AUSTRAC

ANNUAL REPORT 2010–11

SUMMARY
 AUSTRAC’s role and functions
AUSTRAC is Australia’s anti-money laundering and
counter-terrorism financing (AML/CTF) regulator and
specialist financial intelligence unit (FIU).

The agency was established in 1989 under the

Financial Transaction Reports Act 1988 (FTR Act) as
a statutory authority within the Attorney-General’s
portfolio and is continued in existence by section 209
of the Anti-Money Laundering and Counter-Terrorism
Financing Act 2006 (AML/CTF Act).

AUSTRAC reports to the Minister for Home Affairs and

Justice on the operations of the agency.

AUSTRAC’s vision and purpose

AUSTRAC’s vision is an Australian community which
is hostile to money laundering, financing of terrorism,
and serious and organised crime, including people
smuggling and tax evasion.

AUSTRAC’s purpose is to protect the integrity of

Australia’s financial system and contribute to the
administration of justice through its expertise in
countering money laundering and the financing of
AUSTRAC ANNUAL REPORT 2010–11 │ SUMMARY

terrorism.

This purpose is achieved through the collaborative

efforts of AUSTRAC’s two interdependent functions
of AML/CTF regulator and FIU, as detailed in this
summary.

2 © Commonwealth of Australia 2011

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Designed and produced by the Australian Transaction
Reports and Analysis Centre [AUSTRAC]
 Australia’s AML/CTF
regulator
In its regulatory role, AUSTRAC oversees compliance
with the obligations of the AML/CTF Act and FTR
Act by businesses across diverse industry sectors.
AUSTRAC’s population of regulated entities includes
financial services providers, entities in the gambling
industry, bullion dealers, designated remittance
service providers and other specified ‘reporting
entities’ (under the AML/CTF Act), as well as ‘cash
dealers’ (under the FTR Act).
In 2010–11 AUSTRAC increased its focus on
supervising the transaction reporting performance of
its regulated entities, which allowed the agency to
extend its supervisory activity across a wider range of
entities.
AUSTRAC also took enforcement action against a
number of entities found to be non-compliant with
their obligations under the AML/CTF Act.
Fast facts
In 2010–11, AUSTRAC:
• received a total of 44,068,331 transaction reports
from regulated entities and partner agencies,
a 104 per cent increase on the number of
reports received in 2009–10. AUSTRAC analysed
these reports and disseminated them to other
AUSTRAC ANNUAL REPORT 2010–11 │ SUMMARY
• received 10,552 AML/CTF compliance reports from
regulated entities for the 2010 calendar year. These
compliance reports detail the AML/CTF programs
those entities have in place to prevent their services
being misused for money laundering or terrorism
financing
• issued a total of 1,053 recommendations and
requirements to regulated entities to address
identified areas of AML/CTF non-compliance or to
reduce the possibility of future non-compliance
• registered an additional 810 money remittance
service providers (money transfer businesses),
bringing to 6,927 the total number of remittance
businesses registered with AUSTRAC at 30 June 2011
• consulted closely with industry and government
on the implementation of important reforms for
enhanced regulation of the remittance sector and
the introduction of a supervisory levy for AUSTRAC’s
regulatory activities
• received more than 18,000 calls from regulated
entities and the general public about AML/CTF
matters and responded to more than 7,700 emails
and letters
• released strategies covering the key areas of

supervision and enforcement to provide industry

government agencies to be used as financial with a valuable insight into the agency’s supervisory
intelligence in their investigations. Pages 4–6 of priorities for 2010–11.
this brochure summarise transaction reporting to
AUSTRAC in 2010–11 See pages 17–55 of AUSTRAC’s 2010–11 annual
• undertook 3,052 AML/CTF compliance assessments report for more information about AUSTRAC’s
and reviews to assess regulated entities’ performance as Australia’s AML/CTF regulator.
compliance with their AML/CTF obligations. This
is a 508 per cent increase on the number of
assessments and reviews conducted in 2009–10.
Assessments included on-site assessments, desk
reviews and reviews examining the financial
transaction reporting performance of entities

• took enforcement action against several regulated

entities as a result of breaches of the AML/CTF
Act. AUSTRAC issued one remedial direction
to a regulated entity, accepted enforceable
3 undertakings from seven regulated entities (from
the same business group), and removed the names
and registrable details of two people from the
Register of Providers of Designated Remittance
Services
 Reporting to AUSTRAC
Reports of international funds transfers
Under the AML/CTF Act, if a reporting entity sends or receives an instruction to or from a foreign country
to transfer money or property, that entity must submit an international funds transfer instruction (IFTI) report
to AUSTRAC.

