Changes to the ACT jail's "flawed" banking system recommended more than six years ago created a loophole which was exploited by a serving prisoner to slowly bleed a victim's external account.
In 2017, forensic financial auditors KPMG were called in to investigate the Alexander Maconochie Centre's banking trust account after officials noted between $10,000 and $15,000 had potentially gone missing a year earlier.
No evidence of fraud was found occurring, however, auditors noted management of the account had created "a 'perfect storm' where fraud can occur".
"The investigation report identified that the management and operation of the trust account appears to be exposed to a broad range of fraud risks," the KPMG auditors wrote.
The auditors made a number of recommendations, one of which included setting up individual accounts for inmates, allowing them to receive money into their own online trust accounts using a banking provider.
Under the Corrections Management (Detainee Trust Fund Management) policy, it states "deposits are only accepted from family and/or friends using debit cards or bank account transfers".
The maximum amount that can be deposited to a prisoner's account is $150 per week.
The money generally is used by prisoners for "buy-ups", to make phone calls, as well as to purchase items such as toiletries and magazines.
Former ACT corrections minister Shane Rattenbury told the ACT Assembly at the time the summoning of the auditors was a "proactive" engagement after "a flaw in the system" was detected.
At the time, the directorate spokesperson explained the account errors were "administrative" and "largely due to debts that detainees incurred".
"These debts were unable to be recovered and include items such as fines, financial advances for shop items, tobacco advances and phone credit advances," the spokesperson said at the time.
A fully cashless, individualised system was then introduced which was supposed to create "strong controls to mitigate the risks identified in the original [KPMG] report", a directorate spokesperson said.
However, the new system generated the loophole in which a serving prisoner this year allegedly used his victim's name and banking details - suspected to have been stolen during the offender's 2021 crime spree in which he burgled homes in Campbell and stole a Mercedes SLK - to gain access to the prison's online payment portal in which more than $7000 was poured over nearly a one-year period.
More than 47 transactions are suspected to have occurred at the maximum of $150 each.
None of these regular, maximum transactions, paid into the trust account of a prisoner with a lengthy criminal history and serving time for burglary and identity theft, raised any alarm bells with ACT Corrections.
ACT Corrections said detainees were unable to access internet banking or any online payment systems from within the Alexander Maconochie Centre, however, the prisoners' trust accounts could be topped up from the "outside" via the direct debit system.
Family members often set up such direct payments as a support mechanism.
Police are investigating the latest fraud.
ACT Corrections said the "payment clearing system utilised for payments to detainee trust accounts is facilitated by a banking service provider".
"ACT Corrective Services works closely with the banking provider to ensure detainees can access reasonable funds in an accessible, reliable and secure way," the spokesperson said.
"The detainee finance policy review will be finalised as soon as possible in consultation with stakeholders including our banking industry partners."
