ng information international environment hostile support EDDSWeb C atory liaison analysis monitoring transactions compliance identificati ership honesty Financial Transaction Reports Act 1988 Financial Int e collar crime international co-operation law enforcement revenue c g transactions compliance identification fraud inclusive commitment nesty security privacy reporting Minister financing information inter dealer Egmont achieving output co-ordination regulatory liaison an nclusive commitment action results understanding partnership hone y awareness Data identified insight money laundering white collar c TRAQ TES suspect reports regulatory liaison analysis monitoring tra emocracy technical assistance understanding partnership honesty ort EDDSWeb Commonwealth partner applications cash dealer Egmont liance identification fraud overcoming terrorism inclusive commitment nancial Intelligence Units Outposting community awareness Data iden nt revenue collection Commonwealth TRAQ TES suspect reports regu itment action results diversity democracy whole technical assistan ng information international environment hostile support EDDSWeb C atory liaison analysis monitoring transactions compliance identificati ership honesty Financial Transaction Reports Act 1988 Financial Int e collar crime international co-operation law enforcement revenue c g transactions compliance identification fraud inclusive commitment nesty security privacy reporting Minister financing information inter dealer Egmont achieving output co-ordination regulatory liaison an nclusive commitment action results understanding partnership hone y awareness Data identified insight money laundering white collar c TRAQ TES suspect reports regulatory liaison analysis monitoring tra cation fraud inclusive commitment action results diversity democrac ce AUSTRAC Annual Report Australian Transaction Reports and Analysis Centre 2002-03 understanding partnership honesty security privacy reporting Ministe nformation international environment hostile support EDDSWeb Common partner applications cash dealer Egmont achieving output co-ordinatio liaison analysis monitoring transactions compliance identification frau terrorism inclusive commitment action results understanding partners Financial Transaction Reports Act 1988 Financial Intelligence Units Out community awareness Data identified insight money laundering white co nternational co-operation law enforcement revenue collection Common TES suspect reports regulatory liaison analysis monitoring transactio dentification fraud inclusive commitment action results diversity demo technical assistance understanding partnership honesty security priv Minister financing information international environment hostile suppor Commonwealth partner applications cash dealer Egmont achieving outp ordination regulatory liaison analysis monitoring transactions complia dentification fraud overcoming terrorism inclusive commitment action r understanding partnership honesty Financial Transaction Reports Act Financial Intelligence Units Outposting community awareness Data ident money laundering white collar crime international co-operation law en revenue collection Commonwealth TRAQ TES suspect reports regulator analysis monitoring transactions compliance identification fraud inclus action results diversity democracy whole technical assistance unders partnership honesty security privacy reporting Minister financing info nternational environment hostile support EDDSWeb Commonwealth part applications cash dealer Egmont achieving output co-ordination regula analysis monitoring transactions compliance identification fraud overc terrorism inclusive commitment action results understanding partners AUSTRAC Annual Report Australian Transaction Reports and Analysis Centre 2002-03 © Commonwealth of Australia 2003 ISSN ISBN 1321-1366 0-646-42777-6 This work is copyright. Apart from any use as permitted under the Copyright Act 1968, no part may be reproduced by any process without prior written permission from the Commonwealth available from the Department of Communications, Information Technology and the Arts. Requests and inquiries concerning reproduction and rights should be addressed to the Commonwealth Copyright Administration, Intellectual Property Branch, Department of Communications, Information Technology and the Arts, GPO Box 2154, Canberra ACT 2601 or by e-mail. Designed and produced by the Australian Transaction Reports and Analysis Centre (AUSTRAC). AUSTRALIAN TRANSACTION REPORTS AND ANALYSIS CENTRE 17 October 2003 Senator the Honourable Chris Ellison Minister for Justice and Customs Parliament House CANBERRA ACT 2600 Dear Minister, In accordance with section 40B of the Financial Transaction Reports Act 1988 and section 63 of the Public Service Act 1999, I am pleased to submit the Annual Report on operations of the Australian Transaction Reports and Analysis Centre for the year ended 30 June 2003. Yours faithfully, Neil Jensen PSM Director AUSTRAC OFFICE OF THE DIRECTOR AUSTRAC • PO Box 5516 • West Chatswood NSW 1515 • Sydney Australia Telephone 61 - 2 - 9950 0055 • Facsimile 61 - 2 - 9950 0073 • DX AUSTRAC 29668 Chatswood understanding partnership honesty security privacy reporting Ministe partner applications cash dealer Egmont achieving output co-ordinatio overcoming terrorism inclusive commitment action results understand Outposting community awareness Data identified insight money launde Commonwealth TRAQ TES suspect reports regulatory liaison analysis m diversity democracy whole technical assistance understanding partne environment hostile support EDDSWeb Commonwealth partner applicatio transactions compliance identification fraud overcoming terrorism incl Reports Act 1988 Financial Intelligence table of crime international co-operation law e analysis monitoring transactions com contents technical assistance understanding p environment hostile support EDDSWeb regulatory AUSTRAC Annual Report inclusive c Act 1988 F Introduction laundering Director’s perspective ............................................................................................. vi Commonwe Overview and reader’s guide ................................................................................. ix Highlights of the year ............................................................................................... x identificatio understan internation Egmont ac identificatio honesty F awareness New Director and Deputy Director AUSTRAC funding Information exchange agreements Other amendments to AUSTRAC’s legislation Certified agreement Technical assistance Cost of identity fraud project Data mining AUSTRAC in Canberra Inspection program Electronic reporting Agency overview 1. Overview of AUSTRAC ...................................................................................... 3 2. Money Laundering Deterrence overview ....................................................... 9 3. Money Laundering Targeting overview ........................................................ 11 Performance reporting 4. Primary Output Group 1 Deterring money laundering, serious crime and tax evasion ..................... 15 Introduction Collection of FTR information FTR statistics Promotion of FTR Act compliance Individual cash dealer compliance improvement Inspection program Future priorities iv AUSTRAC Annual Report 2002-03 ter financing information international environment hostile support ED on regulatory liaison analysis monitoring transactions compliance ide ding partnership honesty Financial Transaction Reports Act 1988 Fina ering white collar crime international co-operation law enforcement r monitoring transactions compliance identification fraud inclusive comm ership honesty security privacy reporting Minister financing informatio ons cash dealer Egmont achieving output co-ordination regulatory lia lusive commitment action results understanding partnership honesty 5. Primary Output Group2 awareness Data identified insight money ce Units Outposting community Targeting money laundering, serious crime and tax evasion...................... 31 enforcement revenue collection Commonwealth TRAQ TES suspect rep mpliance identification fraud inclusive commitment action results diver partnership honesty security privacy reporting Minister financing info 6. Primary Output Group 3 Advice on the applications effectiveness of the Financial Reports Act ..... 49 achieving ou b Commonwealth partner cashTransaction dealer Egmont y liaison analysis monitoring transactions compliance identification fr commitment action results understanding partnership honesty Finan Financial Intelligence Outposting community awareness Data iden 7. PrimaryUnits Output Group 4 Contribution to international efforts directed at the g white collar crime international co-operation law enforcement reve suppression of money laundering, serious crime and tax evasion ........... 57 ealth TRAQ TES suspect reports regulatory liaison analysis monitoring ion fraud inclusive commitment action results diversity democracy w nding partnership honesty security privacy reporting Minister financi Primary Output Group 5 nal environment8. hostile support EDDSWeb Commonwealth partner appl Privacy and Security ...................................................................................... 75 chieving output co-ordination regulatory liaison analysis monitoring t ion fraud overcoming terrorism inclusive commitment action results u Financial Transaction Reports Act 1988 Financial Intelligence Units Ou s Data identified insight money laundering white collar crime internatio Introduction Provision of value added FTR information through analysis Promotion of effective use of FTR information Future priorities Introduction Reviewing the Financial Transaction Reports Act Amendments to the Financial Transaction Reports Act Advising industry bodies Monitoring technological changes in the financial and gaming sectors AUSTRAC’s increased international role Exchange of intelligence International exchange of financial intelligence Expanding the global network in the fight against money laundering Future priorities Introduction Ensuring the security of AUSTRAC information Ensuring the security of AUSTRAC resources Ensuring the security of AUSTRAC personnel Ensuring privacy Data matching Future priorities 9. Enabling Output Information Technology ................................................................................. 81 Introduction Developing IT systems and solutions Ensuring the safety and integrity of AUSTRAC data 10. Enabling Output Corporate Services ........................................................................................ 87 Introduction Delivering effective human resource management Administering financial and property resources Administering knowledge management Financial Statements .................................................................................................... 95 Appendices ................................................................................................................. 125 Glossary ....................................................................................................................... 149 Compliance Index ....................................................................................................... 152 Index ............................................................................................................................ 153 AUSTRAC Annual Report 2002-03 v understanding partnership honesty security privacy reporting Ministe partner applications cash dealer Egmont achieving output co-ordinatio overcoming terrorism inclusive commitment action results understand Outposting community awareness Data identified insight money launde Commonwealth TRAQ TES suspect reports regulatory liaison analysis m diversity democracy whole technical assistance understanding partne environment hostile support EDDSWeb Commonwealth partner applicat transactions compliance identification fraud overcoming terrorism incl Reports Act 1988 Financial Intelligence Director’s crime international co-operation law e monitoring transactions com perspective analysis technical assistance understanding p environment hostile support EDDSWeb During the last seven months Australia has category of report, with the exception of regulatory further increased its focus on detecting the international currency transfer reports. financing of terrorism. The work AUSTRAC Similarly, all areas of our work have increased inclusive c initiated after the events of 11 September 2001 over the levels reported last year. This year, we Act 1988 F has increased as a result of the terrorism that have focused our attention on setting priorities took place on 12 October 2002 in Bali. As well for the many important aspects of our work. By laundering as enhancing its domestic focus on countering specifically focusing on sophisticated technology the financing of terrorism, AUSTRAC has also and more highly developed analytical skills, we Commonwe made a number of advances internationally. We are trying to employ even more efficient are working bilaterally with countries in our identificatio practices to enable us to deal with much of the region and also collectively in other strategic increased work load. Advanced technology understan regions, with the world’s Financial Intelligence solutions have been employed across the Units through the work of the Egmont Group of internation agency to assist in data delivery, data mining Financial Intelligence Units. and IT security. Egmont This work has been assisted by amendments to the Financial Transaction Reports Act 1988 that identific were enacted by the Suppression of the Financing of Terrorism Act 2002. These partner amendments have enabled AUSTRAC to more commun readily enter into agreements for the exchange of financial intelligence with our overseas counterparts. As a consequence, AUSTRAC has increased its international agreements from nine last reporting year, to 14 this year. This has resulted in an increase in requests for the exchange of financial intelligence. AUSTRAC has also entered into new Memoranda of Understanding with the Commissioner of the Australian Federal Police and the DirectorGeneral of Security, to enable the Australian Federal Police and the Australian Security Intelligence Organisation to more readily exchange AUSTRAC’s financial intelligence with their overseas counterparts. The number of financial transaction reports collected by AUSTRAC has again followed the trend of previous years by increasing in each vi AUSTRAC Annual Report 2002-03 AUSTRAC Director, Neil Jensen PSM ter financing information international environment hostile support ED on regulatory liaison analysis monitoring transactions compliance ide ding partnership honesty Financial Transaction Reports Act 1988 Fina ering white collar crime international co-operation law enforcement r monitoring transactions compliance identification fraud inclusive com ership honesty security privacy reporting Minister financing informatio tions cash dealer Egmont achieving output co-ordination regulatory l lusive commitment action results understanding partnership honesty ce Units Outposting community awareness Data identified insight money enforcement revenue collection Commonwealth TRAQ TES suspect rep mpliance identification fraud inclusive commitment action results diver partnership honesty security privacy reporting Minister financing info b Commonwealth partner applications cash dealer Egmont achieving ou This reporting year we have continued to 1,500 investigations collectively reported by law y liaison analysis monitoring transactions compliance identification fr implement innovative staffing solutions to meet enforcement agencies involving use of our demands of our work while minimising the intelligence. This includes some of honesty the most commitmentthe action results understanding partnership Finan cost to AUSTRAC. During the year we finalised significant criminal investigations undertaken Financial Intelligence Outposting community s Data iden an agreement with the Units Australian Federal Police during the reporting year. awarenes While these results to have an AUSTRAC officer located in their show how effective AUSTRAC is in the law g white collar crime international co-operation law enforcement reve newly established Transnational Crime enforcement and revenue fields, I believe that Centre. Throughreports funding receivedregulatory much more can be gleaned analysis from AUSTRAC’s monitoring ealth TRAQCoordination TES suspect liaison from AusAID, we have placed an experienced intelligence once further innovative technologyion fraud AUSTRAC inclusive results democracy w officer in commitment the Indonesian Financial actionbased solutions arediversity applied to, and analysts Intelligence Unit, PPATK, to provide training and become even more proficient in the use of, the nding partnership security privacy reporting Minister financi capacity building.honesty The head of the PPATK has AUSTRAC database. publicly acknowledged the expert assistance nal environment hostile support EDDSWeb Commonwealth partner appl Our work in helping to ensure that the Financial AUSTRAC is providing to his organisation Transaction Reports Act 1988 remains relevant this ongoing aid program. t achieving through output co-ordination regulatory liaison analysis monitoring in the changing global financial markets The Attorney-General’s Department has also continued to commitment be a challenge for AUSTRAC this cation fraud overcoming terrorism inclusive action results assisted by providing accommodation in its reporting year. This work is dependent upon a rship honesty Financial Transaction Reports 1988 Financial Intell Canberra offices for an AUSTRAC Senior Policy range of externalAct influences, including the Manager. This has enabled AUSTRAC to more review of international best practices in antinity awarenes s Data identified insight money money laundering white collar readily assist the Minister for Justice and laundering and countering terrorist Customs and his staff on matters relating to AUSTRAC’s work, to forge a closer working relationship with the Attorney-General’s Department and to be more readily involved in the development of policy through various fora. In addition, AUSTRAC staff have entered into a three-year Certified Agreement resulting in further efficiencies in the AUSTRAC workplace. Not only has the work of AUSTRAC increased during the reporting year, but the work of our partners has also expanded, with increased access to and use of our intelligence. The results reported by our partners continue to be exceptional, with the Australian Taxation Office reporting more than $99 million in assessments and penalties being directly attributed to the use of AUSTRAC intelligence and more than financing. Consequently, our work on this project will continue into the next reporting year. We have continued to build strong relationships through our close work with the AttorneyGeneral’s Department and the Department of the Treasury in meeting this challenge. Late in the reporting year we received advice of an increased appropriation for the 2003-04 financial year. This funding has been provided in acknowledgement of our increasing workload, particularly in the area of countering terrorist financing. Specific funding under the National Illicit Drugs Strategy will also enable AUSTRAC to commence some very important work in identifying money trails associated with psychostimulant drugs. AUSTRAC Annual Report 2002-03 vii understanding partnership honesty security privacy reporting Ministe partner applications cash dealer Egmont achieving output co-ordinatio overcoming terrorism inclusive commitment action results understand Outposting community awareness Data identified insight money launde Commonwealth TRAQ TES suspect reports regulatory liaison analysis m diversity democracy whole technical assistance understanding partne environment hostile support EDDSWeb Commonwealth partner applicat transactions compliance identification fraud overcoming terrorism incl Reports Act 1988 Financial Intelligence Units Outposting community aw law enforcement revenue collection Commonwealth TRAQ TES suspect nclusive commitment action results diversity democracy whole technic financing information international environment hostile support EDDSW regulatory liaison analysis monitoring transactions compliance identifi partnership honesty Financial Transaction Reports Act 1988 Financial white collar crime international co-operation law enforcement revenue transactions compliance identification fraud inclusive commitment acti honesty security privacy reporting Minister financing information inter Over the past 12 months, AUSTRAC has dealer Egmont achieving output co-ordination regulatory liaison analys successfully met the challenges of operating within the changed financial and law understanding partnership honesty Financ commitment action results enforcement sectors. The performance Data identified money highlights ofinsight the year demonstrate that laundering white collar crime internationa AUSTRAC has continued to play a large role in regulatory liaison analysis monitoring transactions compliance identifi domestic and international efforts to prevent financial crime. We have provided essential and assista effective intelligence to law enforcement, informa revenue and national security agencies, which has proven to be a vital part of the global efforts to prevent crimes such as money laundering, terrorist financing and tax evasion. We have also had significant results in our efforts to improve the domestic regulation of the financial sector through our work in identity fraud and identification of customers, particularly in respect of cash management trusts. Once again this year, our staff have worked hard to meet all of our challenges. In a year of sweeping changes, AUSTRAC’s staff have continued to provide strong support to me and to the work of AUSTRAC and have positively met the challenges confronting them. I thank them for their continuing support and contribution to our vital work. viii AUSTRAC Annual Report 2002-03 AUSTRAC’s Director meeting with the Minister for Justice and Customs, Senator the Honourable Chris Ellison, in Perth. ter financing information international environment hostile support ED on regulatory liaison analysis monitoring transactions compliance ide ding partnership honesty Financial Transaction Reports Act 1988 Fina ering white collar crime international co-operation law enforcement r monitoring transactions compliance identification fraud inclusive com ership honesty security privacy reporting Minister financing informatio tions cash dealer Egmont achieving output co-ordination regulatory l lusive commitment action results understanding partnership honesty wareness Data identified insight money laundering white collar crime in t reports regulatory liaisonand analysis monitoring transactions complia Overview cal assistance understanding partnership honesty security privacy Web Commonwealth partner applications cash dealer Egmont achieving reader’s fication fraud overcoming terrorism inclusive commitment action result l Intelligence Units Outposting community awareness Data identified in guide e collection Commonwealth TRAQ TES suspect reports regulatory liais tion results diversity democracy whole technical assistance understa rnational environment hostile support EDDSWeb Commonwealth partne Australian government bodies, such as the ysis monitoring compliance identification fraud overcomin Australiantransactions Transaction Reports and Analysis Centre (AUSTRAC), are required to prepare annual cial Transaction Reports Act 1988 Financial Intelligence Units Outpost reports for tabling in Parliament. The annual report plays an important accountability role, nal co-operation law enforcement revenue collection Commonwealth T allowing Parliament and more generally the fication fraud inclusive commitment public, to be informed of AUSTRAC’s activities and action results diversity democracy achievements during the past twelve months. In ance understanding partnership honesty security privacy reporting M preparing this year’s annual report, AUSTRAC has been particularly mindful of the different groups ation international environment hostileChapters support EDDSWeb Commonwealt 1 to 3 form the agency overview section, of readers who may refer to the annual report. We have incorporated: • specific sections aimed at cash dealers, solicitors and the public with reporting obligations under the Financial Transaction Reports Act 1988; • sections showing how we interact with our partner law enforcement, revenue and national security agencies and how we are refocusing our work to maximise our assistance to them; • a highlights section, allowing quick insights into AUSTRAC’s achievements throughout the reporting year; and • a compliance index which allows Parliament and other interested parties to easily assess how AUSTRAC has complied with the Requirements for Annual Reports, issued by the Department of the Prime Minister and Cabinet. containing general information on AUSTRAC’s structure and operations and offering the reader a ‘big picture’ view of the agency. Chapters 4 to 10 form the performance reporting section, outlining AUSTRAC’s achievements towards fulfilling our outcome and output objectives. Our financial statements are also included in the report. The appendices contain important additional information such as the committees in which AUSTRAC participates. A glossary is at the end of this report. Further information can be obtained, or feedback made, on the annual report by writing to the Annual Report Contact Officer, GPO Box 5516, West Chatswood, NSW 1515, or by e-mailing [email protected] or by telephoning AUSTRAC on 02 9950 0055. The annual report is also accessible on AUSTRAC’s website at: http://www.austrac.gov.au AUSTRAC Annual Report 2002-03 ix understanding partnership honesty security privacy reporting Ministe partner applications cash dealer Egmont achieving output co-ordinatio overcoming terrorism inclusive commitment action results understand Outposting community awareness Data identified insight money launde Commonwealth TRAQ TES suspect reports regulatory liaison analysis m diversity democracy whole technical assistance understanding partne environment hostile support EDDSWeb Commonwealth partner applicat transactions compliance identification fraud overcoming terrorism incl Act 1988 Financial Intelligence Highlights of Reports crime international co-operation law e analysis monitoring transactions com the year technical assistance understanding pa New Director and Deputy Director In September 2002 the Attorney-General, the Honourable Daryl Williams AM QC MP, together with the Minister for Justice and Customs, Senator the Honourable Chris Ellison, announced the appointment of Neil Jensen PSM, as the new Director of AUSTRAC. Mr Jensen had previously occupied the position of Deputy Director for seven years and had been Acting Director since the departure of Ms Elizabeth Montano in December 2001. He has been appointed for a four-year term. The appointment of Ric Power to the Deputy Director’s position vacated by Mr Jensen was also announced early in the reporting year. Mr Power will commence his Deputy Director duties at AUSTRAC early in the next reporting year. He is currently on secondment to the United Nations Office of Drug and Crime in the Caribbean, where he is assisting several nations in establishing Financial Intelligence Units. AUSTRAC funding Towards the end of the reporting year, an increase in AUSTRAC’s budget for 2003-04 of $8.2 million was announced by the Government. AUSTRAC was also provided additional funding as part of the National Illicit Drugs Strategy to undertake work relating to money laundering associated with drug trafficking, particularly the production and distribution of psychostimulants. This funding signals the Government’s commitment to AUSTRAC’s work in countering the financing of terrorism, money laundering, tax evasion and drug trafficking. With the assistance of this additional funding AUSTRAC will be able to provide greater support to investigations and operations conducted by our partner agencies as well as expanding our work in the international arena. We will also be able to enhance our regulatory work in the financial sector. Planning began late in the reporting year on strategies for obtaining the most value from this additional funding. x AUSTRAC Annual Report 2002-03 The press releases announcing the appointment of Neil Jensen PSM as the new Director of AUSTRAC, and the increase in AUSTRAC’s budget for the 2003-04 financial year. ter financing information international environment hostile support ED on regulatory liaison analysis monitoring transactions compliance ide ding partnership honesty Financial Transaction Reports Act 1988 Fina ering white collar crime international co-operation law enforcement r monitoring transactions compliance identification fraud inclusive com ership honesty security privacy reporting Minister financing informatio tions cash dealer Egmont achieving output co-ordination regulatory l lusive commitment action results understanding partnership honesty e Units Outposting community awareness Data identified insight money enforcement revenue collection Commonwealth TRAQ TES suspect repo mpliance identification fraud inclusive commitment action results diver partnership honesty security privacy reporting Minister financing info environment hostile support EDDSWeb Commonwealth partner applic agreements Egmont achievingInformation output exchange co-ordination regulatory liaison analysis m Relations with our international counterparts are formalised in agreements to exchange compliance identification fraud terrorism inclusive commi financial intelligence. This year,overcoming AUSTRAC entered into six such agreements. These new agreements were signed with Isle of Man, Israel, Singapore, Canada, Malaysia and the understanding partnership honesty Financial Transaction Reports Republic of Korea. This brings the number of agreements we currently have in place to 14. agreements allow AUSTRAC and its counterparts to share information to aid in the Intelligence UnitsThese Outposting community awarenes s Data identified in investigation and prosecution of money launderers and the financers of terrorism. white collar crime international co-operation law enforcement reve An important change brought about by the Suppression of the Financing of Terrorism Act 2002 amendments to the Financial Transaction Reportsregulatory Act 1988 (FTR Act), provided the Commonwealth TRAQ TES suspect reports liaison analys Director of AUSTRAC with the ability to establish transactions compliance identification agreements with international counterparts to exchange intelligence both upon request and spontaneously. fraud inclusive commitment action results These amendments have allowed AUSTRAC to increase the number of agreements we currently have in place. diversity democracy whole technical It also allows our valuable information to be used by assistance understanding partnership overseas Financial Intelligence Units and law enforcement agencies to prevent crimes such as money honesty security privacy reporting laundering, terrorist financing and tax evasion. This is a significant milestone in the enhancement of AUSTRAC’s Minister financinginternational information international efforts. It is through spontaneous exchange of intelligence that we will be able to get a clearer idea of the global money trail. Other amendments to AUSTRAC’s legislation A number of technical amendments were made to the FTR Act which increased the effectiveness of the FTR The signed MOU between AUSTRAC and Korea Financial Intelligence Unit Act. These amendments came into effect during the (KoFIU) . reporting year and occurred through a number of legislative vehicles including the Crimes Legislation Amendment (People Smuggling, Firearms Trafficking and Other Measures) Act 2002, the Suppression of the Financing of Terrorism Act 2002 and the Proceeds of Crime (Consequential Amendments and Transitional Provisions) Act 2002. These amendments are important to ensure that the FTR Act operates effectively to AUSTRAC Annual Report 2002-03 xi understanding partnership honesty security privacy reporting Ministe partner applications cash dealer Egmont achieving output co-ordinatio overcoming terrorism inclusive commitment action results understand Outposting community awareness Data identified insight money launde Commonwealth TRAQ TES suspect reports regulatory liaison analysis m diversity democracy whole technical assistance understanding partne environment hostile support EDDSWeb Commonwealth partner applicat transactions compliance identification fraud overcoming terrorism incl Reports Act 1988 Financial Intelligence Units Outposting community aw regulate cash dealers and is consistent with the new proceeds of crime legislation that law enforcement revenue collection Commonwealth TRAQ TES suspect came into effect in the reporting year. nclusive commitment action results diversity democracy whole technic financing Certified information international environment hostile support EDDSW agreement A newliaison AUSTRAC Certified Agreement was certified by the Australian Industrial Relations regulatory analysis monitoring transactions compliance identifi Commission on 26 September 2002. The new agreement assists both management and staff in honesty attaining overall agency objectives, with Transaction emphasis on communication, flexible work Act 1988 Financial partnership Financial Reports practices and democracy. Significant features of the new agreement include a joint staff white collar crimecommitment international co-operation law enforcement revenue and management to undertake a review of the AUSTRAC Job Evaluation Scheme, the introduction of access to home-based work, an increase in maternity leave transactions compliance identification fraud inclusive commitment acti entitlements and access to personal leave to undertake further education. honesty Assecurity privacy reporting Minister financing information inter a result of these Certified Agreement negotiations, a joint management and staff working group was formed to review performance management at AUSTRAC. The dealer Egmont achieving output co-ordination regulatory liaison analys Performance Management Working Group successfully met its objective of providing recommendations to better meetunderstanding the needs of staff and managers through the use commitment actionon how results partnership honesty Financ of a revised performance management system. The revised performance agreement and Data identified insight money laundering white collar crime internationa appraisal policies and processes implemented during the reporting year are expected to deliver an overall improvement in the individual performance characteristics of staff. regulatory liaison analysis monitoring transactions compliance identifi assistance understanding partnership honesty security privacy repor Technical assistance Commonwealth cash dealer Egmont achieving outp Following thepartner bombings in Bali applications in October 2002, the Australian Government announced a $10 million initiative managed by AusAID, to assist in the development of counter-terrorism fraud overcoming terrorism inclusive commitment action results under capabilities in Indonesia. As part of this initiative, AUSTRAC has embarked upon a longterm technical assistance program to assist Indonesia in developing an effective Financial Units Outposting community awarenes s Data identified insight money l Intelligence Unit (FIU). Currently we have one staff member working in Jakarta with the Indonesian FIU, PPATK. The feedback from Indonesia regarding the value and quality of our work is indicative of the proven value of assisting the establishment of effective procedures for identifying transactions which may be related to money laundering, the financing of terrorism, people smuggling and tax evasion. Earlier in the reporting year, an AUSTRAC Senior Analyst conducted a project working with staff of Vanuatu’s FIU to identify current issues facing the FIU and potential strategies to meet these issues and enhance its operations. This assistance was well received by Vanuatu and assisted them to implement effective strategies to improve their anti-money laundering systems and procedures. Recognised as a world leader in this field, AUSTRAC is increasingly being called upon to provide advice and assistance to countries establishing FIUs. xii AUSTRAC Annual Report 2002-03 ter financing information international environment hostile support ED on regulatory liaison analysis monitoring transactions compliance ide ding partnership honesty Financial Transaction Reports Act 1988 Fina ering white collar crime international co-operation law enforcement r monitoring transactions compliance identification fraud inclusive com ership honesty security privacy reporting Minister financing informatio tions cash dealer Egmont achieving output co-ordination regulatory l lusive commitment action results understanding partnership honesty wareness Data identified insight money laundering white collar crime in Cost of identityliaison fraud project t reports regulatory analysis monitoring transactions complia AUSTRAC’s Proof of Identity Steering Committee has commissioned a study into the cost cal assistance honesty and extent understanding of identity fraud in Australia. Thepartnership study, which is expected to be published in security privacy September 2003, will establish a method by which calculations can be made to show the Web Commonwealth partner applications cash dealer Egmont achieving cost to the community of identity fraud. The study will provide details of the measurable components of identity fraud, which can be used in future for more intensive studies. In fication fraud overcoming terrorism inclusive commitment action result June 2003 the Australian Research Council announced a linkage grant for further work on l Intelligence Outposting community awarenes s Data identified in identityUnits crime over the next three years, subject to satisfactory completion of the current study. e collection Commonwealth TRAQ TES suspect reports regulatory liais tion resultsData diversity democracy whole technical assistance understa mining rnational environment hostile At its meeting in August 2002, the National support Illicit Drug StrategyEDDSWeb (NIDS) InformationCommonwealth partne Technology Working Group agreed to fund a proposal put forward by AUSTRAC to acquire a ysis monitoring transactions compliance identification fraud overcomin data mining application. This reporting year, we conducted a pilot project using a commercial off-the-shelf data mining The use ofFinancial data mining tools offers enormous cial Transaction Reports Acttool.1988 Intelligence Units Outpost potential in the identification of anomalous activity that may be indicative of criminal nal co-operation lawtheseenforcement revenue activity. Adopting technologies represents a step up to a highercollection level of analysis than Commonwealth T previously undertaken by AUSTRAC since the agency’s inception and requires a significant fication fraud inclusive commitment action results diversity democracy investment in training for our analysts. orting Minister financing information international environment hostile tput co-ordination liaison analysis monitoring transactions AUSTRAC inregulatory Canberra This reporting year, AUSTRAC has established permanent presence in Canberra. The rstanding move partnership honesty aFinancial Transaction Reports Act 198 to place a Senior Policy Manager in Canberra has enabled AUSTRAC to more readily the Minister for Justice crime and Customs and his staff on matters relating to AUSTRAC’s laundering assist white collar international co-operation law enforcem work, to forge a closer working relationship with the AttorneyGeneral’s Department and to be more readily involved in the development of policy through various fora. As AUSTRAC continues to expand and the value derived from our work to combat money laundering, the financing of terrorism and other serious crime increases, both internationally and domestically, it is important for us to work more closely with Parliament and government departments and agencies in Canberra. AUSTRAC has also recruited an analyst to work within the Australian Federal Police’s (AFP’s) Transnational Crime AUSTRAC’s Senior Manager, Policy and Coordination, Canberra, AUSTRAC’s Partner Liaison Manager, Perth and the Director meet in Perth. AUSTRAC Annual Report 2002-03 xiii Coordination Centre (TCCC) in Canberra. By placing an analyst with the TCCC, AUSTRAC is better positioned to provide more detailed analytical support to the AFP. The placement will increase the number of staff members based at the AFP to five, strengthening our relationship in the fight against organised crime. The TCCC will play a significant role in coordinating intelligence in the fight against terrorism, drug trafficking, people smuggling and other transnational crimes. Inspection program Our work with those institutions offering cash management trust (CMT) accounts continued this reporting year. We provided advice to financial institutions with the aim of ensuring that signatories to these accounts are identified in accordance with the Financial Transaction Reports Act 1988 (FTR Act). This year we conducted inspections of CMT products affected by identification requirements, involving the managed funds, banking and related industries. This occurred after an extensive consultation process over the last two years. Our consultative approach resulted in high levels of compliance, especially where cash dealers had made efforts to closely liaise with us and seek information regarding their obligations during this process. Overall, results were good, with most cash dealers meeting compliance requirements. Some cash dealers are currently rectifying problems found during the inspections and we expect that this process will be completed within the next reporting year. This work has ensured that CMTs are complying with the identification provisions of the FTR Act. Electronic reporting This year the number of cash dealers reporting electronically to AUSTRAC using the EDDSWeb system increased by 356 per cent, from 42 users to 160. By encouraging cash dealers to fulfil their reporting requirements through electronic means, AUSTRAC is able to provide high quality data to our partner agencies in a timely manner. The increasing volume of reports submitted to AUSTRAC and the number of cash dealers using the EDDSWeb system significantly increases both the volume of FTR intelligence available to partner agencies and the speed with which those agencies can access that intelligence. AUSTRAC is continuing to work toward ensuring that all information is received electronically so that we can analyse and disseminate this information quickly. xiv AUSTRAC Annual Report 2002-03 nderstanding partnership honesty security privacy reporting Minister formation international environment hostile support EDDSWeb Common pplications cash dealer Egmont achieving output co-ordination regulat nalysis monitoring transactions compliance identification fraud overco clusive commitment action results understanding partnership honest ransaction Reports Act 1988 Financial Intelligence Units Outposting co wareness Data identified insight money laundering white collar crime in peration law enforcement revenue collection Commonwealth TRAQ TES eports regulatory liaison analysis monitoring transactions compliance raud inclusive commitment action results diversity democracy whole ssistance understanding partnership honesty security privacy report nancing information international environment hostile support EDDSWe ommonwealth partner applications cash dealer Egmont achieving outpu egulatory liaison analysis monitoring transactions compliance identific vercoming terrorism inclusive commitment action results understandin onesty Financial Transaction Reports Act 1988 Financial Intelligence U utposting community awareness Data identified insight money launder rime international co-operation law enforcement revenue collection Co RAQ TES suspect reports regulatory liaison analysis monitoring trans ompliance identification fraud inclusive commitment action results dive emocracy whole technical assistance understanding partnership hones rivacy reporting Minister financing information international environmen upport EDDSWeb Commonwealth partner applications cash dealer Egmon utput co-ordination regulatory liaison analysis monitoring transaction entification fraud overcoming terrorism inclusive commitment action re nderstanding partnership honesty Financial Transaction Reports Act Agency overview staff structure reporting Minister financing information international environment hostile Financial support ED Commonwealth partner applications cash dealer Egmont achieving output co-ordination Financial Transaction R Intelligence Units Outposting community awareness Data identified insight money laundering white collar crime i operation law enforcement revenue collection Commonwealth TRAQ TES suspect reports regulatory liaison anal transactions compliance identification fraud staff structure reporting Minister financing information internatio hostile Financial support staff structure reporting Minister financing information international environment ho support EDDSWeb Commonwealth partner applications cash dealer Egmont achieving output co-ordination Financ Reports Act 1988 Intelligence Units Outposting community awareness Data identified insight money laundering w chapter 1 The Australian Transaction Reports and Analysis Centre (AUSTRAC) was established in 1989 under section 35 of the Financial Transaction Reports Act 1988 (FTR Act). Our mission is to make a valued contribution towards a financial environment hostile to money laundering, major crime and tax evasion. AUSTRAC is an agency under the Attorney-General’s portfolio and is responsible to the Minister for Justice and Customs, Senator the Honourable Chris Ellison. Overview of AUSTRAC As Australia’s anti-money laundering regulator and specialist Financial Intelligence Unit, our focus is to collect financial transaction information, analyse that information and disseminate financial intelligence. Information is collected from the wider financial services and gaming sectors and members of the public and the financial intelligence is disseminated to our Commonwealth Attorney - General The Hon. Daryl Williams Minister for Justice and Customs Senator the Hon. Chris Ellison Commonwealth Attorney - General’s Department AGS - Australian Government Solicitor AUSTRAC Australian Transaction Reports and Analysis Centre ACC - Australian Crime Commission ALRC - Australian Law Reform Commission ACS - Australian Customs Service ASIO - Australian Security Intelligence Organisation AFP - Australian Federal Police (including Australian Protective Service) DPP - Director of Public Prosecutions HREOC - Human Rights and Equal Opportunity Commission ITSA - Insolvency Trustee Service Australia OFLC - Office of Film and Literature Classification OFPC - Office of the Federal Privacy Commissioner OPC - AIC - Australian Institute of Criminology CrimTrac - CrimTrac Agency Office of Parliamentary Counsel The Attorney - General’s Portfolio overview. AUSTRAC Annual Annual Report AUSTRAC Report 2002-03 2002-03 3 partner agencies, consisting of Australian law enforcement, revenue and security agencies and certain Royal Commissions, as well as international counterparts. Our role is twofold: as the regulator of the wider financial and gaming sectors in countering money laundering, terrorist financing and the financing of crime generally; and as the Financial Intelligence Unit responsible for gathering and disseminating financial data supporting revenue collection, law enforcement and national security measures. In our regulatory role, we work to ensure that financial service providers and other specified groups (our ‘cash dealers’) provide reports of certain financial transactions and identify their customers to reduce the occurrence of false name accounts. This is important to Australia’s law enforcement, revenue and national security programs. The FTR Act assigns AUSTRAC its regulatory role and also provides for the requirement to report certain transactions to us. These transactions include: • significant cash transactions - any transaction involving a cash component of AUD$10,000 or more, or the equivalent in foreign currency; • international funds transfer instructions - any instruction transmitted electronically either into or out of Australia, for the transfer of funds; • international currency transfers - a report of physical currency (cash) of AUD$10,000 or more, or the foreign equivalent, leaving or entering Australia by carriage, mailing or shipping; and • suspect transactions - any transaction that arouses suspicions with the cash dealer due to either the monies or individuals involved in the transaction. 150501 PART A DETAILS OF PERSON CARRYING THE CURRENCY INTO OR OUT OF AUSTRALIA International Currency Transfer Report 1 Full name of person carrying the currency (given & surnames) 2 Business/residential address in home country (not a P.O. Box) 6 Sending institutions details BIC CARRYING CURRENCY INTO OR OUT OF AUSTRALIA $10 ,000 or more International Funds Transfer Instruction Report OR Name of bank City Country Significant Cash Transaction Report $10,000 or more 4 7 Receiving institutions details BIC State OR Name of bank Date of birth 5 (if not Australia) D D MM Y Y Y Y How was the identity of this person confirmed? ID type ID no. CASH DEALERS PART B METHODS USED TO VERIFY IDENTITY Significant Cash Transaction Report $10,000 or more Postcode Please complete in black ink and print in CAPITAL LETTERS 3 One of the following categories MUST be completed Mark appropriate answer boxes with a cross (X) Issuer Country (if not Australia) (a) Passport sighted Please leave a space (1 box) between words Please City complete in black ink and print in CAPITAL LETTERS Please complete in black ink and print in CAPITAL LETTERS Mark appropriate answer boxes with a cross (X) Country Passport no. Mark appropriate answer boxes with a cross (X) (if not Australia) Complete this form if you are carrying Australian or foreign 3 Are you an Australian resident? 1 6 0 5Country 01 ID type 4 Date of birth D D MM Y Y Y Y currency that is not less than AUD $10,000.00 in value. Currency Refer to the Explanatory Notes for Form Completion on reverse Complete this form if you are a cash dealer whom is a party to a 8 Date funds available No Please specify your address while in Australia Yes D D MM 2 0 Y Y cash transaction of $10,000 or more. is defined as the coin and paper money of a country and does not include travellers cheques/other monetary instruments. (b) Drivers licence sighted Complete this form if you are a cash dealer, in respect of anReporting significant cashAmount transactions is required by law under ID no. of transaction 9 ofCurrency code 5 How was the identity of this person confirmed? Section 7 of the Financial Transaction Reports Act 1988 (Cth) Reporting of international currency transfers is required by law international funds transfer instruction. Licence no. and Issuer under Section 15 of the Financial Transaction Reports Act 1988 Reporting of international funds transfer instructions is required(FTR Act). ID type Issuer (Cth) (FTR Act). by law under Section 17 of the Financial Transaction Reports ActSend the completed form to: PART B INVOLVED PARTY AND INSTITUTION DETAILS 1988 (Cth) (FTR Act). 