Financial crime task force takes aim at cryptocurrency, pandemic fraud

The peak agency looking at financial crime is preparing to probe digital currencies’ role in tax avoidance and money laundering.

ATO Deputy Commissioner Will Day. Picture: AAP

The peak agency looking at financial crime is preparing to crack down on cryptocurrency transactions, to head off their role in tax avoidance while also thwarting efforts by criminals from using digital currency such as bitcoin to bring cash back home.

This Serious Financial Crime Taskforce – which includes the Tax Office and Federal Police — is seeking to head off pandemic stimulus fraud and block attempts by organised crime to repatriate funds to Australia while borders remain closed.

Set up in 2015, the SFCT, has been using the army of regulatory and law enforcement resources contributed by its members to chase down white collar criminals in recent years.

Almost 40 people are currently before the courts on charges resulting from SFCT investigations.

While another 50 operations are currently underway, looking into a variety of key areas including the misuse of pandemic stimulus measures, fraud around the early release of superannuation, and attempts to dodge tax or repatriate dark money via cryptocurrency.

SFCT chief Will Day said the agency had stepped up its operations in the last two years, in the wake of a major investment from Canberra.

In December 2018 the federal government provided the Australian Taxation Office $182m over four years to extend its brief.

Mr Day said the SFCT was reaping the benefits from deals signed with international law enforcement and data sharing arrangements with cryptocurrency exchanges to monitor transactions by Australians.

About 14 cryptocurrency exchanges were now sharing data with the SFCT.

“It is a big world, obviously there are various forms of exchange of information that’s available for us from tax jurisdiction to tax jurisdiction.” he told The Weekend Australian.

Mr Day said there had been a considerable exchange in data between members of Joint Chiefs of Global Tax Enforcement regarding cryptocurrency.

“We’ve got a data matching program that we’ve had in place for a couple of years with digital currency exchanges,”

“The chink in the armour for those attempting to use crypto is the on-ramping or off-ramping (of their funds). We are able to look at data matching to observe people’s spending habits, if they’re purchasing luxury cars or real estate.”

Picture: AFP

The moves by the SFCT come as global banking regulators this week firmed up rules around cryptocurrencies.

The Basel Committee on Banking Supervision said that the digital currencies posed “unique risks” to the banking system and proposed banks to hold one US dollar of capital against each dollar of crypto exposure to protect against potential losses from the volatile assets.

Chinese police arrested 1,100 people suspected of trading in cryptocurrencies to launder illegal funds this week.

This move is widely seen as contributing to the hit to the value of bitcoin which is currently trading at $US37,200, well off a peak of more than $US63,000.

The task force headed by Mr Day, who is also a deputy commissioner of the ATO, takes in members of a suite of regulatory and law enforcement agencies including the Australian Federal Police, Australian Criminal Intelligence Commission, Attorney-General’s Department, Australian Transaction Reports and Analysis Centre, Australian Securities and Investments Commission, Commonwealth Director of Public Prosecution, and the Australian Border Force.

Mr Day said throughout the pandemic period the task force had focused on investigations into fraud around the early release of superannuation and the payment of JobKeeper, JobSeeker, and the business cash flow boost.

“We observed what were relatively low levels or very low levels of fraud, In part that was due to upfront controls we put in place,” he said.

“Where we did see fraud we developed risk models based on what we were seeing in order to work with some of the partners.”

Mr Day said the SFCT worked closely with financial institutions and superannuation funds to share data around what was being picked up through investigations.

Once investigations were complete, the task force referred several matters to the AFP.

Mr Day said the task force was concerned how lawyers and accountants could be caught up in financial fraud schemes and used to further their scope.

“Certainly professional enablers of all types, pre-insolvency advisers, other forms of company agents, and professionals are part of our focus,” he said.

As part of its recent work the ATO has made 30 referrals to the Tax Practitioners Board, which registers and investigates tax accountants.

Mr Day said the task force was now shifting its focus not just to focus on identity theft crime, but also looking at how criminal elements were abusing mechanisms in the tax system to illegally claim refunds.

“You see some of the insidious side of these organised crime attacks against the tax and super system. You see the role of the stooge director,” he said.

“Quite often they’re utilised to further phoenix activity.”