The head of Australia’s financial intelligence agency, Austrac, has warned that law enforcement agencies need to conduct more money laundering prosecutions if the country is to avoid being whacked by international regulators.
Nicole Rose also said it had been “a hard journey” to convince Australian chief executives and board members to take money laundering seriously, but legal action by Austrac, including a record $1.3bn fine against Westpac, had helped build solid foundations.
However, she warned that the gambling industry was in Austrac’s spotlight and needed to do more work to lift its standards.
Speaking at a conference organised by ACAMS, an international network of anti-financial crime professionals, Rose said getting prosecutions under way was important because it was a benchmark against which Australia will be measured for its compliance with standards set by the international Financial Action Task Force (FATF). That evaluation will take place in 2025.
“The other thing that we’re pushing for is more resources either to be diverted or to be given to law enforcement for money laundering investigations and prosecutions, because of course they’re the only ones that can do it – we can only provide them with information,” she said.
“It’s a lot more complex than a speeding ticket, is money laundering, and there’s issues of whether DPPs [prosecutors] prosecute money laundering because that’s more complex than a drugs charge.”
Rose said she had been on an “action-packed journey over the past five or so years”.
“When I started at Austrac, just over four and a half years ago, I was quite perplexed by the blank expressions I received in response to raising the devastating causes and impacts of money laundering on our community,” she said.
“At that time, Austrac had just settled a record $45 million penalty with Tabcorp and I thought avoiding this sort of outcome would be an absolute priority for discussion in Australian boardrooms.
“Of course, as we know now that has taken some time to transpire.”
Australia did poorly at its last evaluation in 2016 and also faces hurdles in the upcoming round of evaluation because the Morrison government failed to bring in a register of beneficial ownership or implement “tranche 2” reforms, which bring real estate agents and lawyers into the anti-money-laundering system.
David Shannon, who directs the mutual evaluation process for multilateral body the Asia/Pacific Group on Money Laundering, which runs Australia’s evaluations, warned that Australia faced challenges at the next round.
“Australia won’t get any free rides,” he told the conference.
He said it was theoretically possible that Australia could be “greylisted” – placed on a list of jurisdictions that aren’t doing enough to combat money laundering and terror finance.
Greylisting can be economically devastating: the decision to greylist the UAE in March is reportedly set to carve 3% from the country’s GDP, or about US$10bn.
“Theoretically FATF does list its own members for serious failures in non-compliance,” he said.
“It’s very rare that they do it.”
However, he warned that the European Union maintained its own greylist and inclusion on it was more automatic.
“There is a significant risk for FATF members of going on that list,” he said.
“We can see that there has been blowback on countries that have been found to have failed to meet standards that have been in place for a long time.”
