funds online payment systems may correspond with collected for terrorist groups. This is the use of social media by terrorist groups and especially the case for donations collected extremists to radicalise, recruit and through charities and NPOs. Commingling can communicate with sympathiser. disguise funds raised for terrorism fnancing Stored value cards and credit/debit cards may among legitimate donations. It can also add to be used by Australians linked to foreign the total pool of funds directed towards a terrorist groups to access funds overseas. terrorist group.” Charities and NPOs may be used to raise The report also identifes several specifc funds for groups engaged in foreign confict channels used to fnance terrorism; “Self- and as a cover to transfer funds offshore. Funds funding from legitimate sources being used to for legitimate humanitarian aid may also be pay travel and living expenses for Australians to diverted in Australia, or at their destination, and fght alongside terrorist groups overseas. used to support terrorist groups.” Family and associates in Australia have also knowingly or unwittingly transferred their own In 2017, AUSTRAC published a report on legitimately obtained funds to persons Terrorism Financing in South East Asia and engaged in confict. There is also a signifcant Australia117. “Small-cell terrorist activity, foreign risk that self-funding may be used to fund the terrorist fghter travel and the growing number activities of any ‘lone wolf’ extremists within of lone actors will see continued use of self- Australia. … funding to raise funds and cash smuggling to move them. These proven, easy-to-use There is a signifcant risk that the cross-border terrorism fnancing methods reduce the need movement of cash may be used as a channel for terrorists and their supporters to resort to by Australians travelling overseas to fund more complex fnancial activity or adopt new terrorist groups and activity. The risk is payment systems. The region’s porous land and heightened when Australians travel to Syria and close maritime borders, as well as informal neighbouring countries.

Australia - Threat Assessment - 2021 34 of 57 cash-intensive economies, also infuence the platforms if detection and disruption of continued use of established methods. commonly used methods force a shift in fnancial activity”. Terrorism fnancing funds fowing out of the region are currently channelled mainly into the The recommendations in the report advise Syria-Iraq confict, but comprise only a small authorities to focus on the areas below as their portion of international funding to factions highest priorities: fghting in that area. While outfows to foreign • Self-funding from legitimate sources; confict zones pose a high risk, concern is growing over signs of funding entering the • At risk - NPOs (particularly those that region to support local terrorist actors”. receive funds sent from foreign regions or that send funds abroad or have links to “Banking and remittance sectors continue to be confict zones); used to move terrorism funds within countries and to foreign regions. Terrorism funding • Cross border movement of funds / value; through the banking sector is often small-scale and and hard to distinguish from the volume of • External funding into the region. legitimate ordinary daily fnancial transactions.

Authorities have some degree of visibility over Vulnerability to TF AUSTRAC 2016 Risk Assessment remittance fnancial activity including Self-funding from legitimate sources High international transfers where funds fow NPOs High through bank channels. However, suspicious Cross border movement of cash Highest transaction reporting (STR) from remitters is Use of social media and crowdfunding platforms Medium Banking sector Medium generally lower than expected when Remittance sector Medium considering the sector’s high vulnerability to Source: https://www.austrac.gov.au/sites/default/fles/2019-07/regional-risk- assessment-SMALL_0.pdf misuse. This problem, combined with the challenges the sector poses for regulatory oversight, raises concern that actual terrorism fnancing misuse of remitters may be higher than currently detected”

Two emerging threats identifed relate to “greater uptake of stored value cards and online payment platforms if detection and disruption of commonly used methods force a shift in fnancial activity”, and “greater uptake of stored value cards and online payment

Australia - Threat Assessment - 2021 35 of 57 Australia - Threat Assessment - 2021 36 of 57 Section 9 - Money Laundering - �

In this Section 9 the focus is on Australia’s Technology has also changed the way in which vulnerability to money laundering. criminals launder money, with “the electronic transfer of funds to multiple accounts in According to the 2017 OC Report, published different jurisdictions” the dominant method by the ACIC, “Money laundering remains a key for the movement and laundering of illicit risk to Australia and is the common element in funds.121 almost all serious and organised crime. Money laundering enables criminals to hide and In the Austrac 2011 Report it was stated that accumulate wealth, avoid prosecution, evade money laundering had been highlighted as taxes, increase profts through re-investment, one of the three “critical organised crime risks and fund further criminal activity. Money to the Australian community”.122 laundering activities also have the potential to 9.2 Higher Risk Areas: The FATF Mutual undermine the stability of fnancial institutions Evaluation Report into Australia published in and systems, discourage foreign investment 2015123 states that the prevalence of other and alter international capital fows.”118 serious organised crime suggests that the use The Serious Financial Crime in Australia (2017) of money laundering channels in Australia is report also states; “Money laundering remains high. “Authorities have found that organised a fundamental enabler of fnancial crime and is criminal groups use complex corporate a signifcant and potentially lucrative criminal vehicles to conceal and launder proceeds, enterprise in itself. As well, our stable fnancial which are often sent out of Australia as part of markets and valuable real estate market make the laundering process or to fund more drug- Australia an attractive destination for criminal related activity. “ groups and individuals looking to invest or However the Serious Financial Crime report, launder the proceeds of crime.”119 conducted by ACIC124 states that the method 9.1 Money Laundering: The Serious Financial chosen for laundering money is often based Crime in Australia (2017)120 report published around the predicate offence that has by the ACIC highlights informal remittance generated the illicit funds. “Methodologies services, smart automatic teller machines, used to launder the proceeds of drug crime, for stored value cards, trade-based money example, are likely to differ from the laundering, online wagering platforms, methodologies used to launder the profts of offshore business structures and fnancial crime. The former requires larger professional facilitators as all being amounts of illegal cash to be placed into vulnerable as tools of money laundering. banking or alternative remittance systems before it can be laundered, while fnancial

Australia - Threat Assessment - 2021 37 of 57 crime proceeds are more likely to already be in Remittance services are outside of the formal the legitimate banking systems. It is likely that fnancial and banking sector, and is a very the majority of the proft from fnancial crime is cash intensive business. The majority of laundered by transferring funds through a remittance translations are low-value, high- series of bank accounts in different volume. These businesses are therefore highly jurisdictions. Corporate structures within vulnerable to money laundering, with OCGs Australia and overseas are also used to able send illicit funds back and forth facilitate this process.” internationally. Effectively, those looking to launder illicit funds can use these services in In the AUSTRAC 2011 Report the most high order to move money from one account to risk money laundering areas were; the another, with little scrutiny and relatively banking system, money transfer businesses undetected. and alternative remittance services, the gaming sector, high value goods and AUSTRAC’s 2011 report into Money dealers. The less visible channels for money Laundering (2011)126 went into detail about laundering were identifed as; professionals - the different ways in which money launderers both those unknowingly laundering money, manipulate remittances services; and those who are criminal entities, legal entity “Structuring. As in the banking sector, the structures, cash intensive businesses, technique of breaking down transactions into electronic payment systems and new payment smaller amounts is widely used to try to avoid methods, cross-boarder movement of cash, detection. international trade, and investment vehicles. Cuckoo smurfng. This has emerged as a key 9.3 Remittance Services: It is likely that money laundering methodology over the past remittance services are heavily used for the decade. It involves complicit remittance dealers purposes of transmitting illicit funds for the operating as ‘go-betweens’, depositing illicit purpose of laundering. In 2017, US$16.8billion funds (for instance, the proceeds from drug in remittances were sent from Australia, deals) into accounts of innocent parties who making it the 11th largest remittance-sending are expecting transfers from legitimate country globally.125 The largest receiving transactions made overseas. In exchange, nations for remittances from Australia were criminals receive matched payments overseas China, India, Vietnam and the Philippines. without leaving a money trail back to them. All remittance services in Australia must be Offsetting. The common alternative remittance registered with AUSTRAC and abide by certain practice of offsetting — hawala or hundi — regulations. Those that are not are highly likely enables the international transfer of value to be used by one launderers. without actually transferring money. This is possible because the arrangement involves a

