In the old days, superheroes fought crime wearing their underwear as outerwear with a cape billowing behind them. They often relied on a special power or sophisticated gadgetry, and a smart sidekick who could piece together the clues to find the villain. The Australian Transaction Reports and Analysis Centre (AUSTRAC) is the modern day equivalent of that sidekick, helping today’s ‘superheroes’, government and private crime-fighting agencies, locate ‘villains’ who may be involved in illegal activities, ranging from scam artists to drug-traffickers, people-smugglers to terrorists.
AUSTRAC was established in 1989 under the Financial Transaction Reports Act 1988 and came into its current role as Australia’s anti-money laundering and counter-terrorism financing regulator via the Anti-Money Laundering and Counter-Terrorism Financing Act 2006, an increasingly significant area.
Chief Executive John Schmidt admits that there’s not much he doesn’t like about the challenging environment he has led for the past two years. “I just find it a fascinating area to work in, where you can see the value that’s been added to the community and business. The challenge is the enjoyment.”
And challenging it is. While cartoon villains were murderers, thugs and thieves whose actions became frontpage news, real criminals are more clandestine, which is where the smart sidekick steps up. Whether it’s secret weapons manufacturing, underground drug lairs or terrorist cells, these crimes all leave a financial trace and it is the job of AUSTRAC and its international counterparts to find and analyse all the data that could implicate and locate illegal activity.
The AUSTRAC team consists of staff with diverse talents, from mathematicians to former police officers, employees from the private banking sector to graduates with degrees encompassing legal studies, statistics, economics and accounting. Largely it’s about seeing beyond the figures, says Schmidt, using experience and a “particular ability and capacity to identify patterns which warrant further investigation.” Instinct? “There has to be,” he concurs. “People have to have that capacity to feel that there’s something worth looking at. Machines can only do so much.”
The Melting Pot
AUSTRAC as a government department is an interesting confluence of financial, legislative, economic and community service. A big part of its operations involves interacting with banks and other financial institutions, monitoring transactions and providing alerts for suspicious activity. Schmidt says AUSTRAC is careful not to step on the toes of legitimate commercial activity, but confirms the centre has a role to play.
“They don’t want to be seen to be associated with criminal behaviour, they don’t want to be defrauded. We can point them in the direction of risks and attacks,” he states. “The regime that we impose should be merely part of a good risk management and governance arrangement that you’d expect to have as a business anyway because you’d be on the lookout for these things regardless of whether AUSTRAC existed; that’s demonstrated in how we are developing.”
Although legislation guides its operations, AUSTRAC has a number of liberties in this regard. “We have powers, we can make up the rules which can modify the operations or legislation,” Schmidt says. “We have some safeguards because we do have personal information about people and their transactions [but]people are comfortable with the idea of information being used to assist law enforcement. The vast majority of people do the right thing but they might have a transaction going through their books that they don’t appreciate is linked to a bigger picture of criminal behaviour. That’s what we’re looking for: we indicate where law enforcement might want to do more work.”
Less directly, but most importantly, AUSTRAC’s role is to provide information that will lead to the termination of criminal activity for the benefit of the community. But the sidekick is never lauded, it seems, and this is an area Schmidt says will need some work: “Making people aware of what you do is a challenge.”
Public notice doesn’t preclude the centre from doing its job, however. Schmidt says they’ve had some big wins, although some are ongoing and he is not at liberty to disclose them. He lists Gordian-Katakan, where AUSTRAC’s intelligence led to busting a heroin syndicate, as one victory, and Project Wickenby, tracking down money secreted into overseas tax havens, as another…
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