Australia’s chief financial crime investigation and analysis agency, AUSTRAC, has released a new guide to help FSIs fight the growing scourge of trade-based financial crime.
Developed in partnership with the Australian Border Force, the guide [direct PDF link] is designed to help financial service providers identify and report suspicious transactions indicative of criminals engaging in trade-based money laundering.
The guide also provides advice on how to identify when to submit a suspicious matter report to AUSTRAC.
Trade-based money laundering is the process of disguising the proceeds of crime by moving funds through trade transactions masking their illegal origin or finance illegal activities. The source of these illicit activities can include anything from drug trafficking and smuggling of illegal goods to tax evasion and evasion of customs and excise duties.
AUSTRAC said that while it recognised that “most trade is the legitimate movement of goods”, there is increasing evidence, based on its intelligence, “that criminals are increasingly employing sophisticated methods to integrate illicit funds into the financial system”.
“International trade is an attractive avenue for the movement of proceeds of crime, given the multiple points of vulnerabilities that can be exploited by criminals,” AUSTRAC said.
Among several indicators of trade-based money laundering, according to AUSTRAC, include: customers suddenly being involved in the import/export of goods; customers who appear to conduct business exclusively with a single counterpart; an unexplained change in transaction volume and/or value; evidence of consistent and significant cash payments, including to previously unknown third-parties.
AUSTRAC national manager, law enforcement and industry, Jon Brewer, recognised the criticality of proper suspicious matter reporting to prevent financial crime.
“The information shared by the financial services sector through suspicious matter reports is critical in helping AUSTRAC and its partners identify and dismantle criminal networks, stopping the flow of illicit funds from proceeds of crime from entering and moving through the Australian financial system,” he said.
“Financial service providers, particularly those engaged in trade financing, should assess and understand the risks associated with the services they offer, and have appropriate risk-based systems and controls in place to identify suspicious activity.”
Australian Border Force commander, customs group, Brett Cox, added that the provides “a timely contribution to countering the exploitation of the trade system as a means for financial crime”.
“It will be beneficial in gaining an understanding of this activity for anyone in the trading community, and help Government agencies in their efforts to identify, prevent and disrupt organised criminality through trade.”