AUSTRAC releases ML/TF National Risk Assessments 2024

AUSTRAC recently unveiled the Money Laundering (ML) and Terrorism Financing (TF) National Risk Assessments 2024 (NRA). The NRAs will be a critical element in showcasing to the Financial Action Task Force (FATF) for the Australia’s upcoming mutual evaluation exercise.

Money Laundering National Risk Assessment (ML NRA)

The ML NRA aims to enhance the understanding of money laundering tactics and trends at a national level. It presents risk ratings across a range of predicate offences, and sector/channel vulnerabilities. This analysis will be instrumental in framing robust countermeasures and bolstering Australia's defenses against these illicit activities.

The report notes that Australia remains an attractive destination for storing and integrating criminal proceeds, i.e., laundering illicit funds. This means designated service providers will continue to face, in many cases increasing, risks of being used for money laundering purposes.

Further highlights from the ML NRA include:

- Among the many illicit money-generating crimes listed in the report, those relating to illicit drugs, tax and revenue crimes, and government-funded programs top the chart and pose a ‘high’ risk with an increasing threat outlook over the next three years.

- Threats from crimes such as scams, pure cybercrime, identity fraud, corruption and bribery, and superannuation fraud pose a ‘medium’ risk, but also have an increasing threat outlook over the next three years. These indicate a need for progressively heightened vigilance and preventive and mitigating strategies.

- Perhaps understandably, none of the 15 predicate offenses listed in the report show a decreasing threat outlook.

- Channels such as cash, luxury goods, real estate, domestic banks, casinos and remitters are being used to launder funds in Australia.

- The use of digital currency, digital currency exchanges, unregistered remitters and bullion dealers is increasing in the money laundering activities.

- The assessment also rates the vulnerability of professional service providers to money laundering, with high risk ratings for lawyers and accountants.

Terrorism Financing National Risk Assessment (TF NRA)

The Terrorism Financing National Risk Assessment notes that Australia’s terrorism financing environment is small scale and low value, and domestic threat has receded in recent years.

Regarding TF fund flows, the assessment notes that the funds primarily flow out of Australia, rather than into Australia.

Methods like Self-funding, and fund raise through social media and crowd-funding are high risk channels / modes of raising funds; and digital currencies, banking system, remittance service providers and non-bank online payment service providers are high risk channels of moving the funds.

Integrating the ML/TF NRA with the Organisational ML/TF Risk Assessment  

Businesses providing Designated Services should review their ML/TF risk assessment in light of the ML/TF NRAs, and integrate the relevant risks and insights into their enterprise risk assessment. This will also extend to the products, channels, services and customer risk assessments.

While at it, if AUSTRAC has published your industry-specific risk assessment, you must consider that too in your risk assessment exercise.

For example, if you are a bullion dealer providing designated services, consider the risk guidance for bullion dealers in the NRA. If as a bullion dealer, you also accept payment in cryptocurrency, then you should consider the combined risks and vulnerabilities related to the bullion business and crypto as a means of payment. Since AUSTRAC has also issued a ‘Bullion Dealers - Money Laundering and Terrorist Financing Risk Assessment’, consider that too while formulating your risk assessment.  

Even while assimilating the NRA or industry-specific risk assessment with your risk assessment, the principles of a risk-based approach, and risks and mitigants in the context of the size, nature, and complexity of your business continue to be relevant.

Resources:

- Money Laundering in Australia - National Risk assessment 2024 – click here

- Terrorism Financing in Australia – National Risk assessment 2024 – click here

- AUSTRAC guidance on risk assessment – click here

- AUSTRAC industry / topic based risk assessments – click here.

Update: 24 Sept 2024

A slightly different version of this article was published in the Stockbrokers & Investment Advisors Association Newsroom - click here to read.

PS: 29 Sept 2024

The AML/CTF Amendment Bill 2024 has been introduced in the Parliament on 11 September 2024, to reform and modernise Australia's AML/CTF regime. The Bill proposes significant changes to the AML/CTF Act including in regards to risk assessments. The commentary above is subject to the new provisions.

Read our article here on the AML/CTF Bill.

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Compliense Advisors is an AML/CTF and FinCrime compliance and risk management advisory firm. Our experience includes undertaking ML/TF risk assessment; setting up, implementing, uplifting AML/CTF program; advising on AML/CTF matters; and a range of AML and FinCrime compliance and risk matters.

The article above is for general awareness and informational purposes only. Please carefully evaluate your circumstances, and seek professional advice for your specific needs. You are responsible for your compliance obligations, and for any action taken or omitted. We are not a law firm, and do not provide legal advice.

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