6 Give details if this person is a signatory to account(s) affected by(c) Other identification (e.g. Bankcard, VIP room card, etc) ID no. THE DIRECTOR, AUSTRAC Give the completed form to: this transaction Please complete in black ink and print in CAPITAL LETTERS DX 29668 P.O. BOX 10 5516 Ordering customer/organisation OR completed form to: Postcode A CUSTOMS OFFICER at any Australian AIR or SEA PORT at the Send theState Mark appropriate answer boxes with a cross (X) Chatswood WEST CHATSWOOD NSW 1515 Issuer ID type time of your arrival or departure. Name THE DIRECTOR, AUSTRAC Facsimile: (02) 9950 0883 Complete this form if you are a cash dealer whom is a party to a DX 29668 Help Desk: 1800 021 037 5516 Help Desk: 1800 021 037 Facsimile: (02) 9950 0883 P.O. BOX Occupation,NSW business or principalOR activity Please complete in black ink and print in CAPITAL LETTERS Account Chatswood WEST4 CHATSWOOD 1515 cash transaction of $10,000 or more. IDMark no. appropriate answer boxes with a cross (X) title Privacy Statement Help Desk: 1800 021 037 Facsimile: (02) 9950 0883 ID type Reporting of significant cash transactions is required by law under Privacy Statement as much of this form as possible, as soon as practicable The FTR Act is an initiative to assist in the detection of tax evasion and Section 7 of the Financial Transaction Reports Act 1988 (Cth)CompleteIssuer The FTR Act is an initiative to assist in the detection of tax evasion AFTER the dealing/transaction. other criminal activities, including money laundering. Information reported (FTR Act). Privacy Statement and other criminal activities, including money laundering. Information ID no. BSB no. Business/residential (cannotTaxation be a P.O.Office, Box) the to AUSTRAC may be used by address the Australian Reporting of suspect transactions is required by law under Section of tax reported to AUSTRAC may be used by the Australian Taxation Office, The FTR Act is an initiative to assist in the Ddetection D Information M Mevasion Yand YAustralian Y Y Customs Service, the National Crime Authority, the Australian Send the completed form to: 5 Date of birthincluding money laundering. 16 of the Financial Transaction ReportsOR Act 1988 (Cth) (FTR Act). activities, reportedFederal Police, State Police and certain other law enforcement agencies the Australian Customs Service, the National Crime Authority, the other criminal Issuer Account (d) The patron is known to me personally and (a) or (b) above THE DIRECTOR, number AUSTRAC Australian Federal Police, State Police and certain other law enforcement to AUSTRAC may be used by the Australian Taxation Office, theas authorised under the FTR Act. have been sighted and attested to DX 29668 Send the completed P.O. BOX 5516 formpreviously to: Australian Service, National Crime thedocuments Australian that you agencies as authorised under the FTR Act. 6 Customs Give details of allthe valid passports or Authority, other travel OR ChatswoodTHE DIRECTOR, AUSTRAC Federal Police, holdState Police and certain other law enforcement agenciesIt is an offence for a cash dealer to refuse/fail to report a significant WEST CHATSWOOD NSW 1515 OR Penalties for failure to lodge or supply full and correct information as authorised cash transaction. All reports must be complete and correct. 6 Give details if this person is a signatory to account(s) affected by under the FTR Act. DX 29668 P.O. BOX 5516 Help Desk: 1800 021 037 Facsimile: (02) 9950 0883 (e) If you consider that the information OR provided by the patron is this transaction include: Passport no. WEST CHATSWOOD 1515 1. inadequate,NSW please give a brief description ofChatswood them for a cash dealer to refuse or fail to report an internationalFor Assistance please call the Help Desk on 1800 021 037 or - imprisonment for a period of not more than 2 years; and or It is an offence Account Country of issue All reports must be complete and correct.02 9950 0827 funds transfer instruction. - an appropriate fine State title Help Desk: 1800 021 037 Facsimile: (02) 9413 3705 Privacy Statement - seizure of the currency Passport no. call the Help Desk on 1800 021 037 or For Assistance please Important Information for Small Businesses Postcode The FTR Act is an initiative to assist in the detection of tax evasion and Account For Assistance please call the Help Desk on 1800 021 037 or 02 9950 2.0827 title (i.e. for businesses with less than 20 employees) other criminal activities, including money laundering. Information reported Privacy Statement Country Country of issue 02 9950 0827 (if not Australia) Please note the time you start to complete this form. At the end we to AUSTRAC BSB no.may be used by the Australian Taxation Office, the Australian Customs Service, the National Crime Authority, the AustralianThe FTR Act is an initiative to assist in the detection of tax evasion and will ask you how long it took to complete. Important Information for Small Businesses Important Information for Small Businesses BSB no. Federal Police, State Police and certain other law enforcement agenciesother criminal activities, including money laundering. Information reported (i.e. for businesses with less than 20 employees) Account to AUSTRAC may be used by the Australian Taxation Office, the (i.e. for businesses with less than 20 employees) BSB no. as authorised numberunder the FTR Act. Australian Customs Service, the National Crime Authority, the Australian Please note the time you start to complete this form. At the end we Please note the time you start to complete this form. At the end we PART Account A DETAILS OF PERSON(S) CONDUCTING It is an offence for a cash dealer to refuse/fail to report a significantFederal Police, State Police and certain other law enforcement agencies will ask you how long it took to complete. number PART - DETAILS OF TRAVEL will ask you how long it took to B complete. Account TRANSACTION 7 Signature of Person cash transaction. All reports must1be complete and correct. as authorised under the FTR Act. number Suspect Transaction Report CASINOS ACS USE ONLY I Yes No 1 Currency verified Yes No Officers badge number IV Name of port V Date Person 1 7 PART Direction of travel OF OUT OF TRANSACTION Australia INTO Australia A DETAILS THE Senders correspondent 1 Full11name of person 1 (given name/s and surname) Initiating branch/office 8 What is the name of the Australian city/town where you are clearingBIC Customs? OR 2 3 MM 2 0 Y Y 4 Arrival OR departure date MM MM City 2 20 YBusiness/residential Y address (cannot be a P.O. Box) Country (if not Australia) 12 2 0 Y Y BIC Direction of transmission Into 1 Australia 5 D D Date of transmission/receipt 10 Flight number or name of ship D D Out of Australia For Assistance please call the Help Desk on 1800 021 037 or Important Information for Small Businesses (i.e. for businesses less than employees) Person 2with - If more than20one person at counter 02 9950 0827 (If more separate this sheetform. providing Please note the than time two, you attach start toacomplete At therequired end wedetails) Important Information for Small Businesses PART C DETAILS OF THE TRANSACTION will ask you how long it took to complete. (i.e. for businesses with less than 20 employees) 8 Full name of person 2 (given name/s and surname) Please4note Date the time you start to complete of transaction D D this Mform. M At the 2 end 0 Ywe Y will ask you how long it took to complete. PART A PATRONS DETAILS Name of bank BSB number (if applicable) 9 D D SIGN please call the Help Desk on 1800 021 037 orPenalties exist for failure to lodge or supply full and correct information For Assistance HERE as required. 02 9950 0827 ABN Name, date of birth and passport verified II III Receivers correspondent 1 Full name of patron (given name/s and surname) 2 Business/residential address (cannot be a P.O. Box) OR 9 Name of State City Postcode Country Country $ $ $ 1 Occupation, business or principal activity Full name of person 1 (given name/s and surname) 2 Cash to Patron Transaction Amount (Australian $) Code* Business/residential address (cannot be a P.O. Box) IFTI Form 17 (FEB2001) State Postcode State Country (if not Australia) Postcode Country 1 (if not Australia) Person 1 1 (if not Australia) (if not Australia) 3 BSB no. Transaction details - Refer to list of Transaction Codes over the Account number PART Apage IDENTITY OF PERSON(S) CONDUCTING Cash from THEPatron SUSPECT TRANSACTION Transaction Amount (Australian $) Code* Business/residential address (cannot be a P.O. Box) ICTR(C) Form 15 (MAY2001)bank Transaction reference number Account title 5 SCTR(CD) Form 7 (FEB2001) * If this transaction has been conducted on behalf of another person, please enter their details in Part D (over the page) State 6 $ $ $ cc 7 cc cc 8 cc cc cc If applicable, foreign currencies involved (e.g. USD, GBP, etc) 4 AUSTRAC Annual Report 2002-03 chapter 1 Business/residential address (cannot be a P.O. Box) State Postcode Country Country (if not Australia) SCTR(C) Form 5 (FEB2001) 1 Occupation, business or principal activity 9 1 AUSTRAC reporting forms for cash dealers. Full name of person 2 (given name/s and surname) Postcode (if not Australia) 3 Person 2 (complete if more than one person at counter) Occupation, business or principal activity SUSTR Form 16 (MAY2001) austrac: the organisation Director Neil Jensen Deputy Director Acting Deputy Director Deputy Director Money Laundering Deterrence Money Laundering Targeting Information Technology Liz Atkins Paul Ryan Martin French Senior Manager Senior Manager Manager Corporate Resources IT Security IT Facilities Alf Mazzitelli Jill Scott Anthony Johnston Senior Manager Senior Manager Manager Policy and Coordination Monitoring and Analysis IT Systems Andrew Joyce John Visser Kiru Manavalan Manager Acting Senior Manager Reporting Partner Liaison and Support Iain McAlister Wendy Ward Senior Manager International Rachelle Boyle Acting Manager Compliance Kim O’Grady AUSTRAC’s organisational chart as at 30 June 2003. As Australia’s Financial Intelligence Unit, AUSTRAC plays an important role in analysing the financial transaction reports we receive and making this analysis and data available to our partner agencies. Through our compilation and analysis functions, we monitor and identify financial intelligence related to money laundering, drug trafficking, tax evasion, terrorist financing, people smuggling and other major crimes. AUSTRAC has always had an important role in the international arena. Due to the nature of money laundering and major crime, international cooperation and financial intelligence exchange with international counterparts have been important functions of AUSTRAC since its inception. The international community has become increasingly committed to strengthening anti-money laundering regimes around the world and in doing so, preventing the sponsorship of terrorist groups and activities. In response to the changing international environment, AUSTRAC’s international role has evolved and been strengthened. AUSTRAC works both bilaterally and multilaterally to facilitate the exchange of financial information and to build an international environment hostile to money laundering, major crime, tax evasion and the sponsorship of terrorism. Our structure AUSTRAC has three branches: Money Laundering Deterrence, Money Laundering Targeting and Information Technology. These branches work towards achieving our mission and outputs. The Money Laundering Deterrence branch is responsible for liaising with cash dealers, solicitors and the public to ensure they comply with the FTR Act and submit financial transaction reports. This branch also undertakes work on the quality of data we receive, to ensure that the most accurate information is available to our partner agencies. It liaises with various government departments and agencies to ensure that the FTR Act and AUSTRAC’s roles are effective and meet world standards. The branch also undertakes corporate support of the agency. The Money Laundering Targeting branch is responsible for analysing and disseminating financial transaction reports information. The branch liaises with our partner agencies to enable maximum value to be extracted from our intelligence. This branch also provides operational assistance in the international exchange of financial intelligence. The Information Technology branch works to develop and maintain the systems supporting AUSTRAC’s outputs, using the latest technology to enhance AUSTRAC’s various functions. This reporting year, AUSTRAC established a new international section which reports to the Director and is responsible for coordinating our increasing participation and leadership in the international arena. More information about the work of these branches can be found in Chapters 2 and 3. 6 AUSTRAC Annual Report 2002-03 chapter 1 AUSTRAC management In September 2002, the Minister for Justice and Customs, Senator the Honourable Chris Ellison and the Attorney-General, the Honourable Daryl Williams AM QC MP, announced the appointment of Mr Neil J Jensen PSM, as the Director of AUSTRAC under section 36 of the FTR Act, for a four-year term. Mr Jensen, previously a Deputy Director with AUSTRAC for seven years, has been with AUSTRAC since September 1989. The Director provides advice and assistance concerning AUSTRAC’s roles to executives of law enforcement and revenue agencies, Royal Commissions and national security agencies. The Director also plays a vital role in international forums, particularly as the Head of the Oceania Region and Co-Vice Chair of the steering committee of the Egmont Group of Financial Intelligence Units. For further information, please see Chapter 7. AUSTRAC’s Management Board, from left Paul Ryan, Acting Deputy Director Money Laundering Targeting, Liz Atkins, Deputy Director, Money Laundering Deterrence, Neil Jensen, Director and Martin French, IT Deputy Director. The Director is a member of the Heads of Commonwealth Operational Law Enforcement Agencies (HOCOLEA) and chairs its Action Group into the Law Enforcement Implications of Electronic Commerce (AGEC). The Director is also a member of numerous agency committees and working groups. AUSTRAC has three Deputy Directors responsible for the Money Laundering Deterrence, Money Laundering Targeting and Information Technology branches. The Deputy Director, Money Laundering Deterrence, participates in a number of industry and government committees including AGEC and is chairperson of the Provider Advisory Group, Gaming Provider Advisory Group, Privacy Consultative Committee and Proof of Identity Steering Committee. Participation in these committees forges a strong relationship between AUSTRAC Annual Report 2002-03 7 AUSTRAC and industry groups and enhances the effective running of AUSTRAC. For further information, please see Chapter 6. The Deputy Director, Money Laundering Targeting, builds and maintains strong relationships with our partner agencies and ensures that we are meeting their intelligence needs. This Deputy Director participates in a number of law enforcement committees including the Australian Crime Commission’s Heads of Criminal Intelligence Agencies Committee and often participates in international conferences and forums. The Deputy Director, Information Technology, oversees the development and smooth running of our IT systems and procedures and also participates internationally in the Egmont Group Training IT Sub-Group. This Deputy Director also participates in inter-agency working groups on information technology issues. More information about staffing statistics and the committees in which AUSTRAC participates can be found in the appendices. The monthly staff meeting is a regular opportunity for management to share information with staff about agency activities, external meetings and the broader strategic environment that influences the future direction of the agency. The photo above shows the Director (far right) and staff in Melbourne on a videolink with staff in Sydney. 8 AUSTRAC Annual Report 2002-03 chapter 1 staff structure reporting Minister financing information international environment hostile Financial support ED Commonwealth partner applications cash dealer Egmont achieving output co-ordination Financial Transaction R Intelligence Units Outposting community awareness Data identified insight money laundering white collar crime i operation law enforcement revenue collection Commonwealth TRAQ TES suspect reports regulatory liaison anal transactions compliance identification fraud staff structure reporting Minister financing information internatio hostile Financial support staff structure reporting Minister financing information international environment ho support EDDSWeb Commonwealth partner applications cash dealer Egmont achieving output co-ordination Financ Reports Act 1988 Intelligence Units Outposting community awareness Data identified insight money laundering w chapter 2 Money Laundering Deterrence Overview AUSTRAC’s Money Laundering Deterrence (MLD) branch is responsible for regulatory, policy and corporate services issues. This covers primary outputs 1, 3 and 5 and enabling output 2. The functional areas of the branch are: • • • • Reporting and Compliance; Policy and Coordination; Corporate Resources; and Security and Privacy. Compliance with reporting and other obligations under the Financial Transaction Reports Act 1988 (FTR Act) by cash dealers, solicitors and the public, is integral to the success of AUSTRAC’s work in combating money laundering, major crime, tax evasion and terrorist financing. The MLD branch is responsible for ensuring that these obligations are understood and met. The branch works closely with cash dealers to develop more efficient and effective means of reporting to AUSTRAC and to increase the accuracy of the data reported. In order to do this, MLD staff conduct awareness raising and educational activities in close cooperation with cash dealers and solicitors as well as compliance inspections to ensure the FTR Act requirements are met. One aim of the MLD branch is to increase the number of cash dealers who report to AUSTRAC electronically, thereby significantly reducing the number of paper reports we receive. This also results in a reduction of both costs and time taken to ensure the accuracy of the records in our database. The AUSTRAC Annual Report 2001-02 was made available on CD-Rom for the first time. Inspection programs of cash dealers and solicitors are regularly undertaken by the MLD branch, with the aim of ensuring that adequate systems have been implemented and that provisions and requirements under the FTR Act have been met. It is through these inspections that we are able to improve AUSTRAC Annual Report 2002-03 9 the quality, timeliness and comprehensiveness of the FTR information reported to us. Identification of customers by cash dealers is an important part of Australia’s anti-money laundering strategy. Particularly in relation to cash management trusts (CMTs), this has been a focus of our inspection program this reporting year. CMT providers were required to implement rectification programs, with inspections of CMTs taking place late in the reporting year. The MLD branch is also responsible for policy and coordination within AUSTRAC and liaison with government and other agencies in relation to policy matters. This reporting year AUSTRAC focused on reviewing the provisions of the FTR Act and followed the progression of the Financial Action Task Force on Money Laundering (FATF) review of its 40 Recommendations. The placement of a senior manager in Canberra early in the reporting year has been very successful, with AUSTRAC playing a role in a number of major policy issues, especially in the areas of counter-terrorism, terrorist financing and the National Illicit Drugs Strategy (NIDS). The corporate support function also falls within the responsibilities of the MLD branch. The Corporate Resources section is responsible for supporting and maintaining the efficient running of all areas of AUSTRAC in relation to finance, human resources, property management and knowledge management. In this increasingly security-conscious global environment, our Security and Privacy section continues to uphold a high level of protection of AUSTRAC staff and information, including the privacy of the personal information we store. This involves complying with all government policies, procedures and standards, while continually striving to achieve best practice in the areas of security and privacy. For more information about the performance of the MLD branch, see chapters 4, 8 and 10. Senior Manager, Corporate Resources, discusses resourcing issues with the Personnel Officer. 10 AUSTRAC Annual Report 2002-03 chapter 2 staff structure reporting Minister financing information international environment hostile Financial support ED Commonwealth partner applications cash dealer Egmont achieving output co-ordination Financial Transaction R Intelligence Units Outposting community awareness Data identified insight money laundering white collar crime i operation law enforcement revenue collection Commonwealth TRAQ TES suspect reports regulatory liaison anal transactions compliance identification fraud staff structure reporting Minister financing information internatio hostile Financial support staff structure reporting Minister financing information international environment ho support EDDSWeb Commonwealth partner applications cash dealer Egmont achieving output co-ordination Financ Reports Act 1988 Intelligence Units Outposting community awareness Data identified insight money laundering w chapter 3 Money Laundering Targeting Overview The laundering of the financial benefits of all forms of illegal activity, including serious and organised crime, terrorism, drug trafficking, tax evasion, corporate fraud and corruption by public officials, will often create readily identifiable indicators within Australia’s financial system. AUSTRAC’s data holdings regularly play a major role in the provision of such indicators. These in turn provide operational leads for law enforcement, revenue and national security agencies through the identification of known or suspected targets and their associates. There are, however, many other less obvious or nascent indicators of illegal activity which, if detected through increased knowledge and the application of technical expertise, may provide more important leads. Just as legitimate business is becoming more sophisticated and reliant on technology and expertise, so too is illegitimate business. Increasingly, the identification of unknown or emerging criminal or terrorist threats requires a more strategic and technology-assisted approach to the development of financial targeting and tracking systems. AUSTRAC’s Money Laundering Targeting (MLT) branch has responded to this challenge during the reporting year by creating a closer alignment and cross-skilling of its staff and by introducing new ‘data mining’ technology to assist in the identification of previously unknown suspected money laundering and terrorist financing activity. The MLT branch was restructured early in the reporting year, to ensure that it continued to meet these challenges. A Transaction Reports Analysis and Query Enquiry System training brochure designed for new users of the system. AUSTRAC Annual Report 2002-03 11 The branch focuses on achieving the following outputs: • primary output 2 - targeting money laundering, serious crime and tax evasion; and • primary output 4 - contribution to international efforts to suppress money laundering, major crime and tax evasion. The Monitoring and Analysis (M&A) section comprises skilled analysts based in our Sydney and Melbourne offices and in the Australian Federal Police’s Transnational Crime Coordination Centre in Canberra. Their main role is to identify unusual financial activity, using AUSTRAC’s automated monitoring system, TargIT. They also participate in an Australian Crime Commission (ACC) special investigation into major money laundering and tax fraud. This investigation proactively exploits financial transaction reports (FTR) information relevant to organised criminal enterprises. Other agencies that participate include the Australian Customs Service, Australian Federal Police (AFP), Australian Taxation Office and the Australian Securities and Investments Commission. Partner Liaison Manager, Brisbane and the National Co-ordinator meet with the Senior Manager, Partner Liaison and Support. The Partner Liaison and Support (PLS) section liaises with our partner agencies to promote the effective use of FTR information in agency operations. Under the Financial Transaction Reports Act 1988 (FTR Act), the Director may communicate FTR information to Australian law enforcement, revenue and national security agencies and Royal Commissions. 12 AUSTRAC Annual Report 2002-03 chapter 3 Presently, AUSTRAC’s partner agencies total 27. They are: • • • • • • • • • • • • • • Anti-Corruption Commission (WA) Australian Crime Commission Australian Customs Service Australian Federal Police Australian Securities and Investments Commission Australian Security Intelligence Organisation Australian Taxation Office Crime and Misconduct Commission (Qld) Independent Commission Against Corruption (NSW) New South Wales Crime Commission Police Integrity Commission (NSW) Royal Commission into the Western Australia Police State and Territory Police Services (7) State and Territory Revenue Authorities (8) The AFP Commissioner, Mick Keelty, with AUSTRAC Director Neil Jensen at the signing of a Memorandum of Understanding between the two organisations. The Director has signed Memoranda of Understanding (MOUs) with the heads of each of these agencies, the terms and conditions of which govern security requirements, privacy obligations, feedback commitments and training and support arrangements in relation to each agency’s access to and use of FTR information. During the reporting year, we negotiated new MOUs with the AFP and the Australian Security Intelligence Organisation AUSTRAC Annual Report 2002-03 13 (ASIO). The need to have these particular MOUs renegotiated came about as a result of the passing of the Suppression of the Financing of Terrorism Act 2002, the consequence of which is that AUSTRAC, the AFP and ASIO can now provide FTR information to equivalent agencies in other countries in specific and controlled circumstances. MOUs were also signed with the Chief Executive Officer of the new ACC and the head of the Queensland Crime and Misconduct Commission. Each of our PLS managers spent a period within the M&A section during the reporting year, honing and refining their FTR analytical skills to enable them to be better equipped, experienced and expert in providing analytical support to our partner agencies. Our M&A staff have also developed a stronger understanding of partner agency needs, demands, resource constraints and priorities, through active participation in and analytical support for, various inter-agency intelligence gathering processes and taskforce operations. Responsibility for ATO liaison and support has also been integrated into the work of all PLS managers, again facilitating a wider internal dispersement and exchange of ideas and standardisation of analytical support methodologies within the branch. The Information Technology (IT) Security section has also continued its important work in support of the MLT branch’s analysis, dissemination, integration and liaison work. 14 AUSTRAC Annual Report 2002-03 chapter 3 nderstanding partnership honesty security privacy reporting Minister formation international environment hostile support EDDSWeb Common pplications cash dealer Egmont achieving output co-ordination regulat nalysis monitoring transactions compliance identification fraud overco clusive commitment action results understanding partnership honest ransaction Reports Act 1988 Financial Intelligence Units Outposting co wareness Data identified insight money laundering white collar crime in peration law enforcement revenue collection Commonwealth TRAQ TES eports regulatory liaison analysis monitoring transactions compliance raud inclusive commitment action results diversity democracy whole ssistance understanding partnership honesty security privacy report nancing information international environment hostile support EDDSWe ommonwealth partner applications cash dealer Egmont achieving outpu egulatory liaison analysis monitoring transactions compliance identific vercoming terrorism inclusive commitment action results understandin onesty Financial Transaction Reports Act 1988 Financial Intelligence U utposting community awareness Data identified insight money launder rime international co-operation law enforcement revenue collection Co RAQ TES suspect reports regulatory liaison analysis monitoring trans ompliance identification fraud inclusive commitment action results dive emocracy whole technical assistance understanding partnership hones rivacy reporting Minister financing information international environmen upport EDDSWeb Commonwealth partner applications cash dealer Egmon utput co-ordination regulatory liaison analysis monitoring transaction entification fraud overcoming terrorism inclusive commitment action re nderstanding partnership honesty Financial Transaction Reports Act Performance reporting Outputs and their components chapter number Output 1 Deterring money laundering, serious crime and tax evasion • collection of FTR information • promotion of FTR Act compliance • individual cash dealer compliance improvement 4 Output 2 Targeting money laundering, serious crime and tax evasion • dissemination of FTR information • provision of value added FTR information through analysis • promotion of effective use of FTR information 5 Output 3 Advice on the effectiveness of the FTR Act • reviewing the FTR Act • advising industry bodies • monitoring technological changes in the financial and gaming sector 6 Output 4 Contribution to international efforts directed at the suppression of money laundering, serious crime and tax evasion • participation in international initiatives • exchange of intelligence • expanding the global network in fight against money laundering 7 Output 5 Privacy and Security • • • • ensuring the security of AUSTRAC information ensuring the security of AUSTRAC resources ensuring the security of AUSTRAC personnel ensuring privacy 8 Enabling Output 2 Information Technology • maintaining system availability • developing IT systems and solutions • ensuring the safety and integrity of data 9 Enabling Output 1 Corporate Services • delivering effective human resource management • administering financial and property resources • administering knowledge management 10 staff structure reporting Minister financing information international environment hostile Financial support ED Commonwealth partner applications cash dealer Egmont achieving output co-ordination Financial Transaction R 1988 Intelligence Units Outposting community awareness Data identified insight money laundering white collar international co-operation law enforcement revenue collection Commonwealth TRAQ TES suspect reports regula analysis monitoring transactions compliance identification fraud staff structure reporting Minister financing in international environment hostile Financial support staff structure reporting Minister financing information in environment hostile Financial support EDDSWeb Commonwealth partner applications cash dealer Egmont achievin ordination Financial Transaction Reports Act 1988 Intelligence Units Outposting community awareness Data ide chapter 4 Primary Output Group 1 Deterring money laundering, serious crime and tax evasion n AUSTRAC Informatio Circular No. 35 Financial Transacti on Reports Act 1988 ralia Media Release Reserve Bank of Aust against Repeal of Sanctions nce of Angola the Total Independe National Union for d under the of Australia was directe the United the Reserve Bank effect to In December 1999, tions 1959 to give Exchange) Regula sanctions against the Banking (Foreign resolutions imposing il's A). Counc ty (UNIT a Securi of Angol Nations the Total Independence National Union for repeal of such d AUSTRAC of the to remove has recently advise has been directed The Reserve Bank . The Reserve Bank es AUSTRAC sanctions against UNITAlia. Accordingly, this circular replac Austra the imposition in on ns ation sanctio these ed inform ar No. 15 which provid Information Circul the issue was of sanctions in 1999. Media Release on e Bank of Australia A copy of the Reserv 2003 (below). released on 6 March Media Release tions 1959 Exchange) Regula Banking (Foreign Against UNITA Repeal of Sanctions to lift the s Security Council ndence n by the United Nation for the Total Indepe Following the decisio Union al Nation the against of the remaining sanctions has, at the direction the Reserve Bank g (Foreign of Angola (UNITA), steps under the Bankin taken , ns nment sanctio financial Commonwealth Gover to remove Australia's 1959 tions Exchange) Regula effect from today. against UNITA, with Introduction The Reporting and Compliance (R&C) section plays an important role in deterring criminals from using Australia’s financial and gaming sectors to finance illegal activities and/or launder the proceeds of crime. We achieve this deterrence through ensuring that businesses vulnerable to such activity, referred to as ‘cash dealers,' comply with their obligations under the Financial Transaction Reports Act 1988 (FTR Act), by reporting financial transaction information to AUSTRAC. Our compliance and educational programs aim to ensure that cash dealers understand and are able to meet the FTR Act’s ‘Know Your Customer’ obligations, designed to prevent criminals from opening accounts and conducting transactions using false identities. The R&C section is also responsible for ensuring that AUSTRAC’s financial transaction database contains all the information that may be collected under the FTR Act. AUSTRAC’s law enforcement, revenue and national security partner agencies and inhouse analysts access our financial intelligence database to assist with and commence investigations into, money laundering, terrorist financing, tax evasion and other major crime. The work of the R&C section includes monitoring the quality, quantity and timeliness of reports entering the database and ensuring that any issues are followed up with the cash dealers involved. Enquiries: Manager, Media Office lia Reserve Bank of Austra SYDNEY (02) 9551 9720 An AUSTRAC Information Circular AUSTRAC Annual Report 2002-03 17 Collection of FTR information The FTR Act imposes a number of reporting obligations upon cash dealers, solicitors and the public, to ensure the flow of FTR information to AUSTRAC. Cash dealers are obliged to submit a report to AUSTRAC whenever they are involved in any of the following types of transactions: • significant cash transactions - any transaction with a cash component of AUD$10,000 or more, or its equivalent in foreign currency; • international funds transfer instructions - any instruction for the transfer of funds that is transmitted electronically either into, or out of, Australia; • suspect transactions - any transaction, or attempted transaction, where the cash dealer has concerns about the individuals, monies, or circumstances of the transaction; and • international currency transfers - the carrying, mailing or shipping of AUD$10,000 cash, or its equivalent in foreign currency, either into, or out of, Australia. Solicitors are only required to report significant cash transactions. Members of the public are only required to report international currency transfers. Cash dealers submit all the above report types to AUSTRAC by means of electronic transmission, or in some limited circumstances, in paper form. During the reporting year we further refined AUSTRAC’s Electronic Data Delivery System, Web version (EDDSWeb) and promoted its use to cash dealers, to expand the EDDSWeb user base. EDDSWeb provides a secure internet-based method of reporting FTR information to AUSTRAC. This method of reporting was developed to reduce the compliance costs of processing paper reports for cash dealers and AUSTRAC. Results have shown that EDDSWeb has significantly reduced the number of paper reports received by AUSTRAC, therefore reducing the time required to enter FTR information into our database while increasing the timeliness and quality of that information. At the beginning of the reporting year, 42 cash dealers submitted 67,970 reports via EDDSWeb. By June 2003, 160 cash dealers were using EDDSWeb and collectively submitted 785,532 reports to AUSTRAC during that month. During the reporting year 4,654,305 reports were submitted by cash dealers to AUSTRAC via EDDSWeb. As at 30 June 2003, when the transfer from the old EDDS version (4.1) to EDDSWeb was complete, AUSTRAC receives over 99 per cent of all reports electronically. AUSTRAC will further encourage cash dealers who are currently reporting by the more time-intensive paper format, to make the transition to electronic reporting. Various screens from EDDSWeb. AUSTRAC receives over 99% of all reports electronically. 18 AUSTRAC Annual Report 2002-03 chapter 4 FTR statistics Significant cash transaction reports (SCTRs) Cash dealers are obliged to report a SCTR whenever they are party to a transaction with a cash component of AUD$10,000 or more, or its equivalent in foreign currency. During the reporting year, 1,979,446 SCTRs were reported to AUSTRAC, an increase of almost seven per cent compared with the previous reporting year. Figure 4.1 Trends in SCTR reporting 1998-2003 International funds transfer instructions (IFTIs) Cash dealers are required to report any IFTIs they receive from, or send on behalf of, customers, for the transfer of funds internationally. The report is of the instruction for the transfer of funds. Generally, but not exclusively, this is a report of the transmission sent by the cash dealer through the global Society for Worldwide Interbank Financial Telecommunication (SWIFT) system. During the reporting year, 7,493,765 IFTIs were reported to AUSTRAC, an increase of just over six per cent compared with the previous reporting year. Figure 4.2 Trends in IFTI reporting 1998 - 2003 AUSTRAC Annual Report 2002-03 19 Suspect transaction reports (SUSTRs) The FTR Act requires cash dealers to report any transactions, or attempted transactions, that raise concerns about the individuals, monies, or circumstances, of the transaction. Although AUSTRAC provides guidelines on the reporting of suspicious transactions, generally it is the expertise of individual cash dealers that determines the types of circumstances considered suspicious or unusual for that cash dealer’s respective industry and which therefore need reporting. During the reporting year, 8,054 SUSTRs were reported to AUSTRAC, an increase of more than three per cent compared with the previous reporting year. Figure 4.3 Trends in SUSTR reporting 1998 - 2003 International currency transfer reports (ICTRs) Cash dealers and members of the public are obliged to report ICTRs whenever they carry, mail, or ship AUD$10,000 or more, or its foreign currency equivalent, either into, or out of, Australia. The overwhelming majority of ICTRs are submitted to AUSTRAC by declaration to the Australian Customs Service (ACS) when individuals enter or leave Australia. During the reporting year, 28,274 ICTRs were reported to AUSTRAC, a decrease of just over four per cent compared with the previous reporting year. Figure 4.4 Trends in ICTR reporting 1998 - 2003 AUSTRAC is consistently receiving increasing volumes of FTR information. In the last five years the has been an increase in the total number of reports received by AUSTRAC from 6.9 million reports in 1998-99 to 9.5 million reports in 2002-03 (a 40% increase). The high quality of the reported information is a vital component in partner agency investigations and operations to reduce criminal activity. Promotion of FTR Act compliance Two major aspects of promoting compliance with the FTR Act are education and communication. AUSTRAC’s regulatory policy relies upon maintaining good relationships with cash dealers and industry bodies and using a consultative approach to address issues specific to individual cash dealers, or generic to the broader cash dealer community. This approach ensures that cash dealers are aware of specific issues of concern to AUSTRAC, as well as both domestic and international changes to the regulatory environment. It also ensures that cash dealers and industry bodies have the opportunity to raise issues of concern with AUSTRAC. AUSTRAC ensures that it maintains and further develops various forums for industry consultation. The principal mechanisms for industry consultation are: • the Provider Advisory Group (PAG), which includes representatives of major banks, industry bodies and law enforcement and revenue agencies; and • the Gaming Provider Advisory Group (GPAG), which includes representatives from casinos, TABs, sports betting organisations, industry bodies and law enforcement and revenue agencies. The PAG and GPAG meet to discuss major issues of interest and to advise the Director of AUSTRAC on the concerns of industry bodies. During the reporting year these issues included: • new electronic commerce products and value transfer systems; • domestic and international developments, including potential changes to the FTR Act; and • anti-money laundering trends. Two PAG meetings were held during the reporting year, in August 2002 and May 2003 and one GPAG meeting was held in November 2002. The scheduled GPAG meeting for June 2003 was postponed following consultation with the relevant cash dealers regarding the status of AUSTRAC’s review of the FTR Act. AUSTRAC also organises meetings with cash dealers on specific issues when necessary. During the reporting year, AUSTRAC was responsible for organising a series of industry consultation meetings to advise cash dealers of the Government’s anti-terrorism measures specified in the Suppression of the Financing of Terrorism Act 2002. This consultative approach allowed industry bodies to discuss their major issues with representatives of the Australian Federal Police (AFP) and the Department of Foreign Affairs and Trade (DFAT). AUSTRAC also provides Information Circulars and Guidelines on specific issues, as well as regular newsletters. The following Information Circulars were released during the reporting year: • AUSTRAC Information Circular No 30 - NSW BDM Birth Card and other forms of documentation; AUSTRAC Annual Report 2002-03 21 • AUSTRAC Information Circular No 31 - Guidance for financial institutions in detecting terrorist financing activities; • AUSTRAC Information Circular No 32 - Short Term Money Market Accounts and other related products; • AUSTRAC Information Circular No 33 - OECD News Release - Financial Action Task Force (FATF) on Money Laundering’s Non-Cooperative Countries and Territories List; • AUSTRAC Information Circular No. 34 - Reserve Bank of Australia Media Release Financial Sanctions against Zimbabwe; and • AUSTRAC Information Circular No. 35 - Reserve Bank of Australia Media Release National Union for the Total Independence of Angola. In addition to these Information Circulars, a multilingual educational campaign in Filipino, Vietnamese and Arabic language newspapers was completed in early 2003, to advise small nonenglish speaking remittance dealers (who provide a money transfer system) of their obligations under the FTR Act. Last reporting year, we advised that this campaign was on hold, pending the resolution of legal issues. These issues were subsequently resolved, which enabled the advertising campaign to be implemented. The campaign focused on a range of newspapers servicing the following ethnic groups: • Arabic; • Filipino; • Bosnian; • Serbian; and • Croatian; • Vietnamese. The campaign was run during February 2003 over a four-week period and addressed a range of issues including AUSTRAC, the FTR Act and reporting obligations. AUSTRAC’s work with remittance dealers is continuing. AUSTRAC’s R&C section provides a Help Desk service to support and educate cash dealers, solicitors, law enforcement, revenue and national security agencies and members of the public, in their understanding of the requirements of the FTR Act and AUSTRAC’s position on specific issues. During the reporting year, the AUSTRAC Help Desk responded to 7,704 enquiries, an increase of four per cent compared with the previous reporting year. The following chart highlights the increase in Help Desk enquiries over the last four years: A multi-lingual education campaign was conducted in 2003 to advise ethnic-based remittance dealers of their obligations under the FTR Act. Year Number of queries 2002 - 2003 7,704 2001 - 2002 7,406 2000 - 2001 4,181 1999 - 2000 2,950 Queries received through the Help Desk 1999 - 2003 22 AUSTRAC Annual Report 2002-03 chapter 4 During the reporting year R&C staff also provided educational presentations on the reporting of financial transactions and on anti-money laundering programs, to representatives of the following industries: • banks; • investment banks; • financial institutions; • money transmitters; • securities dealers; and • cash carriers. AUSTRAC considers these educational presentations to be important as they raise the level of cash dealers’ knowledge of reporting requirements for financial transactions and also provide the opportunity to build and strengthen regulatory relationships with individual cash dealers and industry bodies. Cash dealers have advised AUSTRAC that they find these regulatory presentations to be very beneficial in assisting their staff members’ awareness of the broader issues of Australia’s anti-money laundering environment. Individual cash dealer compliance improvement AUSTRAC assesses industry and cash dealer compliance with the FTR Act through the use of monitoring programs, statistical information, cash dealer annual submissions to AUSTRAC and exception reports detailing anomalies in reporting quality and patterns. We conduct inspections of cash dealers and solicitors to assess their compliance levels and where necessary, recommend rectification programs for completion within agreed timeframes. These exercises are generally conducted in a cooperative manner and cash dealers usually implement recommended system and procedural changes without the need for escalating the matter through the stages of our enforcement policy. These visits are also educational for both the cash dealer and the AUSTRAC inspectors, as cash dealers usually welcome the opportunity to have their systems thoroughly reviewed and to discuss rectification programs or requirements that they may not have understood. AUSTRAC inspectors learn about each cash dealer’s business and industry, are better able to recommend compliance improvements regarding the cash dealer’s practical concerns and gain an understanding of particular issues that may be experienced by different industries. Compliance inspections of cash dealers and solicitors are targeted and conducted on the basis of an overall risk assessment, taking into account factors such as: • risk that an industry or cash dealer’s products may be used to finance or launder the proceeds of crime; • law enforcement and revenue agency intelligence; • an assessment of an industry or cash dealer’s compliance profile, based on our monitoring program; and • whether the dealer or industry contributes an amount of intelligence to our database commensurate with expected reporting levels. AUSTRAC Annual Report 2002-03 23 Inspection program The compliance inspection team conducted two significant industry-wide campaigns during the reporting year and inspected 104 cash dealers. Industry-wide campaign - solicitors Solicitors were the subject of our first major inspection program this reporting year. After consultation with the law societies/institutes in each state and the publication of educational material in law journals to notify solicitors that AUSTRAC would soon commence inspections, we inspected 58 solicitors/solicitor partnerships across Australia. Most solicitors were found to already be reporting to AUSTRAC as required. However, the inspections also confirmed our in-house monitoring work which had suggested that, although this is not a cash intensive industry, in cases where cash was present there were some solicitors who had not been fulfilling their reporting obligations. Particular solicitors who, as a result of an inspection, appeared not to have reported to AUSTRAC as required, undertook rectification action by filing outstanding reports and introducing controls to ensure that they met their reporting obligations. We are now in the process of implementing recommendations arising from this program, including enhanced systems monitoring to locate potential non-compliance. Cash Management Trusts This reporting year, AUSTRAC continued its close involvement with the Cash Management Trust (CMT) sector, to assist cash dealers offering CMTs considered to be accounts for the purposes of the FTR Act, to meet their legislative obligations. Following advice from the Australian Government Solicitor, AUSTRAC required the CMT sector to undertake a rectification program to ensure that all cash dealers offering CMTs had properly identified all existing investors and had amended their account opening practices to ensure future compliance with the requirements of the FTR Act. All rectification was required to be completed within the reporting year. We worked closely with individual cash dealers and the relevant industry bodies to ensure that cash dealers were fully aware of their obligations and to develop rectification programs. We conducted an inspection program on CMT products affected by identification requirements, involving the managed funds, banking and related industries. This occurred after an extensive consultation process over the last two years. Our consultative approach resulted in high levels of compliance, especially where cash dealers had made efforts to closely liaise with us and had sought information regarding their obligations during this process. Overall, results were good, with most cash dealers meeting compliance requirements. Some cash dealers are currently rectifying problems found during the inspections and we expect that this process will be completed within the next reporting year. This work has ensured that CMTs are complying with the identification provisions of the FTR Act. Other inspections AUSTRAC’s inspection teams also inspected a number of other cash dealers during the reporting year, undertaking 104 compliance inspections. Some high-risk cash dealers were included in this process as part of AUSTRAC’s ongoing National Illicit Drugs Strategy (NIDS) work. The industries inspected as part of this process included bureaux de change, remittance dealers and loan and finance companies. 