AUSTRAC received 35,666,743 reports of international funds transfers in 2010–11.

IFTI reporting volumes 2006–07 to 2010–11

Total number Change from

of reports previous year

2006―07 13,017,467 14%

2007―08 14,963,719 15%

2008―09 16,325,870 9.1%

2009―10 18,095,756 10.8%

2010―11 35,666,743 97%

0 10 million 20 million 30 million 40 million

Reports of suspicious matters

Under the AML/CTF Act, reporting entities must submit suspicious matter reports (SMRs) if, at any time while
dealing with a customer, the entity forms a reasonable suspicion that the matter may be related to an offence,
tax evasion, or the proceeds of crime. Entities must submit SMRs to AUSTRAC within three days of forming the
AUSTRAC ANNUAL REPORT 2010–11 │ SUMMARY

suspicion (or within 24 hours for matters related to the suspected financing of terrorism).

For most reporting entities, SMRs (which were introduced in December 2008) have progressively replaced
suspect transaction reports (SUSTRs), which are reported under the FTR Act.

AUSTRAC received a combined total of 44,775 SMRs and SUSTRs in 2010–11.

SUSTR/SMR reporting volumes 2006–07 to 2010–11

Total number Change from

of reports previous year

2006―07 24,440 -1.5%

2007―08 29,089 19.02%

2008―09 32,449 11.55%

2009―10 47,386 46.0%

4
2010―11 44,775* -5.5%

0 10,000 20,000 30,000 40,000 50,000

* In 2010–11 the vast majority of AUSTRAC’s reporting entities completed the transition to reporting SMRs under the
AML/CTF Act. Of the combined total of 44,775 SMRs and SUSTRs received, only 560 were SUSTRs.
 Reports of cash transactions
Under the AML/CTF Act, if a reporting entity provides a designated service to a customer which involves the
transfer of physical currency (or e-currency) of AUD10,000 or more (or the foreign currency equivalent), that
entity must submit a threshold transaction report (TTR) to AUSTRAC.

For most reporting entities, TTRs (which were introduced in December 2008) have replaced significant cash
transaction reports (SCTRs), which are reported under the FTR Act.

AUSTRAC received a combined total of 8,325,621 TTRs and SCTRs in 2010–11.

SCTR/TTR reporting volumes 2006–07 to 2010–11

Total number Change from

of reports* previous year

2006―07 2,675,050 10.7%

2007―08 2,934,955 9.72%

2008―09 3,373,280 14.93%

2009―10 3,375,447 0.06%

2010―11 8,325,621 147%

0 2 million 4 million 6 million 8 million 10 million

* The totals for 2006–07 and 2007–08 include only SCTRs, which were submitted under the FTR Act. The totals for 2008–09
onwards include both SCTRs and TTRs.

Reports of cross-border movements of physical currency

Under the AML/CTF Act, cross-border movements of physical currency (CBM-PC) reports are submitted when
currency (coin or paper money) worth AUD10,000 (or the foreign equivalent) or more is carried, mailed or
AUSTRAC ANNUAL REPORT 2010–11 │ SUMMARY

shipped into or out of Australia.

AUSTRAC received 30,342 CBM-PC reports in 2010–11.

CBM–PC reporting volumes 2006–07 to 2010–11

Total number Change from

of reports* previous year

2006―07 23,351 -15.87%

2007―08 36,131 54.73%

2008―09 38,669 7.02%

2009―10 35,527 -9.1%

2010―11 30,342 -14.6%

5 0 10,000 20,000 30,000 40,000

* In December 2006 ICTRs, which were submitted under the FTR Act, were replaced by CBM-PC reports under the
AML/CTF Act. The total for 2006–07 includes both ICTRs and CBM-PC reports. The totals for 2007–08 onwards include
CBM-PC reports only.
 Reports of cross-border movements of bearer negotiable instruments
Under the AML/CTF Act, cross-border movements of bearer negotiable instruments (CBM-BNI) reports must
be completed by persons entering or leaving Australia who are carrying bearer negotiable instruments (such
as travellers cheques, cheques or money orders) of any amount, if asked to do so by a Customs and Border
Protection or police officer.

AUSTRAC received 850 CBM-BNI reports in 2010–11.