Australia - Threat Assessment - 2021 38 of 57 fnancial credit and debit (offsetting) which they can use to help present ‘front relationship between two or more dealers businesses’ as legitimate operations. operating in different countries. Criminals can International funds transfers (‘wire’ exploit offsetting to conceal the amount of illicit transfers). Transfers through banking networks funds transferred, obscure the identity of those are the main way of moving funds rapidly involved and avoid reporting to AUSTRAC.” across international borders. Criminals exploit These methods are especially useful for this service to move the proceeds of crime moving large amounts of dirty cash around, quickly and securely to foreign jurisdictions and as such are favoured by those selling or where they can take advantage of features such distributing illicit goods. as bank secrecy laws to complete the money laundering process. 9.4 The Banking Sector: The AUSTRAC 2011 report127 suggests there are signifcant Loans. Criminals use loans to layer and connections between the traditional banking integrate illicit funds into other assets such as sector and money laundering; “A signifcant real estate and motor vehicles. They can amount of money laundering activity begins or launder funds by obtaining loans which they makes its way through the banking system at then pay out using lump sum cash payments or some stage. smaller structured cash amounts. The loans are essentially taken out as a cover for laundering The banking sector is attractive to money criminal proceeds under the guise of launderers because its large number of users repayments. Transactions related to a loan may and vast fnancial fows provide opportunities attract less scrutiny than signifcant cash to disguise and conceal illicit transactions. For activity. Criminals may also obtain loans in false criminals, the effectiveness of services such as names to try and distance themselves from funds transfers and loans, the security of suspicious fnancial activity. deposits and the liquidity of banked cash outweigh the risks of detection.” Bearer negotiable instruments (BNIs). BNIs, including bank drafts, promissory notes, The key connections between the banking traveller’s cheques and money orders — offer a sector and more laundering are; portable and compact way to smuggle high- “Accounts. Financial intelligence shows bank value assets across international borders. accounts are misused to introduce illicit money Criminals may attempt to purchase BNIs with into the fnancial system before it is moved to co-mingled funds (consisting of legitimate other fnancial markets in Australia and abroad. business earnings and the proceeds of crime) Criminals can also target account opening to camoufage the connection to underlying procedures to build false customer profles, crimes

Australia - Threat Assessment - 2021 39 of 57 Safe deposit boxes. Criminals exploit the Crime in Australia report states that, “not only privacy of safe deposit boxes to store the is the value of investment likely to increase, the proceeds and instruments of crime including benefcial (true) ownership of the property can cash, drugs and frearms. They can use false be concealed. In addition, professionals identities to lease multiple boxes across facilitating real estate transactions—such as real different bank branches to try to hinder law estate agents, conveyancers and lawyers—are enforcement investigations.” not subject to most controls under Australia’s anti-money laundering and counter-terrorism 9.5 Cash Based Money Laundering: Cash fnancing (AML/CTF) regime. They currently based money laundering is incredibly versatile have no legal obligation to report suspicious and takes many forms. The key ones identifed transactions, despite these professions posing in a variety of reports are; High Value Goods, high money laundering/ terrorism fnancing Stored Value Cards, and Smart ATMs. risks.” 9.5.1 High Value Goods (HVGs): The 2017 Effectively, using real estate to launder illicit report into Serious Financial Crime by the funds allows OCGs to hide proft of criminal ACIC128 High Value Commodities “continue to activity, but also the opportunity to grow the provide an effective vehicle for organised investment. crime groups and criminal entities to commit fnancial crime. Jewellery, precious gems and metals as well as art and antiques offer OCGs an They are used to store and transfer value and effective method of storing wealth and moving launder the proceeds of crime, due to the it effciently across borders. “Jewellery and opportunity they afford to conceal illicit profts precious gems in particular can be accepted in legitimate assets that can be purchased with within the criminal fraternity as a form of minimal regulatory oversight, and can over currency, where the transfer of value or the time accumulate ostensibly legitimate value. encashment of items are largely untraceable. High-value commodities include real estate, The signifcant value of small items of jewellery precious gems, valuable metals, art, and precious gems also enables more antiquities, luxury vehicles and gold bullion. convenient storage, transfer and concealment Gold bullion is not only used to store or transfer than the equivalent value in cash. The goods value but provides a way to exploit different tax are also free from reporting obligations when treatments for gold and obtain fraudulent purchased using cash or when being moved refunds.” out of Australia.”

The real estate market in Australia is thought In November of 2019, more than AUS$8.5 to be heavily utilised by those looking to million worth of jewellery, cars and other luxury launder illicit funds. The Serious Financial items were seized by Australian Federal Police

Australia - Threat Assessment - 2021 40 of 57 as part of an investigation into offshore funds looking to launder the proceeds of crime. With being laundered in Australia.129 this type of card, there are thresholds applicable if the card holds above a certain Gold bullion has also been identifed as a amount of money which introduce restrictions methods used by OCGs to launder illicit funds. on SVCs. For an SVC that holds below It high value and portability, as well as being AUS$1,000 it is not regulated by AML/CTF highly available, make it a useful and relatively legislation. If the SVC can hold upwards of easy method for the laundering of illicit funds. AUS$1,000 and can withdraw cash, or can hold Through the use of gold bullion, OCGs are AUS$5,000 or more and cash cannot be also able to increase their funds as they can withdrawn, then these cards are regulated. exploit good and services tax (GST) provision. “This type of fraud involved altering or The Serious Financial Crime in Australia report misclassifying pure gold bullion and coins— identifed both above and below threshold which are not legally taxed—as lesser quality or SVCs as vehicles to move illicit funds; “Above scrap gold, which is taxed at 10 per cent, to threshold stored value cards (SVCs) have been fraudulently claim refunds in the form of GST identifed as being used to move large sums of tax credits.” money derived from the proceeds of crime through established fnancial networks, often High value goods are known to be a useful offshore. tool for money laundering in Australia, due to inconsistent laws and minimal regulation. In a While above threshold SVCs are subject to anti- report for the Sydney Morning Herald in money laundering/counter-terrorism fnancing

130 2019 , Professor Liz Campbell stated that, reporting, below threshold SVCs have also "unlike property transactions and fnancial been identifed as being used to launder institutions, records are not routinely kept of money, despite holding less monetary value. purchases of luxury goods such as watches, Below threshold SVCs are an attractive option, jewellery, artworks or antiques.” There is no though, as they offer complete anonymity and requirement for dealers of high value goods to do not attract reporting obligations. The make a report if they suspect the funds used to limitation of storage value is often purchase items may be illicit or to attempt to circumvented by purchasing multiple cards.” ascertain the source of the funds used to AUSTRAC published a report into the use of purchase goods. This leaves OCGs with a great SVCs for the purpose of money laundering in deal of freedom, and the high value goods April 2017.131 It states that between market exceptionally vulnerable to money September 2015 - August 2016, AUS$5.1 laundering. billion was loaded on to SVCs in Australia. 9.5.2 Stored Value Cards: Stored value cards More than AUS$2.2 billion of this was (SVCs) are known to be a useful tool for OCGs