24 AUSTRAC Annual Report 2002-03 chapter 4 AUSTRAC’s inspection program is an invaluable tool in ensuring compliance with the reporting provisions of the FTR Act. Our skilled teams of inspectors have developed good relationships with cash dealers and this has allowed us to ensure that effective anti-money laundering systems are in place in the wider financial and gaming sectors. LAUNDERING LAWS BOOST INVESTMENT By Simon Hayes TOUGHER money laundering provisions are likely to increase technology spending in the financial sector, as firms scramble to comply with increasingly stringent regulation. Travelex IT director Steve McCarthy warned the strict regulations in the US Patriot Act could be just the start of a move to tighten financial regulations worldwide. The Patriot Act -- passed in the wake of September 11 -- is being used by the US government to track down funds linked to Saddam Hussein and Iraq’s ruling elite. But such laws were not purely the concern of US-based companies, Mr McCarthy said. “These requirements are becoming a global issue, whereas previously they were unique to particular countries,” he said. Sydney-based Mr McCarthy heads the Australasian IT operations of Travelex -- a UK-based foreign exchange group that issues travellers’ cheques and handles commercial foreign currency transactions. He is one of its three staff responsible for global IT strategy. “Look at requirements for things like data encryption, for example,” he said. “We have encryption, but there are certain circumstances in the US that require encryption of databases. “This hasn’t come up yet, but it is being looked at.” Mr McCarthy said the US Office of Foreign Asset Control, responsible for administering the Patriot Act, was watching foreign transactions closely. Australia also had compliance requirements. “In anti-money laundering we have large compliance requirements,” he said. “We provide daily information to Austrac and Fintrac in the US.” Austrac is responsible for tracking and reporting suspicious transactions and money laundering relating to offences ranging from drug crime to terrorism. Travelex’s OFAC-compliant software came from US vendor Prime Associates, allowing it to track transactions against a list of known terrorists, drug traffickers and others under sanctions. “It alleviates manual work that would have to be done to protect the corporation from violations of these acts,” Mr McCarthy said. Regulatory requirements also have been a key factor behind another IT decision -establishing a disaster recovery site. “September 11 and compliance under the Financial Services Reform Act are two drivers of disaster recovery,” Mr McCarthy said. “We have huge requirements under the Act to maintain services -- people tend to get a little toey if money goes missing for a few days.” The Sydney branch of the company manages the IT requirements of the company in Australia, New Zealand, Fiji, Japan and Hong Kong. The Australian 8 April 2003 AUSTRAC Annual Report 2002-03 25 Future priorities AUSTRAC is committed to a process of continuous improvement in its regulatory and compliance program. In particular, we are examining ways in which FTR reporting can be made more efficient and effective, both for cash dealers and AUSTRAC. Accordingly, a number of future priorities for the R&C section can be broadly described as systems development. Planned developments include: • the continued development of AUSTRAC’s Regulatory Risk Analysis System (ARRAS), for which a pilot system has been developed; • continued expansion of the functionality within AUSTRAC’s EDDSWeb system to allow further automation of the compliance requirements for cash dealers and to provide AUSTRAC with a mechanism for providing regulatory information back to cash dealers via a secure system; and • the use of data mining applications to improve both the quality of FTR information submitted to AUSTRAC and our ability to detect patterns of non-compliance and other information. Other priorities for the new reporting year include: • the development of targeted industry-specific educational campaigns; • an increased audit presence within the broader cash dealer community; • making full use of the increased resources allocated to AUSTRAC’s regulatory program for the next reporting year; and • the continued training and development of staff to ensure AUSTRAC is able to meet future regulatory challenges. 26 AUSTRAC Annual Report 2002-03 chapter 4 Output Table Primary Output 1 Deterring money laundering, serious crime and tax evasion This output refers to the regulatory role of AUSTRAC in creating a climate of compliance with the reporting and other provisions of the Financial Transaction Reports Act 1988 (FTR Act). Price Performance Measure The cost of providing primary output 1 was $3.597 million. Primary Output 1.1 - Collection of FTR information This output refers to the collection and capture of reports and transactions or instructions as required by the FTR Act. Quantity Performance Measure Quality Performance Measure AUSTRAC received 9,549,322 financial transaction reports from cash dealers, solicitors and the public during the reporting year. This represents a 5.47% increase in the volume of reports submitted to AUSTRAC. The number of cash dealers reporting electronically to AUSTRAC using the EDDSWeb system increased significantly from 42 users to 160, an increase of 356%. The EDDSWeb system allows AUSTRAC to return reports to the relevant cash dealer when reports require verification or further explanation. Contribution to Outcome The increasing volume of reports submitted to AUSTRAC and the number of cash dealers using the EDDSWeb system significantly increases both the volume of FTR intelligence available to partner agencies and the speed with which partner agencies can access that intelligence. AUSTRAC Annual Report 2002-03 27 Primary Output 1.2 - Promotion of FTR Act compliance This output refers to the provision of advice and guidance to cash dealers and the public. Quantity Performance Measure Quality Performance Measure Contribution to Outcome During the year 7,704 queries were handled by the AUSTRAC Help Desk, an increase of 4% from the previous year. The broad range of AUSTRAC’s educational services, Help Desk, circulars and guidelines all contributed a broader understanding of the FTR Act and its requirements within the cash dealer community. AUSTRAC regulatory staff contributed to the agency’s broader mission through their ongoing education, liaison, compliance monitoring and inspection programs. AUSTRAC staff met with a large number of representatives from cash dealers and industry bodies on many occasions to discuss specific issues relating to the FTR Act, the obligations the legislation imposes upon cash dealers, potential products and other issues of interest. AUSTRAC met formally with its PAG and GPAG industry forums to discuss a range of issues including the direction of the FTR Act. AUSTRAC released its Information Circulars Nos. 30 to 35 during the reporting year. One advertising campaign was developed and implemented to raise awareness of the FTR Act within ethnic businesses offering remittance services. A variety of educational FTR and antimoney laundering presentations were provided to cash dealers from the following sectors: • banks; • investment banks; • financial institutions; • money transmitters; • securities dealers; and • cash carriers. AUSTRAC’s strong relationships and ongoing liaison work with the broader cash dealer community have enabled it to resolve a wide range of issues related to the provisions of the FTR Act. AUSTRAC worked closely with the CMT sector to educate their compliance areas on their FTR obligations and to help develop the necessary rectification programs. AUSTRAC’s CMT inspection program indicates that cash dealers have now developed a much stronger appreciation of their FTR obligations. AUSTRAC also raised cash dealer awareness of changes in the FATF’s non-cooperative countries and territories list and of Australia’s list of prescribed entities connected to terrorism, through the release of regular Information Circulars on these issues. The AUSTRAC website was accessed 147,500 times during the reporting year. 28 AUSTRAC Annual Report 2002-03 chapter 4 Primary Output 1.3 - Individual cash dealer compliance improvement This output refers to the range of activities from cooperative compliance inspections with cash dealers, to enforcement action. Quantity Performance Measure Quality Performance Measure Contribution to Outcome During the reporting year AUSTRAC undertook 104 compliance inspections. The vast majority of recommendations arising from compliance inspections were accepted and implemented by cash dealers, resulting in increased reporting levels and improved adherence to the requirement for cash dealers to identify people for whom they hold accounts. We continued to work with cash dealers to resolve any outstanding issues. Acceptance by certain cash dealers of recommendations from AUSTRAC inspections resulted in the rectification of non-compliance by those cash dealers and fostered the development of a more comprehensive framework of compliance by cash dealers. Inspection activity was conducted in a variety of sectors, with a focus on solicitors, providers of cash management trust products and high risk cash dealers, i.e. dealers who pose a risk in terms of possible facilitation of drug traffickers to move funds, such as dealers in remittances overseas. A limited number of serious cases of non-compliance were referred to law enforcement agencies. While some cash dealers who remit funds to overseas beneficiaries remain noncompliant, prosecution action is still pending, as legal issues being addressed by the Attorney-General’s Department are yet to be fully resolved. However, progress was made in this area during the reporting year, with an amendment made to the FTR Act, which has enabled the continuation of our work supporting the National Illicit Drugs Strategy. More high risk cash dealers were identified during the reporting year, resulting in an increase in compliance in this sector. This also generated an increase in the number of referrals of suspect transaction reports to AUSTRAC’s law enforcement partner agencies. AUSTRAC Annual Report 2002-03 29 staff structure reporting Minister financing information international environment hostile Financial support ED Commonwealth partner applications cash dealer Egmont achieving output co-ordination Financial Transaction R 1988 Intelligence Units Outposting community awareness Data identified insight money laundering white collar international co-operation law enforcement revenue collection Commonwealth TRAQ TES suspect reports regula analysis monitoring transactions compliance identification fraud staff structure reporting Minister financing in international environment hostile Financial support staff structure reporting Minister financing information in environment hostile Financial support EDDSWeb Commonwealth partner applications cash dealer Egmont achievin ordination Financial Transaction Reports Act 1988 Intelligence Units Outposting community awareness Data ide chapter 5 Primary Output Group 2 Targeting money laundering, serious crime and tax evasion Introduction The importance of effective analysis, dissemination and integration of financial transaction reports (FTR) information into the work of our partner agencies has never been more apparent than during the past reporting year. The tragedy of the Bali bombings, the record seizures of illicit drugs, numerous corporate collapses and continuing cash economy activity, all provide indicators of the need for increased security, vigilance, protection and assistance. In this context, AUSTRAC’s role and in particular, the role of the Money Laundering Targeting (MLT) branch, is to provide an efficient and effective mechanism for converting the FTR information we collect into valuable intelligence that can be expertly integrated into the work of Australia’s law enforcement, revenue and national security agencies. This conversion of FTR information into intelligence takes many forms and is facilitated through various processes. At the basic level, we provide access to our data to 27 law enforcement, revenue and national security agencies and Royal Commissions.1 Online access takes the form of an encrypted password and user identification access to our protected wide area network, called the TRAQ Enquiry System (TES), available to authorised users from each of the agencies. Access to TES enables authorised users to conduct searches on known entities, their addresses, bank accounts, identifying records and various other attributes contained in 1 Due to the conclusion of the Royal Commission into the Building and Construction Industry, the Royal Commission relating to the failure of HIH Insurance Group and the amalgamation of the Australian Bureau of Criminal Intelligence into the Australian Crime Commission, the number of partner agencies has declined from 29 last reporting year to 27 in this reporting year. AUSTRAC Annual Report 2002-03 31 AUSTRAC’s database. This facility is an enormous intelligence support tool, particularly for the operational work of the agencies. However, increasingly we are finding that more sophisticated methodologies are being employed by criminals and tax evaders in relation to illegal activity. Our response to this is to deploy a variety of technology-assisted analytical techniques designed to detect previously unknown illegal activity. Our money laundering monitoring system, TargIT, has been developed for this purpose and its success to date is unquestionable. TargIT, with its technological capacity to identify unusual or suspicious networks of transactions and associated entities, provides a very important mechanism by which we are able to proactively assist the law enforcement, revenue protection and national security endeavours of our partner agencies. Our partnership with Australia’s law enforcement, revenue and national security agencies Following the Bali bombings of 12 October 2002 and in furtherance of our response to the attacks in the United States on 11 September 2001, we have significantly increased our emphasis on the collection, monitoring, analysis and dissemination of intelligence relevant to suspected terrorist financing activity. The Department of Foreign Affairs and Trade’s list of suspect entities has provided us with a particular focus in terms of our monitoring of suspicious or unusual financial activity. This has resulted in the need to devote an increasing amount of our resources towards working with the Australian Federal Police (AFP) and the Australian Security Intelligence Organisation (ASIO) on counter-terrorism strategies and in particular, the financing of suspected terrorist activity. Importantly, this work is already returning us dividends in terms of building closer alliances and working relationships with other areas of government in the fight against terrorism. Neil Jensen (centre) with officers from the Australian Federal Police (left) and the Australian Crime Commission (right). 32 AUSTRAC Annual Report 2002-03 chapter 5 We have posted a full-time Senior Analyst to the AFP’s Transnational Crime Coordination Centre in Canberra to work specifically on transnational organised crime and counterterrorism programs. This position is funded by the AFP, thereby providing a clear and strong indication of their ongoing support for the value of our intelligence contribution. At the start of the reporting year we provided access to FTR information, training and analytical support to 30 law enforcement, revenue and security agencies, including three Royal Commissions. This followed the signing of a new Memorandum of Understanding (MOU), on access to and use of FTR information, with the Royal Commission into the Western Australia Police. 2 During this reporting year, we ceased to provide FTR information to the Royal Commission into the Building and Construction Industry and the Royal Commission into the HIH Insurance Group. On 1 January 2003, two of our partner agencies, the National Crime Authority (NCA) and the Australian Bureau of Criminal Intelligence (ABCI), merged with the Office of Strategic Crime Assessments (OSCA) to form the Australian Crime Commission (ACC). The Director of AUSTRAC and the Chief Executive Officer of the ACC signed a new MOU shortly before the end of the reporting year. Amendments to the FTR Act as a result of the passing of the Suppression of the Financing of Terrorism Act 2002, now enable the Director of AUSTRAC, as well as the Commissioner of the AFP and the Director-General of Security, to provide FTR information to their foreign counterparts spontaneously or upon request. AUSTRAC worked closely with the AFP and ASIO to ensure that these legislative changes had the necessary standard procedures, auditing and feedback mechanisms in place before the dissemination of any FTR information overseas. Existing MOUs with both the AFP and ASIO were amended during the reporting year and now outline the requirements for communicating FTR information to overseas agencies. Furthermore, amendments to the ASIO MOU now enable a small number of ASIO staff to have online user access to TES within their own premises. Dissemination of FTR information AUSTRAC provided online access to 2,074 partner agency officers during the reporting year, an increase of 17 per cent over the previous reporting year. Similarly to last year, this increase came about as a result of interagency agreements regarding the need for greater numbers of TES users from operational areas of our partner agencies. The Australian Taxation Office (ATO) sought an increase in access because of increased demands flowing from greater Cash Economy Compliance activity by that agency. Low value International Funds Transfer Instructions Since 1993 AUSTRAC has had a policy that International Funds Transfer Instructions (IFTIs) of less than AUD$10,000 would not be included in AUSTRAC’s database for direct access by our partner agencies. However, during the reporting year there was an ever-increasing demand on AUSTRAC to disseminate low value (under AUD$1,000) IFTI reports to our partner agencies. This demand was driven by an increasing awareness that low value transactions are providing opportunities for the laundering of money and the financing of terrorist-related activity. A review of our policy on access to low value IFTIs concluded that it is essential that 2 Royal Commission into whether there has been any corrupt or criminal conduct by Western Australian Police Officers. AUSTRAC Annual Report 2002-03 33 these reports be made readily available to our partner agencies. As a result, limited access will be provided to specific partner agency online officers in the new reporting year, according to each agency’s operational requirements and investigative needs. Registered Users (agency category) June 1999 June 2000 June 2001 June 2002 June 2003 ATO 660 479 540 723 1,005 Cwlth LEA 555 692 740 725 757 State LEA 193 246 241 153 138 State revenue authorities 11 10 7 10 3 AUSTRAC 33 57 67 66 68 1,412 1,376 1,547 1,770 2,074 TOTAL Table 5.1 Number of officers with online access to FTR information as at 30 June 2003 LEA = Law Enforcement Agencies There was an overall increase of 10 per cent in total search activity conducted on the AUSTRAC database. Feedback from partner agencies indicates that FTR information has been a vital tool in achieving results during the investigative process and reflects the growing awareness of the importance of financial intelligence. This will further grow in importance due to the passing of the Proceeds of Crime Act 2002. Agencies including the NSW Crime Commission, the Police Integrity Commission (NSW) and the Tasmanian State Revenue Office all showed increases in search activity of more than 35 per cent over the reporting period. Despite the overall increase, there were instances where search activity was significantly low compared with the results of the last reporting year. The search activity of the Australian Customs Service (ACS) and the AFP decreased by up to 10 per cent. Furthermore, use of the AUSTRAC database by a number of the state law enforcement agencies, dropped by up to 40 per cent. At least part of this may be due to the shifting of resources by these agencies to meet other priorities. The use of AUSTRAC’s macro tools was lower than the previous reporting year, by 19 per cent. This decline was largely due to a 47 per cent decrease in AUSTRAC staff use of these tools. In past years, Commonwealth partner agencies relied heavily upon AUSTRAC staff to conduct macro searching on request. We now find that more partner agency staff have online access to these tools and with growing expertise, rely less upon AUSTRAC staff to perform these searches for them. As a result, there has been an increase in the use of the Summary Management Reporting (SMR) by the AFP, the ACC and the ATO, of over 35 per cent. The ATO’s use of the Data Warehouse increased by 45 per cent from the previous reporting year, mainly as a result of the ATO’s increased emphasis on tax haven monitoring of IFTIs and cash economy monitoring and compliance work in respect of significant cash transaction report (SCTR) trends. The use of the Alerts facility available to all partner agencies also increased by 18 per cent over the reporting period and reflects partner agency awareness of the need to perform AUSTRAC searches throughout the entire period of an investigation. 34 AUSTRAC Annual Report 2002-03 chapter 5 TES total TES name TES other searches searches searches Data Active warehouse alerts searches Agency Logons AUSTRAC 18,909 238,957 35,348 203,609 1,342 197 9,114 ATO 28,163 170,950 62,821 108,129 845 20 3,280 Cwlth LEA 49,257 375,324 142,460 232,864 1,747 0 340 State LEA 10,788 88,303 34,542 53,761 51 0 31 39 281 95 186 0 0 0 107,156 873,815 275,266 598,549 3,985 217 12,765 State Rev TOTAL SMRs Table 5.2 Total logons and TES searching activity, 1 July 2002 - 30 June 2003 SMR = Summary Management Report TES = TRAQ Enquiry System LEA = Law Enforcement Agencies Article removed due to copyright restrictions AUSTRAC Annual Report 2002-03 35 Provision of value added FTR information through analysis Analytical work We continued our work in identifying, analysing and disseminating financial intelligence to our partner agencies, generated from suspect transaction reports (SUSTRs) and our automated monitoring system, TargIT. We also commenced a pilot project using a new data mining tool funded early in the reporting year by the National Illicit Drug Strategy (NIDS) Information Technology Working Group comprising representatives of the AFP, ACS and NCA. The number of SUSTRs received during the reporting year totalled 8,054. Our analysts also prepared 999 financial intelligence assessments. During the year several enhancements to our case management system were implemented in order to improve our ability to link apparently disparate groups of entities through their suspect financial activity. We also implemented changes to the suspect transaction report dissemination procedures, in line with new MOU arrangements with state law enforcement bodies. The changes mean that AUSTRAC will now only disseminate SUSTRs upon request from an agency, where the report is clearly relevant to any particular agency, or the SUSTR has some element of urgency about it. They are, however, readily accessible online for the agencies. These changes mirror arrangements that have been in place with Commonwealth agencies for some time. Consequently, the number of SUSTRs disseminated directly to state authorities has declined significantly and now more accurately reflect the interests of our respective partner agencies. We also provided an increased number (21) of customised structured query language (SQL) analyses of financial transaction reports in response to specific partner agency analytical needs. Activity type statistics and trends The chart to the right shows a comparison of the classifications of activity types identified from SUSTRs that were entered into our database over the past two years. There was a significant increase in the number of SUSTRs where the grounds of suspicion reported by cash dealers indicated tax evasion, suspicious behaviour by customers, or unusually large foreign currency transfers. There was a moderate increase in the number of reports that involved structuring. The incidence of unusually large cash transactions and money laundering appear to have dropped. Data Mining This reporting year, AUSTRAC conducted a pilot project using a commercial off-the-shelf data mining tool. Data mining has traditionally been used commercially for business risk and customer relationship management and is extremely powerful in such applications. We are confident that it also offers enormous potential in the identification of anomalous activity that may be indicative of criminal activity. Adopting these technologies represents a step up to a higher level of analysis than that which has been undertaken at AUSTRAC since the agency’s inception and requires a significant investment in training for our analysts. 36 AUSTRAC Annual Report 2002-03 chapter 5 Figure 5.1 Suspect activity types identified for 2001-02 and 2002-03 Data Understanding Business Understanding Data Preparation DATA STORAGE Deployment Evaluation Modelling Figure 5.2 A generic data mining methodology AUSTRAC Annual Report 2002-03 37 Resource constraints affected the agency’s capacity to effectively deploy the technology, but exposure to these systems has been positive and has set the skills upgrade process in motion. Committees and taskforces The establishment of the Australian Crime Commission (ACC) meant that new arrangements were required to continue the work of the former National Crime Authority Agio task force. This multi-agency approach to adding value to FTR information continued throughout the second half of the reporting year under the management of the ACC. The group comprises representatives of the ACC, AFP, ACS, ATO, Australian Securities and Investments Commission (ASIC) and AUSTRAC. The Agio multi-agency group received 73 disseminations from AUSTRAC, which comprised seven per cent of the total financial intelligence assessments prepared by AUSTRAC throughout the reporting year. The group referred 27 value-added cases to partner agencies. Other partner agencies directly received, from AUSTRAC, a further 56 per cent of the total financial intelligence assessments prepared by us. Evaluation of feedback surveys returned by our partner agencies suggests that of all the assessments disseminated, where we received feedback, 33 per cent were used for investigations, 29 per cent were used for intelligence purposes and 12 per cent were not relevant to the agency that had received the intelligence. In 25 per cent of cases it was too early to categorise the assessments we had provided. Promotion of effective use of FTR information This reporting year we continued our promotion of the effective use of FTR information by our partner agencies. This was achieved through our onsite training and support program, funded through the National Illicit Drugs Strategy (NIDS) again this year, with AUSTRAC personnel working onsite at the AFP, ACS, ACC and state law enforcement agencies, providing analytical support and assistance in relation to major drug investigations. With the Government’s increased emphasis on strategies designed to identify and bring to justice those responsible for trafficking in synthetic drugs, in particular psychostimulants, the work of our onsite staff will increase in the next reporting year. As at 30 June 2003, AUSTRAC staff working onsite at our partner agencies are as follows: Partner Liaison and Support Manager deployed as follows: Providing analytical support and training to: AFP Brisbane Partner agencies in Queensland AFP Headquarters Canberra Transnational Crime and Coordination Centre ACS Melbourne ACS Victoria, ATO Victoria, ASIC Victoria, Royal Commission into the Building and Construction Industry, Victoria State Revenue Authority and partner agencies in Tasmania AFP and ACC Melbourne AFP Southern Operations (Victoria), ACC Victoria, Victoria Police, ASIO Victoria and partner agencies in South Australia 38 AUSTRAC Annual Report 2002-03 chapter 5 ACS and AFP Sydney AFP Eastern Operations (NSW), ACS NSW and ATO NSW ACC and NSWCC Sydney ACC Sydney, NSW Crime Commission, Royal Commission into the HIH Insurance Group and partner agencies in the Northern Territory NSW Police, Sydney NSW Police, ASIC NSW, Independent Commission Against Corruption, Police Integrity Commission, NSW Office of State Revenue and partner agencies in the Australian Capital Territory AFP Perth Partner agencies in Western Australia In addition, we had two National Coordinators based in the Sydney and Melbourne offices with responsibility for support services to all partner agencies at a national level. One of these National Coordinators also provided operational support to the ATO throughout Australia, while the other provided support to ASIO. With the increased need during the reporting year to focus on issues such as terrorist financing and international support for anti-money laundering strategies, we streamlined our partner agency arrangements. Each of our managers became responsible for a broader portfolio of agencies and further developed their analytical skills. We also diversified the responsibility for the ATO liaison and support. Our work with the ATO gained increased public attention, with respect to tax haven activity and the increasing threat to the revenue base posed by a reported acceleration in the use of tax havens by Australian taxpayers. To further increase our awareness of the requirements of specific partner agencies, a number of staff attended intelligence courses facilitated by various law enforcement agencies. Coursework included intelligence and analysis processes, as well as the issue of cybercrime. Such courses provided valuable insight into both the nature of these crimes and the various analytical techniques applied by law enforcement agencies to combat them. Training and support Providing partner agency officers with training and tools to enable them to effectively integrate FTR information into their investigations, continued to be a priority for AUSTRAC this reporting year. There has been a growing requirement for the development of advanced agency-specific training sessions and train-the-trainer programs. One such program has been designed for the AFP national training team, with the relevant PLS Manager providing initial training to the AFP trainers and providing course documentation. The trainers are now using these skills to educate AFP recruits on the value of FTR information. During the reporting year we also produced a new guideline outlining the use of FTR information. This guideline specifies the agencies and the officers within these agencies who can access FTR information, the special provisions relating to SUSTRs and the requirements surrounding the use of FTR information in a brief of evidence, or in an application for a search warrant. Feedback from partner agencies has been very positive. AUSTRAC Annual Report 2002-03 39 Feedback and significant results Recognition by a large percentage of Australia’s law enforcement community continues to grow regarding the value of FTR information and the need to integrate AUSTRAC’s intelligence into investigations. Feedback received after the conclusion of the Royal Commission into the Building and Construction Industry, specified that AUSTRAC data provided an alternative avenue of enquiry and was a useful intelligence tool in identifying money transactions and accounts of interest. AUSTRAC continued to promote the need for meaningful feedback from our partner agencies regarding ways in which they use and benefit from access to FTR information. We are reliant on feedback to enable us to appropriately service our partner agencies into the future, effectively review legislative requirements and provide feedback and education to cash dealers. During the reporting year we continued to work closely with each of our partner agencies to improve the timeliness and quality of feedback provided to us. Feedback provided by our partner agencies during the reporting year identified the use of FTR information in 1,544 investigations. In 730 of these investigations, AUSTRAC’s intelligence was identified as being of major significance. In addition, the ATO directly attributed more than $99 million in tax assessments to the use of AUSTRAC’s intelligence. The following examples outline some significant cases provided by our partner agencies in which intelligence from AUSTRAC either initiated or assisted partner agency investigations. significant cases significant cases Laundering funds for commission AUSTRAC’s automated monitoring system identified a series of financial transactions where a person appeared to have been conducting transactions in such a way as to avoid the reporting requirements of the FTR Act. Financial transaction reports showed that more than $4 million was remitted by one person to accounts at two different banks in Asia. After it received AUSTRAC’s information, an Australian law enforcement agency commenced an investigation into the possible money laundering activities of the subject of these reports. The person in question was already known to law enforcement agencies due to his connections with targets of past operations. After several months of investigation, information was received specifying that the person was collecting money from an associate, then remitting the funds to Asia via a particular cash dealer. As a consequence of this information, surveillance was placed on the person. The person was observed attending an associate’s premises before driving towards the cash dealer’s business premises. The person was intercepted and found to be in possession of approximately $50,000 cash. The person was subsequently arrested and during an interview, investigators learned that a resident in Asia paid the person a commission in return for the remittance of funds to Asia. It was further ascertained that packages of $100,000 cash were delivered within Australia and subsequently electronically remitted overseas through a series of structured transactions. In court, the person pleaded guilty to one count of money laundering and one count of defrauding the Commonwealth and was found guilty on a second count of defrauding the Commonwealth. He was sentenced to a maximum of six months imprisonment for money laundering and twelve months imprisonment for defrauding the Commonwealth. As a result of this investigation, a tax assessment of approximately $4 million was raised and more than $600,000 has been recovered. 40 AUSTRAC Annual Report 2002-03 chapter 5 Joint operation ‘freezes’ activities of ‘ice’ importers significant cases significant cases Two shipping containers imported from Asia were examined upon arrival in Australia. Some 79 kilograms of methylamphetamine (known as ‘ice’) was found in purpose-built girders below each container. Two weeks later, analysts identified and searched another three shipping containers linked to the same entities. This examination revealed 184 kilograms of heroin concealed in the same manner. The discovery of the drugs initiated a joint operation conducted by two Commonwealth law enforcement agencies. Surveillance was carried out on Person ‘W’ who received delivery of the containers. Person W was observed removing 82 packages of ice from two containers. Person W was later observed handing over 20 kilograms of ice to another person (Person ‘X’). Consequently, both people were arrested. Person W was charged with ‘being knowingly concerned in the importation of a prohibited import.’ He pleaded guilty and was sentenced to seven years imprisonment with a non-parole period of five years and three months. Person X was charged with and pleaded guilty to an ‘attempt to possess a prohibited import.’ Person X was sentenced to six years imprisonment with a non-parole period of three-and-a-half years. FTR information was used throughout the investigation. This information led to the identification of a previously unknown person (‘Person Y’) and an address which was later discovered to be the ‘safe house’ where the ice was being stored. AUSTRAC’s automated monitoring system also detected unusual transactions linked to the ‘safe house’ address. Due to this new information supplied by AUSTRAC, surveillance was conducted on Person Y. Person Y was observed collecting a car which contained 20 kilograms of ice. He then drove the car to his house and repackaged the ice before storing it under his bed. Person Y was charged with ‘attempt to possess a prohibited import.’ He pleaded not guilty to the charge and told the court that he believed the drugs to be rock salt that he intended to sell to local restaurants. He was found guilty and was sentenced to nine years imprisonment with a non-parole period of five-and-a-half years. AUSTRAC also assisted in identifying $1.5 million dollars remitted to overseas accounts. The use of AUSTRAC’s data was instrumental in identifying new targets receiving money from Person ‘Z’ who at the time was located in Asia. Person Z was arrested by Asian authorities as he attempted to flee his country of residence. Australian authorities lodged an extradition order, which Person Z did not contest. After returning to Australia under extradition orders, Person Z was charged with and pleaded guilty to being ‘knowingly concerned in the importation of methylamphetamine’ in addition to being ‘knowingly concerned with the importation of heroin.’ He was sentenced to 12 years imprisonment with an eight year non-parole period for the importation of methylamphetamine. He was sentenced to life imprisonment with 20 years non-parole for the importation of heroin. AUSTRAC Annual Report 2002-03 41 Monetary motive for murder significant cases significant cases A state law enforcement agency was alerted to an incident in which a person was stabbed multiple times, causing death. A number of leads directed homicide investigators to the victim’s estranged husband, who was charged with the murder. Investigators believed that the issue of income formed part of the overall motive in this case. This matter proceeded as a contested court hearing. The defendant tried to disprove the suggested motive by stating that he was the main income earner for the family. He claimed that he had brought an amount of cash (to the value of AUD$14,000) into Australia from overseas. It was also alleged that large funds transfers were remitted into and out of Australia. With this defence, the defendant was able to suggest that he did not have a motive to kill his wife. At the request of the law enforcement agency, AUSTRAC provided a statement to the court, confirming that no financial transaction reports were held on the AUSTRAC database relating to the defendant. This evidence was used to disprove the financial independence of the defendant, further corroborating the motive stated by the law enforcement agency. Once the defendant was informed that AUSTRAC’s statement would be submitted as evidence, he elected to use a different line of defence. Further evidence was used, coupled with the statement provided by AUSTRAC. The person was convicted of murder and sentenced to 18 years imprisonment. Suspect transaction stops fleeing target A revenue agency initiated an operation after receiving a suspicious transaction report (SUSTR) referred to them by AUSTRAC. Suspicions were raised as the subject of the SUSTR, a small businessman, was found to be in receipt of a large amount of government funds. The AUSTRAC database was used to identify transactions conducted by the businessman, highlighting the fact that he was sending funds offshore to Africa. A further four SUSTRs were received by AUSTRAC, showing that the person was structuring his withdrawals in an attempt to avoid detection by AUSTRAC. These reports also indicated the person’s intention to leave the country permanently for an overseas destination. Under Section 16(4) of the FTR Act, the revenue agency served a notice on the cash dealer involved to gather more information regarding the person. As a result of further enquiries, it was found that the person had defrauded the Commonwealth of over $100,000. The revenue agency sought the assistance of an Australian law enforcement agency to arrest the person two days before he was due to leave Australia. The person was charged with two counts of ‘obtaining a financial benefit by deception under S134.2(1) of the Criminal Code 1995.’ Subsequently, he was found guilty and was sentenced to one year’s imprisonment on the first offence and two-and-a-half years imprisonment on the second offence, with a minimum term of ten months to be served. Without the cash dealer’s report, its suspicions and consequently AUSTRAC’s referral of the SUSTR, which highlighted the occurrence of an offence, the person would have remained undetected and would have left Australia. 42 AUSTRAC Annual Report 2002-03 chapter 5 significant cases significant cases Cocaine seizure An Australian law enforcement agency was notified of a suspicious person entering Australia. An investigation commenced into the person’s activities. Analysis of the person’s financial affairs was undertaken, with AUSTRAC data identifying the person as having received funds transferred from Asia. A consignment of four boxes arrived from South America shortly after the person’s arrival in Australia. The boxes were examined at the border and a significant quantity of black cocaine was identified. Investigators then proceeded to observe the person accept the controlled delivery of the four boxes. AUSTRAC data was used to support telephone interception evidence in relation to the receipt of money from Asia. The money was believed to be used for the payment for cocaine, and the source of the money also indicated a possible destination for the person. As a result, the person was arrested when he attempted to leave the country. The person was charged with the attempted possession of a prohibited import, possession of a prohibited import and being knowingly concerned with the importation of a prohibited import. The person was subsequently found guilty and sentenced to 15 years imprisonment, with 10 years non-parole. This investigation resulted in the seizure of 115 kilograms of black cocaine. This was the first Australian seizure of this type of chemically altered cocaine and the second largest seizure of its type in the world. Future priorities In the reporting year ahead, following further re-allocation of responsibilities, we will be focusing the resources of the MLT branch on: • increased use of more sophisticated data mining technologies and analytical refinements; • ensuring our partner agencies are better positioned to meet their changing demands in a more strategic manner; • increased diversification in the support our PLS managers are able to give to ATO operational, tactical and strategic demands; • increased onsite support for major law enforcement and security agency initiatives, particularly in relation to their efforts in countering the trafficking of illicit drugs and terrorist financing; • increased support for our partner agencies to improve their initiatives in combating corporate malfeasance; and • the rapid development and integration of our new analysts and partner agency liaison officers into our work culture. AUSTRAC Annual Report 2002-03 43 Output Table Primary Output 2 Targeting money laundering, serious crime and tax evasion This output group refers to the use of FTR information by our partner agencies and by AUSTRAC on behalf of our partner agencies, in identifying financial activity indicative of money laundering, major crime or tax evasion. It includes the provision of Information Technology analytical tools and other Information Technology resources, which support the analysis of FTR information. Price Performance Measure The cost of providing primary output 2 was $5.165 million. Primary Output 2.1 - Dissemination of FTR information This output refers to the online and other methods of making FTR information available to partner agencies. Quantity Performance Measure Quality Performance Measure Contribution to Outcome Number of access logons was 107,156. TES had an availability of approximately 99.9% MondayFriday (24 hours). It was available 98.7% on weekends (midnight Friday to midnight Sunday). Downtime was generally a result of maintenance or upgrades to systems. Feedback from law enforcement and revenue agencies details the value of FTR information in 1,544 investigations, indicating that FTR information either initiated or added value to these investigations. The ATO reported upon the direct and indirect benefits of use of FTR information. Number of off-line disseminations was 459. 44 AUSTRAC Annual Report 2002-03 FTR information contributed to ATO assessments valued at more than $99 million during 2002-03. chapter 5 Primary Output 2.2 - Value added FTR information through analysis This refers to the analysis, by AUSTRAC, of FTR information using purpose-built analysis tools and our specialist resources. Quantity Performance Measure Quality Performance Measure Contribution to Outcome Number of financial networks generated by our automated money laundering monitoring systems was 6,021. Our analysts worked on 999 of the networks generated by our systems and prepared 650 assessments for use by our partner agencies. A total of 528 disseminations were made to partner agencies from the 650 assessments prepared by AUSTRAC. A further 104 disseminations of assessments from previous years were also provided to partner agencies last year bringing the total to 632 (44 of these were multiple disseminations). The breakdown of disseminations to partner agencies was as follows: Evaluation of feedback survey material from our partner agencies indicates that of the assessments disseminated, where we received feedback, 33% were used for investigations, 29% were used for intelligence purposes, and 12% were not relevant to the agency that had received the intelligence. In 25% of cases it was too early to categorise the assessments we had provided. AFP ACS ATO NSWPOL VICPOL NSWCC ASIC WAPOL QLDPOL RCBCI NCA SAPOL CMC TASPOL 157 154 92 52 26 21 20 12 7 6 4 4 2 2 In addition, the NCA’s (now ACC) Agio task force selected 73 matters for further research. The task force referred 27 value AUSTRAC Annual Report 2002-03 45 Primary Output 2.2 - Value added FTR information through analysis (cont) Quantity Performance Measure Quality Performance Measure Contribution to Outcome added financial intelligence reports to other partner agencies last year. We received 8,054 suspect transaction reports from cash dealers last year. 46 AUSTRAC Annual Report 2002-03 Our analysts prepared 384 assessments generated by our TargIT system that were associated with suspect transaction reports and made available for use by our partner agencies. chapter 5 The number of suspect reports disseminated to partner agencies over the past financial year is presented below: Agency ABCI ACC ACSHEAD ACSNSW ACSNT ACSQLD ACSSA ACSTAS ACSVIC ACSWA AFPACT AFPCR AFPER AFPHQ AFPNR AFPSR AFPWR ASIC ATO AWGM AWGS CJC CMC (Qld) ICAC NCA NCAA NCAAGIO NCAATF NCAB NCAM NCAP Jun-03 210 3 11 461 5 72 50 6 188 25 34 29 266 167 121 104 216 107 8,310 4 6 7 2 2 2 243 18 11 12 4 Primary Output 2.2 - Value added FTR information through analysis (cont) Quantity Performance Measure Quality Performance Measure Contribution to Outcome NCAS NSWCC NSWPOL NTPOL PIC QLDPOL RCBCI RCHIH SAPOL SRAACT SRANSW SRANT SRAQLD SRASA SRATAS SRAVIC SRAWA TASPOL VICPOL WAPOL 6 162 211 8 36 6 2 154 1 18 1 2 19 154 32 Note: Some reports may have been disseminated to more than one partner agency. AUSTRAC Annual Report 2002-03 47 Primary Output 2.3 - Promotion of effective use of FTR information This refers to the promotion of effective use of FTR information by our partner agencies and relates to the use of both the online service and value-added analysis. Quantity Performance Measure Quality Performance Measure Contribution to Outcome There was an increase of 10% in the search activity. Feedback from partner agencies indicated that access and integration of FTR information into investigations was vital and contributed significantly to operational matters. Partner agencies provided positive feedback, particularly with regard to the outposting of AUSTRAC staff to their agencies. Outposted staff can add value to all operational matters and ensure the integration of FTR information into operations via a high level of analytical support, training and awareness sessions. Feedback received from partner agencies rated all training and presentation sessions very highly. Search activity increased slightly over the reporting year. There was a growing expertise in the use of the macro tools and a raised awareness of the need to use the Alerts facility. The use of Alerts increased by 18%. PLS Managers provided 260 training sessions to users and 54 presentations on the role and functions of AUSTRAC. 48 AUSTRAC Annual Report 2002-03 chapter 5 staff structure reporting Minister financing information international environment hostile Financial support ED Commonwealth partner applications cash dealer Egmont achieving output co-ordination Financial Transaction R 1988 Intelligence Units Outposting community awareness Data identified insight money laundering white collar international co-operation law enforcement revenue collection Commonwealth TRAQ TES suspect reports regula analysis monitoring transactions compliance identification fraud staff structure reporting Minister financing in international environment hostile Financial support staff structure reporting Minister financing information in environment hostile Financial support EDDSWeb Commonwealth partner applications cash dealer Egmont achievin ordination Financial Transaction Reports Act 1988 Intelligence Units Outposting community awareness Data ide chapter 6 Primary Output Group 3 Advice on the effectiveness of the Financial Transaction Reports Act Introduction As in previous years, we devoted much time and effort this reporting year helping to ensure that the Financial Transaction Reports Act 1988 (FTR Act) remains relevant in the ever-changing financial sector. The domestic and global financial environment is constantly changing and it is important that the FTR Act be periodically reviewed with the aim of effectively meeting these changes. This work requires consultation with other Commonwealth, State and Territory agencies, as well as the financial and gaming sectors and our international peers. The placement of a senior manager in Canberra has provided a significant benefit in our ability to keep abreast of changes that affect the FTR Act. It is also important to keep up with technological and other changes in the financial and gaming sectors, to ensure AUSTRAC remains effective. To achieve this, AUSTRAC participates in and chairs a number of committees which review issues such as proof of identity and electronic commerce. Reviewing the Financial Transaction Reports Act The ongoing review of the FTR Act commenced at the end of the 2001-02 reporting year. As highlighted in last year’s annual report, detailed input was sought from our partner agencies as to their concerns with the effectiveness of the FTR Act and what to include in future amendments to the Act. Due to the changes to the Financial Action Task Force (FATF) 40 Recommendations that were under development throughout the year and finalised in June 2003, work did not proceed on the review of the FTR Act in the form of an issues paper. However, a number of areas for improvement were identified as a AUSTRAC Annual Report 2002-03 49 result of consultation with partner agencies and through discussion with cash dealers, which will be incorporated into a broader consideration of Australia’s anti-money laundering system in the next financial year. Amendments to the Financial Transaction Reports Act As a result of work undertaken during the previous reporting year, a number of technical amendments were made to increase the effectiveness of the FTR Act. These amendments occurred through several legislative vehicles including the Crimes Legislation Amendment (People Smuggling, Firearms Trafficking and Other Measures) Act 2002, the Suppression of the Financing of Terrorism Act 2002 and the Proceeds of Crime (Consequential Amendments and Transitional Provisions) Act 2002 and came into effect early in the reporting year. These amendments are important to ensure that the FTR Act operates effectively to regulate cash dealers and is consistent with the new Proceeds of Crime legislation. International efforts that may lead to further review of the FTR Act The FATF continued its review of its 40 Recommendations and released a series of revised international standards for anti-money laundering and counter-terrorist financing in late June 2003. These changes to the FATF 40 Recommendations will require further consideration of the provisions of the FTR Act to ensure consistency with the international standards to counter money laundering and terrorist financing. More information about the 40 Recommendations and the FATF can be found in Chapter 7. Advising industry bodies AUSTRAC continued to give a high priority to maintaining and further developing its various forums for industry consultation. These include: • • • • The FATF 40 Recommendations, revised in June 2003. the Provider Advisory Group; the Gaming Provider Advisory Group; the Proof of Identity Steering Committee; and specific forums to discuss a variety of issues ranging from cash management trusts, to assessing the implications of the Suppression of the Financing of Terrorism Act 2002 for cash dealers. The Provider Advisory Group (PAG) comprises representatives of AUSTRAC, our law enforcement partner agencies and the major industry bodies for banks, building societies, credit unions and financial institutions, as well as individual cash dealer organisations. 