CBM-BNI reporting volumes 2006–07 to 2010–11

Total number Change from

of reports previous year

2006―07 437 n/a*

2007―08 1,479 n/a*

2008―09 1,635 10.54%

2009―10 918 -43.9%

2010―11 850 -7.4%*

0 500 1000 1500 2000

* CBM-BNI reports were introduced in December 2006 under the AML/CTF Act; therefore the 2006–07 figure represents only
part of the year. Note that CBM-BNIs need to be reported upon request only.

See page 31 of AUSTRAC’s 2010–11 annual report for more information about the various reports AUSTRAC
receives from industry and partner agencies.
AUSTRAC ANNUAL REPORT 2010–11 │ SUMMARY

6
 Australia’s financial
intelligence unit
As Australia’s FIU, AUSTRAC analyses the financial
information provided by regulated entities and
disseminates this information to its Australian law
enforcement, national security, human services,
regulatory and revenue partner agencies, and
international counterparts.
AUSTRAC information assists its partners in the
investigation and prosecution of serious criminal
activity, including terrorism financing, organised
crime and tax evasion.
AUSTRAC works with 39 designated partner agencies
and other non-designated agencies in Australia
and has agreements with FIUs in 59 countries for the
exchange of financial intelligence.
Fast facts
In 2010–11, AUSTRAC:
• disseminated financial intelligence to more than
40 different government agencies to assist them in
their investigations into suspected offences
• provided information which contributed to 1,619
Australian Taxation Office (ATO) cases, resulting in
$241.11 million in additional tax assessments raised
• supplied information which contributed to 679
AUSTRAC ANNUAL REPORT 2010–11 │ SUMMARY
cases and $6.7 million of annualised savings for
Centrelink
• in addition to the results listed above, provided
intelligence which contributed significantly to
576 investigations conducted by AUSTRAC’s law
enforcement, human services and revenue partner
agencies
• developed the AUSTRAC typologies and case
studies report 2011, which was published in
September 2011, to educate industry and partner
agencies about the methods used by criminals to
commit money laundering and other crimes
• disseminated 55,465 SMRs/SUSTRs to its partner
agencies to assist in their investigations
7 • made a total of 1,449 disseminations of intelligence
reports to partner agencies (an increase of 4 per
cent on the 1,391 reports disseminated in 2009–10)
• continued to play a vital role in important whole-of-
government initiatives to combat crime, including
the government’s Criminal Intelligence Fusion
Centre, Project Wickenby, and the Commonwealth
Organised Crime Strategic Framework
• gained five new partner agencies with which it can
share financial intelligence, following amendments
to the AML/CTF Act – the amendments added the
Department of Foreign Affairs and Trade, Defence
Imagery and Geospatial Organisation, Defence
Intelligence Organisation, Defence Signals
Directorate and the Office of National Assessments
to AUSTRAC’s list of ‘designated’ partner agencies
• completed the implementation of a new analytics
solution to improve AUSTRAC’s financial intelligence
capabilities, and commenced planning for the
‘enhanced analytical capability program’, a
four-year project to further develop the agency’s
intelligence systems
• released the AUSTRAC intelligence strategy 2010–12,
which sets out the FIU’s priorities for 2010–11 and
beyond, and its strategies for addressing those
priorities.
See pages 57–87 of AUSTRAC’s 2010–11 annual
report for more information about AUSTRAC’s
performance as Australia’s FIU.
International contributions
In 2010–11, AUSTRAC:
• entered into an exchange instrument with the
FIU of Fiji, bringing AUSTRAC’s total number of
instruments for the international exchange of
intelligence to 59
• hosted 18 AML/CTF visit and attachment
programs for international delegations
• provided technical assistance and training
including workshops, mentoring and visits
to partners in South Asia, Africa, Pakistan,
Indonesia, Philippines and Thailand
• took part in 201 exchanges of financial
intelligence with overseas FIUs
• continued to work closely with major
international AML/CTF bodies, including the
Financial Action Task Force, the Asia/Pacific
Group on Money Laundering and the Egmont
Group of FIUs.
See pages 80–87 of AUSTRAC’s 2010–11
annual report for more information about
AUSTRAC’s contribution to international
AML/CTF efforts.
 Case studies
AUSTRAC’s 2010–11 annual report includes several real-
life case studies which demonstrate how AUSTRAC’s
partner agencies use AUSTRAC information in their
investigations into money laundering and other serious
crimes.
Suspects jailed after using offshore
scheme to avoid $4 million tax
Authorities investigated three suspects for their
involvement in the use of an offshore scheme
to defraud the Commonwealth and avoid
paying almost AUD4 million in tax.
The suspects allegedly used an offshore
scheme promoted by an overseas accounting
firm to avoid paying the tax:
• A fictitious intermediary company was set
up by the overseas accounting firm, which
charged the main company, owned by
the suspects, for inflated business expenses
on 44 separate occasions.
• By artificially inflating their business
expenses, the suspects reduced their
company’s taxable income and therefore
AUSTRAC ANNUAL REPORT 2010–11 │ SUMMARY
the amount of income tax they were
required to pay.
• After the main company paid the inflated
invoices issued by the intermediary
company, the funds used to pay the
invoices were diverted into offshore trust
funds held in each of the suspects’ names.
These undeclared company profits were
subsequently channelled through the
trust funds and bank accounts, and finally
withdrawn by the suspects as cash from
automatic teller machines in Australia.
Ultimately, two of the suspects were found
guilty of conspiring to dishonestly cause a loss
to the Commonwealth and sentenced to six-
8 and-a-half years imprisonment.
Source: AUSTRAC typologies and case studies
report 2011 (Case study 4)
Jail for suspects who
extorted victim for three years
A law enforcement investigation into
blackmail and extortion attempts resulted in
the arrest of two suspects, who were both later
found guilty of multiple charges.
Suspect A and Suspect B extorted money
and other assets from a victim over a period
of three years by threatening the victim,
the victim’s family, and their property. The
extortionists’ demands against the victim were
initially small, but grew over time to include
cash, company shares and luxury motor
vehicles.
The victim made cash payments to the
suspects and electronically transferred funds
directly into the suspects’ accounts, which
were held in their own names. These payments
totalled approximately AUD150,000. The victim
was also forced to take out loans to purchase
two luxury vehicles for the suspects. In addition,
the suspects attempted to obtain shares in the
victim’s company.
AUSTRAC received a number of suspect
transaction reports (SUSTRs) and significant
cash transaction reports (SCTRs) detailing
the pair’s financial activity. The resulting law
enforcement investigation led authorities to
restrain two luxury vehicles, two properties and
numerous other items, with a total value of
more than AUD1 million.
Suspect A was charged with 36 counts relating
to blackmail and extortion, and sentenced to
a minimum of six-and-a-half years jail. Suspect
B was charged with 13 counts of blackmail
and extortion, and sentenced to a minimum of
three-and-a-half years jail.
Source: AUSTRAC typologies and case studies
report 2011 (Case study 3)
 Industry reporting of suspicious matters
Under the AML/CTF Act, reporting entities which submit SMRs to AUSTRAC are required to specify within the
report one or more ‘reasons for suspicion’ – that is, they must report the suspicious customer behaviour which
prompted them to submit the report to AUSTRAC.