Australia - Threat Assessment - 2021 41 of 57 redeemed offshore, and of this, more than enforcement agencies. The casino chips are AUS$981.5 million was redeemed in cash. then cashed-in as ‘winnings’ and the money, which is now linked to a legitimate source, is From April 2014 - March 2016 916 Suspicious spent domestically or transferred to overseas Matter Reports (SMRs) were submitted in accounts. These methods are often used in the relation to SVCs. The total value of these SMRs placement and layering phases of the money was AUS$72.3 million. It is assumed that this laundering process.” is likely to be an underestimation of the actual scale. On the 15th of February 2021 the CEO of Crown Resorts - Ken Barton - was forced to 9.5.3 Smart Automatic Teller Machines: The step down from his role following an Serious Financial Crime report identifes Smart investigation into money laundering within its ATM’s as being a potential money laundering casino’s.132 In a report published prior to threat; “Smart automatic teller machines Barton’s departure the inquiry commissioner capable of accepting cash deposits have the found that “Crown had been "facilitating potential vulnerability of allowing people to money laundering, exposing staff to the risk of make illicit cash deposits into third-party detention in a foreign jurisdiction and accounts. This practice, although not entirely pursuing commercial relationships with anonymous, has been seen as an opportunity individuals" connected to criminal groups.” to move cash into accounts while avoiding face-to-face interactions with bank staff Online wagering platforms have also been members, who could identify suspicious identifed as being a method through which transactions and report them.” OCGs launder proceeds of crime. The Serious Financial Crime in Australia report states; 9.6 The Gaming Sector: The gaming sector in “Serious and organised crime entities may have Australia is highly vulnerable to money both access to and control of offshore laundering through multiple channels. In wagering platforms. Betting activity through recent years it has become increasingly offshore platforms also conceals betting activity apparent that casinos are being used as a on corrupted sports and racing events, and the method to launder the proceeds of crime. In potential laundering of criminal wealth.” the 2011 report into money laundering in Australia, it reported that the exchanging of illicit cash for casino chips or gaming tokens in casino’s had been identifed as a common method for money laundering. “Exchanging illicit cash for casino chips or gaming tokens. This is a common gaming-related money laundering method observed by law

Australia - Threat Assessment - 2021 42 of 57 Section 10 - Response - �

In this Section 10, the focus is on Australia’s substantial results in risk, policy and level of resilience and response. coordination, the use of fnancial intelligence and combating terrorist fnancing and 10.1 FATF: The most recent country evaluation proliferation fnancing. Only moderate or minor of Australia was published in 2015.133 The improvements are needed in these areas. report stated the Australian authorities have a Major improvements are needed in other good understanding of the money laundering areas,” (ML) and terror fnancing (TF) risks prevalent in the region, however there are key areas that The main area the report identifed as needing “remain unaddressed, and an underlying improvement was the actual focus of law concern remains that the authorities are enforcement agencies; “Australia’s main addressing predicate crime rather than ML. criminal justice policy objective is to disrupt and deter predicate crime, including if Based on FCN’s simple scoring model, necessary through ML investigations/ Australia scored 65/100 on technical prosecutions. Australia focuses on what it compliance and 52/100 for effectiveness. considers to be the main three proceeds generating predicate threats (drugs, fraud and tax evasion). However, Australia should expand its focus to ensure that a greater number of cases of ML are being identifed and investigated adequately. “

"Most designated non-fnancial business and In terms of its level of compliance with FATF profession sectors are not subject to AML/CTF recommendations, the report stated; “Australia requirements, and did not demonstrate an has a strong institutional framework for adequate understanding of their ML/TF risks or combatting ML, TF, and proliferation fnancing. have measures to mitigate them effectively. Australia’s measures are particularly strong in This includes real estate agents and lawyers, legal, law enforcement, and operational both of which have been identifed to be of areas, and targeted fnancial sanctions; some high ML risk in Australia’s National Threat improvements are needed in the framework Assessment. “ for preventive measures and supervision, in particular for designated non-fnancial "Operationally, national AML/CTF coordination businesses and professions. In terms of is very comprehensive, but demonstrating its effectiveness, Australia has achieved high overall success is challenging, although results results in international cooperation, and from national taskforces are showing positive

Australia - Threat Assessment - 2021 43 of 57 trends. A stronger focus is required on R26 (FI Supervision) - PC, R28 (DNFPBs monitoring and measuring success.“ Supervision) - NC & R29 (FIU) - C. Taking these core elements, FCN scores the UK at 42%. In terms of Australia’s terror fnance combatting framework, the FATF largely On Effectiveness, Australia received 1 “High”, 4 praised Australian authorities. “Australia’s legal “Substantials”, 6 “Moderates”, and 0 “Lows.” framework to combat TF is comprehensive. Key IO results were: IO3 (Supervision) - M, IO4 Australia has undertaken several TF (Preventative Measures) - M, IO6 (FIU) - S and investigations and prosecutions, and secured IO8 (Confscations) - M. Taking into account three convictions for the TF offence. Australia these core elements, FCN scores Australia at also successfully uses other criminal justice and 42% for effectiveness for these key areas. administrative measures to disrupt terrorist and The 3rd Enhanced Follow Up Report (FUR) & TF activities when a prosecution for TF is not Technical Re-Rating was published In practicable.” November 2018. Recommendations 5, 8, 15, However “Australia has not conducted a formal 19, 30, 32 and 36 were all re-rated. The new risk assessment on TF risks associated with ratings are 17 “Compliant” ratings, 9 “Largely legal persons and arrangements. The majority Compliant, 9 “Partially Complaint” and 5 “Non of legal persons are registered with the Compliant”. Core Recommendation result Australian Securities and Investment changes were: R8 (NPOs) - LC, and R15 Commission (federal) while others with State or (NewTech) - C. The report does not re-rate IO Territory authorities. While the information ratings. “Overall, Australia has made some seems to be largely available to competent progress in addressing the technical authorities and to the public, very limited compliance defciencies identifed in its MER verifcation is conducted on the information and has been re-rated on seven that is registered. Information on the benefcial Recommendations. However, 14 owner of legal persons and legal arrangements Recommendations remain non-compliant or is not maintained and accessible to competent partially compliant”. authorities in a timely manner. “ 10.2 Financial Institutions: Australia was Key areas for technical compliance with 40 rated “Compliant” for R9 (FI Secrecy Laws). For Recommendations show that Australia R11 (Record Keeping), R12 (PEP), & R14 received 12 “Compliant” ratings, 12 “Largely (Money or Value Transfer Services), Australia Compliant, 10 “Partially Complaint” and 6 “Non was rated “Largely Compliant”. Australia was Compliant”. 10 Core Recommendation results given a rating of “Partially Compliant” for R10 were: R8 (NPOs) - NC, R10 (CDD) - LPC, R12 (CDD) & R16 (Wire Transfers), and a rating of (PEPs) - LC, R13 (CBR) - NC, R14 (MVTS) - LC, “Non-Compliant” for R13 (Correspondent R15 (NewTech) - LC, R22 (DNFPBs CDD) - NC, Banking).