50 AUSTRAC Annual Report 2002-03 chapter 6 Meetings were held twice in the reporting year and discussed and assessed issues from both law enforcement and cash dealer perspectives. At a meeting late in the reporting year, an executive of the Attorney-General’s Department addressed the Group on the review of the FATF 40 Recommendations and the process required to progress consideration of these issues by the Government. The Gaming Provider Advisory Group (GPAG) comprises representatives of AUSTRAC, our law enforcement partner agencies and the major industry bodies for casinos and bookmakers, as well as individual casinos, TABs and sports betting organisations. One meeting was held this year and discussed and assessed issues from both law enforcement and cash dealer perspectives. Both the PAG and the GPAG were used throughout the reporting year to seek industry input into possible amendments to the FTR Act. In addition, issues relating to cash management trusts (CMTs) were raised at PAG meetings. As a result of work undertaken by AUSTRAC and industry bodies concerning CMTs, issues were raised with the Government regarding the effectiveness of the customer identification provisions of the FTR Act. In particular, the question of the use of tax file numbers as part of the 100 point identification system set out in the FTR Regulations was raised with the Assistant Treasurer. This issue is still under consideration by the Government. Article removed due to copyright restrictions AUSTRAC Annual Report 2002-03 51 The Proof of Identity Steering Committee (POISC) comprises representatives of AUSTRAC, the Australian Taxation Office (ATO), major cash dealer industry bodies, individual financial institutions and a range of State and Australian Government agencies responsible for issuing documents commonly used to establish proof of identity. Private sector and government agency members of the POISC funded a survey into the cost and extent of identity fraud in Australia, conducted by the Securities Industry Research Centre, Asia Pacific Ltd (SIRCA). The results of this survey are due to be released early in the new reporting year. AUSTRAC representatives have also been involved in assisting several other organisations with proof of identity issues including the ATO, the Attorney-General’s Department, the Department of Treasury and the Australian Bankers’ Association (ABA). In particular, we worked with the Attorney-General’s Department on a major whole-of-government initiative to combat identity fraud and we joined the ABA’s Fraud Taskforce. This taskforce is looking at a range of initiatives, including the development of voluntary industry standards on security and fraud prevention, an analytical study of identity documents and the development of a fraud education program for banking customers. The work of the Attorney-General’s Department and the fraud taskforce will provide major input into a review of the effectiveness of the customer identification provisions of the FTR Act. Taskforce to combat ID fraud industry By Louise Perry and Natalie O’Brien AUSTRALIA’S largest ever taskforce has been set up to fight identity fraud, an escalating white-collar crime that is costing the country up to $4 billion a year and increasing the risk of terrorist activity. but it has already uncovered fraud networks in the ACT, Western Australia, South Australia and overseas. Aiming to crack what is considered the new “boom crime” - encompassing everything from fake passports and drivers’ licences to stolen personal profiles, the taskforce was set up in March for an initial three months. The dangers of identity fraud were highlighted by the September 11 attacks in New York. The terrorists who hijacked the planes had used stolen identities as a “cover” while training to be pilots. Australian Federal Police assistant commissioner Tony Negus said that within its first six weeks elaborate scams had already been discovered in at least five states. Identity fraud can involve schemes such as hacking into computers, breaking into letterboxes and skimming personal details from credit cards to use to gain loans, qualify for credit cards or adopt a new persona. “We expect to make a number of arrests in the next few weeks of people central to the creation of whole portfolios of identities,” said Mr Negus, general manager of AFP eastern operations. The taskforce is being led by the AFP and includes the NSW Police and Crime Commission, the new Australian Crime Commission, Customs and the transaction watchdog Austrac. They are being helped by Australia Post, the Immigration Department, the NSW Roads and Traffic Authority, Health Insurance Commission, the Office of Births Deaths and Marriages and Centrelink. Housed in an AFP building in Sydney, the taskforce members began using an identity fraud register being built by the ACC. The taskforce was to initially target only NSW “It is giving us an idea of the size and scope of the problem,” Mr Negus said. AFP commissioner Mick Keelty told a security conference this week that the use of false identities, along with money laundering and the creation of safe houses could be used by underworld gangs and terrorist groups. The Australian Institute of Criminology’s manager of sophisticated crime, Russell Smith, said identity fraud was so wide-ranging it could strike anyone. “Identity fraud is the key thing lying behind a lot of crime . . . It takes years to re-establish your good name financially,” he said. In South Australia the first legislation in the country that specifically targets identity theft is being designed. The Australian 1 May 2003 Other issues AUSTRAC was responsible for organising a series of industry consultation meetings regarding the Government’s anti-terrorism measures encapsulated within the Suppression of the Financing of Terrorism Act 2002, which includes amendments to: • The FTR Act; • The Proceeds of Crime Act; and • The Charter of the United Nations Act and its Regulations. These amendments require financial institutions to monitor their customer databases to ensure they are not providing services and access to the global financial environment, to prescribed individuals and entities listed on the DFAT website. The industry bodies represented at these meetings included the ABA, industry associations for credit unions and building societies, the International Banks and Securities Association, the Investment and Financial Services Association (IFSA), the Australian Stock Exchange, Sydney Futures Exchange, the Insurance Council of Australia and the Securities and Derivatives Industries Association. Representatives from AUSTRAC, the Reserve Bank of Australia, DFAT and law enforcement agencies also were present. CO-ORDINATOR SOUGHT FOR CYBER CRIME THINK TANK A top job in e-commerce law enforcement is up for grabs, writes David Adams The Commonwealth Government is seeking someone to co-ordinate and promote the activities of a top-level committee charged with examining the law-enforcement implications of e-commerce. The position, which has been in existence for only a year, was created after the members of the Action Group into the Law Enforcement Implications of Electronic Commerce (AGEC) identified the need for a co-ordinator. “While the co-ordinator will do some of the work themselves, a lot of it is about pulling the information out of the committee members and getting the committee members doing things as well,” explains Liz Atkins, deputy director, money laundering deterrence, at the Australian Transaction Reports and Analysis Centre (Austrac) and AGEC member. The group was formed in 1997 to provide a forum through which research could be channeled to Commonwealth law-enforcement, regulatory and revenue-raising bodies on issues arising from the advent of e-commerce. According to a statement on the website of the National Office for the Information Economy, these issues related to such matters as telecommunications offences, improvement in international law-enforcement co-operation, lawenforcement access to email messages, computer intrusion warrants and the disclosure of intercepted information between authorities as well as technological developments in internet media monitoring and electronic forensic capabilities. AGEC is chaired by Austrac director Neil Jensen, who was appointed last September after the sudden resignation of former Austrac director Elizabeth Montano in December 2001. Its members include representatives of agencies such as the Australian Federal Police and the Australian Customs Service, as well as regulatory and revenue-raising bodies such as the Australian Securities and Investments Commission and the Australian Taxation Office. Other members include the Commonwealth Attorney-General’s Department and the Australian Competition and Consumer Commission. State police services are represented by an observer. Atkins says that while the job involves some behind-the-scenes co-ordination work, such as organizing AGEC meetings and providing secretariat services to focus groups, it also involves “getting out there, talking to private enterprise, raising awareness of what our issues are and finding solutions between private enterprise and the government body involved.” cases involving electronic crime. The position, which carries a salary of between $74,298 and $87,344 is for 12 months after which its future will be reviewed. “We see it as the sort of job where you do it for 12 months and then you need to move back on out into the wider public service or the wider private sector,” Atkins says. “It’s not the sort of job you’re going to be in for the rest of your career, we don’t think.” She adds that while the position has existed for 12 months, “there’s still a lot of scope for the person who comes into it to develop it.” The post, which requires a security clearance, has been based in Sydney, where Atkins, as the senior executive as Austrac with responsibility for the group, is based. But Atkins says the location is flexible. “We could be interested in someone who is based in Melbourne or Canberra. It will really depend on the successful candidate.” She says the group has already worked with the Internet Industry Association in the development of parts of its cybercrime code. It is also working with Standards Australia in relation to standards for evidence in The Age 10 June 2003 AUSTRAC Annual Report 2002-03 53 With the passage of the Suppression of the Financing of Terrorism Act 2002, several amendments were made to the FTR Act that reflected the Government’s new focus on terrorism and countering the money flows that finance it. As a consequence, AUSTRAC representatives were involved in a number of committees related to the development and implementation of the Government’s policies to deter and combat the financing of terrorism. Through this process, AUSTRAC has been able to take a proactive role in promoting the importance of countering the money flows associated with terrorism, as well as providing input that is reflective of industry standards and approaches to the issues associated with the risk of terrorist financing. This has also involved working closely with the AttorneyGeneral’s Department to develop advice for the Government as to how the FTR Act should address issues associated with terrorist financing, particularly those associated with FATF initiatives in this area. Monitoring technological changes in the financial and gaming sectors The Action Group into the Law Enforcement Implications of Electronic Commerce (AGEC) has continued to pursue issues arising from electronic commerce and electronic crime which affect law enforcement, regulatory and revenue agencies’ capacities to function in an environment increasingly influenced by emerging information and communications technology. In doing so, AGEC contributes to Australia’s e-security strategic objective of creating a secure and trusted electronic operating environment for both the public and private sectors. AGEC is chaired by AUSTRAC and we benefit from its work in monitoring technological changes, particularly in the financial sector. During the reporting year, AGEC reviewed its operations and changed the way it works. Four focus groups were created to take AGEC’s work forward: • Financial Sector Focus Group, which monitors developments in the financial sector and their implications for AGEC members; • Legal and Procedures Focus Group, which contributes to work on proposed legislative amendments and identifies legal and procedural issues affecting AGEC members; • New Technology Focus Group, which identifies and considers new technological developments and their implications for AGEC members; and • Investigative Methodology Focus Group, which identifies and examines forensic and investigative issues. Major issues examined during the reporting year included fraud using electronic means and what legislative provisions might be necessary to combat this; new payment systems within the financial sector; work by Standards Australia on a standard for electronic evidence; and the continuation of work with various industry bodies, particularly the Internet Industry Association which finalised its Cybercrime Code of Practice and announced the establishment of a law enforcement and industry forum. 54 AUSTRAC Annual Report 2002-03 chapter 6 Output Table Primary Output Group 3 Advice on the effectiveness of the FTR Act This output refers to the work done to ensure that the anti-money laundering reporting regime remains effective in the face of rapid change in both the financial services sector and the wider information economy. Price Performance Measure The cost of providing primary output 3 was $1.106 million. Quantity Performance Measure Quality Performance Measure Contribution to Outcome A number of issues for further consideration have been identified in a review of the FTR Act. Issues relating to customer identification and changes in the financial services sector were identified for consideration as amendments to the FTR Act. Issues were raised internally at AUSTRAC and by partner agencies and cash dealers. AUSTRAC also worked closely with other Government departments, canvassing issues through various committees. Many other issues were identified and dealt with during the reporting year, primarily relating to counter-terrorism measures and existing FATF Recommendations. Issues relating to suppression of terrorist financing were identified and amendments were made to the FTR Act. The work highlighted the importance of working with other government agencies and the private sector, in fostering an environment hostile to money laundering, major crime and tax evasion. AUSTRAC Annual Report 2002-03 55 staff structure reporting Minister financing information international environment hostile Financial support ED Commonwealth partner applications cash dealer Egmont achieving output co-ordination Financial Transaction R 1988 Intelligence Units Outposting community awareness Data identified insight money laundering white collar international co-operation law enforcement revenue collection Commonwealth TRAQ TES suspect reports regula analysis monitoring transactions compliance identification fraud staff structure reporting Minister financing in international environment hostile Financial support staff structure reporting Minister financing information in environment hostile Financial support EDDSWeb Commonwealth partner applications cash dealer Egmont achievin ordination Financial Transaction Reports Act 1988 Intelligence Units Outposting community awareness Data ide chapter 7 Primary Output Group 4 Contribution to international efforts directed at the suppression of money laundering, serious crime and tax evasion AUSTRAC’s increased international role Contributing to international initiatives is integral to AUSTRAC’s work to combat money laundering and other financial crimes. Recent events including the Bali bombings and the 11 September 2001 terrorist attacks have resulted in an increased emphasis on combating terrorism. A key element in this endeavour is the suppression of the financing of terrorist organisations and their activities. Internationally, particularly in the Asia Pacific region and also domestically, the role of Financial Intelligence Units (FIUs) such as AUSTRAC has been recognised as vital in achieving this aim. As part of the global fight against terrorism, the United Nations implemented United Nations Security Council Resolution 1373 in September 2001. This Resolution called upon states and countries to ‘find ways of intensifying and accelerating the exchange of operational information, especially regarding actions or movements of terrorist persons or networks.’ In order to meet this commitment, the Suppression of the Financing of Terrorism Act 2002 (SFTA) took effect during the reporting year. The SFTA strengthened and enhanced Australia’s counter-terrorism legislative framework through amendments to the Financial Transaction Reports Act 1988 (FTR Act) as well as to the Criminal Code Act 1995 (Criminal Code), the Mutual Assistance in Criminal Matters Act 1987 and the Charter of the United Nations Act 1945. An important change brought about by the SFTA amendments to the FTR Act provided the Director of AUSTRAC with the ability to establish agreements with international counterparts to directly exchange intelligence, both upon request and spontaneously. This is a significant milestone in the enhancement of AUSTRAC’s international efforts. It is through AUSTRAC Annual Report 2002-03 57 spontaneous exchange of intelligence that we will be able to get a clearer idea of the global money trail. Increasingly, international channels are being used to launder funds, finance terrorism and commit other financial crimes. In addition to meeting the increased expectations of international bodies, we have actively fostered closer working relationships and enhanced our exchange of intelligence with our international counterparts. This has added important value to Australia’s law enforcement and revenue programs, especially with regard to people smuggling, drug trafficking, tax evasion and terrorist financing. In order to meet the challenges of the increasing global fight against crime, AUSTRAC restructured and refocused our priorities this reporting year. A small international team was established in December 2002 and has been working closely with all areas of AUSTRAC to ensure AUSTRAC contributes to and benefits from international initiatives to combat transnational organised crime. Exchange of intelligence Bilateral relationships and Memoranda of Understanding AUSTRAC enjoys good bilateral relations with other FIUs around the world. During the reporting year we continued our work in enhancing existing relationships and establishing new relationships, focusing particularly on the Asia Pacific region. Relations with our international counterparts are formalised in agreements to exchange financial intelligence. Prior to amendments to the FTR Act, which occured in the reporting year, AUSTRAC had eight international agreements in place. In the eight months since the amendments, AUSTRAC has entered a further six agreements, with Isle of Man, Israel, Singapore, Canada, Malaysia and the Republic of Korea. Negotiations to establish agreements with a further 22 Financial Intelligence Units are currently underway. Several of these agreements are expected to be finalised early in the new reporting year. AUSTRAC’s Director with Mr Byung-Ki Kim, Commissioner of the Korea Financial Intelligence Unit at the signing of the MOU between the two organisations. 58 AUSTRAC Annual Report 2002-03 chapter 7 AUSTRAC’s current agreements to exchange financial intelligence: Belgium Canada Denmark France Isle of Man Israel Italy Korea Malaysia New Zealand Singapore United Kingdom United States Vanuatu Belgian Financial Intelligence Processing Unit (CTIF - CFI) Financial Transactions Reports and Analysis Centre (FINTRAC/CANAFE) SØK/Hvidvasksekretariatet Traitement du Renseignement et Action Contre les Circuits Financiers Clandestins (TRACFIN) Financial Crime Unit Israel Money Laundering Prohibition Authority (IMPA) Ufficio Italiano dei Cambi (UIC [SAR]) Korea Financial Intelligence Unit (KoFIU) Bank Negara Malaysia NZ Police Financial Intelligence Unit Suspect Transaction Reporting Office (STRO) National Criminal Intelligence Service (NCIS/ECU) Financial Crimes Enforcement Network (FinCEN) Financial Intelligence Unit - Vanuatu AUSTRAC’s Director in Melbourne, signing an MOU with the Suspect Transaction Reporting Office, Singapore, through video conference. AUSTRAC Annual Report 2002-03 59 International exchange of financial intelligence There was a significant increase this reporting year in the number of requests from FIUs for the exchange of financial information with 35 requests received, an increase of 21 from the previous reporting year. While meeting the challenge of dealing with the substantial increase in requests from our counterpart FIUs, we have remained committed to providing high quality reports in response to overseas requests for assistance. We continue to receive positive feedback from FIUs and foreign law enforcement agencies on the value and quality, in both content and presentation, of our information exchange reports. These reports contain valuable information which has assisted overseas investigations. In order to measure the quality of our information exchange reports and to ensure we are fulfilling the requirements of overseas FIUs, we conduct feedback surveys. Samples of some comments provided to us regarding the quality and value of our information include: The information you have provided has been instrumental in the imminent deployment of considerable resources to further investigate the criminal syndicate. Through AUSTRAC, we are able to ascertain that the subject has also made various remittances to other parts of the world. We now know the extent of the suspect’s bank accounts in Australia. The information received has been of great importance to our investigation. The information was helpful in connecting different aspects of subjects under investigation. I do not think that the content or layout of this report could be improved. Australian law enforcement agencies have also taken advantage of the increase in the number of international agreements we now have in place, submitting 14 requests for assistance to overseas FIUs during the reporting year. This was a substantial increase from the previous year when four requests were sent. The AUSTRAC International team was formed in December 2002. 60 AUSTRAC Annual Report 2002-03 chapter 7 5876 SENATE Monday, 11 November 2002 bombing, there has been strong progress made in relation to the investigation. In fact, I think it would be fair to say that law enforcement in Australia did not expect the progress to be as it has been. Of course, this is a complex investigation-a big investigation-and on e which has now resulted in a suspect, Amrozi, being held in the custody of the Indonesian police and making various admissions in relation to the transportation and Senator ALSTON – If the proposition is that manufacture of the bomb concerned. Another somehow Telstra is our company and, therefore, it person has also been arrested-Mr Sylvester has access to sensitive government policy Tendean, a shop owner in Surabaya-in relation to information, then of course there is an obvious the supply of chemicals allegedly used to produce solution, as you know, isn’t there? If, however, the the bomb. Other people have been detained and are issue is not privatisation, which would resolve all being questioned by the Indonesian police. The these conflicts of interestAustralian Federal Police continue to have an Senator Lundy – It’s a probity issue. Don’t essential role in this investigation and, although not try and fudge it; answer the question! having access to Amrozi, who is being held at the Senator ALSTON – Don’t try and get moment, the Australian Federal Police are happy annoyed, either! It does not become you. with the evidence that is being provided and have Honourable senators interjectingstated that this has been a significant development and one which has resulted in new lines of inquiry. The PRESIDENT – Order! I ask the Senate Apart from the statements made by Mr Amrozi, to come to order so that we at least have a chance there have been other corroborating facts dealing of hearing what the minister has to say. with the vehicle concerned and the premises which Senator ALSTON – To the extent that there are alleged to have been used for the manufacture are concerns about anyone with whom the of the bomb. The Australian Federal Police government might contract in respect of IT forensic team has been working closely with the outsourcing or, indeed, of the use of any sensitive Indonesians, and the AFP continue to be the lead information, one would expect that the government foreign agency in relation to law enforcement in has put in place those sorts of arrangements. It is this matter. We have to remember that this not confined to telecommunications policy; it is a investigation is being conducted on Indonesian soil whole of government issue. (Time expired) and within Indonesian jurisdiction. It is believed Senator —was....in As well ofasthethe that ELLISON the suspect Amrozi possession Indonesia: Terrorist Attacks Mitsubishi L300 carried the bomb and investigation by van thewhich Australian Federal that there is other evidence to corroborate what he Senator SANDY MACDONALD (2.50 Police,has AUSTRAC is police. alsoAs involved. said to the Indonesian well as the p.m.) – My question is to the Minister for Justice investigation Australian Federal Police, and Customs, Senator Ellison. Minister, will AUSTRAC you is by thetheforemost anti-money AUSTRAC is also involved. AUSTRAC is the update the Senate on the recent significant Australia andin is foremostagency anti-moneyin laundering agency developments in the joint investigation laundering by Australia and is widely acknowledged Australian and Indonesian law enforcement widelyinternationally acknowledged internationally as as being excellent in detecting agencies to hunt down those responsible for the laundering. in Financing is the lifeblood of being money excellent detecting money Bali bombings and bring them to justice? terrorism and AUSTRAC is working on this Senator ELLISON – I thank Senator Sandy laundering. Financing is the lifeblood of matter. It has identified a number of transactions Macdonald for what is a very important question of interest is pursuing its investigations. terrorism andandAUSTRAC is working on and one which all Australians will be vitally interested in. In the short time since the this Bali matter. It has identified a number of munications policy? How can the minister assume or possibly guarantee that commercially sensitive information about the government’s policies and plans cannot reach Telstra via its wholly-owned subsidiary, Telstra Enterprise Services, which has control of the IT functions-including data and voice communications-in both of those departments? transactions of interest and is pursuing its investigations. Senate Hansard 11 November 2002 Terrorism on the cheap left island in a $3.5bn hole Darren Goodsir in Kuta It cost the Bali bombers just $US30,000 ($53,250) to assemble their lethal payload. But 10 weeks after the October attacks,in local tourism officials have revealedasthea bombing ... Last12week, what organisers promoted symbolic left a staggering $3.5 billion in the island’s economy. The exodusco-hosted of thousands act ofhole defiance, Indonesia and Australia a of holidaymakers after the blasts tore apart Jalan Legian tourist strip has abated, but ever so conference on combating money laundering and terrorist slightly. financing. The challenges, however, are starkly different. Now the battle is on to not only restore confidence, but encourage tour operators, insurers airlines who to ease their Thegovernments, Justice Minister, Senator Chrisand Ellison, opened restrictions and help revive the island’s fortunes. Last month, for instance, 57 per cent fewer thecompared conference with the Indonesian visitors came through Bali, with the previous year’s intake.Foreign Minister, Dr Hassan Wirajuda, had to defend the Australian Government’s warning to citizens about travelling to That trend is being repeated this month, and next year’s bookings are patchy. In April the Pacific Asia Travel Association (PATA) will hold its 52nd annual meeting in Bali, bringing together 1000 ofIndonesia. the region’s tourism leaders. High on the agenda will “Every be the travel bans, whichhas Australia and other nations have to upgraded government a responsibility, a duty inform since October 12. Together with PATA, Indonesian authorities have in the past 10 days enlisted its citizens,” he said. the help of lobbyists Gavin Anderson to petition government officials and insurers to develop a more coherent travel advisory system. The conference heard of the critical need to toughen laws, The director of the Bali Tourism Authority, I Gde Pitana, said a huge marketing push was under and bolster resources, to better detect suspicious cash way to target the island’s most frequent visitors. Of all travellers, 63 per cent are repeat visitors, transactions; a possible hint of future terrorist activity. But mostly from the Asia Pacific, including Japan and Australia. in the Bali bombings, the funding came in two $US15,000 “Bali is back to normal, and we know we are attracting not blame for what happened, but parcels, walked across the border by couriers and evading sympathy,” Mr Pitana said. any Semone, electronic PATA’s vice president, Peter saiddetection. political pressure, as much as firm intelligence on possible terrorist threats, seemed to be driving the travel bans. “But the reality is that the Some of the proceeds came from a jewellery store advisories are not going to go away, and we have to deal with them,” he said. robbery; again almost impossible for anti laundering Last week, in what organisers promoted as a symbolic act of defiance, Indonesia and Australia officials tomoney monitor. co hosted a conference on combating laundering and terrorist financing. The Justice Minister, Senator Chris Ellison, who opened the conference with the agency, Indonesian The director of Australia’s money monitoring Foreign Minister, Dr Hassan Wirajuda, had to defend the Australian Government’s warning to Austrac, Neil Jensen, told the Herald the difficulty of citizens about travelling to Indonesia. tracing such small transactions. He said the agency had shifted focus in the wake of the September 11 and October “Every government has a responsibility, a duty to inform its citizens,” he said. The conference heard of the critical need to toughen laws, and bolster resources, to better detect 12 attacks, concentrating relatively tinyBut money suspicious cash transactions; a possible hint of futureonterrorist activity. in the Bali movements. “But we just walked can’t put our oncouriers the low bombings, the funding came in two $US15,000 parcels, across theefforts border by and evading any electronic detection. level financing that might be a pointer to terrorist actions, Some of the proceeds came jewellery store robbery; again almost impossible for we from also ahave responsibilities for drug trafficking andanti tax laundering officials to monitor. evasion,” he said. The director of Australia’s money monitoring agency, Austrac, Neil Jensen, told the Herald the want He to said leave door onfocus those issues difficulty of tracing such“We small don’t transactions. thethe agency hadopen shifted in the wakeas of the September 11 and October 12 attacks, concentrating on relatively tiny money well.” movements. “But we just can’t put our efforts on the low level financing that might be a pointer Austrac has a database of trafficking 60 million to terrorist actions, we also have responsibilities for drug andtransactions, tax evasion,” hedating said. to open 1994onand 35,000 “We don’t want to leave back the door thoseanalyses issues as well.” deposits and withdrawals a day. Alldating international telegraphic transfers Austrac has a database of 60 million transactions, back to 1994 and analyses 35,000 deposits and withdrawalsare a day. Allautomatically international telegraphic transfers are nowwhich automatically now reported to Austrac, is reported to Austrac, which is helping poorerresourced resourced nations throughout the region to enact to helping poorer nations throughout the region sufficiently robust regulatory codes. enact sufficiently robust regulatory codes. “It is in our interests to help other jurisdictions with the establishment of financial investigation teams, and legislation,” Mr said. interests to help other jurisdictions with the “ItJensen is in our establishment of financial investigation teams, and legislation,” Mr Jensen said. Sydney Morning Herald 23 December 2002 Terrorism on the cheap left island in a $3.5bn hole Darren Goodsir AUSTRAC Annual Report 2002-03 61 In addition to requests from foreign counterparts for financial transaction reports information, AUSTRAC also receives a number of requests each year for more general information relating to AUSTRAC policy and structure. During the reporting year, several general information requests were received from approximately 15 countries. These requests focused on how Australia implements its anti-money laundering strategy and AUSTRAC’s internal information technology systems and procedures. Expanding the global network in the fight against money laundering Technical assistance AUSTRAC is increasingly being called upon to provide advice and assistance to other jurisdictions establishing FIUs. Wherever possible and appropriate, we provide assistance in the development of operational processes and participate in training initiatives and seminars. AUSTRAC’s limited capacity to assist in this way has been focused on assisting the development of FIUs in the Asia Pacific region as a priority. In November 2002, an AUSTRAC Senior Analyst conducted a project working with staff of Vanuatu’s FIU to identify current issues facing the FIU and potential strategies to meet these issues and enhance its operations. As part of the project, the analyst spent a week with the Vanuatu FIU, hosted by the Australian Federal Police (AFP). This assistance was well received by Vanuatu and helped implement effective strategies to improve their anti-money laundering systems and procedures. We received positive feedback from the Vanuatu FIU for our assistance. Following the bombings in Bali in October 2002, the Australian Government announced a $10 million initiative, administered by the Australian Agency for International Development, AusAID, to assist in the development of counter-terrorism capabilities in Indonesia. As part of this initiative, AUSTRAC is playing a leading role in a long-term technical assistance project to assist Indonesia in developing an effective FIU. Under the ‘Australia Indonesia Financial Intelligence Unit Cooperation Project’ (AIFIUCP), AUSTRAC is providing expert advice to assist the recently established Indonesian FIU (‘PPATK’) to: • • • • develop strategies and priorities relating to core FIU functions and processes; develop suspect transaction report handling, analysis and dissemination procedures; develop expertise in money laundering typologies; develop guidelines for the Indonesian financial sector and PPATK procedures relating to financial sector reporting and compliance; and • develop procedures and protocols governing PPATK’s relationships with the various Indonesian regulators and investigating agencies, as well as with other FIUs. AUSTRAC has entered into a new phase in its contribution to international counter-terrorism financing and anti-money laundering efforts. The experience developed through the projects in Vanuatu and Indonesia will serve as a platform for the development of future technical assistance initiatives for other jurisdictions in this region. 62 AUSTRAC Annual Report 2002-03 chapter 7 International visitors Each year, AUSTRAC hosts an increasing number of visits from international delegations. While many of these visitors are from other FIUs, AUSTRAC has hosted delegations from fields as diverse as financial industry bodies, security services, science and technology bodies and academic institutions. We have also been visited by Ministers and other senior officials who aim to establish or enhance financial intelligence, anti-money laundering, or counter-terrorism programs in their respective countries. During the reporting year, many of our international visitors were from countries either establishing, or which had recently established, an FIU. Their requests generally sought information on how AUSTRAC was established, our relationships with cash dealers and partner agencies, our information technology solutions, reporting mechanisms and analysis of financial transaction reports. Visit formats have ranged from high level meetings between Ministers, FIU Directors, Deputies and Senior Managers, to longer training-focused visits involving staff from across AUSTRAC, partner agencies and financial institutions. International visits provide the opportunity to present and showcase AUSTRAC’s operations and strategies in the international arena, as well as to develop important relationships with international counterparts and anti-money laundering and counter-terrorism advocates. This reporting year, AUSTRAC hosted 21 visiting delegations. Seven of these delegations were from international counterpart FIUs, three from foreign governments, four from law enforcement bodies, one from an international non-government organisation and the remainder of the delegations were from financial services and academic bodies. The international delegations which visited AUSTRAC this reporting year included: • • • • • • • • • • • • • • • • • • • • • Yannan Public Security Bureau, Beijing International Monetary Fund Philippines National Bureau of Investigations Bank Negara Malaysia (Central Bank of Malaysia) American Financial Services Association Federal Department of Justice, Canada The Netherlands Police Reserve Bank, Fiji Canada Customs and Revenue Agency Brown University, USA House of Representatives of Thailand West LB Bank, Germany FBI Terrorist Financing Operations National Taxation Agency, Japan Financial Services Authority, UK University of Maryland, USA Korea Financial Intelligence Unit (KoFIU) Korean Advanced Institute of Science and Technology (KAIST) Hong Kong Police and Hong Kong Customs PPATK, Indonesia Oman Royal Police and Internal Security Service, Oman AUSTRAC Annual Report 2002-03 63 AUSTRAC has received a number of international delegations during the financial year. From top - AUSTRAC’s National Co-ordinator with the Director of the National Bureau of Investigation, The Philippines; House of Representatives Committee, Thailand; AUSTRAC staff with representatives of Bank Negara, Malaysia; visitors from Bank of Indonesia, the Ministry of Justice and Human Rights and the Department of Foreign Affairs. 64 AUSTRAC Annual Report 2002-03 chapter 7 International conferences and training Our participation in conferences, seminars and workshops organised by international antimoney laundering bodies, FIUs, law enforcement agencies and the financial sector, keep our staff informed of international developments. During the reporting year we participated in: • The Third Global Forum on Fighting Corruption and Safeguarding Integrity, Seoul, May 2003; • The Pacific Money Laundering and Financial Crime International Conference, Thailand, March 2003; • Money Laundering 2003: The New Global Regime, Thailand, February 2003; • Criminalising the Financing of Terrorism: Workshop on Counter-Terrorism Financing, Singapore, January 2003; • Conference on Combating Money Laundering and Terrorist Financing, Bali, December 2002; and • Japan International Cooperation Agency one day seminar for Indonesian Government, Jakarta, December 2002. AUSTRAC’s Director chairing the AML workshop at Global Forum III in Seoul, May 2003. Participation in international initiatives The Egmont Group, the Asia/Pacific Group on Money Laundering (APG) and the Financial Action Task Force on Money Laundering (FATF) remained the major multilateral forums in which we participated. During the reporting year these forums have focused on measures to detect and suppress terrorist financing, in addition to continuing work to increase the worldwide effectiveness of anti-money laundering programs. AUSTRAC’s focus within these forums is on enhancing cooperation, improving mechanisms for the exchange of financial intelligence and developing the capacity of FIUs. Egmont Group AUSTRAC is a member of the Egmont Group of Financial Intelligence Units (‘the Egmont Group’), which currently comprises 69 FIUs worldwide. The Egmont Group’s purpose is to facilitate cooperation in the exchange of financial intelligence by its members. During the reporting year, AUSTRAC placed increasing emphasis on full and productive involvement in AUSTRAC Annual Report 2002-03 65 the Egmont Group. AUSTRAC’s Director is a Co-Vice chair of the Egmont Committee. He is also Head of the Oceania regional group, which currently comprises the four Oceania region members of the Egmont group: Australia, Marshall Islands, New Zealand and Vanuatu. AUSTRAC also participates in the Egmont Group’s Outreach and Legal Working Groups. There were several Egmont meetings during the reporting year in which AUSTRAC participated. These included the Egmont Group’s 2002 Annual Meetings held in Monaco and meetings of the Egmont Committee and the Egmont Working Groups in Prague, Czech Republic in November 2002 and in Bern, Switzerland in March-April 2003. We also maintain links with Egmont FIUs through the Egmont Group’s secure website, which provides a mechanism to make requests of international counterparts for financial information intelligence. This is increasingly being used by FIUs. Currently, AUSTRAC is working to increase the involvement of Asia Pacific countries in the Egmont Group and is sponsoring the Malaysian FIU in its application to become a member. Egmont Group Annual Meetings 2003 Early in the reporting year, the Minister for Justice and Customs, Senator the Honourable Chris Ellison, agreed that Australia would host the 11th Annual Meetings of the Egmont Group. Intensive preparations have commenced for these meetings. AUSTRAC’s Director will chair the Plenary meeting in Sydney from 21-25 July 2003. AUSTRAC, the AFP, the Attorney-General’s Department and other Australian agencies are cooperating to ensure the success of these meetings. About 200 participants from the FIUs of approximately 80 countries and representatives from more than ten international organisations are expected to participate. The Annual Meetings provide the opportunity for participants to strengthen their contacts and cooperative efforts to develop and share financial intelligence. The 2003 Annual Meetings will also be an opportunity to discuss some important issues facing FIUs, as well as to showcase innovations and new techniques being adopted to combat money laundering and the financing of terrorism. This is a significant time for the Egmont Group, with rapidly increasing membership and rising expectations of its work by members and international fora. It is also a significant time for Australia’s involvement. We are working with the Egmont Group to assist the continuing development of FIUs in the region and to enhance relationships and the exchange of information and financial intelligence between FIUs. The Financial Action Task Force on Money Laundering The FATF continued its various strategies to fight money laundering by holding three plenary sessions during the reporting year, in addition to various other meetings and initiatives to develop effective global anti-money laundering and counter-terrorist financing standards. Key issues advanced by the FATF this reporting year included: • creation and implementation of a new common methodology for assessing jurisdictions’ anti-money laundering and counter-terrorist financing programs; • measures to counter the financing of terrorism; and • identification of countries in need of technical assistance and coordination of that assistance. In addition, a review of the FATF 40 Recommendations has been finalised, with the revised 40 Recommendations being released on 20 June 2003. The new recommendations differ 66 AUSTRAC Annual Report 2002-03 chapter 7 from the previous in a number of key areas, recommending FATF member jurisdictions, including Australia, extend: • the range of businesses and professions required to keep records and report transactions; and • customer due diligence measures. The FATF has continued its work on Non-Cooperative Countries and Territories (NCCTs). This list has been revised on four occasions this year and the current jurisdictions considered by the FATF to be non-cooperative are: Cook Islands, Egypt, Guatemala, Indonesia, Myanmar, Nauru, Nigeria, the Philippines and Ukraine. Asia/Pacific Group on Money Laundering The APG is a regional body comprising 26 member jurisdictions, 13 observer jurisdictions and 16 observer organisations. The APG works to ensure the adoption, implementation and enforcement of internationally accepted anti-money laundering standards within the Asia Pacific region. It also coordinates and provides assistance to Asia Pacific jurisdictions developing their measures to combat money laundering and the financing of terrorism. AUSTRAC works closely with the Secretariat of the APG and with its Co-Chairs, sharing information and ideas and coordinating action wherever appropriate. APG Working Group on Alternative Remittance and Underground Banking Our Senior Manager, International Relations, is Co-Chair of the APG Working Group on Alternative Remittance and Underground Banking. This longstanding multi-jurisdictional working group has, over the past reporting year, produced an Alternative Remittance Regulation Implementation Package and conducted an alternative remittance workshop at the APG Typologies Workshop. It has also provided information and assistance to various countries to help in developing an understanding of alternative remittance and underground banking as well as an understanding of the implications these systems have for anti-money laundering and counter-terrorist financing programs. The Working Group provided expertise and insight to the FATF during the reporting year through its involvement in the FATF Working Group on Terrorist Financing (WGTF). The WGTF released an Interpretative Note and Best Practices Paper for FATF Special Recommendation Number 6 on Terrorist Financing, the recommendation that specifically deals with alternative remittance and underground banking. As an APG Working Group representative, AUSTRAC attended the WGTF and FATF plenary meetings in February 2003. Financial Sector Assessment Program A new FATF, International Monetary Fund/World Bank Financial Sector Assessment Program (FSAP) has been developed as a global tool for analysing anti-money laundering and counter-terrorist financing programs. This assessment methodology is currently undergoing an intensive international pilot study. AUSTRAC has agreed to provide the law enforcement expert member of the assessment team for the Singapore FSAP, to be held in late July 2003. Singapore is an important partner for AUSTRAC and participation in the new FSAP assessment is likely to result in AUSTRAC further developing its understanding of Singapore’s initiatives to counter money laundering and terrorist financing. Participation in this program may also demonstrate further refinements that AUSTRAC and Australia could make to our efforts to suppress money laundering and the financing of terrorism. AUSTRAC Annual Report 2002-03 67 Contributing to domestic anti-money laundering and counter terrorist financing initiatives and to meeting AUSTRAC’s objectives AUSTRAC’s growing international role has also seen an increased importance in contributing to domestic initiatives focused on the provision of counter-terrorism assistance to our regional neighbours. AUSTRAC has made contributions to various Australian Government initiatives that have helped to provide advice, initiatives and funding for technical assistance programs to our regional allies. AUSTRAC has also been involved in various working groups that have examined possible counter-terrorism and anti-money laundering initiatives with various countries. As a consequence, AUSTRAC has been involved in making valuable contributions to the Government’s agenda for the provision of counter-terrorism efforts in the region. AUSTRAC is also a member of AusAID’s donor coordination group, which is coordinating the work of various Australian agencies in Indonesia under the Government’s counter-terrorism assistance package that was announced after the bombings in Bali in 2002. AUSTRAC’s Director was the Head of Australia’s delegation to a regional counter-terrorism summit that was co-sponsored by Australia and Indonesia and held in Bali, Indonesia in December 2002. This summit brought together various countries who formed an alliance to assist Indonesia’s efforts in developing its counter-terrorist capability. AUSTRAC’s Director also assisted the Japanese Aid Agency by joining other international delegates in Jakarta in December 2002 to advise the Indonesian FIU on aspects of the development of FIUs. AUSTRAC participates in the FATF/APG Coordination Group, which is chaired by the AttorneyGeneral’s Department. This group also comprises of senior representatives from the AFP, Australian Prudential Regulation Authority, Australian Securities and Investments Commission, Department of Foreign Affairs and Trade, Reserve Bank of Australia and the Department of the Treasury. The group ensures that when Australia is represented at the FATF, APG and other forums, a considered and holistic approach is taken. Future priorities In recent years we have seen a growing trend towards greater cooperative work with our international counterparts and greater interaction with international bodies such as the Egmont Group and the APG. In the next financial year AUSTRAC will have an increasing role in international efforts to counter money laundering and the financing of terrorism, from increased exchange agreements in place with other countries and from new roles in identifying and spontaneously disseminating relevant financial information to overseas counterparts. 