‘We’re watching’: Financial cop Austrac drafted to help fight tobacco wars
Australia is becoming a haven for dirty money and much of it is coming from offshore. The boss of Austrac is fighting back.
The nation’s powerful financial crime fighting agency has been drafted in to help fight the war on illegal tobacco, using its cutting edge intelligence and monitoring systems to track hundreds of millions of dollars in cash generated by crooks.
Austrac is putting real-estate transactions, privately owned ATMs, cryptocurrencies, lawyers and car dealers under scrutiny to track the large amount of cash generated by illegal tobacco sales which can help tip off police.
Intensive efforts by Austrac in cracking down on money laundering across banks, bookmakers and casinos over the past decade have now largely closed off those avenues to organised crime, forcing them to find other ways to get dirty cash into the financial system.
Now, the agency has been tapped to provide financial tracing support to state and federal police efforts to battle the surge in illegal tobacco trade. Victoria has borne the brunt with more than 100 shop fires linked to the tobacco turf war. That fight is rapidly spreading into other states.
“The illicit tobacco industry is very much a cash-based industry. We’re having a good look at the things that might be helping to facilitate that cash through the economy,” Austrac chief executive Brendan Thomas told The Australian in an interview. “We have a lot of people paying attention to that.”
The comments by Thomas offer a rare insight into operations of the anti-money laundering regulator. As well as keeping track of proceeds of crime, Austrac monitors for terrorism financing, scams and payments for child exploitation.
Austrac is one of the key members of Canberra’s powerful National Intelligence Community that includes defence intelligence, federal police and the department of home affairs.
As well as working with police, the crime fighting agency is one of Australia’s most potent corporate regulators. It has extracted billions of dollars of fines from the nation’s banks, casinos and bookmakers in recent years – including a record $1.3bn from Westpac – for poor controls in monitoring cash payments.
Casino operator Crown Resorts was hit with a $450m penalty, and Austrac is in the Federal Court currently pursuing a $400m fine from the cash-strapped Star Entertainment after alleging that the Sydney-based casino also turned a blind eye to dirty money going through its systems. Star is contesting the size of the penalty.
Thomas declined to comment on Star, but said casinos were becoming better at identifying customers. Increasingly, they were moving to a cashless regime where transactions are traceable.
“They’re getting the dirty money out,” he says.
Thomas warned about the growing sophistication of international crime networks including operators across Asia, with Australia being targeted by specialist laundering syndicates whose sole job is to clean cash for a fee.
“What we’re seeing in Australia is the growth of organised crime and particularly organised money laundering.
“They’ll come, and they’ll say, ‘we’ll launder your $20m, and we’ll take this proportion as a fee’. Then they’ll look for ways in which they can launder the money through the economy in any way they can find.”
The dirty money might not necessarily even be generated in Australia, but this doesn’t stop the criminal networks looking for cracks in Australia’s laundering defences, allowing the funds to be returned to the home market as legitimate money.
Increasingly, operators will attempt to enlist international students to open dozens of bank accounts, or sell their existing accounts to laundering networks. In turn, these so-called mule accounts will be used by crime networks.
Property is also an area that has now become a big target of launderers. This is why real estate agents, lawyers and other business facilitators are set to be subject to the new wave of rules designed to clamp down even harder on money laundering across the economy.
Austrac is running a consultation round on the so-called Tranche 2 rules passed by parliament last year. This means real estate agents, jewellers, luxury watch retailers, lawyers, conveyancers and accountants will be regulated by Austrac from July 2026. Crypto exchanges will come under Austrac’s net from March.
This will bring Australia in line with every other major economy, except the US and China, when it comes to tracing transactions.
“It’s really important for the next evolution of trying to shut-out dirty money from the Australian economy,” Thomas says.
The new rules have two aims. They create a responsibility for people in these businesses to report suspicious activity and to report activity that might be criminal. The second is it gives Austrac the ability to collect valuable intelligence from those industries over where illegal cash is going.
With tens of thousands of businesses about to come under Austrac’s net, Thomas acknowledged the rules, including mandatory risk assessments, needed to be balanced to ensure they weren’t too onerous for small businesses. But equally, they were designed to maintain integrity in the financial system.
“The whole point of these international money laundering organisations is they’re constantly looking for the gap to jump through. If they see a gap in someone’s controls, they’re straight in there to launder as much money as they can until that gap gets closed, then they’re out and looking for the next one.
“They’re as bold as you can get, they’re sophisticated, and they’re well organised.”
Austrac has a formidable track record in going after those that fail to take money laundering rules seriously. This has resulted in billions in combined penalties issued to both Commonwealth Bank and Westpac that sent a message to the entire Australian banking sector to lift its game.
Banks have now taken a “complete 180 degree” turn, the Austrac boss says. Today their level of investment in anti-money laundering runs into the hundreds of millions with thousands of staff across the banks now looking at the area.
Where Austrac and the banks were once at loggerheads, they are now working much closer together under a banner of the Fintel Alliance in order to go deeper into combating criminal efforts.
This took a big a step forward last year when the big four banks and Austrac collectively undertook a nationwide sweep of cash deposits made over a six-month period and were well under the $10,000 threshold required to trigger a report of a transaction. Some 56 million data points were analysed using artificial intelligence tools.
“We picked up criminal patterns that just weren’t visible to anybody, or any one institution looking at it on their own. We wouldn’t be able to do that without the technology that banks are investing in.”
While digital currencies such as bitcoin are the method of choice used by criminals to move cash around, they are not anonymous as many believe, Thomas says. Initially they presented a challenge to agencies like Austrac, however tracing tools can be deployed.
The $10,000 reporting threshold has been in place for more than two decades and often comes under focus around whether the limit is now too low, given the volume of reporting it now generates for some operators.
Thomas says the limit is an international standard, and the absolute number is becoming less relevant because sophisticated AI tools are focused on patterns of behaviour. This will identify multiple cash deposits of any amount or even across different banks, which will trigger alerts.
“A lot of dumb criminals turn up with $9,900 and think they’re gaming the system. The monitoring picks all that up.”
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