Australia - Threat Assessment - 2021 44 of 57 On this non-compliant rating for Correspondent Banking the Mutual Evaluation report wrote “Financial institution representatives did not highlight any major challenges or diffculties in instituting measures for correspondent banking under the AML/CTF Act and AML/CTF Rules. AUSTRAC identifed Australia was rated “Partially Compliant” for very few breaches of correspondent banking R26 (Regulation & Supervision of FIs), for R27 obligations in 2013/14. Based on AUSTRAC’s (Powers of Supervisors), and R35 (Monetary understanding, fnancial institutions would Sanctions). For R28 (Regulation & Supervision adopt a risk-based approach to determine the of DNFPBs), Australia was rated as “Non- extent of due diligence that is required with Compliant”. respect to correspondent banking. Interviews with the sector indicate that Australian rules on According to a 2021 media article, “Australian correspondent banking are being banks accounted for the second-highest implemented. It should however be noted that fnancial penalties in 2020, which amounted to the AML/CTF Act correspondent banking $981.06 million in fnes from three cases, while requirements are not in line with the FATF the US banks topped the list with the highest Standard; as a result the measures fnes of $11.11 billion from 12 violations in implemented by reporting entities may not 2020, according to Finbold”134. According to meet the FATF standard, even if they meet ABC News, Westpac “has agreed to pay the Australia’s requirements.” largest fne in Australian corporate history — a $1.3 billion civil penalty for more than 23 10.3 Designated Non Financial Businesses million breaches of anti-money laundering & Professions (DNFPB’s): Australia was rated laws”…The biggest breach was Westpac’s “Non-Compliant” for R22 (DNFPB CDD) & R23 failure to properly report more than 19.5 (DNFPBs Other Measures). million instructions to transfer money overseas 10.4 Benefcial Ownership Registers of or bring foreign funds into Australia, totalling Legal Persons: Australia is rated as “Partially more than $11 billion….Westpac has also Compliant” with FATF R24 (Transparency & BO admitted it failed to properly assess and of Legal Persons), & “Non-Compliant” with monitor the risk associated with some of there R25 (Transparency & BO of Legal foreign transfers, some of which were banks on Arrangements). “higher risk jurisdictions” including Iraq, Lebanon, Ukraine, Zimbabwe and Democratic 10.5 Regulatory Supervision: Australia Republic of Congo”. scored 1.9 in the country rankings by the World Bank for regulatory quality (2018).

Australia - Threat Assessment - 2021 45 of 57 State Street Bank was also fned A$1.4 million 10.6 Financial Intelligence Unit: AUSTRAC (US$950k) fne for ninety-nine (99) self- (Australian Transaction Reports and Analysis reported breaches in connection with failing to Centre) is Australia’s Financial Intelligence Unit declare international transaction instructions. (FIU), and has been operational since its The Australian Transaction Reports and establishment in 1989.138 AUSTRAC is a Analysis Centre (AUSTRAC) said banks need to member of the Egmont Group.139 The FIU was report suspicious transactions in a timely rated as “Compliant” under R29 in the FATF’s manner to counter terrorism-fnancing and Mutual Evaluation Report. money laundering.135

This follows fnes against Commonwealth Bank for AML/CFT failures in 2017 for just over A$700 million in 2018 for over 53,000 alleged violations of Australia’s AML/CTF law. Although the case involves several types of alleged AML violations, it fundamentally rests According to AUSTRAC’s annual evaluation on the bank’s use of so-called intelligent 265,000 Suspicious Matter Report’s were made deposit machines (“IDMs”), a type of ATM in 2019.140 This is an increase of 258% over a 4 which allowed customers to anonymously year period. deposit and transfer cash. The IDMs also became an alleged favoured conduit for Australia was also rated as “Largely money laundering by criminals involved in Compliant” for R34 (Guidance and Feedback) 141 drug traffcking and illegal frearms136. in the 2015 MER. Austrac regularly publishes individual risk assessments - See Section 6.1 National Australia Bank reported in June 2021 above. that it is under investigation for suspected serious and ongoing breaches of anti-money 10.7 Law Enforcement: Australia was rated laundering and counter-terrorism laws, as “Largely Compliant” for R30 & R31 (Law sparking concerns about potential fnes and Enforcement Responsibilities & Powers) in the higher compliance costs. Austrac stated there 2015 MER. were "areas of serious concern" that required The Australian Federal Police (AFP) are further investigation, and that the problems at Australia’s national law enforcement agency. NAB involved "potential serious and ongoing The AFP has a wide mandate and protects the non-compliance" with customer identifcation national interests, and runs investigations into procedures, customer due diligence and other serious organised crime at the national level. It compliance requirements137. has jurisdiction in all Australian Territories. For

Australia - Threat Assessment - 2021 46 of 57 2017-18, the AFP had a budget of AUS$1.75 proceeds of crime recoveries have increased billion.142 by almost 82% from an average of $25.7 million per annum in 2015 to an average of Each state in Australia has control over its own approximately A$46.7 million per annum over law enforcement on the ground. These the period of the 2014/15 to 2017/18 fnancial localised police forces all report into state level years. government, and carry out the bulk of policing in their state. 10.9 Financial Information Sharing Partnerships (FISPs): IN 2017 AUSTRAC Australia was rated in the 2015 MER as launched the Fintel Alliance.144 It brings “Compliant” for R37 (Mutual Legal Assistance together both private and public sector -MLA) , R38 (MLA, Freezing & Confscation), organisations to “increase the resilience of the R39 (Extradition) & R40 (Other Forms of fnancial sector to prevent it being exploited by International Cooperation). criminals [and] support law enforcement 10.8 Statistics: Australia is rated “Largely investigations into serious crime and national Compliant” for R33 (Statistics) after the 2015 security matters.” MER, which stated that “metrics about how well According to Fintel’s annual report the authorities’ efforts are addressing ML/TF (2019-2020)145, the group helped to aid in risks are limited, and the authorities were investigations being conducted by federal and challenged to present convincing evidence state level, including 9 national taskforce’s. It about what outcomes their efforts are also expanded its membership, going from 24 achieving.” members to 29. “In the past 12 months Fintel According to the Australian Government, “in Alliance continued to target priority crimes to the 8 year history of the CACT (Criminal Assets deliver meaningful outcomes for the Australian Confscation Taskforce) in excess of AUD900m community by disrupting professional money of criminal assets have been restrained, with laundering, targeting the importation of child- over AUD250m restrained in the 2019-2020 like sex dolls, hardening the Australian border fnancial year143, and that average restraint to child sex offenders and protecting fgures have increased by 90% from an average vulnerable Australians from scams.” of A$60.8 million per annum in the four years 10.10 Other Indices: A number of important from 2011 to 2015, to an average of sources identify both indirect and direct approximately A$115.6 million per annum over indicators that contribute to an assessment of the period of the 2014/15 to 2017/18 fnancial response to the fnancial crime threats years. The 2019/20 fnancial year has brought Australia faces, which include the following: the largest annual amount of assets restrained since the creation of the CACT, with over 10.10.1 Freedom: According to the Heritage A$250 million in assets restrained. Average Foundation’s 2019 Index of Economic

Australia - Threat Assessment - 2021 47 of 57 Freedom146, Australia’s economic freedom 10.10.4 Global Tax OECD: Australia is a score is 82.4/100 making its economy one Global Forum Member that was rated “Largely described as “free”. It is ranked at 3rd in the Compliant” in its 2018 Second Round world. However, this score is down by 0.2% on Review.150 the previous year. a broader concept of 10.10.5 Cyber Security: According to the freedom is described by Freedom House’s, 2018 Global Cybersecurity Index (GCI), Freedom in the World Index, which ranks Australia scored 0.89 and is described as countries and their citizens as either, “free” having a “High” level of commitment. It ranks “partly free” or “not free”. Australia was given a 10th globally out of 175 nations. score of 97/100 and rated as “Free”.147 10.11 Anti Corruption Commitments: Australia has ratifed151 the United Nations Convention against Corruption (UNCAC) and the Organisation for Economic Co-operation and Development (OECD) Anti-Bribery Convention152.