68 AUSTRAC Annual Report 2002-03 chapter 7 Output Table Primary Output Group 4 Contribution to international efforts directed at the suppression of money laundering, major crime and tax evasion Price Performance Measure The cost of providing primary output 4 was $0.776 million Primary Output 4.1 - Participate at international forums This output refers to fostering and creating meaningful multilateral relationships between Australia and international Financial Intelligence Units (FIUs) and other organisations. Quantity Performance Measure Quality Performance Measure Contribution to Outcome AUSTRAC actively participated in two rounds of meetings of the Egmont Committee and Egmont Working Groups. In the Egmont Group, we participated in issues under consideration by the Egmont Outreach Working Group and Legal Working Group. This has included development of best practices for FIUs, consideration of applications for Egmont Group membership and work as Head of the Oceania regional group. We also participated in the Egmont Group Committee, coordinating the initiatives of the Working Groups and regional groups. Our position on the Committee of Egmont and as head of the Oceania region will provide significant assistance to the direction of the growing number of FIUs around the world and, importantly, in our region. AUSTRAC agreed to host the 11th Annual Meetings of the Egmont Group. Preparation is underway for hosting of the 11th Annual Meetings of the Egmont Group in Sydney in July 2003. AUSTRAC’s input into the design of the meetings, their agendas and projects will culminate in endorsed direction and outcomes at the 11th Annual Meetings of the AUSTRAC Annual Report 2002-03 69 Primary Output 4.1 - Participate at international forums (cont) Quantity Performance Measure Quality Performance Measure Contribution to Outcome Egmont Group. As this is the first time the Egmont group meetings have been held in the Asia Pacific, these meetings will be used as a means to further engage counterparts in the Pacific and to highlight the work of FIUs across the Asia Pacific. We are sponsoring Malaysia’s application for Egmont Group membership. AUSTRAC has visited Bank Negara Malaysia and met staff of the FIU and its key Malaysian enforcement agencies and financial institutions. Assistance has been provided through the application process and representation was made at the Egmont Legal Working Group on Malaysia’s behalf. In recognition of the strong relationship between the FIUs and AUSTRAC’s standing within the Egmont Group, Malaysia sought our sponsorship of their application. This approach has also been assisted by a closer working relationship following the signing of a MOU with Malaysia in January 2003. AUSTRAC continued close ongoing cooperation with the APG Secretariat, co-chaired an APG Working Group and participated in the APG’s Annual Meeting, Technical Assistance and Training Forum and Typologies. AUSTRAC provided strategic advice to the Co-Chair and the Secretariat of the APG throughout the reporting year. Our practical assistance to the APG has contributed to a continuation of Australia’s reputation as the leading country in fostering the APG’s work. It has also AUSTRAC Annual Report 2002-03 chapter 7 Primary Output 4.1 - Participate at international forums (cont) Quantity Performance Measure Quality Performance Measure Contribution to Outcome assisted with our bilateral relationships in the region and has contributed to the development of global standards by FATF. We assisted by providing expert input as co-chair of the APG Working Group on Alternative Remittance and Underground Banking. This has included coordination of the Working Group’s ‘Alternative Remittance Regulation Implementation Package,’ facilitating an alternative remittance workshop and providing expert input on alternative remittance from the APG to FATF. We actively participated as an APG representative in one FATF Plenary and one FATF Terrorist Financing Working Group meeting and provided some input to initiatives out of session. We participated in three meetings of the Australian FATF/APG Coordination committee. The APG Working Group’s initiatives and reports have been recognised by FATF, ASEAN and APEC and have provided a major contribution to the FATF Best Practices on Alternative Remittance, released in June 2003. We participated as an APG representative in the FATF Working Group on Terrorist Financing, contributing to the development and release of interpretative notes and best practices papers on the FATF Special Recommendations on Terrorist Financing. We provided input to the AttorneyGeneral’s Department for Australia’s contribution to the Review of the FATF 40 Recommendations. We also provided some input on behalf of the APG into the Review of the FATF 40 Recommendations. AUSTRAC Annual Report 2002-03 71 Primary Output 4.2 - Exchange of Data This output refers to the creating of bilateral relationships including the exchange of intelligence data with participating international bodies. Quantity Performance Measure Quality Performance Measure Contribution to Outcome Six new MOUs (with Canada, Isle of Man, Israel, Korea, Malaysia and Singapore) were signed, bringing the total number of MOUs to 14. The ability of the Director to establish these MOUs has assisted the facilitation of this process. Detailed examination of MOU counterpart FIUs and antimoney laundering programs has also been undertaken. Initial work has started on systematic provision of spontaneous exchanges of financial intelligence with MOU counterparts. Increasing numbers of our international counterparts are now approaching AUSTRAC seeking MOUs. These MOUs have resulted in an increased exchange of financial intelligence with other FIUs. Negotiations continued with 22 other potential MOU counterparts. 72 AUSTRAC Annual Report 2002-03 chapter 7 Primary Output 4.3 - International Assistance This output refers to the range of activities associated with offering assistance to countries in an attempt to expand the global network in the fight against money laundering, terrorist financing, tax evasion and other major crime. Quantity Performance Measure Quality Performance Measure Contribution to Outcome Working with AusAID, AUSTRAC commenced the AIFIUCP, our first longterm technical assistance project, assisting the new Indonesian FIU. Our expert assistance has contributed to the development of the Indonesian FIU, particularly regarding its analytical and domestic and international cooperation functions. The AIFIUCP’s contribution to capacity building for Indonesia has been recognised domestically and internationally. The development of an operational FIU has benefited the Indonesian anti-money laundering and counter-terrorist financing program and has been important in the evaluation by FATF of Indonesia. We received 21 international delegations to AUSTRAC. Delegations visited AUSTRAC to explore issues including establishment of FIUs, IT development, liaison with partner agencies and international exchange of information. Visits ranged from longer training programs to short visits. Feedback has been extremely positive. Requests have also been received from international counterparts for longer term training programs and placements at AUSTRAC. AUSTRAC Annual Report 2002-03 73 staff structure reporting Minister financing information international environment hostile Financial support EDDS Commonwealth partner applications cash dealer Egmont achieving output co-ordination Financial Transaction Rep 1988 Intelligence Units Outposting community awareness Data identified insight money laundering white collar cr international co-operation law enforcement revenue collection Commonwealth TRAQ TES suspect reports regulato analysis monitoring transactions compliance identification fraud staff structure reporting Minister financing info international environment hostile Financial support staff structure reporting Minister financing information inte environment hostile Financial support EDDSWeb Commonwealth partner applications cash dealer Egmont achieving ordination Financial Transaction Reports Act 1988 Intelligence Units Outposting community awareness Data ident chapter 8 Primary Output Group 5 Privacy and Security Introduction The objectives of AUSTRAC’s protective security and privacy program are: • to protect official and personal information held at AUSTRAC; • to ensure the personal safety of AUSTRAC employees, contractors and members of the public; • to protect AUSTRAC premises and resources; and • to protect AUSTRAC’s reputation and credibility. AUSTRAC continues to rise to the challenge of the changed security environment. With the rise in the global threat of terrorism, we have examined our policies and procedures to ensure that AUSTRAC’s staff and information are protected. This reporting year, we have maintained our strategic objective to ensure a secure environment which supports and protects the reputation of AUSTRAC, its staff, information and resources and complies with government requirements. We strive for best practice in security and privacy procedures, while maintaining an appropriate balance with business functions. To achieve these objectives, AUSTRAC compares its security and privacy procedures with a range of other government agencies, including the Australian Crime Commission (ACC), the Australian Nuclear Science and Technology Organisation (ANSTO), T4 Protective Security and the Attorney-General’s Department. One of the important aims of Primary Output Group 5 is to ensure that AUSTRAC’s privacy procedures comply with legislation and government standards. We have continued our work to uphold a status of ‘best practice’ for privacy in a number of areas, including our website. AUSTRAC Annual Report 2002-03 75 Ensuring the security of AUSTRAC information The information held by AUSTRAC is crucial to our work. Much of it is personal information and can be of a sensitive nature. The protection of that information is therefore fundamental to our operation. We continue to monitor and review our information security practices to ensure that all information is classified, stored and tracked according to government standards. In our previous annual report we described the implementation of three strategies to counter the risks to AUSTRAC information. These strategies included strengthening the security of our data and records storage facilities, implementing solutions to issues raised during the Protective Security Risk Review, and the development of policies. These strategies were readily adopted by staff and are now part of our everyday procedural security measures. Audits indicate that this successful implementation has resulted in better protection of AUSTRAC’s information. No significant information security incidents were identified during the reporting year. Ensuring the security of AUSTRAC resources AUSTRAC continues to maintain an effective physical security framework that complies with Commonwealth policy and standards. As global security concerns persist, we have reviewed our current security framework with a view to block any perceived gaps in our framework commensurate with the estimated level of risk. During the reporting year, the contingency plans for each section were updated and the business continuity plan was reviewed to ensure that AUSTRAC could respond to new threats in a considered and effective manner. As a follow-up to the physical security audit undertaken by the Australian National Audit Office last reporting year, we have accepted their recommendations, such as home based work policies and information tracking systems. Following a consultative process, the Home Based Work and Occasional Work Policies are near finalisation. A new tracking system, used for tracing file movements in our Melbourne office, has been successfully implemented. The Security Manager, a Security Officer and the Property Project Officer review the draft floor plans. 76 AUSTRAC Annual Report 2002-03 chapter 8 In the coming reporting year, we will face the challenge of creating a secure operating environment that meets AUSTRAC’s standards in our new Melbourne premises. The planning stage for the physical security requirements has commenced, using sound risk management principles to ensure that we meet government standards and maintain best practice security. Once the physical security measures are implemented, we will review our security procedures to ensure they support these measures. No significant physical security incidents were identified during the reporting year. Ensuring the security of AUSTRAC personnel The major aspects of personnel security at AUSTRAC are ensuring that all staff have a suitable security clearance for their position and are trained in our security procedures. During the reporting year, 23 Protected, seven Highly Protected and five Top Secret clearances were granted to AUSTRAC staff and contractors. We also conducted 21 periodic appraisals to ensure the currency of staff security clearances. Our security induction briefing program has been expanded and all new staff and contractors have been briefed. Security and privacy training and education continue to play important roles in establishing better practice security and privacy protocols at AUSTRAC. This reporting year we conducted four security awareness training courses and three one-on-one sessions. Each training course was redesigned to take account of staff feedback and new security and privacy developments within AUSTRAC and the changing global and domestic environment. The inclusion of security snippets in our weekly internal update publication continue to foster security and privacy awareness. No significant personnel security incidents were identified during the reporting year. Ensuring privacy In last year’s annual report, we advised that we were continuing to implement strategies to ensure a high level of compliance with privacy standards. These strategies included training, consultation, regular reviews and audits and conducting meetings of the Privacy Consultative Committee. These strategies have been implemented and have proven successful in ensuring our staff understand their privacy obligations within our collection, analysis and dissemination roles. Privacy awareness training continues and in this reporting year, approximately 25 per cent of the agency attended the sessions. A short course on writing privacy statements was incorporated into induction training sessions in the previous reporting year. This course has been well received by staff and feedback shows the course promotes the importance of privacy in all AUSTRAC functions. The Privacy Consultative Committee formally met twice this year, and held several ad hoc meetings. A consumer representative has joined the Committee, allowing a broader scope to advise AUSTRAC on the privacy and civil liberties issues related to our functions and activities. Although the work of the Committee focused on the review of AUSTRAC Guidelines and Information Circulars, broader issues such as international Memoranda of Understanding, community awareness of the Financial Transaction Reports Act 1988 and the security of AUSTRAC’s web-based reporting system, also were discussed. AUSTRAC Annual Report 2002-03 77 During the reporting year no privacy breaches were detected and the Federal Privacy Commissioner did not advise us of any cases regarding AUSTRAC matters. Data matching Data matching is a large-scale comparison of records or files of personal information, collected or held for different purposes, with a view to identifying matters of interest. It enables information from a variety of sources to be compiled, sorted and analysed at a vastly lower cost than manual methods. 1 During the reporting year, we consulted the Federal Privacy Commissioner’s office to ensure that we were meeting our requirements as a matching agency. 2 The Privacy Commissioner’s Guidelines on Data-matching in Commonwealth Administration specify that a program protocol be prepared by agencies conducting significant data matching programs. After consultation, AUSTRAC elected to update its Technical Standards Report and prepare a generic Program Protocol which describes the generic aspects of data matching exercises involving our data holdings. Similar to previous years, we performed autosearch data matching requests for our partner agencies to match their data holdings with FTR information. In each case we were the matching agency and the partner agency was the user of the resultant data. Five autosearches were undertaken, three for the Australian Taxation Office and two for the Australian Crime Commission. This number is less than that of the previous reporting period, as all requests from partner agencies were postponed until we completed the review of our documentation. All searches were conducted in accordance with the Privacy Commissioner’s Guidelines on the use of Data Matching in Commonwealth Administration issued in February 1998. Future priorities Next reporting year will continue to offer challenges for the security team. Some of these challenges and activities will include: • security fitout of the new Melbourne premises; • security fitout of the expanded Sydney premises; • a protective security risk review; • review and/or revision of standard operating procedures and policies relating to our new premises; and • conducting and maintaining the security clearances of additional staff. 1 As defined in the Federal Privacy Commissioner’s Guidelines on ‘The Use of Data Matching in Commonwealth Administration.’ 2 The Matching Agency is defined under the Privacy Commissioner’s Guidelines as being "… the agency on whose computer facilities the matching is conducted". 78 AUSTRAC Annual Report 2002-03 chapter 8 Output Table Primary Output Group 5 Maintaining privacy and security This output refers to the central place of privacy and security in our information collection and disseminatation role. It applies to both FTR information and AUSTRAC functions under the FTR Act. Price Performance Measure The cost of providing primary output 5 was $1.817 million. Quantity Performance Measure Quality Performance Measure Contribution to Outcome No significant risks were identified. Staff awareness of security issues is high. No serious incidents were identified. All incidents were promptly identified and dealt with effectively. AUSTRAC has maintained a protective security program which is seen as best practice. Our comprehensive physical, personnel and information security measures have been monitored and reviewed to ensure AUSTRAC is well placed to respond to any threats. All security clearances are current and valid. We comply with Acts and guidelines relevant to privacy. AUSTRAC Annual Report 2002-03 79 staff structure reporting Minister financing information international environment hostile Financial support ED Commonwealth partner applications cash dealer Egmont achieving output co-ordination Financial Transaction R 1988 Intelligence Units Outposting community awareness Data identified insight money laundering white collar international co-operation law enforcement revenue collection Commonwealth TRAQ TES suspect reports regula analysis monitoring transactions compliance identification fraud staff structure reporting Minister financing in international environment hostile Financial support staff structure reporting Minister financing information in environment hostile Financial support EDDSWeb Commonwealth partner applications cash dealer Egmont achievin ordination Financial Transaction Reports Act 1988 Intelligence Units Outposting community awareness Data ide chapter 9 Enabling Output Information Technology Introduction The Information Technology (IT) section has continued to play a strong enabling role in AUSTRAC’s ability to deliver our outputs. IT enables financial transaction reports (FTRs) to be collected, stored, analysed and disseminated electronically. IT also supports the efficient day-to-day functioning of the agency. A focus on consolidation and ensuring that IT systems contributed to AUSTRAC’s effectiveness and efficiency were paramount throughout the reporting year. Major projects successfully completed during the reporting year included: decommissioning of EDDS 4.1 (the electronic system for submission of FTR forms that was replaced by the new EDDSWeb system last reporting year); piloting data mining technology; additional enhancements to our online enquiry system; database upgrades; outsourcing of the Wide Area Network (WAN) infrastructure; upgrades to the Desktop Standard Operating Environment (SOE); Defence Signals Directorate (DSD) certification to ensure the continued security of our systems; temporary relocation of the Melbourne office; and PABX and other core infrastructure upgrades. Developing IT systems and solutions Data delivery Almost all financial transaction reports information is collected by AUSTRAC’s secure web-based system, EDDSWeb. Cash dealers report via this system without the need for a paper report to be submitted. EDDSWeb has greatly improved the quality and efficiency of data collection at AUSTRAC. This reporting year, the delivery of FTRs by cash dealers has been further enhanced to enable cash dealers themselves to manage their organisation’s access to and administration of the EDDSWeb system. AUSTRAC Annual Report 2002-03 81 The majority of cash dealers who previously reported using paper forms are now using the EDDSWeb system to report FTR information, including reports of suspicious transactions. This has been beneficial to our internal procedures, for example sorting mail, and has also allowed more efficient and timely availability of financial intelligence to our partner agencies. Data mining A pilot data mining project funded from the National Illicit Drugs Strategy (NIDS), was completed during the reporting year. This work will continue to evolve during the coming reporting year. More information on data mining can be found in Chapter 5. Further developments Work on our TRAQ system was a priority this reporting year. The TRAQ system comprises database software that allows the storage, analysis and searching of FTR information. Additional functionality was added to the TRAQ system to improve data quality and to extract more account and identification details from FTR information. The database software has been upgraded to the latest version to take advantage of the functionality now available, particularly in the area of seamless integration of documents within applications and other facets of portal technology. Further work was done on name-matching software, which involved the latest version of SSANAME3 matching software being implemented. Maintaining IT facilities Outsourcing the Wide Area Network (WAN) The majority of our WAN is now managed by SecureNet. This relationship ensures that AUSTRAC can provide secure and efficient data communications to our partner agencies in a cost effective manner. Desktop and SOE upgrade All of AUSTRAC’s PCs were upgraded with the latest Compaq hardware during the reporting year. We chose Microsoft Windows XP as the basis for the Standard Operating Environment (SOE) installed on these machines, due to its extended functionality and enhanced security features. Relocation of the Melbourne office AUSTRAC’s Melbourne office was temporarily relocated during the reporting year, to premises within Customs House. As a result of this move we were able to upgrade the current Melbourne PABX and the capacity of the data link between Melbourne and Sydney was increased. The data link now provides toll-free secure voice communications between the two offices. This 82 AUSTRAC Annual Report 2002-03 chapter 9 Information technology support staff upgrade has increased the efficiency of staff in our Melbourne office and allowed them speedy access to our systems and information. Ensuring the safety and integrity of AUSTRAC data It is important for AUSTRAC to ensure that our systems and data are secure and will protect the integrity and privacy of the information we store. AUSTRAC works within the security framework defined by the Australian Government and is committed to adopting best practice whilst ensuring cost effectiveness. DSD, the national authority for communications and computer security, provides services to government including certification of information systems. Our ongoing relationship with DSD ensures compliance with government guidelines, while our ongoing strategic relationship with ANSWERZ, an IT security professional organisation, provides us with quality technical reviews and advice. IT security management and culture AUSTRAC convenes an IT Security Committee that meets at least every six months and as required, to discuss security issues and advise the Director on issues of IT security. The committee assumes responsibility for the overall effectiveness of AUSTRAC’s IT security measures and comprises the Director, Deputy Directors and the IT Security Manager. It is through the work of this Committee that AUSTRAC is able to implement and enforce its IT security procedures. Through management policies, publications, informative login screens and awareness training, AUSTRAC staff maintain a strong security culture. All employees are regularly made aware of their obligations, responsibilities and accountabilities in relation to IT security matters. Risk management Many changes were made to our IT infrastructure during the reporting year. One major change was a review of our WAN, resulting in several security functions being outsourced to SecureNet, a DSD-certified service provider. Associated with changes to our IT systems, corresponding risk assessments were undertaken and mitigation strategies were identified and actioned. Threat and risk assessments form the foundations of our IT security practice. A subsequent audit in April 2003, by ANSWERZ, subjected our IT security systems to independent scrutiny. Refinements are now being addressed before we once again apply for DSD certification early in the new reporting year. As we need to know how to respond to a gateway incident with speed and skill, AUSTRAC trains suitable staff in incident detection and response procedures, as well as procedures for gathering necessary forensic data. During this reporting year, no serious IT security incidents were detected. Security of internet facilities SecureNet now hosts our website and provides us with all Internet Service Provider (ISP) services. The agreement allows AUSTRAC to provide a greater level of service and reliability in a cost effective manner. With the recent system modifications and change of service AUSTRAC Annual Report 2002-03 83 provider to SecureNet, our site will be fully penetration tested early in the new reporting year. Our website Our website will also be included in penetration testing for possible defacement and other potential intrusions. EDDSWeb internet application The majority of FTR data is now collected from cash dealers via the internet utilising EDDSWeb, our Data Delivery System with Secure Sockets Layer (SSL) encryption. A valid cash dealer identifier, user identification and password are required for access to the system. We have previously conducted penetration testing of our web application site and a source code audit of a subsequent upgrade to the EDDSWeb application. These independent reviews revealed no problems. Internet browsing and secure e-mail Included in the upgrade of our WAN environment, and subject to stringent security considerations, internet browsing was integrated with desktop facilities in January 2003. This was accompanied by a staff awareness program on internet threats and risks. All e-mail is delivered to the desktop. In addition to our ISP’s software, different virus protection software is employed at various levels on our premises, providing us with multilayer protection. In February 2003, we joined the whole-of-government initiative for secure communications, Fedlink, which provides for secure e-mail up to Protected level. Initially, we intend to use this communication for secure e-mail between our partner agencies, as they have also undertaken to participate in the program. Secure e-mail up to Highly Protected level, between Commonwealth law enforcement revenue and regulatory agencies, is provided by 90East’s Secure Gateway Environment (SGE). Although we have participated in the SGE to date, secure e-mail at this level is not required by AUSTRAC. Our Wide Area Network (WAN) SecureNet manages connections to our gateway by partner agencies for access to our financial transactions database, TRAQ. Additionally, a separate encrypted network between Sydney and Melbourne is maintained over ISDN lines for video-conferencing. Remote access is currently provided to a small number of our staff working at partner agency and remote sites. The Remote Access Service (RAS) provides full encryption and authentication services before access is permitted to desktop and corporate database facilities. Late in the reporting year, our IT contractors were reviewing our RAS solution with the view to future cost savings and obtaining better performance. 84 AUSTRAC Annual Report 2002-03 chapter 9 Our internal environment We maintain a standard suite of management programs running on NT and UNIX platforms, to provide network access, e-mail, internet and server access to our desktops. Access to all desktop facilities is controlled by a single logon and password. This not only reduces the risk of unauthorised access to our facilities, but also allows a more streamlined approach to system access. FedLink cleared for protected info Selina Mitchell FEDERAL government agencies will soon be able to send sensitive information over a secure private communications network like no other in the world. Confidential audit reports, draft legislation and personal data are likely to be among the first details sent over the security enhanced FedLink network. Contractor 90East will extend and manage FedLink, which is currently used by 20 federal agencies, including the Australian Taxation Office, the National Audit Office and the Office of Parliamentary Counsel, which drafts Bills and amendments of Bills for the federal parliament. Deployment of the secure government virtual private network (VPN) will be speeded now that vital software and equipment has been endorsed by the Defence Department. All users would now be able to send secure information over the network and more agencies are joining the network to meet strict security requirements, Mr Bewick said. FedLink handles the routine business of government, but much of the information on it is sensitive, National Office for the Information Economy representative Steve Alford said. Only a very small amount of classified information will be excluded from FedLink. The network will be able to handle information classified to protected level, which includes Cabinet documents and draft legislation. Email was already secure on FedLink and the improved security would enable agencies to be confident of the safety of other critical documentation and applications, FedLink managers said. Networking multinational Cisco and Canberra information risk specialist 90East will partner to create the secure VPN. The secure network will initially cover 120 federal agencies and can scale up to 3000 nodes, each of which may be a separate government agency or organisation requiring secure communications. “The Government considered and started to build this network prior to the September 11 attacks, but now it is a world first network that other governments are trying to emulate,” 90East federal manager Andrew Bewick said. No other VPN had similar scalability, Mr Alford said. The network will be based on the IP Security (IPSec) encryption standard. Cisco’s product based on the standard has just passed a Defence Signals Directorate security evaluation. Only highly protected information will not be entrusted to the network information that is determined capable of leading to serious injury or death. Cisco commercial operations director Kip Cole said the system would cut costs and increase communications efficiency as well as deterring information security attacks. The Cisco Internet Protocol Security Protocol (IPSec) system is one of two network encryption solutions to complete evaluation at the EAL 4 security accreditation the highest level attainable by commercial products. To achieve this result the network software was evaluated by DSD for two years. Some security products have failed the strict evaluation, and if that had happened to the Cisco products planned for use on FedLink, the increasingly vital network would have shut down, Mr Bewick said. “We all breathed a collective sigh of relief,” he said The Australian 21 January 2003 AUSTRAC Annual Report 2002-03 85 Future priorities In the coming reporting year IT will focus on expanding functionality, improving performance and adding backup systems to AUSTRAC’s IT infrastructure. EDDSWeb With nearly all FTR data being collected via the internet, maintaining the stability and availability of this environment are high priorities. The IT team will therefore be adding further backup systems to both the EDDSWeb and Gateway environments. Network and system monitoring and performance We will be upgrading our core network switching infrastructure in the coming reporting year. The upgrade will give faster access through more bandwidth to our internal users. The new switching infrastructure will add backup systems to the environment and ensure that hardware failure does not result in loss of functionality to our users. IT will also be enhancing our system and network monitoring tools to enable a more proactive role in providing a stable and efficient computing environment. PABX expansion The functionality of the PABX will be expanded to incorporate an improved service voicemail and automated attendant facilities. All handsets will be upgraded from analog to digital, allowing more functions and making the phone system easier to use. 86 AUSTRAC Annual Report 2002-03 chapter 9 staff structure reporting Minister financing information international environment hostile Financial support ED Commonwealth partner applications cash dealer Egmont achieving output co-ordination Financial Transaction R 1988 Intelligence Units Outposting community awareness Data identified insight money laundering white collar international co-operation law enforcement revenue collection Commonwealth TRAQ TES suspect reports regula analysis monitoring transactions compliance identification fraud staff structure reporting Minister financing in international environment hostile Financial support staff structure reporting Minister financing information in environment hostile Financial support EDDSWeb Commonwealth partner applications cash dealer Egmont achievin ordination Financial Transaction Reports Act 1988 Intelligence Units Outposting community awareness Data ide chapter 10 Enabling Output Corporate Services Introduction The Corporate Resources Section of AUSTRAC, along with the Knowledge Management Team, provide essential support in human resource management, financial and property management, office services and administration of knowledge management for the agency. Delivering effective human resource management Workplace diversity In accordance with Section 18 of the Public Service Act 1999, the Human Resources unit reviewed the AUSTRAC Workplace Diversity Program (WDP) during the reporting year. This program was developed to help build AUSTRAC’s relationship with the community, enhance the contribution of our employees and improve the quality of our service. Our WDP aims to remove barriers to equal opportunity for all employees, to actively incorporate Equal Employment Opportunity (EEO) principles and measures into people management and to modify workplace culture, attitudes and behaviour. By ensuring our policies, principles, programs and practices are free from discrimination, we will benefit in terms of effectiveness and productivity through the recruitment, development and retention of high quality staff. We believe that a diverse workforce from a variety of backgrounds and perspectives gives the agency a broader range of ideas and insights from which to draw in decision-making and policy development. (See Appendix I for a statistical breakdown of EEO groups within the salary classification levels.) During the reporting year, the AUSTRAC Consultative Group (ACG) was appointed to act as the Workplace Diversity Committee to promote the benefits of diversity. AUSTRAC Annual Report 2002-03 87 Occupational health and safety Consistent with the Occupational Health and Safety (Commonwealth Employment) Act 1991 (OH&S [CE] Act) and associated Regulations, AUSTRAC continued to develop its Occupational Health and Safety Policy and Agreement. We anticipate this will be formalised early in the new reporting year. It aims to ensure the health, safety and welfare of AUSTRAC employees through the promotion of a safe and healthy work environment. Creating and maintaining such an environment will also assist us in achieving our corporate goals. During the reporting year, the ACG continued to act as the Occupational Health and Safety Committee, directing the activities of one OH&S Officer, four First Aid Officers and 13 Fire Wardens. Ergonomic Health Services continued to provide regular assessments of workstations to ensure the safety of our workplace systems. We decided to continue our influenza vaccination program, as there was a resultant reduction in absenteeism from influenza in the previous reporting year. During the reporting year, AUSTRAC continued to develop its Elimination of Harassment Policy. The aim of the policy is to ensure that our employees are able to work in an environment free from harassment and in which they are treated with dignity, courtesy and respect. We believe that effective elimination of harassment in the workplace is essential for maintaining a good work environment and we have created policies and procedures to accomplish this aim. AUSTRAC has four Workplace Harassment Contact Officers. These officers have been fully trained in the skills required to carry out their role. They have developed an education program for all agency staff and contractors. No formal complaints or grievances were reported throughout the year. Participative work practices The ACG also continued to be the formal mechanism for consultation between employees and management on matters of policy and procedure affecting staff. The review of AUSTRAC’s performance management system was the most significant issue dealt with by the ACG during the reporting year. As the elected staff representatives, the ACG also took part in negotiations to finalise our new Certified Agreement. The agency-wide monthly staff meetings, at which the Director delivers status reports, provided further opportunities for staff input. Performance management A highlight of the reporting year was the completion of a joint management and staff working group review of AUSTRAC’s performance management system. The Performance Management Working Group successfully met its objective of providing recommendations on how to better meet the needs of staff and managers by using this revised system. The revised performance agreement and appraisal policies and processes implemented during the reporting year are expected to deliver an overall improvement in the individual performance characteristics displayed by staff. 88 AUSTRAC Annual Report 2002-03 chapter 10 AUSTRAC Certified Agreement and Australian Workplace Agreements A new AUSTRAC Certified Agreement was certified by the Australian Industrial Relations Commission on 26 September 2002. The new agreement assists both management and staff in attaining overall agency objectives, with emphasis on communication, flexible work practices and democracy. Significant features of the new agreement include a joint staff and management commitment to undertake a review of the AUSTRAC Job Evaluation Scheme, the introduction of access to home-based work, an increase in maternity leave entitlements and access to personal leave to undertake further education. AUSTRAC CERTIFIED AGREEMENT 2002 AUSTRAC continues to use Australian Workplace Agreements (AWAs) to build on the flexibilities contained within the terms and conditions of our Certified Agreement. Eight non-SES staff and two SES staff were covered by AWAs during the reporting year. Over a number of years, Certified Agreements and AWAs have provided staff with a wider variety of employment conditions and flexible work practices, permitting a greater balance of work responsibilities and individual needs. A new AUSTRAC Certified Agreement was certified by the Australian Industrial Relations Commission in September 2002. Staff development In consultation with the ACG, our training and development program continued to provide staff with access to effective learning services to achieve agreed performance outcomes, as outlined in individual performance agreements. The emphasis during the reporting year was on the provision of specific in-house training for our staff, including Strategic Planning and Data Mining software workshops and a Managing Change Within AUSTRAC seminar. This reporting year has also seen the development of an online training solution for all staff in Cross-Cultural Communication awareness. We will continue to develop our training strategies to ensure all staff have access to a flexible and personalised learning environment, to create a positive and beneficial effect on business outcomes. AUSTRAC training statistics are provided in Appendix I. Job evaluation During the reporting year we undertook to review the job evaluation scheme as prescribed under our new Certified Agreement. The Job Evaluation Working Group, comprising representatives from various staff demographic groups throughout the agency, met regularly to review the job evaluation scheme. The focus was to provide recommendations on how using the scheme could better meet the needs of staff and managers. The working group will report its recommendations, covering all aspects of the job evaluation scheme, early in the new reporting year. AUSTRAC Annual Report 2002-03 89 Productivity gains We reported last year that we had refocused the structure of the Money Laundering Targeting Branch to meet the challenges of a changing financial sector; and to better identify those involved in serious crime including the financing of terrorism. The resulting restructure of the branch has enabled us to provide more timely and effective support to our partner agencies. The structure of our Reporting and Compliance section was again reviewed in an attempt to more effectively meet our regulatory program needs. A new structure for the section will take effect early in the new reporting year. Our new Certified Agreement contains provisions to allow better management of flex time and recreation leave, as well as flexible work practices, to ensure a more productive workforce. Limits on the accrual of staff flex and recreation leave now ensure that we keep tighter control of our leave liabilities. By using the certified agreement as a strategic management tool, we will continue to maintain our workforce and meet primary output performance targets in addition to the increasing demands of our partner agencies. Towards the end of the reporting year, the Government announced an increase in AUSTRAC’s budget for 2003-04 to $19.943 million (including $17.4 million appropriation and $2.5 million capital). This announcement recognises the productivity gains made by AUSTRAC over the years in meeting its outcome and the need for new resources in order to continue to do so, in a climate of greater demands from both domestic partner agencies and international partners. A staff training session. Commonwealth Disability Strategy In accordance with the Commonwealth Disability Strategy guidelines issued by The Office of Disability, and to meet our obligations under the Disability Discrimination Act 1992, AUSTRAC continued to undertake the roles of regulator, provider and employer. Regulator AUSTRAC’s major regulatory role is to promote the Financial Transaction Reports Act 1988 (FTR Act) by providing advice and guidance to cash dealers and the public. 90 AUSTRAC Annual Report 2002-03 chapter 10 Information on reporting obligations is available at AUSTRAC’s user-friendly website. Forms and other AUSTRAC materials can be obtained upon request. Our website complies with the World Wide Web Consortium (W3C) standards so that people with disabilities are able to access website content. Provider AUSTRAC’s clients also include members of the public who travel to and from Australia and are required to report all currency that is brought into and taken out of Australia. To assist members of the public to understand their obligations, signage in 14 languages has been placed strategically at Australia’s international airports and shipping terminals which explains these reporting requirements. AUSTRAC welcomes feedback through enquiries and complaints. AUSTRAC provides a TTY phone for the hearing impaired, a toll-free number to assist people living in remote areas, and, when required, can arrange an interpreter service for people from a non-English speaking background. Information pamphlets are produced in easily readable paper format, on the AUSTRAC website and in other formats upon request. Employer During the reporting year, AUSTRAC established a new workplace diversity program to ensure that our workplace procedures and practices continued to support equitable working conditions for employees with disabilities. We also assessed these policies and procedures to ensure they complied with the Disability Discrimination Act 1992. Recruitment information is available through our website. Interested applicants may also seek information by telephone and e-mail. Administering financial and property resources During the reporting year, AUSTRAC continued to manage our financial and property resources consistent with the accrual budgeting framework. We also received an unqualified audit report from the Australian National Audit Office (ANAO) on our financial records and reporting for the 2002-03 financial year. Property management During the reporting year our Victorian-based office staff took up temporary occupancy in Customs House in Melbourne, a move providing significant savings in our overall property lease expenditure. The move also enabled us to sublet our former premises, which were subject to higher market rental rates. A rent review was completed with the landlord of our Sydney office accommodation, resulting in a small increase. We also reviewed our Sydney office arrangements in light of our future accommodation needs. Asset management AUSTRAC’s physical assets are presented in our financial records at ‘deprival value’ in line with the Finance Minister’s Orders made under section 63 of the Financial Management and Accountability Act 1997. An upgrade to our PC/LAN environment was completed during the reporting year. This included the replacement of desktop PCs with the current industry standard. The upgrade AUSTRAC Annual Report 2002-03 91 provides increased productivity and efficiency for our staff and reduces the total cost of ownership to the agency, while maintaining IT security. For more information, refer to Chapter 9. Purchasing and competitive tendering and contracting During the reporting year, we tendered for the provision of new desktop PCs. CSC Australia was the successful tenderer in the supply of new PCs to AUSTRAC at very competitive rates. Market testing for the outsourcing of our Wide Area Network (WAN) environment was also conducted during the reporting year. SecureNet was the successful tenderer in the supply of these services to AUSTRAC. We anticipate making significant savings in future years as a result of these market testing activities. Ecologically sustainable development AUSTRAC continued to operate in an environmentally conscious manner, adhering closely to the guidance contained in the Green Office Guide, a joint initiative of Commonwealth, State and Territory government agencies. Our decision-making processes integrate both long-term and short-term economic, environmental, social and equitable considerations as required under the Environment Protection and Biodiversity Act 1999. Through continuing moves to online reporting we were able to progress further towards the minimisation of paper use during the reporting year. The current paper report volume has been reduced from 400,000 reports to less than 50,000 reports, or less than one per cent of the total volume of reports collected (approximately 10 million) per year. We have continued to encourage environmental protection through recycling. Waste paper is disposed of in a manner that facilitates recycling. Printer cartridges and other materials are recycled subject to the availability of appropriate recycling schemes. In accordance with the objective of minimising electricity consumption, we continued to educate and encourage staff to limit their use of electricity. AUSTRAC adopts best practice in purchasing procedures by adhering to the recommendations of the Australian National Audit Office (ANAO) in their report on Life Cycle Costing, by considering the whole-of-life costs in office and IT equipment purchasing decisions. Preference in purchasing is given to environmentally sound products, such as those with power save features and good energy star ratings. The nature of AUSTRAC’s core business, outcomes and activities are such that our activities do not affect the principles of ecologically sustainable development. The agency does not administer any legislation with ecologically sustainable development implications. None of our outcomes as specified in the Appropriations Act (No.1) 2002-2003 will contribute to non-ecologically sustainable development. The main result of the agency’s activities on the environment is the consumption of energy and water in leased premises and fuel in leased vehicles. Data on these sources of consumption is collected and reported annually to the Australian Greenhouse Office. Internal audit The Audit Committee comprises the Director, Deputy Directors and our Internal Auditor, whose services are kindly provided by the Australian Crime Commission. Representatives of the ANAO are invited to attend at least one meeting of the Audit Committee each year. The 92 AUSTRAC Annual Report 2002-03 chapter 10 Committee met twice during the reporting year to consider our financial statements and the findings of internal audit reviews. Reports by the Auditor-General As outlined earlier in this chapter, we received an unqualified audit report from the ANAO with respect to our financial records and reporting for the 2002-03 financial year. AUSTRAC’s financial statements are presented from page 95 of this report. Decisions of courts and tribunals This reporting year, there were several matters before the courts relating to offences under the FTR Act. These included: multiple structuring of transactions to avoid reporting significant cash transactions; not declaring currency transfers (required under section 15[1] of the FTR Act); and opening and operating a false name account. Managing fraud control During the reporting year we continued our commitment to minimising the potential for fraudulent use of AUSTRAC programs or activities by employees, contractors, or people outside the agency. Fraud is a standing agenda item for AUSTRAC’s Audit Committee. A fraud prevention component has been added to our security awareness training program. To ensure new staff members are aware of AUSTRAC’s commitment to prevent fraud, the fraud reporting and investigations guidelines developed last year are now included in the security induction package. No cases of fraudulent use of AUSTRAC’s programs or activities were identified during the reporting year. Administering knowledge management The Knowledge Management team has continued to deliver a wide range of services to AUSTRAC business units. This reporting year, efforts were concentrated on internal procedures to improve the capture, maintenance and distribution of information to and from our internal and external stakeholders. Knowledge management project We further developed our knowledge management project this reporting year. This is an ongoing project examining AUSTRAC’s requirements to ensure our ability to capture and share information. Internal testing and acceptance of the agency-wide taxonomy was undertaken. The taxonomy was designed to improve the retrieval of electronic information resources and therefore increase the efficiency and effectiveness of all staff. The ANAO released its audit report on record keeping during the reporting year. As a result of the information supplied in this report, AUSTRAC conducted an extensive review of our records management program. Numerous projects and practices were put in place as a result of the recommendations of the audit, one being the creation of a records management policy. AUSTRAC Annual Report 2002-03 93 Online services AUSTRAC has continued to develop a robust online service delivery capacity. We also continued to improve our service in the areas of applications (such as online forms), policy consultation, and information publication and dissemination. A review of our Online Action Plan and online services is planned for next reporting year. It is anticipated that AUSTRAC can expand the nature of its online services in order to meet the requirements of our clients (including cash dealers and the public). AUSTRAC also attended a meeting to discuss the creation of a law and justice portal. This portal is being developed by the Attorney-General’s Department as part of the e-government strategy, with the aim of allowing users to search government websites without the need to understand the structure of government. Internet and Intranet AUSTRAC continues to use its Internet site as a means of distributing advice and information to cash dealers and the public in a timely fashion. A major project, which began late in the reporting year, is the modification of the agency’s Intranet to improve access to information that will assist staff in their daily work. The AUSTRAC Internet and Intranet sites continued to be reviewed to serve as the primary sources of information regarding AUSTRAC. Statistics obtained during the reporting year continued to show the large number of people accessing our website. Over the year, there were 147,500 visits to our website. With the increased access to our website, focus has been given to the redevelopment of the AUSTRAC Internet and Intranet sites. This project aims to improve the ease of use and accessibility of information to internal and external users. Improved online services and upgrading of our compliance with government guidelines will be a priority. The Policy and Publishing Officer working on the AUSTRAC website. 