The 10 most common reasons for suspicion during 2010–11 are shown in the chart below. Many of these
categories show large increases compared to 2009–10, reflecting the overall increase in the volume of SMRs
AUSTRAC received in 2010–11.

Reasons for suspicion as reported by industry in SMRs, 2009–10 and 2010–11

Total Total
Reason for suspicion 09―10 10―11
Avoiding reporting obligations 8,135 11,327
Unusual account activity 7,848 10,226
Unusually large cash transaction 5,287 8,297
Suspicious behaviour 4,984 7,672
Inconsistent with customer profile 3,562 6,541
Country/jurisdiction risk 1,435 5,932
Unusual gambling activity 2,123 4,249
Refusal to show identification 2,061 3,584 2009―10
Unusually large transfer 1,622 2,545 2010―11
False name/identity or documents 1,368 2,452

0 2000 4000 6000 8000 10000 12000

See pages 69–75 of AUSTRAC’s 2010–11 annual report for more information about AUSTRAC’s analysis and
dissemination of reports of suspicious matters.
AUSTRAC ANNUAL REPORT 2010–11 │ SUMMARY

Further information
Annual report and media AUSTRAC Help Desk
enquiries Enquiries concerning AUSTRAC, AML/CTF Act
All annual report, media and communications obligations, or other related information, may be
enquires should be directed to: directed to the AUSTRAC Help Desk:

Manager, Corporate Communications PO Box 5516

West Chatswood NSW 1515
Telephone: 03 8636 0585
Telephone: 1300 021 037
Email: corporatecommunications@austrac.gov.au (local call cost within Australia)

AUSTRAC’s 2010–11 annual report is on the Facsimile: 02 9950 0071

9
AUSTRAC website at:
www.austrac.gov.au/annual_report.html Email: help_desk@austrac.gov.au

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