Reviews of compliance with the OECD 10.10.2 AML Indices: According to the 2019 Convention are undertaken by the OECD Basel AML Index,148 Australia had a score of Working Group on Bribery, through peer 3.97/10 and was ranked 110/125 (lower reviews153. Countries are expected to be rankings and scores are better). In 2020 the reviewed through 4 phases with reports score was 3.84 and 124 / 141. published. Australia has completed 4 phases and the Two-year Follow-Up to Phase 4 Report was published in 2019.

According to TI154, “the enforcement of foreign bribery laws among most OECD countries is shockingly low”. Australia is rated as having “moderate enforcement” on rankings of enforcement of OECD obligations on 10.10.3 Global Slavery Index: According to corruption alongside Germany, Italy, Spain, the Global Slavery Index 2018149, Australia has France, Brazil, Sweden, Norway, and Portugal. a low incidence of human traffcking, (0.6 per These 9 countries represent 20.2% of global 1,000, with an estimated 15,000 victims). The exports. index gave Australia a response rating of BBB, which is above the regional average. 10.13 Australia AML Reform: In January 2021, AUSTRAC published on its website a

Australia - Threat Assessment - 2021 48 of 57 mechanism for consultations on Rules for AML/ assessment requirements during a CTF reforms155. “Reforms have been made to correspondent banking relationship; and strengthen Australia’s anti-money laundering • Additional measures - In addition to these and counter-terrorism fnancing laws. The changes, the Phase 1.5 reforms support reforms, known as Phase 1.5, will increase the cooperation and collaboration to detect, resilience of our fnancial system against deter and disrupt money laundering, criminal threats, while making it easier for terrorism fnancing, and other serious businesses to understand and comply with crimes, and increase the AUSTRAC CEO’s their obligations”. The changes for reporting ability to provide access to AUSTRAC institutions include: information to law enforcement partners. • Customer due diligence - These reforms 10.12 Australia AML/CTF Reform: The make it clear that customers must be Australian government passed AML/CTF identifed before providing a designated reforms in December 2020, via the Anti-Money service, except for very limited Laundering and Counter-Terrorism Financing circumstances. They also expand the and Other Legislation Amendment Bill 2020 circumstances where you can rely on (the Amendment). It’s a step that’s been a long customer identifcation by another time coming with changes recommended reporting entity. following a statutory review of the country’s • Tipping off - There will be expanded primary AML/CFT legislation in 2014. These exceptions to tipping-off provisions that came into force in June 2021 and have been allow information from suspicious matter described as Tranche 1.5 responding to FATF reports (SMRs) to be shared with an criticisms including that DNFBPs are not external auditor, or offshore members of included in the AML CTF regime, though this the same corporate or designated business failing is still not remedied and may come in a group that are regulated by laws that give future Tranche 2156. Tranche 1.5 makes it effect to some or all of the FATF explicit that reporting entities must not provide recommendations; and a service until after they perform the proper CDD, though the ability of entities to rely on • Correspondent banking - These changes third-party due diligence has been expanded. affect fnancial institutions. The reforms Additionally, the new law strengthens due include clearer prohibitions against diligence requirements for entering into entering into a relationship with a bank that correspondent banking relationships and bans allows its accounts to be used by a shell FIs from entering into a relationship with an bank, in addition to clearer and institution that permits shell banks to use their strengthened due diligence and risk accounts. Cross-border payment reporting is also more streamlined157.

Australia - Threat Assessment - 2021 49 of 57 Section 11 - Detailed FATF Results & FCN Scoring - �

The country evaluation report for Australia was published in April, 2015. A follow-up report was published in 2018. Australia reported 5 “Non-Compliant” ratings for, R13 (Correspondent Banking), R22 (DNFBPs Customer Due Diligence), R23 (DNFBPs Other Measures), R25 (transparency and benefcial ownership of legal arrangements) and R28 (Regulation and Supervision of DNFBPs). Australia is not included on the FATF Strategic Defciencies/Call to Action lists. Australia reported 6 “Moderately Effective” ratings for IO3 (Supervision), IO4 (Preventative Measures), IO5 (Legal Person’s and Arrangements), IO 7 (ML Investigation and Prosecution), IO 8 (Confscation) and IO 10 (TF preventive measures and fnancial sanctions) in the 2015 evaluation and was not re-rated for effectiveness in 2018. .

FATF 40 Recommendations - “Technical Compliance“

R1 R2 R3 R4 R5 R6 R7 R8* R9 R10*

PC LC C C C C C LC C PC

R11 R12* R13* R14* R15* R16 R17 R18 R19 R20

LC LC NC LC C PC PC PC LC C

R21 R22* R23 R24 R25 R26* R27 R28* R29* R30

C NC NC PC NC PC PC NC C C

R31 R32 R33 R34 R35 R36 R37 R38 R39 R40

LC C LC LC PC C C C C C

Key: C = Compliant, LC = Largely Compliant, PC = Partially Compliant, NC = None Compliant, * = core

FATF 11 Immediate Outcomes - “Efectiveness”

IO1 IO2 IO3* IO4* IO5 IO6* IO7 IO8* IO9 IO10 IO11

SE HE ME ME ME SE ME ME SE ME SE

Key: HE = Highly Efective, SE = Substantially Efective, ME = Moderately Efective, LE = Low Efective, * = core

FATF Overall Scores by FCN

1. FATF 40 Recommendations - “ Technical Compliance“ 65

2. FATF 10 Core* Recommendations - “ Technical Compliance“ 37

3. FATF 11 Immediate Outcomes - “ Efectiveness“ 52

4. FATF 4 Core* Immediate Outcomes - “ Efectiveness“ 42

Scoring by FCN = C/HE -3, LC/SE -2, PC/ME -1, NC/LE -0. Total score divided by total available score x 100

FATF Strategic Defciency List No

Australia - Threat Assessment - 2021 50 of 57 Section 12 - Remittance Data - �

According to World Bank data,158 Australia application.160 The Migration Observatory sends out signifcantly more money than it writes; “Australia’s points system is more receives. In 2019, outbound remittances were centrally planned as the government, rather over 4 times what at received. Outbound than employers, plays the key role in deciding remittances were US$7.441 billion. This is in who should be admitted. There is also more comparison with US$1.754 billion inbound scrutiny of migrants’ personal characteristics remittances, which makes up for approximately such as their age and qualifcations,” Based on 0.126% of Australian GDP. the number of points a person receives, migrants are given permanent residence rights immediately.