94 AUSTRAC Annual Report 2002-03 chapter 10 FINANCIALSTATEMENTSFINANCIALSTATEMENTSFINANCIALSTATEMENTSFINANCIALSTAT CIALSTATEMENTSFINANCIALSTATEMENTSFINANCIALSTATEMENTSFINANCIALSTATEMEN TATEMENTSFINANCIALSTATEMENTSFINANCIALSTATEMENTSFINANCIALSTATEMENTSFIN MENTSFINANCIALSTATEMENTSFINANCIALSTATEMENTSFINANCIALSTATEMENTSFINANCIA SFINANCIALSTATEMENTSFINANCIALSTATEMENTSFINANCIALSTATEMENTSFINANCIALST NCIALSTATEMENTSFINANCIALSTATEMENTSFINANCIALSTATEMENTSFINANCIALSTATEME STATEMENTSFINANCIALSTATEMENTSFINANCIALSTATEMENTSFINANCIALSTATEMENTSFI MENTSFINANCIALSTATEMENTSFINANCIALSTATEMENTSFINANCIALSTATEMENTSFINANCIA SFINANCIALSTATEMENTSFINANCIALSTATEMENTSFINANCIALSTATEMENTSFINANCIALST NCIALSTATEMENTSFINANCIALSTATEMENTSFINANCIALSTATEMENTSFINANCIALSTATEME STATEMENTSFINANCIALSTATEMENTSFINANCIALSTATEMENTSFINANCIALSTATEMENTSFI MENTSFINANCIALSTATEMENTSFINANCIALSTATEMENTSFINANCIALSTATEMENTSFINANCIA 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statements table of contents Financial statements ANAO Independent Audit Report ......................................................................... 98 Statement by the Director ................................................................................... 99 Statement of Financial Performance ................................................................. 100 Statement of Financial Position.......................................................................... 101 Statement of Cash Flows ................................................................................... 102 Schedule of Commitments ................................................................................ 103 Schedule of Contingencies ............................................................................... 104 Notes to and forming part of the Financial Statements .................................. 105 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Summary of Significant Accounting Policies Operating Revenues Operating Expenses Financial Assets Non-Financial Assets Provisions and Payables Equity Cash Flow Reconciliation Appropriations Executive Remuneration Remuneration of Auditors Act of Grace Payments and Waivers Reporting of Outcome Average Staffing Levels Financial Instruments AUSTRAC Annual Report 2002-03 97 FINANCIALSTATEMENTSFINANCIALSTATEMENTSFINANCIALSTATEMENTSFINANCIALSTAT TATEMENTSFINANCIALSTATEMENTSFINANCIALSTATEMENTSFINANCIALSTATEMENTSFINA FINANCIALSTATEMENTSFINANCIALSTATEMENTSFINANCIALSTATEMENTSFINANCIALSTAT TATEMENTSFINANCIALSTATEMENTSFINANCIALSTATEMENTSFINANCIALSTATEMENTSFINA FINANCIALSTATEMENTSFINANCIALSTATEMENTSFINANCIALSTATEMENTSFINANCIALSTAT TATEMENTSFINANCIALSTATEMENTSFINANCIALSTATEMENTSFINANCIALSTATEMENTSFINA FINANCIALSTATEMENTSFINANCIALSTATEMENTSFINANCIALSTATEMENTSFINANCIALSTAT TATEMENTSFINANCIALSTATEMENTSFINANCIALSTATEMENTSFINANCIALSTATEMENTSFINA FINANCIALSTATEMENTSFINANCIALSTATEMENTSFINANCIALSTATEMENTSFINANCIALSTAT 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CENTRE In my opinion, the attached financial statements for the year ended 30 June 2003 give a true and fair view of the matters required by the Finance Minister s Orders made under the Financial Management and Accountability Act 1997. Signed............................ Neil J Jensen PSM Director 11 September 2003 OFFICE OF THE DIRECTOR AUSTRAC • PO Box 5516 • West Chatswood NSW 1515 • Sydney Australia Telephone 61 - 2 - 9950 0055 • Facsimile 61 - 2 - 9950 0073 • DX AUSTRAC 29668 Chatswood AUSTRAC Statement of Financial Performance for the year ended 30 June 2003 2003 $ 2002 $ 11,260,500 18,490 25,169 706,242 11,265,500 240,459 24,394 1,704 12,010,401 11,532,057 4,209,989 7,344,212 907,366 4,051,411 7,030,296 1,229,318 12,461,567 12,311,025 Net operating surplus (deficit) from ordinary activities (451,166) (778,968) Net surplus/(deficit) (451,166) (778,968) Total revenues and expenses attributable to the Commonwealth Government and recognised directly in equity (451,166) (778,968) Total changes in equity other than those resulting from transactions with owners as owners (451,166) (778,968) Notes Revenues from ordinary activities Revenues from government Revenue from sale of assets Interest Other 2A, 9 2B 2C Revenues from ordinary activities Expenses from ordinary activities Employees Suppliers Depreciation and amortisation 3A 3B 3C Expenses from ordinary activities The above statement should be read in conjunction with the accompanying notes 100 AUSTRAC Annual Report 2002-03 AUSTRAC Statement of Financial Position as at 30 June 2003 Notes 2003 $ 2002 $ 4A 4B 4C 1,039,706 222,240 309,627 748,294 94,816 292,079 1,571,573 1,135,189 1,458,368 1,972,745 Total non-financial assets 1,458,368 1,972,745 TOTAL ASSETS 3,029,941 3,107,934 1,291,419 168,012 121,589 1,012,558 136,411 58,878 Total provisions and payables 1,581,020 1,207,847 TOTAL LIABILITIES 1,581,020 1,207,847 NET ASSETS 1,448,921 1,900,087 40,549 1,408,372 40,549 1,859,538 TOTAL EQUITY 1,448,921 1,900,087 Current assets Non-current assets Current liabilities Non-current liabilities 1,571,573 1,458,368 962,474 618,546 1,135,189 1,972,745 735,264 472,583 ASSETS Financial assets Cash Receivables Other Total financial assets Non-financial assets Plant and equipment 5A, 5B LIABILITIES Provisions and payables Employees Suppliers Other 6A 6B 6C EQUITY Reserves Retained surpluses 7 The above statement should be read in conjunction with the accompanying notes AUSTRAC Annual Report 2002-03 101 AUSTRAC Statement of Cash Flows for the year ended 30 June 2003 Notes 2003 $ 2002 $ 11,158,000 635,412 684,479 11,251,000 667,474 26,098 12,477,891 11,944,572 3,931,128 7,703,016 3,894,156 7,452,478 11,634,144 11,346,634 843,747 597,938 22,506 370,896 22,506 370,896 403,841 641,866 403,841 641,866 (381,335) (270,970) 171,000 280,000 171,000 280,000 (171,000) 291,412 748,294 1,039,706 (280,000) 46,968 701,326 748,294 OPERATING ACTIVITIES Cash received Appropriations GST received from ATO Other Total cash received Cash used Employees Suppliers Total cash used Net cash from operating activities 8 INVESTING ACTIVITIES Cash received Proceeds from sale of plant and equipment Total cash received Cash Used Purchase of plant and equipment Total cash used Net cash (used by) investing activities FINANCIAL ACTIVITIES Cash used Capital use charge paid Total cash used Net cash (used by) financing activities Net increase/(decrease) in cash held Cash at the beginning of the reporting period Cash at the end of the reporting period 4A The above statement should be read in conjunction with the accompanying notes 102 AUSTRAC Annual Report 2002-03 AUSTRAC Schedule of Commitments as at 30 June 2003 Notes 2003 $ 2002 $ 2,873,329 4,285,584 Total other commitments 2,873,329 4,285,584 Net commitments 2,873,329 4,285,584 One year or less From one to two years From two to five years 1,350,533 886,798 635,998 1,413,617 1,349,530 1,522,437 Net commitments by maturity 2,873,329 4,285,584 BY TYPE Other commitments Operating leases 1 BY MATURITY Operating lease commitments N.B. All commitments are GST exclusive where relevant. 1 Operating leases included are effectively non-cancelable and comprise: • leases for office accommodation • agreements for the provision of motor vehicles to senior executive officers • leases for IT mainframe equipment The above schedule should be read in conjunction with the accompanying notes. The above statement should be read in conjunction with the accompanying notes AUSTRAC Annual Report 2002-03 103 AUSTRAC Schedule of Contingencies as at 30 June 2003 Notes 2003 $ 2002 $ Contingent losses - - Contingent gains - - Net contingencies - - The above statement should be read in conjunction with the accompanying notes 104 AUSTRAC Annual Report 2002-03 AUSTRAC Notes to and forming part of the Financial Statements for the year ended 30 June 2003 DESCRIPTION 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Summary of Significant Accounting Policies Operating Revenues Operating Expenses Financial Assets Non-Financial Assets Provisions and Payables Equity Cash Flow Reconciliation Appropriations Executive Remuneration Remuneration of Auditors Act of Grace Payments and Waivers Reporting of Outcome Average Staffing Levels Financial Instruments AUSTRAC Annual Report 2002-03 105 AUSTRAC Notes to and forming part of the Financial Statements for the year ended 30 June 2003 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 1.1 Agency objective The mission of the Australian Transaction Reports and Analysis Centre (AUSTRAC) is to make a valued contribution towards a financial environment hostile to money laundering, major crime and tax evasion. AUSTRAC was established under the Financial Transaction Reports Act 1988 (FTR Act). The FTR Act authorises the collection, analysis and dissemination of certain financial information as a deterrence to money laundering, major crime and tax evasion. AUSTRAC works with its law enforcement, revenue and national security agency partners to provide useful financial intelligence in relation to matters involving money laundering, major crime and tax evasion. 1.2 Basis of accounting The financial statements are required by section 49 of the Financial Management and Accountability Act 1997 and are a general purpose financial report. The statements have been prepared in accordance with: • Finance Minister’s Orders (or FMOs, being the Financial Management and Accountability (Financial Statements for reporting periods ending on or after 30 June 2003) Orders); • Australian Accounting Standards and Accounting Interpretations issued by the Australian Accounting Standards Board; and • Consensus Views of the Urgent Issues Group. The statements have also been prepared having regard to the Explanatory Notes to Schedule 1 and Finance Briefs issued by the Department of Finance and Administration. The Statements of Financial Performance and Financial Position have been prepared on an accrual basis and are in accordance with historical cost convention, except for certain assets which, as noted, are at valuation. Except where stated, no allowance is made for the effect of changing prices on the results or the financial position. Assets and liabilities are recognised in the Statement of Financial Position when and only when it is probable that future economic benefits will flow and the amounts of the assets or liabilities can be reliably measured. Assets and liabilities arising under agreements equally proportionately unperformed are however not recognised unless required by an Accounting Standard. Assets and liabilities which are unrecognised are reported in the Schedule of Commitments and the Schedule of Contingencies. Revenues and expenses are recognised in the Agency Statement of Financial Performance when and only when the flow or consumption or loss of economic benefits has occurred and can be reliably measured. 106 AUSTRAC Annual Report 2002-03 The continued existence of the Agency in its present form, and with its present programs, is dependent on Government policy and on continuing appropriations by Parliament for the Agency’s administration and programs. 1.3 Changes in accounting policy The accounting policies used in the preparation of these financial statements are consistent with those used in 2001-02, except in respect of: • • • • • the accounting for output appropriations (refer to Note 1.5); recognition of equity injections (refer to Note 1.6); measurement of certain employee benefits at nominal amounts (refer to Note 1.7); the initial revaluation of plant and equipment on a fair value basis (refer to Note 1.13); and the imposition of an impairment test for non-current assets carried at cost (refer to Note 1.14). 1.4 Agency’s and administered items Agency assets, liabilities, revenues and expenses are those items that are controlled by the Agency. They are used by the Agency in providing outputs including: • • • • computers, plant and equipment used in providing goods and services; liabilities for employee benefits; revenues from appropriations or independent sources in payment of outputs; and employee expenses and other administrative expenses incurred in providing Agency outputs. Administered items are those items which are controlled by the Government and managed or overseen by the Agency on behalf of the Government. No administered items were controlled by the Agency on the Government’s behalf during the reporting year. 1.5 Revenues The revenues described in this Note are revenues relating to the core operating activities of the Agency. Revenues from Government The full amount of the appropriation for departmental outputs for the year (less any savings offered up at Additional Estimates and not subsequently released) is recognised as revenue. Resources Received Free of Charge Services received free of charge are recognised as revenue when and only when a fair value can be reliably determined and the services would have been purchased if they had not been donated. Use of those resources is recognised as an expense. Contributions of assets at no cost of acquisition or for nominal consideration are recognised at their fair value when the asset qualifies for recognition, unless received from another government agency as a consequence of a restructuring of administrative arrangements (refer to Note 1.6). Other Revenue Revenue from the sale of goods is recognised upon the delivery of goods to customers. AUSTRAC Annual Report 2002-03 107 Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial assets. Revenue from disposal of non-current assets is recognised when control of the asset has passed to the buyer. Revenue from rendering of services is recognised by reference to the stage of completion of contracts or other agreements to provide services. The stage of completion is determined according to the proportion that costs incurred to date bear to the estimated total costs of the transaction. 1.6 Transactions by the Government as Owner Equity injections From 1 July 2002, the FMOs require that amounts of appropriations designated as ‘equity injections’ (less any savings offered up in Portfolio Additional Estimates Statements) are recognised directly in Contributed Equity as at 1 July or later date of effect of the appropriation. This is a change of accounting policy from 2001-02 to the extent any part of an equity injection that was dependent on specific future events occurring was not recognised until the appropriation was drawn down. The change in policy has no financial effect in 2002-03 because the full amounts of the equity injections for 2001-02 were recognised in that year. Capital Use Charge A Capital Usage Charge of 11% (2002: 11%) is imposed by the Government on the departmental net assets of the Agency at year end. The net assets figure is adjusted to take account of asset gifts and revaluation increments during the financial year. The Charge is accounted for as a dividend to Government. In accordance with the recommendations of a review of Budget Estimates and Framework, the Government has decided that the Charge will not operate after 30 June 2003. 1.7 Employee benefits Liabilities for services rendered by employees are recognised at the reporting date to the extent that they have not been settled. Liabilities for wages and salaries (including non-monetary benefits) and annual leave are measured at their nominal amounts. Other employee benefits expected to be settled within 12 months of the reporting date are also measured at their nominal amounts. The nominal amount is calculated with regard to the rates expected to be paid on settlement of the liability. This is a change in accounting policy from last year required by initial application of a new Accounting Standard AASB 1028 from 1 July 2002. As AUSTRAC’s certified agreement raises pay rates on 1 July each year, the financial effect of this change is not material. All other employee benefit liabilities are measured as the present value of the estimated future cash outflows to be made in respect of services provided by employees up to the reporting date. 108 AUSTRAC Annual Report 2002-03 Leave The liability for employee benefits includes provision for annual leave and long service leave. No provision has been made for sick leave as all sick leave is non-vesting and the average sick leave taken in future years by employees of the Agency is estimated to be less than the annual entitlement for sick leave. The leave liabilities are calculated on the basis of employees’ remuneration, including the Agency’s employer superannuation contribution rates to the extent that the leave is likely to be taken during service rather than paid out on termination. The estimate of the present value of the liability for long service leave takes into account attrition rates and pay increases through promotion and inflation. Separation and Redundancy Provision is also made for separation and redundancy payments in circumstances where the Agency has formally identified positions as excess to requirements and a reliable estimate of the amount of the payments can be determined. Superannuation Staff of AUSTRAC are members of the Commonwealth Superannuation Scheme and the Public Sector Superannuation Scheme. The liability for their superannuation benefits is recognised in the financial statements of the Commonwealth and is settled by the Commonwealth in due course. AUSTRAC makes employer contributions to the Commonwealth at rates determined by an actuary to be sufficient to meet the cost to the Commonwealth of the superannuation entitlements of the Agency’s employees. The liability for superannuation recognised as at 30 June represents outstanding contributions for the final fortnight of the year. 1.8 Leases Operating lease payments are charged to the Statement of Financial Performance on a basis which is representative of the pattern of benefits derived from the leased assets. 1.9 Financial instruments Accounting policies for financial instruments are stated at Note 15. The Agency is complying with the requirements of AAS 33 Presentation and Disclosure of Financial Instruments. 1.10 Cash Cash includes notes and coins held, deposits held at call with a bank or financial institution. 1.11 Bad and doubtful debts Debts are written off as bad when so identified. The write-off is to expense or, to the extent a provision for a doubtful debt already existed, as a reversal of the provision. A provision is raised for any doubtful debts based on a review of all outstanding accounts at year end. AUSTRAC Annual Report 2002-03 109 1.12 Acquisition of assets Assets are recorded at cost on acquisition except as stated below. The cost of acquisition includes the fair value of assets transferred in exchange and liabilities undertaken. Assets acquired at no cost, or for nominal consideration, are initially recognised as assets and revenues at their fair value at the date of acquisition, unless acquired as a consequence of restructuring of administrative arrangements. In the latter case, assets are initially recognised as contributions by owners at the amounts at which they were recognised in the transferor agency’s accounts immediately prior to the restructuring. 1.13 Plant and equipment Asset Recognition Threshold Purchases of plant and equipment are recognised initially at cost in the Statement of Financial Position, except for purchases costing less than $2,000 which are expended in the year of acquisition (other than where they form part of a group of similar items which are significant in total). Revaluations Basis Plant and equipment are carried at valuation. Revaluations undertaken up to 30 June 2002 were done on a deprival basis; revaluations since that date are at fair value. This change in accounting policy is required by Australian Accounting Standard AASB 1041 Revaluation of Non-Current Assets. Fair and deprival values for each class of asset are determined as shown below. Asset Class Fair value measured at: Deprival value measured at: Leasehold improvements Plant and equipment Depreciated replacement cost Market selling price Depreciated replacement cost Depreciated replacement cost Under both deprival and fair value, assets which are surplus to requirements are measured at their net realisable value. Frequency Plant and equipment are revalued progressively in successive three-year cycles. All current cycles commenced on 1 July 2002 and will finish on 30 June 2005. Leasehold improvements are each revalued progressively on a geographical basis. Plant and equipment assets are being revalued by type of asset. In 2001-02, furniture and fittings, information technology assets (not under operating leases) and non computing equipment were revalued. Assets in each class acquired after the commencement of a progressive revaluation cycle are not captured by the progressive revaluation then in progress. 110 AUSTRAC Annual Report 2002-03 Conduct Leasehold improvements valuations are conducted by an independent qualified valuer. The revaluations of computer and non-computer plant and equipment are conducted in-house. Depreciation Depreciable plant and equipment assets are written-off to their estimated residual values over their estimated useful lives to the Agency using, in all cases, the straight-line method of depreciation. Leasehold improvements are depreciated on a straight-line basis over the lesser of the estimated useful life of the improvements or the unexpired period of the lease. Depreciation rates (useful lives) and methods are reviewed at each reporting date and necessary adjustments are recognised in the current, or current and future reporting periods, as appropriate. Residual values are re-estimated for a change in prices only when assets are revalued. Depreciation rates applying to each class of depreciable asset are based on the following useful lives: Leasehold improvements Plant and equipment 2003 2002 Lease term 3 to 8 years Lease term 3 to 8 years The aggregate amount of depreciation allocated for each class of asset during the reporting period is disclosed in Note 3C. Recoverable Amount Test From 1 July 2002, Schedule 1 no longer requires the application of the recoverable amount test in Australian Accounting Standard AAS 10 Recoverable Amount of Non-Current Assets to the assets of agencies when the primary purpose of the asset is not the generation of net cash inflows. No plant and equipment assets have been written down to recoverable amount per AAS 10. Accordingly, the change in policy has had no financial effect. 1.14 Intangibles Software development costs are expended as incurred, except where future service potential, beyond any reasonable doubt, exceeds those costs. Where software development costs are deferred, such costs are amortised over future periods on a basis related to future service potential. Amortisation commences once a software project becomes fully operational. AUSTRAC’s intangibles comprise internally developed software for internal use. These assets are carried at cost. From 1 July 2002, Schedule 1 no longer requires the application of the recoverable amount test in Australian Accounting Standard AAS 10 Recoverable Amount of Non-Current Assets to the assets of agencies when the primary purpose of the asset is not the generation of net cash inflows. However Schedule 1 now requires such assets, if carried on the cost basis, to be assessed for indications of impairment. The carrying amount of impaired assets must be written down to the higher of its net market selling price or depreciated replacement cost. All software assets were assessed for impairment as at 1 July 2002. None were found to be impaired. Software is amortised on a straight-line basis over its anticipated useful life. The useful lives of AUSTRAC software is 3 years (2002: 3 years). AUSTRAC Annual Report 2002-03 111 1.15 Taxation The Agency is exempt from all forms of taxation except fringe benefits tax and the goods and services tax (GST). Revenues, expenses and assets are recognised net of GST: • except where the amount of GST incurred is not recoverable from the Australian Taxation Office; and • except for receivables and payables. 1.16 Insurance AUSTRAC has insured for risks through the Government’s insurable risk managed fund, called “Comcover”. Workers compensation is insured through the Government’s Comcare Australia. 1.17 Comparative figures Where necessary, comparative figures have been adjusted to conform with changes in presentation in these financial statements. 1.18 Rounding Amounts have been rounded to the nearest dollar with the exception of Note 13 where amounts have been rounded to the nearest $1,000. NOTE 2 - OPERATING REVENUES 2003 $ 2002 $ 11,246,000 14,500 11,260,500 11,251,000 14,500 11,265,500 22,506 4,016 18,490 370,896 130,437 240,459 129,897 304,231 219,772 52,342 706,242 1,704 1,704 Note 2A - Revenues from Government Appropriations for outputs Resources received free of charge Total revenues from government Note 2B - Revenue from Sales of Assets Plant and equipment: Proceeds from disposal Net book value of assets disposed Total net revenue from sales of assets Note 2C - Other Revenue AUSAID Technical Assistance Project Data Mining Pilot Project Sponsorship for Egmont Conference Other* Total other revenue * Figure for 2002-03 comprises primarily of payments for the secondment of a Financial Analyst Officer to the Australian Federal Police as well as sundry tenants revenue. 112 AUSTRAC Annual Report 2002-03 NOTE 3 - OPERATING EXPENSES 2003 $ 2002 $ 3,736,645 447,708 25,636 4,209,989 3,637,465 368,840 14,183 30,923 4,051,411 719,750 5,469,041 1,155,421 7,344,212 546,710 5,450,451 1,033,135 7,030,296 329,220 578,146 907,366 650,537 578,781 1,229,318 1,039,706 1,039,706 748,294 748,294 87,308 46,932 88,000 222,240 94,816 94,816 309,627 309,627 292,079 292,079 Note 3A - Employee Expenses Wages and salary Superannuation Separation and redundancy Other employee expenses Total employee expenses Note 3B - Suppliers Expenses Supply of goods and services from related entities Supply of goods and services from external entities Operating lease rentals Total suppliers expenses Note 3C - Depreciation and Amortisation Depreciation - of plant and equipment Amortisation - of capitalised software Total depreciation and amortisation NOTE 4 - FINANCIAL ASSET Note 4A - Cash Departmental Total cash Note 4B - Receivables GST Receivable from the ATO Trade debtors - current and not overdue Appropriations receivable Aggregate receivables Note 4C - Other Prepayments Total other AUSTRAC Annual Report 2002-03 113 NOTE 5 - NON-FINANCIAL ASSETS 2003 $ 2002 $ 397,292 1,161,232 1,138,675 419,849 1,807,378 1,574,176 233,202 6,549 487,858 341,125 153,282 215,509 16,102 199,407 - - 526,554 296,390 230,164 526,554 219,670 306,884 Internally developed computer software - at cost Less: Accumulated amortisation 2,958,426 2,303,353 655,073 2,958,426 1,725,174 1,233,252 Total plant and equipment 1,458,368 1,972,745 Note 5A - Plant and equipment Computer plant and equipment - at cost Computer plant and equipment - at June 02 valuation (deprival) Less: Accumulated depreciation Non-computer plant and equipment - at cost Non-computer plant and equipment - at June 02 valuation (deprival) Less: Accumulated depreciation Furniture and Leasehold improvements - at cost Furniture and Leasehold improvements - at June 02 valuation (deprival) Less: Accumulated depreciation All revaluations were as at 30 June 2002 in accordance with the progressive revaluations policy stated in Note 1. The valuation of Furniture and Leasehold improvements was completed by independent valuer Miers Consulting Pty Ltd. The revaluation of computer and non-computer plant and equipment was completed in-house by information technology contractors. 114 AUSTRAC Annual Report 2002-03 Note 5B - Analysis of plant & equipment and intangibles TABLE A - Reconciliation of the opening and closing balances of plant and equipment and intangibles ITEM Plant & equipment $ Capitalised software $ Total 2,549,441 2,958,426 5,507,867 395,959 7,882 338,244 315,166 - 395,959 7,882 338,244 315,166 Gross value as at 30 June 2003 2,299,872 2,958,426 5,258,298 Accumulated depreciation/amortisation as at 1 July 2002 1,809,948 1,725,174 3,535,122 329,146 329,715 312,802 - 578,179 - 907,325 329,715 312,802 - 1,496,577 2,303,353 3,799,930 Net book value as at 30 June 2003 803,295 655,073 1,458,368 Net book value as at 1 July 2002 739,493 1,233,252 1,972,745 Plant & equipment $ Capitalised software $ Total 2,175,644 1,462,819 - 2,175,644 1,462,819 712,825 - 712,825 2,549,441 1,809,948 - 2,549,441 1,809,948 739,493 - 739,493 Gross value as at 1 July 2002 Acquisition of replacement assets Acquisition of new assets Write-offs Disposals Depreciation/amortisation charge for year Write-offs Disposals Adjustments for revaluations Accumulated depreciation/amortisation as at 30 June 2003 $ TABLE B - Summary of balances of assets at valuation as at 30 June 2003 ITEM $ As at 30 June 2003 Gross value Accumulated depreciation/amortisation Net book value As at 30 June 2002 Gross value Accumulated depreciation/amortisation Net book value AUSTRAC Annual Report 2002-03 115 NOTE 6 - PROVISIONS AND PAYABLES 2003 $ 2002 $ 133,019 1,109,238 49,162 1,291,419 672,873 618,546 96,069 876,701 39,788 1,012,558 539,975 472,583 168,012 168,012 136,411 136,411 110,124 11,465 121,589 58,878 58,878 Note 6A - Employee Provisions Wages and salary Leave Superannuation Aggregate employee benefit liability Current Non-current Note 6B - Suppliers Payables Accrued expenses - current liabilities Trade creditors - current liabilities Total supplier payables Note 6C - Other Liabilities AGEC trust account - current liabilities POI Study trust account - current liabilities Total other liabilities NOTE 7 - EQUITY Item Asset Revaluation Reserves Accumulated Results 2003 $ TOTAL EQUITY 2002 $ 2003 $ 2002 $ 2003 $ 2002 $ Opening balance as at 1 July 1,859,538 2,638,506 40,549 Net surplus/deficit (451,166) (778,968) - - (451,166) (778,968) (171,000) - - - (171,000) Closing balance as at 30 June 1,408,372 1,859,538 40,549 40,549 1,448,921 1,900,087 Total equity attributable to the Commonwealth 1,408,372 1,859,538 40,549 40,549 1,448,921 1,900,087 40,549 1,900,087 2,679,055 Transactions with owner: Distributions to owner: Returns on Capital Capital Use Charge 116 AUSTRAC Annual Report 2002-03 - NOTE 8 - CASH FLOW RECONCILIATION 2003 2002 $ $ 1,039,706 748,294 1,039,706 748,294 (451,166) 907,366 (18,490) (778,968) 1,229,318 (240,459) 278,861 (49,397) 127,424 17,548 31,601 843,747 157,254 (3,454) 271,465 26,664 (63,882) 597,938 Reconciliation of cash per Statement of Financial Position to Statement of Cash Flows Cash at year end per Statement of Cash Flows Statement of Financial Position items comprising above cash: ‘Financial Assets - Cash’ Reconciliation of net surplus to net cash from operating activities: Operating surplus (deficit) Depreciation/amortisation Net loss of sale on disposal of non-financial assets Changes in assets and liabilities Increase / (decrease) in employee provisions Increase / (decrease) in other liabilities Decrease / (increase) in receivables Decrease / (increase) in other assets Increase / (decrease) in creditors Net cash from / (used by) operating activities AUSTRAC Annual Report 2002-03 117 NOTE 9 - APPROPRIATIONS Note 9A - Cash Basis Acquittal of Appropriations for Departmental outputs Balance carried from previous year Appropriation for reporting period (Act 1) Appropriation for reporting period (Act 3) Adjustments by the Finance Minister Amounts from Advance to the Finance Minister Refunds credited (FMA s30) GST credits (FMA s30A) Annotations to ‘net appropriations’ (FMA s31) Transfer to/from other agencies (FMA s32) Available for payments Payments made Appropriations credited to Special Accounts Balance carried to next year Represented by: Cash Add: Appropriations receivable Add: Receivables - Goods and Services - GST receivable from customers Add: Return of contributed equity Less: Other payables - Net GST payable to the ATO Less: Payable - Suppliers - GST portion Add: Savings in Portfolio Additional Estimates Statement Total 2003 $ 2002 $ 11,274,000 (116,000) 88,000 635,412 25,169 11,906,581 11,818,581 88,000 11,251,000 547,308 26,098 11,824,406 (11,824,406) - 88,000 88,000 - FMA = Financial Management and Accountability Act 1997 Act 1 = Appropriation Act (No. 1) 2002-2003 Act 3 = Appropriation Act (No. 3) 2002-2003 Note 9B - Special Accounts AUSTRAC has an Other Trust Monies Special Account and a Services for other Governments & NonAgency Bodies Account. For the years ended 30 June 2003 and 30 June 2002, both special accounts had nil balances and there were no transactions debited or credited to them. The purpose of the Other Trust Monies Special Account is for expenditure of moneys temporarily held on trust or otherwise for the benefit of a person other than the Commonwealth. The purpose of the Services for other Governments & Non Agency Bodies Special Account is for expenditure in connection with services performed on behalf of other Governments and bodies that are not agencies under the Financial Management and Accountability Act 1997. 118 AUSTRAC Annual Report 2002-03 NOTE 10 - EXECUTIVE REMUNERATION The number of executives who received or were due to receive total remuneration of $100,000 or more: $120,000 to $129,999 $140,000 to $149,999 $160,000 to $169,999 $200,000 to $209,999 The aggregate amount of total remuneration of executives shown above. The aggregate amount of separation and redundancy/termination benefit payments during the year to executives shown above. 2003 2002 1 1 1 1 1 - $364,501 $432,912 Nil Nil 2003 $ 2002 $ 14,500 14,500 NOTE 11 - REMUNERATION OF AUDITORS Financial statement audit services are provided free of charge to the Agency. The fair value of the services provided was: No other services were provided by the Auditor-General. NOTE 12 - ACT OF GRACE PAYMENTS AND WAIVERS No ‘Act of Grace’ payments were made during the reporting period, and there are no amounts owing as at year end. No waivers of amounts owing to the Commonwealth were made pursuant to subsection 34(1) of the Financial Management and Accountability Act 1997. AUSTRAC Annual Report 2002-03 119 NOTE 13 - REPORTING OF OUTCOME Note 13A - Net Cost of Outcome Delivery Outcome Output Output Output Output Output Group 1 Group 2 Group 3 Group 4 Group 5 $’000 $’000 $’000 $’000 $’000 2003 Departmental expenses Total expenses Other external revenues Departmental Interest on cash deposits Revenue from disposal of assets Reversals of previous asset write-downs Other Total Departmental Total other external revenues Net cost of outcome Departmental expenses Total expenses Other external revenues Departmental Interest on cash deposits Revenue from disposal of assets Reversals of previous asset write-downs Other Total Departmental Total other external revenues Net cost of outcome $’000 3,597 3,597 5,165 5,165 1,106 1,106 776 776 1,817 12,461 1,817 12,461 8 6 12 26 26 3,571 10 8 347 365 365 4,800 2 1 4 7 7 1,099 2 1 352 355 355 421 3 25 2 18 6 721 11 764 11 764 1,806 11,697 Output Output Output Output Output Group 1 Group 2 Group 3 Group 4 Group 5 $’000 $’000 $’000 $’000 $’000 2002 Total Total $’000 3,816 3,816 5,048 5,048 985 985 616 616 1,846 12,311 1,846 12,311 8 74 1 83 83 3,733 9 98 1 108 108 4,940 2 19 21 21 964 2 12 14 14 602 3 24 37 240 2 40 266 40 266 1,806 12,045 AUSTRAC allocates all expenditure across its five output groups. Direct costs including salary and operational specific expenditure such as travel are attributed to the relevant output group in the first instance. Overheads which cannot be allocated directly to an output group, including corporate and IT efforts to support the five output groups, other IT expenditure and property operating expenses, are allocated to the five outputs using standard cost accounting methods. 120 AUSTRAC Annual Report 2002-03 Note 13B - Major Classes of Agency Revenues and Expenses by Output Group Outcome 2003 Output Output Output Output Output Group 1 Group 2 Group 3 Group 4 Group 5 $’000 $’000 $’000 $’000 $’000 Total $’000 Departmental expenses Employees Suppliers Depreciation and amortisation Other expenses Total departmental expenses 1,217 2,118 262 3,597 1,745 3,047 373 5,165 374 652 80 1,106 261 457 58 776 613 4,210 1,070 7,344 134 907 1,817 12,461 Funded by: Revenues from government Other non-taxation revenues Total departmental revenues 3,255 20 3,275 4,662 359 5,021 1,002 6 1,008 698 354 1,052 1,644 11,261 10 749 1,654 12,010 2002 Output Output Output Output Output Group 1 Group 2 Group 3 Group 4 Group 5 $’000 $’000 $’000 $’000 $’000 Total $’000 Departmental expenses Employees Suppliers Depreciation and amortisation Other expenses Total departmental expenses 1,256 2,179 382 3,817 1,661 2,882 504 5,047 324 562 98 984 203 352 61 616 608 4,052 1,055 7,030 184 1,229 1,847 12,311 Funded by: Revenues from government Other non-taxation revenues Total departmental revenues 3,493 83 3,576 4,619 109 4,728 901 21 922 563 13 576 1,690 11,266 40 266 1,730 11,532 NOTE 14 - AVERAGE STAFFING LEVELS The average staffing levels for the Agency during the year were: 2003 59 2002 58 AUSTRAC Annual Report 2002-03 121 NOTE 15 - FINANCIAL INSTRUMENTS Note 15A - Terms, conditions and accounting polices Financial Instrument Notes Financial assets Accounting Polices and Methods (including recognition criteria and measurement basis) Nature of underlying instrument (including significant terms and conditions affecting the amount, timing and certainty of cash flows) Financial assets are recognised when control over future economic benefits is established and the amount of the benefit can be reliably measured. Cash/investments 4A, 4C Deposits are recognised at their nominal amounts. Interest is credited to revenue as it accrues. Monies in the Agency's bank accounts are swept into the Official Public Account nightly and interest is earned on the daily balance at rates based on money market call rates. Rates averaged 3.7% for the year (2002: 3.2%). Interest is paid at month end. Receivables/other 4B These receivables are recognised at their nominal amounts. All receivables are with entities external to the Commonwealth. Credit terms are net 30 days (2002: 30 days). Appropriations receivable 4B These receivables are recognised at their nominal amounts. Amounts appropriated by the Parliament in the current or previous years which are available to be drawn down by the Agency. Financial liabilities Trade creditors 122 Financial liabilities are recognised when a present obligation to another party is entered into and the amount of the liability can be readily measured. 6B AUSTRAC Annual Report 2002-03 Creditors and accruals are recognised at their nominal amounts, being the amounts at which the liabilities will be settled. Liabilities are recognised to the extent that the goods or services have been received (and irrespective of having been invoiced). All creditors are entities that are not part of the Commonwealth legal entity. Settlement is usually made net 30 days (2002: 30 days). Note 15B - Interest rate risk Financial Instrument Notes Floating Floating Interest Interest Rate Rate NonInterest Bearing NonInterest Bearing Total 2002 $ 2003 $ 2002 $ 2003 $ 4A 1,039,706 748,294 1,039,706 748,294 - 2003 $ Financial assets Cash at bank Total Total assets Financial liabilities Trade creditors Total Total liabilities 6B - - 168,012 168,012 Total Weighted Weighted Average Average Effective Effective Int. Rate Int. Rate 2002 2003 2002 $ % % - 1,039,706 748,294 - 1,039,706 748,294 3,029,941 3,107,934 136,411 136,411 168,012 136,411 168,012 136,411 1,578,519 1,207,847 3.7 3.2 n/a n/a Note 15C - Net fair values of financial assets and liabilities Notes 2003 Total Carrying Amount 2003 Aggregate Net Fair Value $ 2002 Total Carrying Amount $ 2002 Aggregate Net Fair Value $ Financial assets Cash at bank Total financial assets 4A 1,039,706 1,039,706 1,039,706 1,039,706 748,294 748,294 748,294 748,294 Financial liabilities (recognised) Trade creditors Total financial liabilities (recognised) 6B 168,012 168,012 168,012 168,012 136,411 136,411 136,411 136,411 The net fair value of cash approximates its carrying amount. The net fair values for trade creditors, which are of a short-term nature, are approximated by their carrying amounts. Note 15D - Credit risk exposures The Agency's maximum exposures to credit risk at reporting date in relation to each class of recognised financial assets is the carrying amount of those assets as indicated in the Statement of Financial Performance. The Agency has no significant exposures to any concentrations of credit risk. All figures for credit risk referred to do not take into account the value of collateral or other security. appendicesappendicesappendicesappendicesappendicesappendicesappendic sappendicesappendicesappendicesappendicesappendicesappendicesappend esappendicesappendicesappendicesappendicesappendicesappendicesappen cesappendicesappendicesappendicesappendicesappendicesappendicesappe dicesappendicesappendicesappendicesappendicesappendicesappendicesapp ndicesappendicesappendicesappendicesappendicesappendicesappendicesap endicesappendicesappendicesappendicesappendicesappendicesappendicesa pendicesappendicesappendicesappendicesappendicesappendicesappendices ppendicesappendicesappendicesappendicesappendicesappendicesappendice appendicesappendicesappendicesappendicesappendicesappendicesappendic sappendicesappendicesappendicesappendicesappendicesappendicesappend esappendicesappendicesappendicesappendicesappendicesappendicesappen cesappendicesappendicesappendicesappendicesappendicesappendicesappe dicesappendicesappendicesappendicesappendicesappendicesappendicesapp ndicesappendicesappendicesappendicesappendicesappendicesappendicesap endicesappendicesappendicesappendicesappendicesappendicesappendicesa pendicesappendicesappendicesappendicesappendicesappendicesappendices ppendicesappendicesappendicesappendicesappendicesappendicesappendice appendicesappendicesappendicesappendicesappendicesappendicesappendic sappendicesappendicesappendicesappendicesappendicesappendicesappend esappendicesappendicesappendicesappendicesappendicesappendicesappen cesappendicesappendicesappendicesappendicesappendicesappendicesappe dicesappendicesappendicesappendicesappendicesappendicesappendicesapp ndicesappendicesappendicesappendicesappendicesappendicesappendicesap endicesappendicesappendicesappendicesappendicesappendicesappendicesa pendicesappendicesappendicesappendicesappendicesappendicesappendices Appendices table of contents Appendices I. Staffing overview .................................................................................................. 128 Historical profile from 1998 - 2003 Staff figures at 30 June 2003 SES staff figures 2002-03 Consultants - summary statement Advertising EEO in engagements Occupational health and safety Training and development programs - summary statement Industrial relations Performance pay II. Summary table of resources .............................................................................. 134 III. AUSTRAC’s service charter ................................................................................ 135 IV. Committees and reports ................................................................................... 138 Inquiries by parliamentary and other committees Committees convened by AUSTRAC Committees in which AUSTRAC has a substantial role Other committees/working groups in which AUSTRAC participates International groups in which AUSTRAC participates Reports concerning AUSTRAC V. Acts and regulations ........................................................................................... 141 VI. Publications 2002-03 ........................................................................................ 143 VII. AUSTRAC’s freedom of information (foi) statement........................................ 145 VIII. AUSTRAC’s locations ....................................................................................... 148 Glossary ................................................................................................................. 149 Compliance index ................................................................................................... 152 Index ..................................................................................................................... 153 AUSTRAC Annual Report 2002-03 127 appendicesappendicesappendicesappendicesappendicesappendicesappendice ppendicesappendicesappendicesappendicesappendicesappendicesappendices pendicesappendicesappendicesappendicesappendicesappendicesappendicesa endicesappendicesappendicesappendicesappendicesappendicesappendicesap ndicesappendicesappendicesappendicesappendicesappendicesappendicesapp Appendix I dicesappendicesappendicesappendicesappendicesappendicesappendicesappe cesappendicesappendicesappendicesappendicesappendicesappendicesappen Staffing overview esappendicesappendicesappendicesappendicesappendicesappendicesappend ppendicesappendicesappendicesappendicesappendicesappendicesappendices Historical profile from 1998-2003 pendicesappendicesappendicesappendicesappendicesappendicesappendicesa Human resource statistics, showing operative and paid inoperative staff and unpaid inoperative staff, at 30 June from 1998-2003, are shown below. endicesappendicesappendicesappendicesappendicesappendicesappendicesap In relation to the method of recording: ndicesappendicesappendicesappendicesappendicesappendicesappendicesapp • the tables relating to operative and paid inoperative staff, report actual occupancy dicesappendicesappendicesappendicesappendicesappendicesappendicesappe at 30 June each year, so when an officer was on paid leave as at 30 June and another acted in the position, two officers are recorded against the one position; cesappendicesappendicesappendicesappendicesappendicesappendicesappen • the tables include staff employed under the Public Service Act 1999; esappendicesappendicesappendicesappendicesappendicesappendicesappend • non-ongoing, casual and part-time staff are included in the statistics - part-time staff are shown as full-time equivalents; and sappendicesappendicesappendicesappendicesappendicesappendicesappendic • numbers have been rounded up, to show whole numbers. Operative and paid inoperative staff 1998-99 1999-00 Central office (NSW) Vic regional office 2000-01 2001-02 2002-03 43 48 49 46 47 5 9 9 10 12 ACT regional office - 1 1 - 2 Qld regional office - 1 1 1 1 WA regional office TOTAL 1 1 1 1 1 49 60 61 58 63 Table 1 - Financial year operative and paid inoperative staff Unpaid inoperative staff 2002-03 Central office (NSW) 3 Vic regional office - ACT regional office - Qld regional office - WA regional office - TOTAL - Table 2 - Unpaid inoperative staff 2002-03 128 AUSTRAC Annual Report 2002-03 appendices esappendicesappendicesappendicesappendicesappendicesappendicesappend sappendicesappendicesappendicesappendicesappendicesappendicesappendi appendicesappendicesappendicesappendicesappendicesappendicesappendice ppendicesappendicesappendicesappendicesappendicesappendicesappendices pendicesappendicesappendicesappendicesappendicesappendicesappendices Staff figures at 30 June 2003 endicesappendicesappendicesappendicesappendicesappendicesappendicesa Table 3 provides a summary by classification and shows staff employed under the ndicesappendicesappendicesappendicesappendicesappendicesappendicesap Public Service Act 1999, reflecting full-time equivalent for part-time staff. It also dicesappendicesappendicesappendicesappendicesappendicesappendicesapp includes non-ongoing and casual staff, as well as paid inoperatives and those acting in a higher position at 30 June 2003. Numbers have been rounded to show sappendicesappendicesappendicesappendicesappendicesappendicesappendi whole numbers. appendicesappendicesappendicesappendicesappendicesappendicesappendice 2003 staff figures ppendicesappendicesappendicesappendicesappendicesappendicesappendices Public Senior AUSTRAC AUSTRAC AUSTRAC Office Executive Broadband 3 Broadband 2 Broadband 1 pendicesappendicesappendicesappendicesappendicesappendicesappendices Holder Service (EL 2) (APS Level (APS Levels Total 6 - EL 1) 1 - 5) endicesappendicesappendicesappendicesappendicesappendicesappendicesa M F M F M F M F M F ndicesappendicesappendicesappendicesappendicesappendicesappendicesap dicesappendicesappendicesappendicesappendicesappendicesappendicesapp icesappendicesappendicesappendicesappendicesappendicesappendicesappe Central office (NSW) - - 1 1 1 3 Vic regional office 1 - - - 1 - ACT regional office - - - - 1 Qld regional office - - - - - WA regional office - - - - 1 - 1 1 TOTAL 6 11 6 18 47 6 2 1 1 12 - - 1 - - 2 - 1 - - - 1 - - - 1 - - 1 3 3 7 19 63 13 15 Table 3 - 2003 Staff figures at 30 June 2003 Table 4 is the summary of part-time and non-ongoing staff by classification and state Part-time and temporary staff Part-time staff STATE Classification group M Senior Officer Grades and equivalent APS 1-6 and equivalent - - - - - - - 3 3 2 2 4 Senior Officer Grades and equivalent - - - - - - APS 1-6 and equivalent - 1 1 - - - Senior Officer Grades and equivalent - - - - - - APS 1-6 and equivalent - - - - - - Senior Officer Grades and equivalent - - - - - - APS 1-6 and equivalent - - - - - - Senior Officer Grades and equivalent - - - - - - APS 1-6 and equivalent - - - - - - - 4 4 2 2 4 Central office (NSW) Vic regional office ACT regional office Qld regional office WA regional office TOTAL Table 4 - Part-time and non-ongoing staff at 30 June 2003 F Total Non-ongoing staff M F Total AUSTRAC Annual Report 2002-03 129 appendicesappendicesappendicesappendicesappendicesappendicesappendice sappendicesappendicesappendicesappendicesappendicesappendicesappendic esappendicesappendicesappendicesappendicesappendicesappendicesappend cesappendicesappendicesappendicesappendicesappendicesappendicesappen dicesappendicesappendicesappendicesappendicesappendicesappendicesappe SES staff figures 2002-03 ndicesappendicesappendicesappendicesappendicesappendicesappendicesapp Table 5 shows Senior Executive Service Officer numbers by gender and State at 30 endicesappendicesappendicesappendicesappendicesappendicesappendicesap June 2003. pendicesappendicesappendicesappendicesappendicesappendicesappendicesa BAND NSW ppendicesappendicappendicesappendicesappendicesappendicesappendicesap pendicesappendicesappendicesappendicesappendicesappendicesappendicesa ppendicesappendicesappendicesappendicesappendicesappendicesappendices appendicesappendicesappendicesappendicesappendicesappendicesappendice sappendicesappendicesappendicesappendicesappendicesappendicesappendic esappendicesappendicesappendicesappendicesappendicesappendicesappend cesappendicesappendicesappendicesappendicesappendicesappendicesappen dicesappendicesappendicesappendicesappendicesappendicesappendicesappe There were no SES staff separations or commencements during the year. ndicesappendicesappendicesappendic SES 3 Male Female - SES 2 Male Female - SES 1 Male Female 1 1 TOTAL 2 Table 5 - Substantive SES officers at 30 June 2003 Consultants - summary statement AUSTRAC outsourced some of its specialist service needs during the reporting year. Table 6 outlines the cost to AUSTRAC and the numbers of IT contractors and other consultancy services. CONSULTANCIES No. $ IT contractors Function outsourced, e.g. software development, software and hardware management. Service contracts issued to perform work within AUSTRAC premises. 28 2,858,664 Other consultancy services e.g. security services, library services, recruitment reports, legal advice, translation services, internal audit, training services, specialist financial dealer advice. 531 310,978 81 3,169,642 TOTAL Table 6 - Consultancies 2002-03 1 Of the 53 consultancy services, only seven were more than $10,000. 130 AUSTRAC Annual Report 2002-03 appendices esappendicesappendicesappendicesappendicesappendicesappendicesappend icesappendicesappendicesappendicesappendicesappendicesappendicesappe dicesappendicesappendicesappendicesappendicesappendicesappendicesapp ndicesappendicesappendicesappendicesappendicesappendicesappendicesapp endicesappendicesappendicesappendicesappendicesappendicesappendicesa Advertising pendicesappendicesappendicesappendicesappendicesappendicesappendices During the financial year, AUSTRAC placed a number of classified advertisements to ppendicesappendicesappendicesappendicesappendicesappendicesappendices recruit staff for various positions. A total of $28,943 was paid to Starcom and appendicesappendicesappendicesappendicesappendicesappendicesappendice $44,002 to HMA Blaze to provide this service for us. An educational campaign aimed at remittance dealers was also conducted this year. ppendicesappendicesappendicesappendicesappendicesappendicesappendices Details on this campaign are in chapter 4. The cost of this advertising campaign was appendicesappendicesappendicesappendicesappendicesappendicesappendice $3786.52 sappendicesappendicesappendicesappendicesappendicesappendicesappendi EEO in engagements esappendicesappendicesappendicesappendicesappendicesappendicesappend Table 7 is a summary of the representation of Equal Employment Opportunity groups icesappendicesappendicesappendicesappendicesappendicesappendicesappe within classifications and includes ongoing employees only. AUSTRAC currently holds EEO data for 98 per cent of ongoing staff. dicesappendicesappendicesappendicesappendicesappendicesappendicesapp Total ndicesappendicesappendicesappendicesappendicesappendicesappendicesapp CLASSIFICATION no. of Staff with endicesappendicesappendicesappendicesappendicesappendicesappendicesa EQUIVALENT staff Women ROEB ATSI PWD EEO data APS1 Nil APS2 1 APS3 - - - 1 100% - - - 1 100% 6 5 83% 3 50% 1 17% - 6 100% APS4 12 9 75% 6 50% - - 12 100% APS5 8 5 63% 1 13% - - 8 100% APS6 22 13 59% 7 32% - - 22 100% EL 1 6 2 33% 2 33% - - 6 100% EL 2 6 3 50% 1 17% - - 5 83% SES and equivalent 3 1 33% - - - 3 100% 64 39 61% 20 31% 1 2% - 63 98% Total - - Table 7 - EEO groups within classification levels at 30 June 2003 Note: ROEB ATSI PWD APS EL SES Race or ethnicity background Aboriginal or Torres Strait Islander Person with a disability Australian Public Service Executive Level Senior Executive Service AUSTRAC Annual Report 2002-03 131 appendicesappendicesappendicesappendicesappendicesappendicesappendice ppendicesappendicesappendicesappendicesappendicesappendicesappendices pendicesappendicesappendicesappendicesappendicesappendicesappendicesa endicesappendicesappendicesappendicesappendicesappendicesappendicesap ndicesappendicesappendicesappendicesappendicesappendicesappendicesapp Occupational Health and Safety (OH&S) dicesappendicesappendicesappendicesappendicesappendicesappendicesappe This report is presented in accordance with the requirements of section 74 of the cesappendicesappendicesappendicesappendicesappendicesappendicesappen Occupational Health and Safety (Commonwealth Employment) Act 1991. cesappendicesappendicesappendicesappendicesappendicesappendicesappen Reporting requirements under the Occupational Health and appendicesappendicesappendicesappendicesappendicesappendicesappendice Safety Act ppendicesappendicesappendicesappendicesappendicesappendicesappendices pendicesappendicesappendicesappendicesappendicesappendicesappendicesa Section 68 occurrences endicesappendicesappendicesappendicesappendicesappendicesappendicesap (Notification and reporting of accidents and dangerous occurrences) ndicesappendicesappendicesappendicesappendicesappendicesappendicesapp There were two accidents during the financial year that required giving notice to Comcare under section 68 of the Act. dicesappendicesappendicesappendicesappendicesappendicesappendicesappe Investigations cesappendicesappendicesappendicesappendicesappendicesappendicesappen No investigations were conducted. cesappendicesappendicesappendicesappendicesappendicesappendicesappen Section 45 directions (Power to direct that workplace not be disturbed) No direction was given to AUSTRAC under section 45 of the Act. Section 30 notices (Duties of employers in relation to health and safety representatives) No notice was issued under section 30 of the Act. Section 46 notices (Power to issue prohibition notices) No notice was issued under section 46 of the Act. Section 47 notices (Power to issue improvement notices) No notices were issued under section 47 of the Act. AUSTRAC has acted in accordance with the Occupational Health and Safety (Commonwealth Employment) Act 1991. Training and development programs - summary statement Net eligible training expenditure by AUSTRAC in 2002-03 was $53,026. The total number of person-days spent by staff in training programs during the year was five. A total of 58 officers attended training and development activities. 132 AUSTRAC Annual Report 2002-03 appendices esappendicesappendicesappendicesappendicesappendicesappendicesappend sappendicesappendicesappendicesappendicesappendicesappendicesappendi appendicesappendicesappendicesappendicesappendicesappendicesappendice ppendicesappendicesappendicesappendicesappendicesappendicesappendices pendicesappendicesappendicesappendicesappendicesappendicesappendices Industrial relations endicesappendicesappendicesappendicesappendicesappendicesappendicesa There are 55 staff covered by the AUSTRAC Certified Agreement 2002, as at 30 ndicesappendicesappendicesappendicesappendicesappendicesappendicesap June 2003. Two SES and six non-SES staff were parties to an Australian Workplace ndicesappendicesappendicesappendicesappendicesappendicesappendicesapp Agreement (AWA) at 30 June 2003. Table 9 provides a summary by classification structure of the salary ranges available esappendicesappendicesappendicesappendicesappendicesappendicesappend for APS employees under the Agency’s Certified Agreement. sappendicesappendicesappendicesappendicesappendicesappendicesappendi appendicesappendicesappendicesappendicesappendicesappendicesappendice Classification or Salary Range ppendicesappendicesappendicesappendicesappendicesappendicesappendices equivalent $ pendicesappendicesappendicesappendicesappendicesappendicesappendices endicesappendicesappendicesappendicesappendicesappendicesappendicesa ndicesappendicesappendicesappendicesappendicesappendicesappendicesap ndicesappendicesappendicesappendicesappendicesappendicesappendicesapp APS 1 30,090 - 32,929 APS 2 33,496 - 37,471 APS 3 38,038 - 40,877 APS 4 41,445 - 45,987 APS 5 46,554 - 49,961 APS 6 50,528 - 58,957 EL 1 63,324 - 72,059 EL 2 74,298 - 87,344 Table 8 - Classifications and salary ranges at 30 June 2003 Non-salary benefits provided to staff by the agency under the Certified Agreement include: • • • • • • 11 public holidays per year Flexible working hours, including working shorter hours by agreement Access to salary sacrifice options Home-based work Annual job work evaluations to assess correct work value level Access to development activities. Performance pay As part of the Certified Agreement negotiations in 2002, AUSTRAC management and staff agreed to removed the provisions to provide staff with performance pay. Therefore, there is no performance pay information available. AUSTRAC Annual Report 2002-03 133 appendicesappendicesappendicesappendicesappendicesappendicesappendice ppendicesappendicesappendicesappendicesappendicesappendicesappendices pendicesappendicesappendicesappendicesappendicesappendicesappendicesa endicesappendicesappendicesappendicesappendicesappendicesappendicesap ndicesappendicesappendicesappendicesappendicesappendicesappendicesapp Appendix II dicesappendicesappendicesappendicesappendicesappendicesappendicesappe cesappendicesappendicesappendicesappendicesappendicesappendicesappen Summary table of resources esappendicesappendicesappendicesappendicesappendicesappendicesappend Actual ppendicesappendicesappendicesappendicesappendicesappendicesappendices Budget Expenses Variation Budget pendicesappendicesappendicesappendicesappendicesappendicesappendicesa 2002-03 2002-03 2003-04 $’000 $’000 $’000 endicesappendicesappendicesappendicesappendicesappendicesappendicesap DEPARTMENTAL APPROPRIATIONS ndicesappendicesappendicesappendicesappendicesappendicesappendicesapp Output 1.1: Deterring money laundering 3,517 3,255 (262) 5,090 dicesappendicesappendicesappendicesappendicesappendicesappendicesappe Output 1.2: Targeting money laundering 4,715 4,662 (53) 8,515 cesappendicesappendicesappendicesappendicesappendicesappendicesappen Output 1.3: Advice on effectiveness of FTR Act 723 1,002 279 815 Output 1.4: Contributions to international efforts 672 698 26 1,540 esappendicesappendicesappendicesappendicesappendicesappendicesappend Output 1.5: Privacy and security 1,647 1,644 (3) 1,397 sappendicesappendicesappendicesappendicesappendicesappendicesappendic Total revenue from government (appropriations) contributing to price of outcome 11,274 11,261 (13) 17,357 18 23 14 20 359 6 354 10 2 336 6 354 (4) 9 15 1 2 3 55 749 694 30 Total price of departmental outputs (Total revenue from government and other sources) 11,329 12,010 681 17,387 Total estimated resourcing for outcome 1 (Total administered expenses) 11,329 12,010 681 17,387 REVENUE FROM OTHER SOURCES Output 1.1: Deterring money laundering Output 1.2: Targeting money laundering Output 1.3: Advice on effectiveness of FTR Act Output 1.4: Contributions to international efforts Output 1.5: Privacy and security Total revenue from other sources Average Staffing Level 2002-03 59 134 AUSTRAC Annual Report 2002-03 appendices 2003-04 89 esappendicesappendicesappendicesappendicesappendicesappendicesappend sappendicesappendicesappendicesappendicesappendicesappendicesappendi appendicesappendicesappendicesappendicesappendicesappendicesappendice ppendicesappendicesappendicesappendicesappendicesappendicesappendices pendicesappendicesappendicesappendicesappendicesappendicesappendices Appendix III: endicesappendicesappendicesappendicesappendicesappendicesappendicesa ndicesappendicesappendicesappendicesappendicesappendicesappendicesap AUSTRAC’s Service Charter dicesappendicesappendicesappendicesappendicesappendicesappendicesapp This charter sets out the standards of service which cash dealers and members of the sappendicesappendicesappendicesappendicesappendicesappendicesappendi public can expect from AUSTRAC in administering the Financial Transaction Reports Act 1988 (FTR Act). It includes the steps which may be taken if these standards are not met. appendicesappendicesappendicesappendicesappendicesappendicesappendice The FTR Act relates to the reporting of financial transaction reports (FTR) information by ppendicesappendicesappendicesappendicesappendicesappendicesappendices cash dealers and members of the public and account identification requirements. pendicesappendicesappendicesappendicesappendicesappendicesappendices FTR information includes reports of: endicesappendicesappendicesappendicesappendicesappendicesappendicesa • large cash transactions ($10,000 or more) ndicesappendicesappendicesappendicesappendicesappendicesappendicesap • transfer of currency into and out of Australia ($10,000 or more) • all international funds transfer instructions dicesappendicesappendicesappendicesappendicesappendicesappendicesapp • suspect transactions. icesappendicesappendicesappendicesappendicesappendicesappendicesappe AUSTRAC’s mission is to make a valued contribution towards a financial environment hostile to money laundering, major crime and tax evasion. Relationship with cash dealers and the public • AUSTRAC will provide high quality service, equitably and with integrity. • AUSTRAC will treat cash dealers and members of the public with courtesy and consideration. • Response to enquiries and requests from cash dealers and members of the public will be timely and in language which is clear. • AUSTRAC will act fairly and accurately in applying the provisions of the FTR Act, its regulations and policy. • AUSTRAC is committed to the Government’s objective of assisting cash dealers with the most efficient and effective methods for compliance. • AUSTRAC will review any concerns with the FTR Act raised by cash dealers or members of the public. Where it is warranted, AUSTRAC will recommend appropriate amendment to the FTR Act. Rights of cash dealers and the public AUSTRAC will ensure that the rights of cash dealers and members of the public are maintained in accordance with all relevant Commonwealth, State and Territory laws. AUSTRAC Annual Report 2002-03 135 appendicesappendicesappendicesappendicesappendicesappendicesappendice ppendicesappendicesappendicesappendicesappendicesappendicesappendices pendicesappendicesappendicesappendicesappendicesappendicesappendicesa endicesappendicesappendicesappendicesappendicesappendicesappendicesap ndicesappendicesappendicesappendicesappendicesappendicesappendicesapp Responsibilities of cash dealers and the public dicesappendicesappendicesappendicesappendicesappendicesappendicesappe The responsibilities of cash dealers and members of the public are contained in the FTR cesappendicesappendicesappendicesappendicesappendicesappendicesappen Act. cesappendicesappendicesappendicesappendicesappendicesappendicesappen appendicesappendicesappendicesappendicesappendicesappendicesappendice Privacy and confidentiality ppendicesappendicesappendicesappendicesappendicesappendicesappendices AUSTRAC will respect individuals’ rights to privacy and confidentiality. pendicesappendicesappendicesappendicesappendicesappendicesappendicesa AUSTRAC will ensure that confidentiality of personal information is maintained in accordance with the relevant laws and that individuals will be able to access information endicesappendicesappendicesappendicesappendicesappendicesappendicesap in accordance with the Commonwealth Freedom of Information Act 1982. ndicesappendicesappendicesappendicesappendicesappendicesappendicesapp AUSTRAC will ensure that the FTR information is kept secure and that its use and disclosure is appropriate. dicesappendicesappendicesappendicesappendicesappendicesappendicesappe cesappendicesappendicesappendicesappendicesappendicesappendicesappen Service delivery standards cesappendicesappendicesappendicesappendicesappendicesappendicesappen AUSTRAC will provide accurate and timely information and advice to cash dealers and members of the public. AUSTRAC staff will be available during the hours of 8.30 am to 5.00 pm on weekdays. After hours calls can be made to the Enquiry Help Desk. Interpreter services will be arranged where needed. Consultation Cash dealers and the public were generally consulted in the development of this charter through the AUSTRAC Provider Advisory Group and the AUSTRAC Privacy Consultative Committee. The AUSTRAC Provider Advisory Group includes representatives of financial sector organisations and peak financial sector representative bodies. The AUSTRAC Privacy Consultative Committee includes members who represent privacy, civil liberties and consumer interests. Further information on these committees and contact details for the members can be obtained by contacting AUSTRAC at its offices in Sydney, Melbourne or Perth. The addresses, telephone and facsimile numbers and Internet addresses of AUSTRAC’s offices are detailed in this charter. Monitoring and review AUSTRAC will undertake an annual review of the terms of this charter and its performance under the charter and will report its findings in its Annual Report. The charter will be submitted for review to the AUSTRAC Provider Advisory Group and the AUSTRAC Privacy Consultative Committee at least every three years. 136 AUSTRAC Annual Report 2002-03 appendices esappendicesappendicesappendicesappendicesappendicesappendicesappend sappendicesappendicesappendicesappendicesappendicesappendicesappendi appendicesappendicesappendicesappendicesappendicesappendicesappendice ppendicesappendicesappendicesappendicesappendicesappendicesappendices pendicesappendicesappendicesappendicesappendicesappendicesappendices Enquiries and complaints endicesappendicesappendicesappendicesappendicesappendicesappendicesa AUSTRAC is committed to continuous improvement. ndicesappendicesappendicesappendicesappendicesappendicesappendicesap AUSTRAC welcomes customer feedback through enquiries and complaints. ndicesappendicesappendicesappendicesappendicesappendicesappendicesapp If you have an enquiry or complaint, you can contact AUSTRAC at its offices in Sydney, esappendicesappendicesappendicesappendicesappendicesappendicesappend Melbourne or Perth. sappendicesappendicesappendicesappendicesappendicesappendicesappendi AUSTRAC will return calls within 24 hours, or on the next working day, where telephone appendicesappendicesappendicesappendicesappendicesappendicesappendice messages have been left at its offices. Your enquiry or complaint will be addressed and an initial response will be provided within ppendicesappendicesappendicesappendicesappendicesappendicesappendices two working days. pendicesappendicesappendicesappendicesappendicesappendicesappendices Where appropriate, and upon request, AUSTRAC will provide a copy of the decision and endicesappendicesappendicesappendicesappendicesappendicesappendicesa reasons for the decision to the cash dealer or member of the public concerning their enquiry or complaint. ndicesappendicesappendicesappendicesappendicesappendicesappendicesap The Administrative Decisions (Judicial Review) Act 1977 only applies to decisions under ndicesappendicesappendicesappendicesappendicesappendicesappendicesapp sub-section 17(B)(4) or sub-sections 19(2) or 19(3) of the FTR Act. AUSTRAC staff can provide appropriate contacts for any customer who wishes to pursue a complaint through external disputes handling and appeals mechanisms or who needs to seek information from another government department or agency. The addresses, telephone and facsimile numbers and Internet addresses are detailed in this charter. Performance against Service Charter and complaints procedures AUSTRAC maintains a Help Desk to advise cash dealers and the public of the Financial Transaction Reports Act 1988 (FTR Act) and their specific obligations under the legislation. The Help Desk also serves as a conduit for complaints by members of the public and cash dealers who have concerns with the FTR Act, AUSTRAC’s policy on specific issues, or the actions of financial institutions which affect individuals. All calls to the AUSTRAC Help Desk are registered within the AUSTRAC database with the relevant details. Where necessary, calls which cannot be properly resolved by the Help Desk staff are referred to members of AUSTRAC’s management team. AUSTRAC Annual Report 2002-03 137 appendicesappendicesappendicesappendicesappendicesappendicesappendice ppendicesappendicesappendicesappendicesappendicesappendicesappendices pendicesappendicesappendicesappendicesappendicesappendicesappendicesa endicesappendicesappendicesappendicesappendicesappendicesappendicesap ndicesappendicesappendicesappendicesappendicesappendicesappendicesapp Appendix IV dicesappendicesappendicesappendicesappendicesappendicesappendicesappe cesappendicesappendicesappendicesappendicesappendicesappendicesappen Committees and Reports cesappendicesappendicesappendicesappendicesappendicesappendicesappen appendicesappendicesappendicesappendicesappendicesappendicesappendice Inquiries by parliamentary and other committees ppendicesappendicesappendicesappendicesappendicesappendicesappendices During the year AUSTRAC officers appeared before and/or provided submissions to pendicesappendicesappendicesappendicesappendicesappendicesappendicesa various committees including: endicesappendicesappendicesappendicesappendicesappendicesappendicesap • House of Representatives – Standing Committee on Legal and Constitutional Affairs: Director, Neil Jensen, and Senior Manager Policy and Coordination, Andrew Joyce, ndicesappendicesappendicesappendicesappendicesappendicesappendicesapp appeared. dicesappendicesappendicesappendicesappendicesappendicesappendicesappe • House of Representatives – Standing Committee on Legal and Constitutional Affairs: Deputy Director, Liz Atkins, and Senior Manager Policy and Coordination, Andrew cesappendicesappendicesappendicesappendicesappendicesappendicesappen Joyce, appeared. cesappendicesappendicesappendicesappendicesappendicesappendicesappen • Inquiry into Australia’s relationship with Papua New Guinea and the island states of the south-west pacific by the Senate Foreign Affairs, Defence and Trade References Committee • Parliament of Victoria - Drugs and Crime Prevention Committee - Inquiry into Fraud and Electronic Commerce. • Senate Legal and Constitutional Legislation Committee Budget Estimates Hearings Director, Neil Jensen, Deputy Director, Liz Atkins and Senior Manager Corporate Resources, Alf Mazzitelli, appeared. Committees convened by AUSTRAC • Action Group into the Law Enforcement Implications of Electronic Commerce (AGEC) comprising representatives from the Australian Competition and Consumer Commission, Australasian Centre for Policing Research, Australian Customs Service, Australian Federal Police, Attorney-General’s Department, Australian Securities and Investments Commission, Australian Taxation Office, Commonwealth Director of Public Prosecutions, Department of Immigration and Multicultural and Indigenous Affairs, Australian Crime Commission and the National Office for the Information Economy. • AUSTRAC Partner Liaison Groups comprising representatives of law enforcement, revenue and national security agencies in each State and the Australian Capital Territory. • AUSTRAC Provider Advisory Group, including representatives from the Australian Bankers’ Association, the Credit Union Services Corporation (Australia) Ltd, the Australian Association of Permanent Building Societies (AAPBS), the Australian Finance Conference and individual cash dealer organisations. • AUSTRAC Privacy Consultative Committee, comprising representatives of the Victorian Council of Civil Liberties, the Office of the Federal Privacy Commissioner, Australian Crime Commission, Australian Taxation Office, Australian Federal Police, a representative of the Australian Privacy Charter Council and AUSTRAC. • Gaming Industry Provider Advisory Group, comprising representatives from the major casinos, TAB, bookmakers and gaming industry bodies. 138 AUSTRAC Annual Report 2002-03 appendices esappendicesappendicesappendicesappendicesappendicesappendicesappend sappendicesappendicesappendicesappendicesappendicesappendicesappendi appendicesappendicesappendicesappendicesappendicesappendicesappendice ppendicesappendicesappendicesappendicesappendicesappendicesappendices pendicesappendicesappendicesappendicesappendicesappendicesappendices • Steering Committee on Proof of Identity, comprising endicesappendicesappendicesappendicesappendicesappendicesappendicesa representatives from the Australian Federal Police, Attorney-General’s Department, Department of Immigration and Multicultural and Indigenous ndicesappendicesappendicesappendicesappendicesappendicesappendicesap Affairs, Australian Bureau of Criminal Intelligence, Australian Taxation Office, Victoria Police, NSW Attorney-General’s Department, Centrelink, NSW Registry of ndicesappendicesappendicesappendicesappendicesappendicesappendicesapp Births, Deaths and Marriages, Australian Road Transportation Forum, National Road esappendicesappendicesappendicesappendicesappendicesappendicesappend Transport Commission, Australian Bankers’ Association and representatives from the major banks. sappendicesappendicesappendicesappendicesappendicesappendicesappendi appendicesappendicesappendicesappendicesappendicesappendicesappendice Committees in which AUSTRAC has a substantial role ppendicesappendicesappendicesappendicesappendicesappendicesappendices • Heads of Commonwealth Operational Law Enforcement Agencies (HOCOLEA). • Women in Law Enforcement Strategy (WILES) Steering Group, comprising pendicesappendicesappendicesappendicesappendicesappendicesappendices representatives from HOCOLEA Agencies. endicesappendicesappendicesappendicesappendicesappendicesappendicesa ndicesappendicesappendicesappendicesappendicesappendicesappendicesap Other committees and working groups in which AUSTRAC participates ndicesappendicesappendicesappendicesappendicesappendicesappendicesapp • Australian Crime Commission Identity Fraud Register pilot and the Identity Crime Taskforce. • Australian Crime Commission National Co-ordination Committee. • Australian Crime Commission National Management Committee. • Australian Crime Commission Regional Co-ordination Committee in various States and Territories. • Anti-Terrorism Regulations Working Group. • Australian Prudential Regulation Authority Serious White Collar Crime Committee (Qld). • Australian Taxation Office Cash Economy Taskforce. • Australian Bankers’ Association Fraud Task Force. • Department of the Treasury Consultations with industry on the Review of the FATF 40 Recommendations. • Financial Action Task Force (FATF)/Asia Pacific Group on Money Laundering (APG) Co-ordination Committee, including representatives of the Attorney-General’s Department, National Crime Authority, Australian Federal Police, Australian Customs Service, Department of Foreign Affairs and Trade, Australian Prudential Regulation Authority, Reserve Bank of Australia, the Department of the Treasury and AUSTRAC. • Heads of Criminal Intelligence Agencies. • Industry workshops on the Suppression of the Financing of Terrorism Act 2002. • International Counter-Terrorism Coordination Group (ICTCG). • Joint Agency Coordination Team in WA. • Joint Analyst Group meetings in NSW and WA. • Law Enforcement and National Security Clearing House Group (convened by the National Office for the Information Economy). • National Counter-Terrorism Policy Committee (NCTPC). • Policy Steering Group on Anti-Money Laundering and Counter Terrorist Financing. • Rainbow Coast Intelligence Meetings WA. AUSTRAC Annual Report 2002-03 139 appendicesappendicesappendicesappendicesappendicesappendicesappendice ppendicesappendicesappendicesappendicesappendicesappendicesappendices pendicesappendicesappendicesappendicesappendicesappendicesappendicesa endicesappendicesappendicesappendicesappendicesappendicesappendicesap ndicesappendicesappendicesappendicesappendicesappendicesappendicesapp • Reference Group: Office of Strategic Crime Assessments (OSCA). dicesappendicesappendicesappendicesappendicesappendicesappendicesappe • Senior Intelligence Officers Group (NSW). cesappendicesappendicesappendicesappendicesappendicesappendicesappen • Strategic Direction Working Group for the implementation of the Australian Crime Commission (ACC). cesappendicesappendicesappendicesappendicesappendicesappendicesappen • Terrorist Asset Freezing Working Group. appendicesappendicesappendicesappendicesappendicesappendicesappendice • Various law enforcement agency committees. ppendicesappendicesappendicesappendicesappendicesappendicesappendices International groups in which AUSTRAC participates pendicesappendicesappendicesappendicesappendicesappendicesappendicesa • Asia/Pacific Group on Money Laundering (APG). endicesappendicesappendicesappendicesappendicesappendicesappendicesap • Egmont Group of financial intelligence units. ndicesappendicesappendicesappendicesappendicesappendicesappendicesapp • Financial Action Task Force on Money Laundering (FATF). dicesappendicesappendicesappendicesappendicesappendicesappendicesappe cesappendicesappendicesappendicesappendicesappendicesappendicesappen Reports concerning AUSTRAC cesappendicesappendicesappendicesappendicesappendicesappendicesappen Reports involving or mentioning AUSTRAC, including reports tabled by parliamentary committees, Royal Commissions and the Auditor-General, include: • ANAO Audit Report No. 55 2002-03, Performance Audit Australian Taxation Office, Goods and Services Tax Fraud Prevention and Control, tabled 24 June 2003. • ANAO Audit Report No. 25 2002-03, Audits (including results of the audit of AUSTRAC’s 2000-01 financial statements) of the Financial Statements of Commonwealth Entities for the Period Ended 30 June 2002, tabled 23 December 2002. • AUSTRAC’s 2001-02 Annual Report, tabled October 2002. • Final Report of the Royal Commission into the Building and Construction Industry, tabled in March 2003. • Report for the Royal Commission into the failure of the HIH insurance group (HIH Royal Commission), was tabled on 16 April 2003. 140 AUSTRAC Annual Report 2002-03 appendices esappendicesappendicesappendicesappendicesappendicesappendicesappend sappendicesappendicesappendicesappendicesappendicesappendicesappendi appendicesappendicesappendicesappendicesappendicesappendicesappendice ppendicesappendicesappendicesappendicesappendicesappendicesappendices pendicesappendicesappendicesappendicesappendicesappendicesappendices Appendix V endicesappendicesappendicesappendicesappendicesappendicesappendicesa ndicesappendicesappendicesappendicesappendicesappendicesappendicesap Acts and Regulations ndicesappendicesappendicesappendicesappendicesappendicesappendicesapp esappendicesappendicesappendicesappendicesappendicesappendicesappend Acts Act number / Year enacted sappendicesappendicesappendicesappendicesappendicesappendicesappendi Cash Transaction Reports Act 1988 64, 1988 Crimes Legislation Amendment Act (No. 2) 1989 4, 1990 appendicesappendicesappendicesappendicesappendicesappendicesappendice Corporations Legislation Amendment Act 1990 10, 1990 ppendicesappendicesappendicesappendicesappendicesappendicesappendices Crimes Legislation Amendment Act 1991 28, 1991 pendicesappendicesappendicesappendicesappendicesappendicesappendices Industrial Relations Legislation Amendment Act 1991 122, 1991 Crimes Legislation Amendment Act (No. 2) 1991 123, 1991 endicesappendicesappendicesappendicesappendicesappendicesappendicesa Cash Transaction Reports Amendment Act 1991 188, 1991 ndicesappendicesappendicesappendicesappendicesappendicesappendicesap Crimes Legislation Amendment Act 1992 164, 1992 Banking (State Bank of South Australia and Other Matters) Act 1994 69, 1994 ndicesappendicesappendicesappendicesappendicesappendicesappendicesapp Law and Justice Legislation Amendment Act 1994 Financial Transaction Reports Amendment Act 1997 Retirement Savings Accounts (Consequential Amendments) Act 1997 Telecommunications (Interception) and Listening Device Amendment Act 1997 Financial Sector Reform (Consequential Amendments) Act 1998 Financial Sector Reform (Amendments and Transitional Provisions) Act 1998 Corporate Law Economic Reform Program Act 1999 Australian Security Intelligence Organization Legislation Amendment Act 1999 Law and Justice Legislation Amendment (application of Criminal Code) Act 2001 Corporations (Repeals, Consequentials and Transitionals) Act 2001 General Insurance Reform Act 2001 Financial Services Reform (Consequential Provisions) Act 2001 National Crime Authority Legislation Amendment Act 2001 Measures to Combat Serious and Organised Crime Act 2001 Royal Commissions and Other Legislation Amendment Act 2001 Statute Law Revision Act 2002 Suppression of the Financing of Terrorism Act 2002 Proceeds of Crime (Consequential Amendments and Transitional Provisions) Act 2002 Australian Crime Commission Establishment Act 2002 Crimes Legislation Amendment (People Smuggling, Firearms Trafficking and Other Measures) Act 2002 Crimes Legislation Enhancement Act 2003 84, 1994 33, 1997 62, 1997 160, 1997 48, 1998 54, 1998 156, 1999 161, 1999 23, 2001 55, 2001 199, 2001 123, 2001 135, 2001 136, 2001 166, 2001 63, 2002 66, 2002 86, 2002 125, 2002 141, 2002 41, 2003 AUSTRAC Annual Report 2002-03 141 appendicesappendicesappendicesappendicesappendicesappendicesappendice ppendicesappendicesappendicesappendicesappendicesappendicesappendices pendicesappendicesappendicesappendicesappendicesappendicesappendicesa endicesappendicesappendicesappendicesappendicesappendicesappendicesap ndicesappendicesappendicesappendicesappendicesappendicesappendicesapp Regulations Regulations number / Year enacted dicesappendicesappendicesappendicesappendicesappendicesappendicesappe Cash Transaction Reports Regulations 36, 1990 cesappendicesappendicesappendicesappendicesappendicesappendicesappen Cash Transaction Reports Regulations (Amendment) 162, 1990 cesappendicesappendicesappendicesappendicesappendicesappendicesappen Cash Transaction Reports Regulations (Amendment) 340, 1990 Cash Transaction Reports Regulations (Amendment) 341, 1990 appendicesappendicesappendicesappendicesappendicesappendicesappendice Cash Transaction Reports Regulations (Amendment) 7, 1991 ppendicesappendicesappendicesappendicesappendicesappendicesappendices Cash Transaction Reports Regulations (Amendment) 89, 1991 pendicesappendicesappendicesappendicesappendicesappendicesappendicesa Cash Transaction Reports Regulations (Amendment) 166, 1991 Cash Transaction Reports Regulations (Amendment) 90, 1992 endicesappendicesappendicesappendicesappendicesappendicesappendicesap Cash Transaction Reports Regulations (Amendment) 320, 1992 ndicesappendicesappendicesappendicesappendicesappendicesappendicesapp Financial Transaction Reports Regulations (Amendment) 423, 1992 Financial Transaction Reports Regulations (Amendment) 63, 1997 dicesappendicesappendicesappendicesappendicesappendicesappendicesappe Financial Transaction Reports Regulations (Amendment) 303, 1997 cesappendicesappendicesappendicesappendicesappendicesappendicesappen Financial Transaction Reports Amendment Regulations 2000 (No.1) 288, 2000 Financial Transaction Reports Amendment Regulations 2001 (No.1) 64, 2001 cesappendicesappendicesappendicesappendicesappendicesappendicesappen Financial Transaction Reports Amendment Regulations 2002 (No.1) Financial Transaction Reports Amendment Regulations 2003 (No.1) 142 AUSTRAC Annual Report 2002-03 appendices 257, 2002 32, 2003 esappendicesappendicesappendicesappendicesappendicesappendicesappend sappendicesappendicesappendicesappendicesappendicesappendicesappendi appendicesappendicesappendicesappendicesappendicesappendicesappendice ppendicesappendicesappendicesappendicesappendicesappendicesappendices pendicesappendicesappendicesappendicesappendicesappendicesappendices Appendix VI endicesappendicesappendicesappendicesappendicesappendicesappendicesa ndicesappendicesappendicesappendicesappendicesappendicesappendicesap Publications 2002 - 03 ndicesappendicesappendicesappendicesappendicesappendicesappendicesapp esappendicesappendicesappendicesappendicesappendicesappendicesappend Annual Report sappendicesappendicesappendicesappendicesappendicesappendicesappendi 2001–02 Annual Report appendicesappendicesappendicesappendicesappendicesappendicesappendice ppendicesappendicesappendicesappendicesappendicesappendicesappendices Information Circulars pendicesappendicesappendicesappendicesappendicesappendicesappendices AUSTRAC Information Circular No. 30 endicesappendicesappendicesappendicesappendicesappendicesappendicesa NSW BDM Birth Card and other forms of documentation ndicesappendicesappendicesappendicesappendicesappendicesappendicesap AUSTRAC Information Circular No. 31 Guidance for financial institutions in detecting terrorist financing activities ndicesappendicesappendicesappendicesappendicesappendicesappendicesapp AUSTRAC Information Circular No. 32 Short Term Money Market Accounts and Other Related Products AUSTRAC Information Circular No. 33 OECD News Release Financial Action Task Force (FATF) on Money Laundering’s Non Cooperative Countries and Territories List AUSTRAC Information Circular No. 34 Reserve Bank of Australia Media Release Financial Sanctions against Zimbabwe AUSTRAC Information Circular No. 35 Reserve Bank of Australia Media Release National Union for the Total Independence of Angola Newsletter November 2002 Current Reporting Forms International Currency Transfer Report (Carrying currency into or out of Australia) Form 15 – May 2001 International Currency Transfer Report (Mailing or shipping currency into or out of Australia) Form 14 – September 1997 International Funds Transfer Instruction Report Form 17 – February 2001 AUSTRAC Annual Report 2002-03 143 appendicesappendicesappendicesappendicesappendicesappendicesappendice ppendicesappendicesappendicesappendicesappendicesappendicesappendices pendicesappendicesappendicesappendicesappendicesappendicesappendicesa endicesappendicesappendicesappendicesappendicesappendicesappendicesap ndicesappendicesappendicesappendicesappendicesappendicesappendicesapp Significant Cash Transaction Report dicesappendicesappendicesappendicesappendicesappendicesappendicesappe Form 7 – February 2001 cesappendicesappendicesappendicesappendicesappendicesappendicesappen Significant Cash Transaction Report (Bookmaker/Tote/TAB) Form 6 – February 2001 cesappendicesappendicesappendicesappendicesappendicesappendicesappen Significant Cash Transaction Report (Casino) appendicesappendicesappendicesappendicesappendicesappendicesappendice Form 5 – February 2001 ppendicesappendicesappendicesappendicesappendicesappendicesappendices Significant Cash Transaction Report (Solicitor) pendicesappendicesappendicesappendicesappendicesappendicesappendicesa Form 15A – February 2001 Suspect Transaction Report endicesappendicesappendicesappendicesappendicesappendicesappendicesap Form 16 – May 2001 ndicesappendicesappendicesappendicesappendicesappendicesappendicesapp dicesappendicesappendicesappendicesappendicesappendicesappendicesappe Brochures and flyers cesappendicesappendicesappendicesappendicesappendicesappendicesappen TES Training – fundamental search techniques cesappendicesappendicesappendicesappendicesappendicesappendicesappen 144 AUSTRAC Annual Report 2002-03 appendices esappendicesappendicesappendicesappendicesappendicesappendicesappend sappendicesappendicesappendicesappendicesappendicesappendicesappendi appendicesappendicesappendicesappendicesappendicesappendicesappendice ppendicesappendicesappendicesappendicesappendicesappendicesappendices pendicesappendicesappendicesappendicesappendicesappendicesappendices Appendix VII endicesappendicesappendicesappendicesappendicesappendicesappendicesa ndicesappendicesappendicesappendicesappendicesappendicesappendicesap AUSTRAC’s Freedom of Information ndicesappendicesappendicesappendicesappendicesappendicesappendicesapp (FOI) statement esappendicesappendicesappendicesappendicesappendicesappendicesappend sappendicesappendicesappendicesappendicesappendicesappendicesappendi appendicesappendicesappendicesappendicesappendicesappendicesappendice Statement in accordance with section 8 of the Freedom of Information Act 1982. ppendicesappendicesappendicesappendicesappendicesappendicesappendices pendicesappendicesappendicesappendicesappendicesappendicesappendices Establishment endicesappendicesappendicesappendicesappendicesappendicesappendicesa AUSTRAC was established under section 35 of the Financial Transaction Reports Act ndicesappendicesappendicesappendicesappendicesappendicesappendicesap 1988 (FTR Act). AUSTRAC collects information from financial institutions and other cash dealers and makes that information available to law enforcement, revenue and national ndicesappendicesappendicesappendicesappendicesappendicesappendicesapp security agencies. Organisation AUSTRAC is headed by a Director appointed by the Minister for Justice and Customs under section 36 of the FTR Act. The Director is assisted by the staff of AUSTRAC, who are appointed or employed under the Public Service Act 1999 or on contract under section 40A of the FTR Act. AUSTRAC is presently staffed by the Director, three Deputy Directors and approximately 60 other people. AUSTRAC is located at Sydney, New South Wales; Melbourne, Victoria; Canberra, Australian Capital Territory; Brisbane, Queensland; and Perth, Western Australia. Functions and powers The functions of the Director are set out in section 38 of the FTR Act and include to: 1. collect, retain, compile, analyse and disseminate FTR information; 2. monitor entries made in financial institutions’ exemption registers; 3. provide advice and assistance to the Commissioner of Taxation in relation to FTR information; and 4. issue guidelines to cash dealers about their obligations under the FTR Act and the regulations. The Director is also required to: (a) consult with cash dealers, or the representatives of cash dealers, in relation to the performance of the Director’s functions; and (b) take into account any comments made in the course of consultations referred to in paragraph (a). To further its functions, AUSTRAC liaises with its advisory committees, comprising representatives of cash dealers, law enforcement, revenue and national security agencies, privacy, civil liberties and consumer groups. AUSTRAC Annual Report 2002-03 145 appendicesappendicesappendicesappendicesappendicesappendicesappendice ppendicesappendicesappendicesappendicesappendicesappendicesappendices pendicesappendicesappendicesappendicesappendicesappendicesappendicesa endicesappendicesappendicesappendicesappendicesappendicesappendicesap ndicesappendicesappendicesappendicesappendicesappendicesappendicesapp Categories of documents dicesappendicesappendicesappendicesappendicesappendicesappendicesappe AUSTRAC holds four classes of documents submitted in accordance with the FTR Act: cesappendicesappendicesappendicesappendicesappendicesappendicesappen (i) reports on cash transactions into and out of financial institutions and other cash cesappendicesappendicesappendicesappendicesappendicesappendicesappen dealers defined by the FTR Act, where the transactions are $10,000 or more. Under section 7 of the FTR Act, these reports are required to be submitted by cash dealers. appendicesappendicesappendicesappendicesappendicesappendicesappendice Solicitors are also required to report cash transactions of $10,000 or more in ppendicesappendicesappendicesappendicesappendicesappendicesappendices accordance with section 15A of the FTR Act; (ii) reports of cash transfers into and out of Australia where the amount transferred is pendicesappendicesappendicesappendicesappendicesappendicesappendicesa $10,000 or more. Under section 15 of the FTR Act, these reports are required to be submitted by members of the public; endicesappendicesappendicesappendicesappendicesappendicesappendicesap (iii) reports on suspect transactions, where the financial dealer suspects that the ndicesappendicesappendicesappendicesappendicesappendicesappendicesapp transaction may relate to tax evasion or a breach of law. Under section 16 of the FTR Act and complementary State and Territory legislation, these reports are dicesappendicesappendicesappendicesappendicesappendicesappendicesappe required to be submitted by cash dealers; and cesappendicesappendicesappendicesappendicesappendicesappendicesappen (iv) reports on international funds transfer instructions into and out of Australia. Under section 17B of the FTR Act, these reports are required to be submitted by cash cesappendicesappendicesappendicesappendicesappendicesappendicesappen dealers. The great majority of reports under (i) and (iv) are submitted by electronic means and are contained within AUSTRAC’s TRAQ system. Reports under (ii) and most reports under (iii) are submitted on paper and are entered manually and made available through the TRAQ system. AUSTRAC issued Information Circular No. 7, dated September 1997 (formerly CTRA Information Circular No. 5) in respect of FOI access to documents under (i) to (iv) above. Other documents held by AUSTRAC which are required to be submitted in accordance with the FTR Act are: (i) details of accounts that have not satisfied the account verification requirements in Part III of the FTR Act and which have been blocked from withdrawals for more than 12 months; and (ii) details of the aforementioned accounts when they are unblocked after receipt of adequate identification means. All these records are submitted by the relevant cash dealers on paper forms. The content of the paper forms is transferred onto a database within AUSTRAC. AUSTRAC also holds: (i) details of accounts opened using secondary identification (see section 22 of the FTR Act); (ii) correspondence and other incoming and outgoing documents and records, including letters and FOI requests; (iii) staff and contractor records (including security assessments); and (iv) other records relating to the operation of its own office facilities, such as invoices and financial documents. These documents are maintained in paper form. AUSTRAC has a library and other research materials that it collects for its analytical functions. These are maintained in paper and electronic formats. 