In 2017, the nation that received the greatest amount of remittances from Australia was China, which received US$2.9 billion in remittances in 2017.161 This was followed by India, Vietnam, the UK and the Philippines.

According to the Migration Data Portal,159 Australia has a total population of 7.7 million The United Kingdom is the nation that sends migrants of a total population of 25.5 million the largest amount of remittances to Australia, (at the mid-year of 2020). This equates to with US$446 million in 2017. This is not 30.1% of the population being international surprising, when it is considered that the UK’s migrants. Of these 76,800 are refugee’s. There Offce for National Statistic’s points out that the are believed to be around 598,800 Australian's largest proportion of Australian’s living outside living abroad. of Australia live in the UK, with more than 120,000 Aussies currently residing there.162 Australia is well known for holding a stringent, The next largest amounts of remittances sent “points based” immigration system. Meaning to Australia are from the US, New Zealand, candidates with the highest score, based on Canada and Italy. certain guidelines are invited to submit a visa

Australia - Threat Assessment - 2021 51 of 57 Appendix 1 - FCN Threat Types Mapping - �

Threat types are risk rated “High”or “Not Rated” based on inclusion and special mention given in the Austrac 2011 Report & more recently by Austrac Annual Reports. The mapping has been carried out based on a full analysis of the information contained in this Threat Assessment. To identify those predicate offences to money laundering as well as money laundering itself, and to terrorism and terrorism fnance that pose highest risks, reliance has been placed on the Government of Australia and it’s agencies (with greatest reliance being placed on the contents of the 2011 Austrac Report which identifed Fraud, Drug Traffcking, Tax Evasion, People Smuggling, Theft, Arms Traffcking, and Corrupt Practices as well as the Austrac 2019-20 Annual Report, which includes offences such as Child Exploitation, Cyber Crime, Illicit Tobacco, and Environmental Crimes as crimes that are generative signifcant criminal proceeds. Whilst these sources do not risk rate these predicate offences and or money laundering and or terrorism or terrorism fnance, nor do they employ a methodology or a common language to describe the risks) a number of predicate offences are clearly identifed as being of highest concern. These that are expressed in terms of high concerns have been risk rated for these purposes as high risks. Terrorism in Australia is ranked 74/138 and rated at “low” with a score of 2,148/10,000 on the Global Terrorism Index. The current threat of terror in Australia is currently rated by Australian National Security Advisory System as “Probable”, with is level 3 on the 5 level ranking system. As a result this rating has been mapped and identifed as “Medium” Risk.

Australia Threat Assessment 2021 - Threat Mapping to FI AML /CTF Programme

Copyright: Financial Crime News / Metriqa Limited - 2021 - All rights reserved

Australia - Threat Assessment - 2021 52 of 57 Appendix 2 - Sources - �

These are the main sources for the Australian Threat Assessment by Financial Crime News/Metriqa Limited.

Main Sources

This Australia Threat Assessment, has been generated by compiling, assessing and summarising open source available information. Critical assessments from fnancial crime experts reveal the salient inputs, insights and conclusions to formulate this Australia Threat Assessment. No reliance, except as otherwise represented should be taken by anyone, nor offence taken even by those mentioned, from the publisher, where reasonable responses are taken from such sources as are available, in order to aid the fght against fnancial crime. In case of objection to anything included in this threat assessment, or otherwise including a request for reasonable comment or argument please contact the publisher directly.

Australia - Threat Assessment - 2021 53 of 57 Endnotes - �

1 See https://www.austrac.gov.au/business/how-comply-guidance-and-resources/guidance-resources/money-laundering-australia-2011 2 See https://www.acic.gov.au/publications/unclassifed-intelligence-reports/organised-crime-australia-2017 3 See https://www.acic.gov.au/publications/unclassifed-intelligence-reports/organised-crime-australia-2017 4 See https://www.state.gov/wp-content/uploads/2020/06/2020-TIP-Report-Complete-062420-FINAL.pdf 5 See https://www.ato.gov.au/about-ato/research-and-statistics/in-detail/tax-gap/australian-tax-gaps-overview/ 6 See http://www.worldstopexports.com/australias-top-10-exports/ 7 See: https://www.cia.gov/the-world-factbook/countries/australia/#economy 8 See https://www.gfmag.com/global-data/non-economic-data/worlds-safest-countries-2019 9 See https://www.abs.gov.au/statistics/people/crime-and-justice/crime-victimisation-australia/2019-20 10 See: https://www.cia.gov/the-world-factbook/countries/australia/#introduction 11 See https://www.fsb.org/about/leading-by-example/participation/ 12 See https://datareportal.com/reports/digital-2021-australia?rq=australia 13 See https://www.knomad.org/data/remittances?tid%5B66%5D=66&tid%5B146%5D=146 14 See https://www.abs.gov.au/statistics/people/crime-and-justice/crime-victimisation-australia/2019-20#motor-vehicle-theft 15 See https://www.acic.gov.au/media-centre/media-releases-and-statements/ninth-wastewater-report-reveals-australians-spend-over-113-billion-year-drugs 16 See: https://thefnancialcrimenews.com/global-threat-assessment-2018-by-john-cusack/ 17 See https://apo.org.au/sites/default/fles/resource-fles/2011-11/apo-nid27177.pdf 18 See https://www.austrac.gov.au/sites/default/fles/2020-10/AUSTRAC_Annual%20Report%202019_2020.pdf pp.44 19 See https://www.fatf-gaf.org/publications/mutualevaluations/documents/mer-australia-2015.html 20 See: http://www.fatf-gaf.org/media/fatf/documents/reports/fur/FUR-Australia-2018.pdf 21 See https://www.gfmag.com/global-data/non-economic-data/worlds-safest-countries-2019 22 See https://www.numbeo.com/crime/rankings_by_country.jsp?title=2020&displayColumn=0 23 See https://www.abs.gov.au/statistics/people/crime-and-justice/recorded-crime-victims/2019 24 See http://www3.weforum.org/docs/WEF_TheGlobalCompetitivenessReport2019.pdf 25 See https://www.transparency.org/en/cpi/2019/results/gbr 26 See: https://www.acic.gov.au/publications/unclassifed-intelligence-reports/organised-crime-australia-2017 27 See https://australiainstitute.org.au/post/corruptions-72-3-billion-hit-to-gdp/ 28 See https://matrixbrowser.traceinternational.org 29 See https://www.ganintegrity.com/portal/country-profles/australia/ 30 See https://www.acic.gov.au/publications/unclassifed-intelligence-reports/organised-crime-australia-2017 pp.14 31 See https://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/pubs/BriefngBook46p/OrganisedCrime 32 See https://www.aic.gov.au/sites/default/fles/2020-05/criminal_histories_of_australian_organised_crime_offenders_110119.pdf 33 See https://www.aic.gov.au/sites/default/fles/2020-05/ti586_australian_omcg_involvement_in_violent_and_organised_crime.pdf 34 See https://www.researchgate.net/publication/256028009_Responding_to_Organized_Crime_in_Australia_and_New_Zealand 35 See https://www.acic.gov.au/media-centre/media-releases-and-statements/ninth-wastewater-report-reveals-australians-spend-over-113-billion-year-drugs 36 See https://www.acic.gov.au/sites/default/fles/2020-09/illicit_drug_data_report_2018-19_internals_v10_full.pdf 37 See https://www.aihw.gov.au/reports/illicit-use-of-drugs/national-drug-strategy-household-survey-2019/contents/summary 38 See https://www.aihw.gov.au/reports/australias-health/illicit-drug-use 39 See https://www.aihw.gov.au/reports/australias-health/illicit-drug-use 40 See https://www.acic.gov.au/publications/unclassifed-intelligence-reports/organised-crime-australia-2017 41 See https://www.acic.gov.au/sites/default/fles/2020-09/illicit_drug_data_report_2018-19_internals_v10_full.pdf pp.26 42 See https://www.acic.gov.au/sites/default/fles/2020-09/illicit_drug_data_report_2018-19_internals_v10_full.pdf pp. 50 43 See https://www.acic.gov.au/publications/unclassifed-intelligence-reports/organised-crime-australia-2017 44 See https://www.acic.gov.au/publications/unclassifed-intelligence-reports/organised-crime-australia-2017 45 See https://www.state.gov/reports/2020-traffcking-in-persons-report/australia/ 46 See https://www.globalslaveryindex.org/2018/fndings/country-studies/australia/ 47 See: https://thefnancialcrimenews.com/wp-content/uploads/2019/11/FCN-GTA.2019.Pub-Final.pdf 48 See: https://www.ilo.org/wcmsp5/groups/public/@ed_norm/@declaration/documents/publication/wcms_243027.pdf 49 See https://www.abs.gov.au/statistics/people/crime-and-justice/recorded-crime-victims/latest-release 50 See: https://www.theglobaleconomy.com/Australia/theft/ 51 See: https://www.theglobaleconomy.com/rankings/robery/#Australia 52 See https://time.com/4172274/what-its-like-to-own-guns-in-a-country-with-strict-gun-control/ 53 See https://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/Publications_Archive/CIB/cib9596/96cib16 54 See https://www.acic.gov.au/sites/default/fles/2020-08/illicit_frearms_in_australia.pdf