146 AUSTRAC Annual Report 2002-03 appendices esappendicesappendicesappendicesappendicesappendicesappendicesappend sappendicesappendicesappendicesappendicesappendicesappendicesappendi appendicesappendicesappendicesappendicesappendicesappendicesappendice ppendicesappendicesappendicesappendicesappendicesappendicesappendices pendicesappendicesappendicesappendicesappendicesappendicesappendices endicesappendicesappendicesappendicesappendicesappendicesappendicesa AUSTRAC’s Freedom of Information statistics 2002 - 03 Total ndicesappendicesappendicesappendicesappendicesappendicesappendicesap Requests on hand 1 July 2002 nil ndicesappendicesappendicesappendicesappendicesappendicesappendicesapp Requests received 38 esappendicesappendicesappendicesappendicesappendicesappendicesappend Granted in full 27 sappendicesappendicesappendicesappendicesappendicesappendicesappendi Granted in part 2 appendicesappendicesappendicesappendicesappendicesappendicesappendice Refused (includes cases where no relevant documents were found) 9 ppendicesappendicesappendicesappendicesappendicesappendicesappendices Deferred nil pendicesappendicesappendicesappendicesappendicesappendicesappendices Transferred nil endicesappendicesappendicesappendicesappendicesappendicesappendicesa Withdrawn or lapsed nil Requests outstanding at the end of the period nil ndicesappendicesappendicesappendicesappendicesappendicesappendicesap ndicesappendicesappendicesappendicesappendicesappendicesappendicesapp AUSTRAC Annual Report 2002-03 147 APPENDICESAPPENDICESAPPENDICESAPPENDICESAPPENDICESAPPENDICESAPPENDIce APPENDICESAPPENDICESAPPENDICESAPPENDICESAPPENDICESAPPENDICESAPPENDIce APPENDICESAPPENDICESAPPENDICESAPPENDICESAPPENDICESAPPENDICESAPPENDIce APPENDICESAPPENDICESAPPENDICESAPPENDICESAPPENDICESAPPENDICESAPPENDIce APPENDICESAPPENDICESAPPENDICESAPPENDICESAPPENDICESAPPENDICESAPPENDIce Appendix VIII: APPENDICESAPPENDICESAPPENDICESAPPENDICESAPPENDICESAPPENDICESAPPENDIce APPENDICESAPPENDICESAPPENDICESAPPENDICESAPPENDICESAPPENDICESAPPENDIce AUSTRAC’s locations APPENDICESAPPENDICESAPPENDICESAPPENDICESAPPENDICESAPPENDICESAPPENDIce APPENDICESAPPENDICESAPPENDICESAPPENDICESAPPENDICESAPPENDICESAPPENDIce Initial contact point APPENDICESAPPENDICESAPPENDICESAPPENDICESAPPENDICESAPPENDICESAPPENDIce Enquiries concerning access to documents, matters relating to Freedom of Information or APPENDICESAPPENDICESAPPENDICESAPPENDICESAPPENDICESAPPENDICESAPPENDIce requests for additional information should be directed to the following initial contact APPENDICESAPPENDICESAPPENDICESAPPENDICESAPPENDICESAPPENDICESAPPENDIce officer: APPENDICESAPPENDICESAPPENDICESAPPENDICESAPPENDICESAPPENDICESAPPENDIce Policy Officer PO Box 5516 APPENDICESAPPENDICESAPPENDICESAPPENDICESAPPENDICESAPPENDICESAPPENDIce WEST CHATSWOOD NSW 1515 APPENDICESAPPENDICESAPPENDICESAPPENDICESAPPENDICESAPPENDICESAPPENDIce Telephone: (02) 9950 0055 Facsimile: (02) 9950 0054 Documents may also be viewed, or copies obtained, from our website www.austrac.gov.au or from the offices below. Business hours are Monday to Friday, 8.30 am to 5.30 pm. Sydney Level 12, Tower A Zenith Centre 821 Pacific Highway CHATSWOOD NSW 2067 PO Box 5516 WEST CHATSWOOD NSW 1515 Telephone: (02) 9950 0055 Facsimile: (02) 9950 0054 TTY phone: 1800 673 496 Melbourne Customs House, Level 4, 414 La Trobe Street MELBOURNE VIC 3000 PO Box 13173 Law Courts P.O. MELBOURNE VIC 8010 Telephone: (03) 8636 0500 Facsimile: (03) 8636 0501 148 AUSTRAC Annual Report 2002-03 glossary Perth 619 Murray Street West Perth WA 6005 GPO Box 586 WEST PERTH WA 6872 Telephone: (08) 9320 3495 Facsimile: (08) 9320 3518 Brisbane 203 Wharf Street SPRING HILL QLD 4004 PO Box 451 SPRING HILL QLD 4004 Telephone: (07) 3222 1433 Facsimile: (07) 3222 1234 Canberra Robert Garran Offices National Circuit BARTON ACT 2600 Telephone: (02) 6250 6231 Facsimile: (02) 6250 5918 eglossaryglossaryglossaryglossaryglossaryglossaryglossaryglossaryglossa eglossaryglossaryglossaryglossaryglossaryglossaryglossaryglossaryglossa eglossaryglossaryglossaryglossaryglossaryglossaryglossaryglossaryglossa eglossaryglossaryglossaryglossaryglossaryglossaryglossaryglossaryglossa eglossaryglossaryglossaryglossaryglossaryglossaryglossaryglossaryglossa eglossaryglossaryglossaryglossaryglossaryglossaryglossaryglossaryglossa eglossaryglos saryglossaryglos saryglossaryglossaryglossaryglossaryglossa Glossary of terms eglossaryglossaryglossaryglossaryglossaryglossaryglossaryglossaryglossa ABA Australian Bankers’ Association eglossaryglos saryglos saryglossaryglossaryglossaryglossaryglossaryglossa ABCI Australian Bureau of Criminal Intelligence (incorporated into ACC) ACC Australian Crime Commission (commenced January 2003) eglossaryglos saryglos saryglos saryglos saryglos saryglos saryglossaryglossa ACG AUSTRAC Consultative Group eglossaryglos saryglos saryglos saryglossaryglossaryglossaryglossa ACS Australian Customssaryglos Service ACT Australian Capital Territory eglossaryglos saryglos saryglos saryglossaryglossaryglossaryglossaryglossa AFP Australian Federal Police AGD saryglos Attorney-General’s eglossaryglos saryglosDepartment saryglossaryglossaryglossaryglossaryglossa AGEC Action Group into the Law Enforcement Implications of Electronic Commerce eglossaryglos saryglos saryglos saryglos saryglos sa Agio saryglos A multi agency tasksaryglos force of the former NCA that prepared operational intelligencesaryglos arising from suspicious financial activity. Now replaced by the ACC’s Midas-FIAT eglossaryglossaryglos saryglos saryglossaryglossaryglossaryglossaryglossa special investigation. AIFIUCP ALO AMB AMT ANAO ANSWERZ APG APS ASIC ASIO ATO AUSTRAC AWA Cash dealer CMT CTRA Australia Indonesia Financial Intelligence Unit Cooperation Project AUSTRAC Liaison Officer AUSTRAC Management Board AUSTRAC Management Team Australian National Audit Office An external consultant engaged by AUSTRAC to assist with a risk assessment of AUSTRAC IT systems Asia Pacific Group on Money Laundering Australian Public Service Australian Securities and Investments Commission Australian Security Intelligence Organisation Australian Taxation Office Australian Transaction Reports and Analysis Centre, an agency operating within the Attorney-General’s portfolio, created to administer and oversee the provisions of the Financial Transaction Reports Act Australian Workplace Agreement The term ‘cash dealer’ is defined in Section 3 of the FTR Act and refers to those individuals and bodies who have obligations under the FTR Act to report specified financial transactions and to identify certain customers Cash Management Trust Prior to December 1992, AUSTRAC was known as the Cash Transaction Reports Agency DFAT DSD Department of Foreign Affairs and Trade Defence Signals Directorate E-commerce E-crime E-mail EDDS Electronic Commerce Electronic Crime Electronic mail Electronic Data Delivery System – software developed by AUSTRAC for cash dealers to submit financial transaction reports via encrypted modem – no longer used, has been replaced by EDDSWeb Secure website used by cash dealers for submission of financial transaction reports over the internet Equal Employment Opportunity EDDSWeb EEO AUSTRAC Annual Report 2002-03 149 glossaryglossaryglossaryglossaryglossaryglossaryglossaryglossaryglossary ossaryglossaryglossaryglossaryglossaryglossaryglossaryglossaryglossarygl saryglossaryglossaryglossaryglossaryglossaryglossaryglossaryglossaryglos ryglossaryglossaryglossaryglossaryglossaryglossaryglossaryglossaryglossa lossaryglossaryglossaryglossaryglossaryglossaryglossaryglossaryglossaryg EL Executive Level ssaryglossaryglos saryglos saryglossaryglossaryglossaryglossaryglossaryglo E-security Electronic Security aryglossaryglos saryglos saryglos saryglos saryglossaryglossarygloss FATF Financial Action Task Force on Money saryglos Laundering FCP Fraud Control Plan yglossaryglos saryglos saryglossaryglossaryglossaryglossaryglossaryglossar Fedlink Whole of Government initiative for secure communications between federal agencies Financial Intelligence Unit saryglos ossaryglosFIU saryglossaryglos saryglos saryglossaryglossaryglossarygl FOI Freedom of Information saryglossaryglos saryglos saryglos saryglos saryglos saryglos FTR Financial saryglos Transaction Reports – a general reference to all reports required under the saryglos FTR Act ryglossaryglos saryglos saryglossaryglossaryglossaryglossaryglossaryglossa FTR Act Financial Transaction Reports Act 1988 FTRsaryglos Information saryglos Financial transaction reports information obtained under Partsaryglos II of the FTR Act lossaryglos saryglos saryglos saryglos saryglossaryg FSAP Financial Sector Assessment Program ssaryglossaryglos saryglos saryglos saryglossaryglossaryglo GPAG Gaming (Industry) Providersaryglos Advisory Groupsaryglos HOCOLEA saryglos Heads saryglos of Commonwealth Operational saryglos Law Enforcement Agencies aryglossaryglos saryglos saryglos saryglossarygloss ICTR International Currency Transfer Report – a report of currency (coin or paper money) yglossaryglossaryglos saryglossaryglossaryglossaryglossaryglossaryglossar of AUD $10,000 or more (or the foreign equivalent) leaving or entering Australia Identificationsaryglos ossaryglosIDIFSA saryglossaryglos saryglossaryglossaryglossaryglossarygl Investment Funds Services Association saryglossaryglos saryglos sary IFTI International Funds Transfer Instruction – an instruction for the transfer of funds into IIA IMF IMPA Intranet ISDN ISP IT or out of Australia electronically or by telegraph, to be reported by cash dealers to AUSTRAC Internet Industry Association International Monetary Fund Israel Money Laundering Prohibition Authority A internal web site used by AUSTRAC staff Integrated Services Digital Network Internet Service Provider Information Technology LAN LEA Local Area Network Law Enforcement Agency MLD MLM MLT MOU Money Laundering Deterrence Money Laundering Monitoring Money Laundering Targeting Memorandum of Understanding – a bilateral agreement AUSTRAC has with each of our partner agencies and some international counterparts, detailing, inter alia, conditions of access to FTR information NCA NCCT NIDS NOIE NSW OSR NSWCC NSWPOL National Crime Authority Non-Cooperative Countries and Territories National Illicit Drug Strategy National Office for the Information Economy New South Wales Office of State Revenue New South Wales Crime Commission New South Wales Police OECD OH&S OSCA Organisation of Economic Cooperation and Development Occupational Health and Safety Office of Strategic Assessments (incorporated into ACC) PAG PC Provider Advisory Group Personal Computer 150 AUSTRAC Annual Report 2002-03 glossary ryglossaryglossaryglossaryglossaryglossaryglossaryglossaryglossaryglossa glossaryglossaryglossaryglossaryglossaryglossaryglossaryglossaryglossary ossaryglossaryglossaryglossaryglossaryglossaryglossaryglossaryglossaryg aryglossaryglossaryglossaryglossaryglossaryglossaryglossaryglossaryglos yglossaryglossaryglossaryglossaryglossaryglossaryglossaryglossaryglossar PIC Police Integrity Commission lossaryglos saryglossaryglos saryglossaryglossaryglossaryglossaryglossaryg PLS Partner Liaison and Support (a section at AUSTRAC) POISC Proof of Identity Steering Committee ssaryglossaryglos saryglos saryglos saryglossaryglossaryglossaryglossaryglo PPATK Indonesian Financial Intelligence Unit aryglossaryglos saryglos saryglossaryglossaryglossaryglossaryglossarygloss QCC Queensland Crime Commission QLD saryglos Queensland glossaryglos saryglossaryglossaryglossaryglossaryglossaryglossary QLDPOL Queensland Police ossaryglosR&C saryglossaryglos saryglossaryglossaryglossaryg Reporting andsaryglos Compliance (asaryglos section at AUSTRAC) SAPOL South Australian Police saryglos aryglossaryglos saryglos saryglos saryglossaryglossaryglossaryglos SCTR Significant Cash Transaction Report – a report submitted by cash dealers in respect yglossaryglossaryglos saryglos saryglos saryglos saryglossaryglossaryglossar of a cash transaction involving AUD $10,000 or more SES Senior Executive Service lossaryglos saryglossaryglos saryglossaryglossaryglossaryglossaryglossaryg SGE Secure Gateway Environment – developed by the Department of Primary Industries and Energysaryglos to establish a saryglos secure extranetsaryglos ssaryglossaryglos saryglos saryglossaryglossaryglo SMR Summary Management Report – a system to extract FTR information in a aryglossaryglossaryglos saryglos saryglos saryglossaryglossaryglossarygloss summarised or aggregated form SQL Structured Query Language glossaryglos saryglosState saryglos saryglossaryglossaryglossaryglossaryglossary SRO Revenue Office SSL SUSTR SWIFT TAB TargIT TASPOL TCCC TES TRAQ Typologies Secure Sockets Layer Suspect Transaction Report – a report by a cash dealer, sent to AUSTRAC when the cash dealer has reasonable grounds to suspect that information it has concerning a transaction may be relevant to the investigation of an offence against a law of Australia The Society for Worldwide Interbank Financial Telecommunication Totalisator Agency Board AUSTRAC’s computer-based targeting system for analysing financial transactions Tasmanian Police Transnational Crime Coordination Centre TRAQ Enquiry System (also called TES2000, after the version released in 2000) Transaction Reports Analysis and Query system – the AUSTRAC system which captures and records information from reports provided under the FTR Act Study and interpretation of types of money laundering and criminal financing methodologies UK USA United Kingdom United States of America VICPOL Victorian Police WAN WAPOL WDP WGTF Wide Area Network Western Australian Police Workplace Diversity Program Financial Action Task Force Working Group on Terrorist Financing AUSTRAC Annual Report 2002-03 151 complinacecomplinacecomplinacecomplinacecomplinacecomplinacecomplinaI complinacecomplinacecomplinacecomplinacecomplinacecomplinacecomplinaI complinacecomplinacecomplinacecomplinacecomplinacecomplinacecomplinaI complinacecomplinacecomplinacecomplinacecomplinacecomplinacecomplinaI complinacecomplinacecomplinacecomplinacecomplinacecomplinacecomplinaI complinacecomplinacecomplinacecomplinacecomplinacecomplinacecomplinaI complinacecomplinacecomplinacecomplinacecomplinacecomplinacecomplinaI Compliance index complinacecomplinacecomplinacecomplinacecomplinacecomplinacecomplinaI complinacecomplinacecomplinacecomplinacecomplinacecomplinacecomplinaI Annual report requirement Page Number (s) complinacecomplinacecomplinacecomplinacecomplinacecomplinacecomplinaI Letter of transmission iii complinacecomplinacecomplinacecomplinacecomplinacecomplinacecomplinaI Aids to Access Table of contents iv complinacecomplinacecomplinacecomplinacecomplinacecomplinacecomplinaI Glossary 149 Index 153 complinacecomplinacecomplinacecomplinacecomplinacecomplinacecomplinaI Contact information 148 complinacecomplinacecomplinacecomplinacecomplinacecomplinacecomplinaI Review by Director vi Departmental Overview 1-14 complinacecomplinacecomplinacecomplinacecomplinacecomplinacecomplinaI Report on Performance 15-94 complinacecomplinacecomplinacecomplinacecomplinacecomplinacecomplinaI Output / Outcome table 16 Corporate Governance 87-94 complinacecomplinacecomplinacecomplinacecomplinacecomplinacecomplinaI Names of senior executive 5 Committees and their roles Internal and external scrutiny Internal audit Fraud control Reports by Auditor-General Decisions of courts and tribunals Inquiries by parliamentary committees Human Resources Workplace planning Occupational Health and Safety Certified Agreement and AWAs Productivity gains Statistics on staffing Performance pay Asset Management Purchasing Consultants and Competitive Tendering and Contracting Number of consultancy service contracts let and the total expenditure Name, summary description, price and selection process of consutancy services Financial Statements Other Information Advertising and Market Research Providing access to people with disabilities Ecologically sustainable development and environmental performance Summary resource tables by outcomes Service Charter Freedom of Information 152 AUSTRAC Annual Report 2002-03 compliance 138-140 92-93 92 93 93 93 138 87-91 87 88, 132 89, 133 90 128-129 133 91 92 92, 130 130 Available on request 95-123 22, 131 90-91 92 134 135-137 145-147 INDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIN INDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIN INDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIN INDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIN INDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIN INDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIN INDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIN Index INDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIN appropriations, vii, x, 90, 134 INDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIN A APRA (Australian Prudential Regulation Authority), AAPBS (Australian Association of Permanent INDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIN 68, 139 Building Societies), 138 ARRAS (AUSTRAC’S Regulatory Risk Analysis INDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIN ABA (Australian Bankers’ Association), 52, 53, 138System), 26 139 ASEAN, 71 INDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIN ABCI (Australian Bureau of Criminal Intelligence), Asia Pacific Group on Money Laundering (APG), 65, 31, 33, 46, 139 67, 68, 70-71, 139-140 INDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIN Aboriginal and Torres Strait Island staff, 131 Asia Pacific region, 57-59, 62, 66-71 ACC see Australian Crime Commission ASIC see Australian Securities and Investments INDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIN ACCC (Australian Competition and Consumer Commission Commission), 138 ASIO see Australian Security Intelligence INDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIN account signatory identification see identification Organisation of customers assessments, 36, 45-46 INDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIN accrual budgeting, 91 asset management, 91-92 ACG (AUSTRAC Consultative Group), 87-89 ATO see Australian Taxation Office INDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIN ACS see Australian Customs Service Attorney-General’s Department (AGD) Action Group into the Law Enforcement Implications of Electronic Commerce (AGEC), 7, 54, 138 addresses (AUSTRAC), 148, back cover administrative support see Corporate Resources section advance fee fraud, 37 advertising promotions, 22, 28 advertising (recruitment), 131 AFC (Australian Finance Conference), 138 AFP see Australian Federal Police AGEC (Action Group into the Law Enforcement Implications of Electronic Commerce), 7, 54, 138 Agio task force, 38, 45-46, 149 Alerts function (TRAQ), 34-35, 48 Alternative Remittance Regulation Implementation Package, 67 AMB (AUSTRAC Management Board), 7 analysis of FTR information, 3, 6, 17, 31-33, 36-38, 45-47 assessments, 36, 45-46 future priorities, 43 partner agencies, 39, 44, 48 technology and skills, vi, vii, 11-12, 14 ANAO see Australian National Audit Office annual report, highlights of year, x-xiv overview and reader’s guide, ix ANSTO (Australian Nuclear Science and Technology Organisation), 75 ANSWERZ, 83, 149 Anti-Corruption Commission of Western Australia (ACCWA), 13 Anti-Terrorism Regulations Working Group, 139 APEC, 71 AUSTRAC’s relations with, vii, xiii, 3, 51-52, 54 Committees, 138-139 international cooperation, 66, 68 law and justice portal, 94 legal issues and prosecution action, 29 security and privacy, 75 Audit Committee, 92-93 Auditor-General see Australian National Audit Office (ANAO) audits, 26 AusAID (Australian Agency for International Development), vii, xii, 62, 68, 73 AUSTRAC Consultative Group (ACG), 87-89 AUSTRAC Management Board (AMB), 7 AUSTRAC’S Regulatory Risk Analysis System (ARRAS), 26 Australasian Centre for Policing Research, 138 Australian Agency for International Development (AusAID), vii, xii, 62, 68, 73 Australian Association of Permanent Building Societies (AAPBS), 138 Australian Bankers’ Association (ABA), 52, 53, 138139 Australian Bureau of Criminal Intelligence (ABCI), 31, 33, 46, 139 Australian Capital Territory (ACT), 39, 47 Australian Competition and Consumer Commission (ACCC), 138 Australian Crime Commission (ACC), 3, 8, 12-14, 31, 33, 34, 38, 39, 45-46 audit services, 92 autosearches, 78 committees, 138-139 security and privacy, 75 Strategic Direction Working Group, 140 AUSTRAC Annual Report 2002-03 153 NDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIND EXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEX NDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIND EXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEX NDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIND Australian Customs Service (ACS) B EXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEX Attorney-General’s portfolio, 3 banks AUSTRAC relations, 12-13, 38-39 NDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIND consultation, 21, 50, 53 committees, 138-139 education, 23 data mining, 36 EXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEX fraud against, 51-52 FTR information dissemination, 34, 45 identification requirements, 24 international currency transfer reports (ICTRs), NDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIND inspection, xiv 20 see also cash dealers; Reserve Bank of suspect reports, 46 EXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEX Australia Australian Federal Police (AFP) Belgium, 59 Attorney-General’s portfolio, 3 NDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIND betting organisations, 21, 51. see also gaming AUSTRAC relations, xiii-xiv, 12-13, 21, 36, 38industry 39 EXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEX bookmakers, 51, 138. see also gaming industry committees, 138-139 brochures & flyers (list), 144 counterterrorism strategies, 32 NDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIND budget. see appropriations FTR information dissemination, 33-34, 45, 46 Building and Construction Industry Royal international co-operation, 62, 66, 68 EXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEX Commission (RCBCI), 31, 33, 38, 40, 45, 47, Memorandum of Understanding, vi, 13-14 140 staffing, vii NDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIND building societies, 50, 53 training and support, 39 bureaux de change (money exchangers, currency Transnational Crime Coordination Centre, vii, EXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEX dealers), 24 xiii-xiv, 12, 33, 38 business continuity plans, 76 Australian Finance Conference (AFC), 138 NDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEX Australian National Audit Office (ANAO) life cycle costing, 92 physical security audit, 76 record keeping, 93 reports by Auditor-General, 91-92, 93, 140 Australian Nuclear Science and Technology Organisation (ANSTO), 75 Australian Privacy Charter Council, 138 Australian Prudential Regulation Authority (APRA), 68, 139 Australian Research Council, xiii Australian Road Transportation Forum, 139 Australian Securities and Investments Commission (ASIC) AUSTRAC relations, 12-13, 38-39 committees, 138 financial intelligence dissemination, 45-46 international cooperation, 68 Australian Security Intelligence Organisation (ASIO), 3, 13 anti-terrorism strategies, 32-33 AUSTRAC relations, 38 Memorandum of Understanding, vi, 13-14 Australian Stock Exchange, 53 Australian Taxation Office (ATO) AUSTRAC relations, vii, 12-13, 38-39, 43, 52 autosearches, 78 cash economy, 33, 34 committees, 138-139 FTR information dissemination, 46 FTR information use, 34-35, 45 access, 33 feedback, 40, 44 liaison & support services, 14, 38 Australian Workplace Agreements (AWAs), 89, 133 autosearch, 78 AWAs (Australian Workplace Agreements), 89, 133 154 AUSTRAC Annual Report 2002-03 index C Canada, xi, 58-59, 63, 72 Canberra, AUSTRAC presence in, xiii-xiv, 10, 33, 38, 49 case management system, 36 cash (suspect activities), 37 cash carriers, 23 cash dealers. see also identification of customers AUSTRAC regulation & enforcement, 6, 28, 138 AUSTRAC relationship with, 21, 50-52, 55, 135 AUSTRAC services, 22 compliance see compliance (cash dealers) definition, 149 inspection, xiv reporting, 4, 17-18, 26. see also electronic reporting rights & responsibilities, 135-136 training, 9, 17, 21-23, 26, 28 see also banks; building societies; bureaux de change; cash management trusts; casinos; credit unions; Provider Advisory Group (PAG); securities dealers; totalisator agency boards cash economy, 33, 34 cash management trusts (CMT), viii, 28, 50-51 inspection program, xiv, 10, 24, 28, 29 casinos, 21, 51, 138. see also gaming industry Centrelink, 139 Certified Agreement, vii, xii, 88, 89, 90, 133 Charter of the United Nations Act and Regulations, 53, 57 cheque fraud & laundering, 37 China, 63 CJC (Criminal Justice Commission, Queensland), 46 NDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIND XINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEX DEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIND XINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEX DEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIND data warehouse, 34-35. see CMC (Crime and Misconduct Commission, Qld), 13XINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEX also TRAQ 14, 45, 46 databases, vii, 17, 33, 42. see also data CMT see cash management trusts DEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIND warehouse; online access; TargIT; TRAQ committees, 8, 38, 49, 54-55, 138-139 upgrades, 81-82 common beneficiary/accounts, 37 XINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEX Defence Signals Directorate (DSD) certification, Commonwealth Disability Strategy, 90-91 81, 83 complaints handling, 92, 137 DEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIND Denmark, 59 compliance (cash dealers). see also inspections Department of Foreign Affairs and Trade (DFAT), costs, 18 XINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEX 21, 32, 53, 68, 139 improvement, 23, 29 Department of Immigration and Multicultural and promotion of, 9, 17, 21-26, 28 DEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIND Indigenous Affairs, 138-139 compliance index (annual report), 152 desktop upgrade, 81, 82, 85, 91-92 confidentiality, 136. see also privacy XINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEX deterring money laundering, serious crime and tax consultation, 77, 136. see also Provider Advisory evasion (Primary Output 1), 17-29. see also Groups DEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIND Money Laundering Deterrence Branch consultants see contractors & consultants DFAT (Department of Foreign Affairs and Trade), contact points (AUSTRAC), 148, back cover XINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEX 21, 32, 53, 68, 139 contractors & consultants, 92, 130 Director, AUSTRAC Cook Islands, 67 DEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIND annual report perspective, vi-viii corporate crime, 37, 43 appointment, x, 7 corporate database see TRAQ XINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEX organisational structure, 5 corporate information management see knowledge management Corporate Resources section, 5, 9-10, 87 corporate services, 87-94 court & tribunal proceedings, 93 credit card fraud, 37 Credit Union Services Corporation Australia Ltd (CUSCAL), 138 credit unions, 50, 53, 138 Crime and Misconduct Commission (Qld), 13-14, 45, 46 Crime Commission (NSW), 13, 34, 39, 45, 47 Criminal Justice Commission (CJC, Queensland), 46 criminals, known/suspected, 37 CrimTrac Agency, 3 cryptography, 84 currency dealers, 24 currency transfers not declared, 93 unusually large, 36-37 CUSCAL (Credit Union Services Corporation Australia Ltd), 138 customer identification see identification of customers Customs see Australian Customs Service cybercrime, 53-54 Cybercrime Code of Practice, 54 D data delivery, vi. see also electronic reporting; TRAQ data matching, 78 data mining, vi, xiii, 11, 26, 36-38 future use, 43 information technology, 81, 82 data quality, 6, 10, 17-18, 21, 23, 82 Director-General of Security, vi, 33 Director of Public Prosecutions (DPP), Commonwealth , 3, 138 disability services, 90-91 disability, staff with, 131 dissemination of information see financial intelligence DPP (Commonwealth Director of Public Prosecutions), 3, 138 drug trafficking AUDTRAC funding, x financial intelligence, vii-viii, 38, 58 investigations, 38, 41, 43 DSD certification, 81, 83 E ecologically sustainable development, 92 e-commerce see electronic commerce EDDS (Electronic Data Delivery System), 81, 149 EDDSWeb internet application, xiv, 18, 26, 27, 77, 81-82, 84, 149 future priorities, 86 education see training EEO (Equal Employment Opportunity), 87, 131, 149 Egmont Group of Financial Intelligence Units, vi, 7, 8, 65-66, 68-70, 140 Annual Meetings 2003, 66 Egypt, 67 electronic commerce (e-commerce), 21, 49, 54 electronic crime, 53-54 Electronic Data Delivery System (EDDS), 81, 149 electronic mail see email electronic reporting, xiv, 9, 18, 27, 81. see also EDDS electronic security, 54 AUSTRAC Annual Report 2002-03 155 NDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIND EXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEX NDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIND EXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEX NDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIND Ellison, Chris, Senator, iii, vii, viii, x, xiii, 3, 7, 51, 66 offences under, 93 EXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEX email reporting requirements, 40 access, 85 review of, vii, 10, 21, 49-50, 54-55 NDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIND security & privacy, 84 financial transaction reports (FTR) information employees see staff access to, 33-34 EXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEX enquiries (to AUSTRAC), 22, 137 analysis & monitoring see analysis of FTR Equal Employment Opportunity (EEO), 87, 131, 149 information NDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIND ethnic groups, 22, 131 collection, xiv, 3, 6, 9-10, 17, 18, 27, 81 evidence, 39, 42 definition, 150 EXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEX electronic, 54 dissemination see financial intelligence information technology, 81 NDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIND statistics, vi, 19-21, 27 training and support, 33, 39 F EXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEX use of, 34-35 false identity see identity fraud partner agencies, 31, 39-41, 44 NDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIND FATF see Financial Action Task Force on Money promotion, 38-43, 48 Laundering value adding see analysis EXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEX Fedlink, 84, 85, 150 see also financial intelligence; international feedback from agencies, 34, 38, 39, 40, 44-45, 48 currency transfer reports (ICTRs); NDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIND Fiji, 63 international funds transfer instructions Financial Action Task Force on Money Laundering (IFTIs); significant cash transaction EXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEX (FATF), 28, 65, 66-67, 68, 71, 139-140 reports (SCTRs); suspect transaction 40 Recommendations, 10, 49-51, 55, 66-67, reports (SUSTRs); TRAQ NDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEX 71, 139 FIU see financial intelligence units Working Group on Terrorist Financing (WGTF), 67 financial institutions, 23, 50 financial intelligence assessments, 36, 45-46 dissemination, 3-4, 6, 31-32, 33-35, 38, 44-47 international exchange of, 4, 14, 57, 58-62, 65-66, 69-70, 72-73 information technology, 81-82 value of, 40 volume, 27 see also financial transaction reports (FTR) information financial intelligence units (FIU) AUSTRAC’s role, 3-4, 6 foreign, vi, xi, xii, 57-60, 62-63. see also Egmont Group financial management (AUSTRAC), 10, 87, 91-93 financial networks, 45 financial sector AUSTRAC regulatory work, x, 4 technological change, viii, 49, 54, 55, 90 Financial Sector Assessment Program (FSAP), 67, 150 financial services sector, 3-4, 55 financial statements (AUSTRAC), 91, 95-124 Financial Transaction Reports Act (FTR Act) amendments to, vi, xi-xii, 21, 29, 33, 49, 50, 51, 53-54, 57-58 AUSTRAC advice on effectiveness (Primary Output 3), 49-55 community awareness, 77 compliance with see compliance (cash dealers) industry consultation, 50-54 international standards, 50 156 AUSTRAC Annual Report 2002-03 index flex time, 90 flexible work practices, xii, 90 FOI (freedom of information) statement, 145-147 foreign currency see currency transfers foreign exchange dealers, 24 foreign financial intelligence units see financial intelligence units, foreign France, 59 fraud electronic, 54 intelligence, 37, 40, 42, 51-52 fraud control (AUSTRAC), 93 freedom of information (FOI) statement, 145-147 FSAP (Financial Sector Assessment Program), 67, 150 FTR see financial transaction reports funding see appropriations further education, personal leave for, xi, 89 future priorities deterrence, 26 information technology, 86 international cooperation, 68 privacy & security, 78 targeting, 43 G gaming industry. see also casinos; totalisator agency boards collection of information, 3 consultation, 21, 138 technological change, 49, 54 Gaming (Industry) Provider Advisory Group (GPAG), 7, 21, 28, 50, 51, 138 NDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIND XINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEX DEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIND XINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEX DEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIND Germany, 63 information management see XINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEX glossary, 149-151 knowledge management GPAG (Gaming Provider Advisory Group), 7, 21, 28, information security, 75-76, 79 DEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIND 50, 51, 138 information technology (IT), 8, 81-86 Guatemala, 67 contractors, 130 XINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEX guidelines, 21, 77 data delivery, 81-82 development, 81-82 DEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIND infrastructure, 81 maintaining facilities, 82-83 H XINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEX see also data mining, database systems; harassment, 88 EDDS; Summary Management Reports DEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIND Heads of Commonwealth Operational Law (SMR); TRAQ; wide area network (WAN) Enforcement Agencies (HOCOLEA), 7, 139 Information Technology (IT) branch, 81 XINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEX Heads of Criminal Intelligence Agencies committee, organisational structure, 5-8 8, 139 information technology (IT) security, vi, 14, 81, 83, DEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIND hearing impaired, 91 84 Help Desk, 22, 28, 137 organisational structure, 5 XINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEX highlights of the year, x-xiv information tracking systems, 76 HIH Royal Commission (RCHIH), 31, 33, 39, 47, inquiries, 22, 137 DEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIND 140 inspections (cash dealers), xiv, 9-10, 23, 24-25, HOCOLEA (Heads of Commonwealth Operational 28-29 XINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEX Law Enforcement Agencies), 7, 139 Insurance Council of Australia, 53 home based work policies, xii, 76, 89 Hong Kong, 63 human resource management, 10, 87-91. see also staff I ICAC (Independent Commission against Corruption, NSW), 13, 39, 46 ICTCG (International Counter-Terrorism Coordination Group), 139 ICTRs see international currency transfers ID, refusal to show, 37 identification of customers, viii, xiv, 4, 10, 52, 55 cash management trusts, 24, 51 compliance with FTR Act, 17 see also identity fraud identity crime, xiii, 93 identity fraud, viii, 4, 17, 37, 52. see also account signatory identification cost and extent, xiii IFSA (Investment and Financial Services Association), 53 IFTIs see international funds transfer instructions IIA (Internet Industry Association), 54 illicit drugs see drug trafficking IMF (International Monetary Fund), 63, 67 immigration related offences, 37 Independent Commission against Corruption (ICAC, NSW), 13, 39, 46 Indonesia, vii, xii, 62-64, 67-68, 73 industrial relations, 133 industry consultation, 8, 21, 23, 28, 50-54, 55 influenza vaccination program, 88 information circulars, 17, 21-22, 28, 77, 143 intelligence see financial intelligence interesting country, 37 internal audit, 92-93 International Banks and Securities Association, 53 international co-operation, vi, vii, 12, 57-73 AUSTRAC’s increased role, viii, x, 6, 39, 57-58, 68 bilateral relationships and Memoranda of Understanding, 58-59, 72 conference and training, 8, 65 dissemination of FTR information, 33 information exchange agreements, vi, xi, 4, 6, 8, 14, 57, 58-62, 72 participation in initiatives, 65-67, 69-71, 140 standards, 50, 55 technical assistance, xii, 62, 73 visitors, 63-64, 73 see also Asia Pacific Group on Money Laundering; Egmont Group; Financial Action Task Force on Money Laundering (FATF) International Counter-Terrorism Coordination Group (ICTCG), 139 international currency transfer reports (ICTRs), 4, 18, 143 definition, 150 statistics, vi, 20 international funds transfer instructions (IFTIs), 4, 18, 143 definition, 150 low value, 33-34 statistics, 19 tax haven monitoring, 34 International Monetary Fund (IMF), 63, 67 International section, 5-6, 60 AUSTRAC Annual Report 2002-03 157 NDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIND EXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEX NDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIND EXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEX NDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIND internet, 94. see also EDDSWeb; website M browsing, 84, 85 EXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEX macro analysis tools, 34, 48 security, 84 Malaysia, xi, 58-59, 63-64, 66, 70, 72 Internet Industry Association (IIA), 54 NDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIND managed funds see cash management trusts intranet (AUSTRAC), 94, 150 management, 7-8. see also organisational investigations, vii, x, 12, 17, 34-35, 38-45, 48 EXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEX structure investment banks, 23 maternity leave entitlements, xii, 89 Investment and Financial Services Association NDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIND measures see performance measurement (IFSA), 53 Melbourne office relocation, 81, 82-83, 91 Isle of Man, xi, 58-59, 72 EXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEX Memoranda of Understanding (MOUs) Israel, xi, 58-59, 72 definition, 150 IT see information technology NDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIND international, 58-59, 70, 72, 77 Italy, 59 partner agencies, vi, 13-14, 33, 36 EXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEX Minister for Justice and Customs, iii, vii, viii, x, xiii, 3, 7, 51, 66 J NDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIND mission, 3, back cover Japan, 63, 68 MLD see Money Laundering Deterrence EXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEX Job Evaluation Scheme, xii, 89 MLT see Money Laundering Targeting money exchangers, 24 NDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIND money laundering, 3, 12 K international efforts, xi, xii, 50, 54 EXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEX investigations, 40 knowledge management, 10, 87, 93 suspect activity, 37 NDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEX Korea, xi, 58-59, 63, 72 trends, 21 L LAN (Local Area Network), 91, 150 law enforcement agencies (LEA) AUSTRAC relationships with, 21, 29, 32-33, 36, 38-39, 50-51, 138 change, viii committees, 140 financial intelligence, vii, 4, 31, 34-35, 40-47, 58, 60 foreign, 60 FTR information use, vii see also Action Group into the Law Enforcement Implications of Electronic Commerce (AGEC); Australian Customs Service (ACS); Australian Federal Police (AFP); Australian Securities and Investments Commission (ASIC); Heads of Commonwealth Operational Law Enforcement Agencies (HOCOLEA); investigations; National Crime Authority (NCA); partner agencies Law Enforcement and National Security Clearing House Group, 139 LEA see law enforcement agencies legislation and regulations, 50, 57, 141-142. see also: Financial Transaction Reports Act (FTR Act) life cycle costing, 92 loan and finance companies, 24 Local Area Network (LAN), 91, 150 locations (AUSTRAC), 148 158 AUSTRAC Annual Report 2002-03 index see also deterring; targeting Money Laundering Deterrence (MLD) branch organisational structure, 5-8 overview, 9-10 Money Laundering Targeting (MLT) branch future priorities, 43 organisational structure, 5-8, 90 overview, 11-14 role, 31 see also targeting money transmitters see cash dealers; remittance dealers Monitoring and Analysis section, 5, 12 MOUs see Memoranda of Understanding Myanmar, 67 N National Counter-Terrorism Policy Committee (NCTPC), 139 National Crime Authority (NCA), 33 Agio task force, 38, 45-46, 149 committees, 139 data mining, 36 FTR information dissemination, 45-47 National Illicit Drugs Strategy (NIDS). see also TargIT funding, vii, x, 36, 38, 82 Information Technology Working Group, xiii, 36 inspections, 24 legal issues, 29 policy, 10 NDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIND XINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEX DEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIND XINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEX DEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIND OSCA (Office of Strategic National Office for the Information Economy (NOIE), XINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEX Crime Assessments), 33, 140 138-139 outposted AUSTRAC staff, vii, 38, 48 National Road Transport Commission, 139 DEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIND outputs, components of, 16. see also national security agencies, viii, 4, 31, 32-33, 43, performance measurement 138 XINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEX outsourcing, 92, 130 Nauru, 67 overseas co-operation see international coNCA see National Crime Authority DEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIND operation NCCT (Non-Cooperative Countries and Territories), 28, 67 XINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEX NCTPC (National Counter-Terrorism Policy Committee), 139 P DEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIND Netherlands, 63 PABX, 81, 83, 86 network XINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEX Pacific region, 57-59, 62, 66-71 access, 85 paper based reporting of transactions, 9, 18, 82, monitoring and performance, 86 DEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIND 92 New South Wales parliamentary committees, 138 Attorney-General’s Department, 139 XINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEX participative work practices, 88 Crime Commission (NSWCC), 13, 34, 39, 45, partner agencies, 31, 32-33 47 DEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIND AUSTRAC liaison & support, x, 5, 12, 39, 43, Independent Commission against Corruption 48, 138 (ICAC), 13, 39, 46 XINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEX AUSTRAC relationships, vii, 8, 12, 17, 49-50, Joint Analyst Group, 139 Office of State Revenue (OSR, SRANSW), 39, 47 Police (NSWPOL), 39, 45, 47 Police Integrity Commission (PIC), 13, 34, 39, 47 Registry of Births, Deaths and Marriages, 139 Senior Intelligence Officers Group, 140 New Zealand, 59 newsletters, 21, 143 NIDS see National Illicit Drugs Strategy Nigeria, 67 NOIE (National Office for the Information Economy), 138-139 non-compliance see compliance (cash dealers) Non-Cooperative Countries and Territories (NCCT), 28, 67 Northern Territory, 39, 47 O occupational health and safety (OH&S), 88, 132 offences, 93 Office of Strategic Crime Assessments (OSCA), 33, 140 Office of the Federal Privacy Commissioner (OFPC), 3, 77-78, 138 office services, 87 Oman, 63 online access, 31, 33-35, 36, 44, 48. see also TRAQ Online Action Plan, 94 online enquiry system see TRAQ online services, 94 organisational structure, 6 chart, 5 55 data matching, 78 feedback, 34, 38, 39, 40, 44-45, 48 financial intelligence dissemination & use, 4, 6, 34-39, 44-48 future priorities, 43 list, 13 outposting AUSTRAC staff, 92, 130 significant results, 40-43 training and support, 38, 39, 48 see also investigations; law enforcement agencies; Memoranda of Understanding; revenue agencies Partner Liaison and Support (PLS) section, 12, 14 PCs see desktop upgrade people smuggling, xii, xiv, 58 performance management (staff), xii, 88 performance measurement, viii deterrence program, 27-29 FTR Act effectiveness advice, 55 international co-operation, 69-73 privacy & security, 79 targeting program, 44-48 personal information, 76, 78 personal safety, 75 personnel security, 77, 79 Philippines, 63-64, 67 physical security, 75-79 planning see future priorities POISC (Proof of Identity Steering Committee), xiii, 7, 49-50, 52, 138 Police Integrity Commission (NSW), 13, 34, 39, 47 police services, 13. see also Australian Federal Police; CrimTrac Policy and Co-ordination section, 5, 9-10 Policy Steering Group on Anti-Money Laundering and Counter Terrorist Financing, 139 AUSTRAC Annual Report 2002-03 159 NDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIND EXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEX NDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIND EXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEX NDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIND reports concerning AUSTRAC, 140 PPATK see Indonesia EXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEX Reserve Bank of Australia, 53, 68, 139 price performance measures see performance resources measurement NDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIND increase, 26 privacy, 9-10, 75, 77-79, 83, 136 summary, 134 Privacy Commissioner, 3, 77, 78, 138 EXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEX revenue agencies, vii, 4, 13, 21, 31, 32-33, 42, 44, Privacy Consultative Committee, 7, 77, 138 58, 138. see also Australian Taxation Office Proceeds of Crime Act 2002, xi, 34, 50, 53 NDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIND (ATO); investigations; partner agencies productivity gains, 90 risk management, proof of identity see identification of customers EXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEX information technology, 83 Proof of Identity Steering Committee (POISC), xiii, 7, Royal Commission into the Western Australia 49-50, 52, 138 NDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIND Police, 13, 33 property management, 10, 87, 91 Royal Commissions, 4, 31, 33. see also Building protective security, 75-79 EXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEX and Construction Industry Royal Commission; Protective Security Risk Review, 76 HIH Royal Commission Provider Advisory Groups (PAG), 7, 21, 28, 50-51, NDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIND 138. see also Gaming (Industry) Provider Advisory Group EXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEX public S advice & guidance to, 6, 9, 28, 91 NDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIND search warrants, 39 collection of information from, 3 searching databases see TRAQ reporting obligations, 18, 91 EXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEX Secure Gateway Environment (SGE), 151 service charter, 135-136 Secure Sockets Layer (SSL) encryption, 84 publications NDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEX Securities and Derivatives Industries Association, list, 143-144 online, 94 purchasing, 92 Q quality & quantity performance measures. see performance measurement Queensland AUSTRAC support to partner agencies, 38 Crime and Misconduct Commission (CMC), 13-14, 45, 46 Criminal Justice Commission (QJC), 46 Police Service (QLDPOL), 45, 47 State Revenue Authority (SRAQLD), 47 queries, 22, 137 R race or ethnicity background (ROEB), 131 RAS (Remote Access Service), 84 RCBCI see Building and Construction Industry Royal Commission RCHIH (HIH Royal Commission), 31, 33, 39, 47, 140 records management, 93 recreation leave, 90 rectification programs, 10, 23-24 recycling, 92 remittance dealers, 22-24, 29, 40 Remote Access Service (RAS), 84 Reporting and Compliance (R&C) section, 5, 9, 17, 22-23, 90 reporting forms, 143-144 160 AUSTRAC Annual Report 2002-03 index 53 securities dealers, 23 Securities Industry Research Centre, Asia Pacific (SIRCA), 52 security (AUSTRAC), 75-79 information, 76 organisational structure, 9-10 personnel, 77 physical, 76-77 staff training & education, 77, 79 see also information technology (IT) security security clearances, 77, 79 Senior Executive Service (SES), 130, 131, 133 Senior Intelligence Officers Group (NSW), 140 service charter, 135-137 service delivery standards, 136 SES (Senior Executive Service), 130, 131, 133 SGE (Secure Gateway Environment), 151 significant cash transaction reports (SCTRs), 4, 18, 144 avoidance of reporting, 93 cash economy monitoring and compliance, 34 definition, 151 statistics, 19 Singapore, xi, 58-59, 67, 72 SMR (Summary Management Reports), 34-35, 151 social security fraud, 37 Society for Worldwide Interbank Financial Telecommunication (SWIFT), 19 SOE (standard operating environment), 81, 82 solicitors compliance by, 9 inspection program, 23, 24, 29 liaison with, 6 reporting obligations, 18 NDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIND XINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEX DEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIND XINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEX DEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIND South Australia suspicious behaviour of XINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEX partner agency support, 38 customers, 36-37 Police (SAPOL), 45, 47 SUSTRs see suspect transaction reports DEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIND sports betting see betting organisations SWIFT (Society for Worldwide Interbank SQL (Structured Query Language), 36 Financial Telecommunication), 19 XINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEX SSL (Secure Sockets Layer) encryption, 84 Sydney Futures Exchange, 53 staff, vii, viii DEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIND AUSTRAC Consultative Group (ACG), 87-89 average levels, 134 T XINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEX Certified Agreement, vii, xii, 88, 89, 90, 133 T4 Protective Security, 75 classification, 129 DEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIND TABs see totalisator agency boards flex time, 90 targeting money laundering, serious crime & tax further education leave, xii, 89 XINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEX evasion (Primary Output 2), 12, 31-48 historical profile, 128 TargIT monitoring application, 12, 32, 36, 46, 151 home-based work, xii, 76, 89 DEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIND task forces, national, 38 human resource management, 10, 87-91 Tasmania industrial relations, 133 XINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEX partner agency support, 38 influenza vaccination program, 88 Police (TASPOL), 45, 47 job evaluation, xii, 89 DEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXIND State Revenue office, 34 maternity leave, xii, 89 tax evasion, meetings, 8 XINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEXINDEX international cooperation, xi, xii, 58 outposted, vii, 38, 48 overview, 128-133 performance management, xii, 88 performance pay, 133 personal safety, 75 productivity gains, 90 recreation leave, 90 security, 77, 79 senior, 130, 131, 133 statistics, 129 training and development, 11, 26, 36, 38, 83, 84, 89, 90, 93, 132 workload, vii workplace efficiencies, vii see also contractors & consultants standard operating environment (SOE), 81, 82 Standards Australia, 54 State agencies law enforcement agencies, 34-35, 36, 38, 42 revenue authorities, 34-35, 47 Steering Committee on Proof of Identity see Proof of Identity Steering Committee (POISC) Structured Query Language (SQL), 36 structuring of financial transactions, 36-37, 42, 93 Summary Management Reports (SMRs), 34-35, 151 Suppression of the Financing of Terrorism Act 2002, vi, xi, 14, 21, 33, 50, 53-54, 57, 139 suspect transaction reports (SUSTRs), 18, 144 activity types, 36, 37 analytical work, 36 collection, 4 definition, 151 dissemination, 36 refusal to sign, 37 reporting, 82 statistics, 20, 46 use, 39, 42 statistics and trends, 36-37 tax file numbers, 51 tax fraud, 12 tax haven monitoring, 34, 39 TCCC see Transnational Crime Coordination Centre technological change, 21, 49, 54, 55 technology, vi, vii, 11, 32, 36, 38 telegraphic transfer fraud, 37 terrorism committees, 139-140 financing, vi, x-xii, 10, 21, 32-33, 39, 43, 5355, 58, 67, 68, 71, 73, 89 international cooperation, 50, 57-58, 61-62, 67, 68, 71,73 prescribed entities, 28, 32 security, 75 technical assistance, xii Terrorist Asset Freezing Working Group, 140 TES see TRAQ Thailand, 63-64 totalisator agency boards (TABs), 21, 51, 138, 151. see also gaming industry training cash dealers, 9, 17, 21-23, 26, 28 international, 62, 73 partner agencies, 38, 39, 48 staff, 11, 26, 36, 38, 83, 84, 89, 90, 93, 132 Transnational Crime Coordination Centre (TCCC), vii, xiii-xiv, 12, 33, 38 TRAQ (Transaction Reports Analysis and Query) enquiry system (TES) Alerts function, 34-35, 48 availability, 44 definition, 151 information technology, 82 online access, 31, 33-34, 84 searches, 31-32, 34-35, 48, 81 AUSTRAC Annual Report 2002-03 161 training, 11, 144 see also data warehouse travellers cheques, 37 Treasury, vii, 52, 68, 139 TTY phone, 91 typologies (definition), 151 workloads, vii Workplace Diversity Program (WDP), 87, 91 workstations, 88. see also desktop upgrades World Wide Web Consortium (W3C) standards, 91 U Ukraine, 67 unit trusts see cash management trusts United Kingdom (UK), 59, 63 United Nations (UN), 57. see also Charter of the United Nations…Regulations United States (USA), 59, 63 unusual financial activity, 12, 37 users of FTR information see partner agencies V value added information see analysis of FTR information value transfer systems, 21 Vanuatu, xii, 59, 62 Victoria AUSTRAC partner agency support, 38 Police (VICPOL), 38, 45, 47, 138 State Revenue Authority, 38 Victorian Council of Civil Liberties, 138 video conferencing, 8 visitors to AUSTRAC, 63-64, 73 W WDP (Workplace Diversity Program), 87, 91 web-based reporting system see EDDSWeb website, 28, 94 privacy, 75 security, 84 Western Australia Anti-Corruption Commission, 13 AUSTRAC partner agency support, 39 Joint Agency Coordination team, 139 Joint Analyst Group, 139 Police (WAPOL), 45, 47 Police Royal Commission, 13, 33 State Revenue Authority (SRAWA), 47 WGTF (Working Group on Terrorist Financing), 67 wide area network (WAN) internet browsing, 84 online access, 31 outsourcing, 81, 82, 83, 92 security, 84 women, employment of, 131 Women in Law Enforcement Strategy (WILES) Steering Group, 139 Working Group on Terrorist Financing (WGTF), 67 162 AUSTRAC Annual Report 2002-03 index Sydney office Level 12, Tower A Zenith Centre 821 Pacific Highway Chatswood NSW 2067 Postal PO Box 5516 West Chatswood NSW 1515 Website www.austrac.gov.au Telephone (02) 9950 0055 Online Annual Report www.austrac.gov.au/annualreport Fax (02) 9950 0054 ISSN ISBN 1321-1366 0-646-42777-6 AUSTRAC Annual Repor t 2 0 0 2 - 0 3 ng partnership honesty security privacy reporting Minister financin lications cash dealer Egmont achieving output co-ordination regulat terrorism inclusive commitment action results understanding partne community awareness Data identified insight money laundering white th TRAQ TES suspect reports regulatory liaison analysis monitoring mocracy whole technical assistance understanding partnership hon hostile support EDDSWeb Commonwealth partner applications cash ransactions compliance identification fraud overcoming terrorism inc Reports Act 1988 Financial Intelligence Units Outposting community l co-operation law enforcement revenue collection Commonwealth T dentification fraud inclusive commitment action results diversity de nister financing information international environment hostile suppo rdination regulatory liaison analysis monitoring transactions compl ng partnership honesty Financial Transaction Reports Act 1988 Fin dering white collar crime international co-operation law enforcement nitoring transactions compliance identification fraud inclusive commit ng partnership honesty security privacy reporting Minister financin lications cash dealer Egmont achieving output co-ordination regulat terrorism inclusive commitment action results understanding partne community awareness Data identified insight money laundering white AUSTRAC mission AUSTRAC’s missionregulatory is to make a valuedliaison contributionanalysis monitoring th TRAQ TES suspect reports towards a financial environment hostile to mocracy whole technical assistance understanding partnership hon money laundering, major crime hostile support EDDSWeb Commonwealthandpartner tax evasion. applications cash ransactions compliance identification fraud overcoming terrorism inc Reports Act 1988 Financial Intelligence Units Outposting community l co-operation law enforcement revenue collection Commonwealth T compliance identific technical assistanc
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