Australia - Threat Assessment - 2021 54 of 57 55 See https://www.acic.gov.au/publications/unclassifed-intelligence-reports/organised-crime-australia-2017 pp.24 56 See https://www.austrac.gov.au/sites/default/fles/2020-10/AUSTRAC_Annual%20Report%202019_2020.pdf 57 See https://www.acic.gov.au/publications/unclassifed-intelligence-reports/organised-crime-australia-2017 pp.23 58 See https://www.ato.gov.au/General/The-fght-against-tax-crime/Our-focus/Illicit-Tobacco/ 59 See: https://euipo.europa.eu/tunnel-web/secure/webdav/guest/document_library/observatory/documents/reports/ trends_in_trade_in_counterfeit_and_pirated_goods/trends_in_trade_in_counterfeit_and_pirated_goods_en.pdf 60 See: https://oec.world/en/profle/country/aus 61 See: https://www.transparency.gov.au/annual-reports/reserve-bank-australia/reporting-year/2019-20-8 62 See: https://mypolice.qld.gov.au/bayside/2020/06/25/how-can-you-tell-if-you-have-a-counterfeit-note/ 63 See: https://7news.com.au/lifestyle/personal-fnance/police-warn-against-dodgy-100-banknotes-with-foreign-text-printed-on-them-c-1333841 64 See: https://www.acic.gov.au/publications/unclassifed-intelligence-reports/organised-crime-australia-2017 65 See: https://www.dfat.gov.au/publications/international-relations/international-cyber-engagement-strategy/aices/chapters/part_3_cybercrime.html 66 See: https://www.cyber.gov.au/sites/default/fles/2020-09/ACSC-Annual-Cyber-Threat-Report-2019-20.pdf 67 See https://www.acic.gov.au/publications/unclassifed-intelligence-reports/organised-crime-australia-2017 68 See https://www.acic.gov.au/publications/unclassifed-intelligence-reports/organised-crime-australia-2017 69 See https://www.ato.gov.au/uploadedFiles/Content/CR/Downloads/Annual_Report_2019-20/annual_report_2019-20.pdf 70 See https://www.acic.gov.au/publications/unclassifed-intelligence-reports/organised-crime-australia-2017 71 See https://www.acic.gov.au/publications/unclassifed-intelligence-reports/organised-crime-australia-2017 72 See https://www.acic.gov.au/publications/unclassifed-intelligence-reports/organised-crime-australia-2017 73 See https://www.acic.gov.au/publications/unclassifed-intelligence-reports/organised-crime-australia-2017 74 See https://www.accc.gov.au/media-release/scams-cost-australians-over-630-million 75 See https://www.accc.gov.au/system/fles/1657RPT_Targeting%20scams%202019_FA.pdf 76 See https://www.scamwatch.gov.au/scam-statistics?scamid=all&date=2020 77 See https://www.acic.gov.au/publications/unclassifed-intelligence-reports/organised-crime-australia-2017 78 See https://www.acic.gov.au/sites/default/fles/2020-08/sfca_2017.pdf 79 See https://www.acic.gov.au/sites/default/fles/2020-08/sfca_2017.pdf 80 See https://www.abc.net.au/news/2020-04-06/australians-access-their-super-early-coronavirus-covid19/12125328 81 See https://www.moneymanagement.com.au/news/superannuation/323-increase-super-scam-reports 82 See https://www.acic.gov.au/sites/default/fles/2020-08/sfca_2017.pdf 83 See: https://www.auspaynet.com.au/sites/default/fles/2020-08/Fraud_Report_2020.pdf 84 See https://www.auspaynet.com.au/sites/default/fles/2020-08/Fraud_Report_2020.pdf 85 See: https://www.auspaynet.com.au/sites/default/fles/2020-08/Fraud_Report_2020.pdf 86 See: https://epi.yale.edu/downloads/epi2018reportv06191901.pdf 87 See: https://www.austrac.gov.au/sites/default/fles/2020-10/AUSTRAC_IWT%20Guide_October%202020.pdf 88 See: https://globalinitiative.net/wp-content/uploads/2019/02/IUU-Fishing-Index-Report-web-version.pdf 89 See: https://www.theglobaleconomy.com/Australia/homicide_rate/ 90 See: https://www.theglobaleconomy.com/Australia/kidnapping/ 91 See: https://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/pubs/rp/rp1314/QG/BoatArrivals 92 See: http://sievx.com/articles/background/DrowningsTable.pdf 93 See: https://www.theguardian.com/australia-news/2019/may/31/where-does-the-coalitions-re-election-leave-refugees-on-manus-and-nauru 94 See: https://refugeecouncilms.sharepoint.com/:x:/s/Public/EYTMV8fDZ-VGkyGAhNmU9g8BDkdmxURhRfYaVSPTNZiz8A?rtime=JY0g6JQh10g 95 See: https://globalinitiative.net/wp-content/uploads/2017/10/people-smuggling-internals-for-john.pdf 96 See: https://thefnancialcrimenews.com/child-abuse/ 97 See: https://static1.squarespace.com/static/5630f48de4b00a75476ecf0a/t/5deecb0fc4c5ef23016423cf/1575930642519/FINAL+- +Global+Threat+Assessment.pdf 98 See: https://egmontgroup.org/en/content/combatting-child-sexual-abuse-and-exploitation-iewg-project-report-now-available 99 See: https://knowledgehub.transparency.org/assets/uploads/kproducts/2020_Professional-enablers-of-economic-crime-during-crises.pdf 100 See: https://www.ifac.org/system/fles/publications/fles/Staff-Alert-COVID-19-and-Evolving-Risks-for-Money-Laundering_1.pdf 101 See: https://www.cyber.gov.au/acsc/view-all-content/advisories/threat-update-covid-19-malicious-cyber-activity-20-april-2020 102 See https://www.dfat.gov.au/international-relations/what-you-need-know-0 103 See: https://www.dfat.gov.au/international-relations/security/sanctions/sanctions-regimes 104 See: https://www.dfat.gov.au/geo/iran/Pages/iran-country-brief 105 See: https://www.dfat.gov.au/geo/iran/Pages/iran-country-brief 106 See: https://www.dfat.gov.au/geo/democratic-peoples-republic-of-korea/Pages/democratic-peoples-republic-of-korea-north-korea-country-brief 107 See:https://tradingeconomics.com/australia/imports-from-syria 108 See: https://embassy-fnder.com/australia_embassies 109 See: https://sanctionssearch.ofac.treas.gov 110 See: https://isis-online.org/uploads/isis-reports/documents/ThePeddlingPerilIndex2019_POD.pdf

Australia - Threat Assessment - 2021 55 of 57 111 See: https://www.visionofhumanity.org/wp-content/uploads/2020/11/GTI-2020-web-1.pdf 112 See: https://www.nationalsecurity.gov.au/Securityandyourcommunity/Pages/National-Terrorism-Threat-Advisory-System.aspx 113 See: https://en.wikipedia.org/wiki/Terrorism_in_Australia#Endeavour_Hills_stabbings_(2014) 114 See: https://www.state.gov/reports/country-reports-on-terrorism-2019/australia/ 115 See: https://www.fatf-gaf.org/publications/mutualevaluations/documents/mer-australia-2015.html 116 See: https://www.austrac.gov.au/sites/default/fles/2019-07/terrorism-fnancing-in-australia-2014.pdf 117 See:https://www.austrac.gov.au/sites/default/fles/2019-07/regional-risk-assessment-SMALL_0.pdf 118 See https://www.acic.gov.au/publications/unclassifed-intelligence-reports/organised-crime-australia-2017 119 See https://www.acic.gov.au/sites/default/fles/2020-08/sfca_2017.pdf 120 See https://www.acic.gov.au/sites/default/fles/2020-08/sfca_2017.pdf 121 See https://www.acic.gov.au/sites/default/fles/2020-08/sfca_2017.pdf 122 See https://www.austrac.gov.au/business/how-comply-guidance-and-resources/guidance-resources/money-laundering-australia-2011 123 See https://www.fatf-gaf.org/publications/mutualevaluations/documents/mer-australia-2015.html 124 See https://www.acic.gov.au/sites/default/fles/2020-08/sfca_2017.pdf 125 See https://www.gpf.org/sites/gpf/fles/sites/default/fles/Australia%20National%20Remittance%20Plan%202019.pdf 126 See https://www.austrac.gov.au/business/how-comply-guidance-and-resources/guidance-resources/money-laundering-australia-2011 127 See https://www.austrac.gov.au/business/how-comply-guidance-and-resources/guidance-resources/money-laundering-australia-2011 128 See: https://www.acic.gov.au/sites/default/fles/2020-08/sfca_2017.pdf 129 See: https://www.smh.com.au/national/afp-seize-8-5m-of-luxury-goods-claim-chinese-criminals-buying-homes-20181115-p50g6z.html 130 See: https://www.smh.com.au/national/experts-warn-inconsistent-laws-make-luxury-goods-an-easy-target-for-moneylaundering-20191218-p53l7q.html 131 See: https://www.austrac.gov.au/sites/default/fles/2019-06/stored-value-cards-risk-assessment.pdf 132 See: https://www.bbc.co.uk/news/world-australia-56065635 133 See: https://www.fatf-gaf.org/media/fatf/documents/reports/mer4/Mutual-Evaluation-Report-Australia-2015.pdf 134 See: https://www.moneymanagement.com.au/news/fnancial-planning/aussie-banks-rank-second-fnancial-penalties 135 See: https://www.kyckr.com/aml-bank-fnes-2020/ 136 See: https://www.theguardian.com/australia-news/2017/aug/03/commonwealth-bank-accused-of-money-laundering-and-terrorism-fnancing-breaches 137 See: https://www.reuters.com/world/asia-pacifc/australias-nab-reveals-anti-money-laundering-probe-shares-fall-2021-06-06/ 138 See: https://en.wikipedia.org/wiki/Australian_Transaction_Reports_and_Analysis_Centre 139 See: https://www.austrac.gov.au/about-us/international-engagement/international-partners 140 See: https://www.austrac.gov.au/sites/default/fles/2020-10/AUSTRAC_Annual%20Report%202019_2020.pdf 141 See https://www.austrac.gov.au/business/how-comply-and-report-guidance-and-resources/guidance-resources/risk-assessments? feld_industries_target_id=All&feld_guidance_topics_target_id=All&page=1 142 See: https://en.wikipedia.org/wiki/Australian_Federal_Police 143 See: https://www.unodc.org/documents/corruption/G20-Anti-Corruption-Resources/Accountability-and-Monitoring-Reports/ 2020_Accountability_Report_Annex.pdf 144 See: https://www.austrac.gov.au/about-us/fntel-alliance 145 See: https://www.austrac.gov.au/sites/default/fles/2020-11/Fintel%20Performance%20Report%202020.pdf 146 See: https://www.heritage.org/index/country/australia 147 See: https://freedomhouse.org/countries/freedom-world/scores 148 See: https://baselgovernance.org/sites/default/fles/2019-02/basel_aml_index_10_09_2018.pdf 149 See https://www.globalslaveryindex.org/2018/fndings/regional-analysis/asia-and-the-pacifc/ 150 See http://www.oecd.org/tax/transparency/country-monitoring/ 151 See: https://www.unodc.org/unodc/en/corruption/uncac.html 152 See: http://www.oecd.org/daf/anti-bribery/WGBRatifcationStatus.pdf 153 See: https://www.oecd.org/daf/anti-bribery/australia-oecdanti-briberyconvention.htm 154 See: https://www.transparency.org/en/exporting-corruption 155 See: https://www.austrac.gov.au/consultation-now-open-rules-amlctf-reforms 156 See https://www.jdsupra.com/legalnews/australia-moves-incrementally-towards-51891/ 157 See https://www.austrac.gov.au/new-guidance-amlctf-reforms 158 See https://data.worldbank.org/indicator/BM.TRF.PWKR.CD.DT?locations=AU 159 See: https://migrationdataportal.org/data?i=stock_abs_&t=2020&cm49=36 160 See: https://migrationobservatory.ox.ac.uk/resources/reports/the-australian-points-based-system-what-is-it-and-what-would-its-impact-be-in-the-uk/ 161 See: https://www.pewresearch.org/global/interactives/remittance-fows-by-country/ 162 See: https://myoe.com/work/why-are-so-many-australians-moving-to-the-uk/

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