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Auditor-General Audit reports for 2012-13 No. 47 Performance audit AUSTRAC's administration of its financial intelligence function: Australian Transaction Reports and Analysis Centre (AUSTRAC)


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T h e A u d i t o r - G e n e r a l

Audit Report No.47 2012-13 Performance Audit

AUSTRAC’s Administration of its Financial Intelligence Function

Australian Transaction Reports and Analysis Centre (AUSTRAC)

A u s t r a l i a n N a t i o n a l A u d i t O f f i c e

 

ANAO Audit Report No.47 2012-13 AUSTRAC’s Administration of its Financial Intelligence Function

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© Commonwealth of Australia 2013 

ISSN 1036-7632 ISBN 0 642 81364 7 (Print)  ISBN 0 642 81365 5 (On‐line) 

Except for the content in this document supplied by third parties, the Australian National Audit Office logo, the Commonwealth Coat of Arms, and any material protected by a trade mark, this document is licensed by the

Australian National Audit Office for use under the terms of a

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Executive Director Corporate Management Branch Australian National Audit Office 19 National Circuit BARTON ACT 2600

Or via email: webmaster@anao.gov.au

 

     

 

ANAO Audit Report No.47 2012-13 AUSTRAC’s Administration of its Financial Intelligence Function

2

   

© Commonwealth of Australia 2013 

ISSN 1036-7632 ISBN 0 642 81364 7 (Print)  ISBN 0 642 81365 5 (On‐line) 

Except for the content in this document supplied by third parties, the Australian National Audit Office logo, the Commonwealth Coat of Arms, and any material protected by a trade mark, this document is licensed by the

Australian National Audit Office for use under the terms of a

Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 Australia licence. To view a copy of this licence, visit http://creativecommons.org/licenses/by-nc-nd/3.0/au/

You are free to copy and communicate the document in its current form for non-commercial purposes, as long as you attribute the document to the Australian National Audit Office and abide by the other licence terms. You may not alter or adapt the work in any way.

Permission to use material for which the copyright is owned by a third party must be sought from the relevant copyright owner. As far as practicable, such material will be clearly labelled.

For terms of use of the Commonwealth Coat of Arms, visit It’s an Honour at http://www.itsanhonour.gov.au/coat-arms/index.cfm.

Requests and inquiries concerning reproduction and rights should be addressed to:

Executive Director Corporate Management Branch Australian National Audit Office 19 National Circuit BARTON ACT 2600

Or via email: webmaster@anao.gov.au

 

     

 

ANAO Audit Report No.47 2012-13

AUSTRAC’s Administration of its Financial Intelligence Function

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Canberra ACT 18 June 2013

Dear Mr President Dear Madam Speaker

The Australian National Audit Office has undertaken an independent performance audit in the Australian Transaction Reports and Analysis Centre with the authority contained in the Auditor-General Act 1997. I present the report of this audit to the Parliament. The report is titled AUSTRAC’s Administration of its Financial Intelligence Function.

Following its presentation and receipt, the report will be placed on the Australian National Audit Office’s Homepage—http://www.anao.gov.au.

Yours sincerely

Ian McPhee Auditor-General

The Honourable the President of the Senate The Honourable the Speaker of the House of Representatives Parliament House Canberra ACT    

ANAO Audit Report No.47 2012-13 AUSTRAC’s Administration of its Financial Intelligence Function

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AUDITING FOR AUSTRALIA

The Auditor-General is head of the Australian National Audit Office (ANAO). The ANAO assists the Auditor-General to carry out his duties under the Auditor-General Act 1997 to undertake performance audits, financial statement audits and assurance reviews of Commonwealth public sector bodies and to provide independent reports and advice for the Parliament, the Australian Government and the community. The aim is to improve Commonwealth public sector administration and accountability.

For further information contact: The Publications Manager Australian National Audit Office GPO Box 707 Canberra ACT 2601

Telephone: (02) 6203 7505 Fax: (02) 6203 7519

Email: webmaster@anao.gov.au

ANAO audit reports and information about the ANAO are available at our internet address:

http://www.anao.gov.au

Audit Team Celine Roach Meegan Reinhard Tom Clarke

 

   

ANAO Audit Report No.47 2012-13

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Contents Abbreviations .................................................................................................................. 8 

Summary and Recommendations ............................................................................ 11 

Summary ...................................................................................................................... 12 

Introduction ............................................................................................................. 12 

Audit objective and criteria ...................................................................................... 16 

Overall conclusion ................................................................................................... 16 

Key findings by Chapter .......................................................................................... 19 

Summary of agency response ................................................................................ 24 

Recommendations ....................................................................................................... 26 

Audit Findings ............................................................................................................ 27 

1.  Background and Context ........................................................................................ 28 

Introduction ............................................................................................................. 28 

AUSTRAC and FIU’s expenses and staffing .......................................................... 31 

The Intelligence Branch .......................................................................................... 33 

Assessment of financial intelligence ....................................................................... 33 

Dissemination of financial intelligence .................................................................... 35 

IT database upgrade—Enhanced Analytical Capability .......................................... 36 

Audit Objective, Criteria and Scope ........................................................................ 36 

2.  Administrative Arrangements .................................................................................. 39 

Introduction ............................................................................................................. 39 

Management structure for financial intelligence ..................................................... 39 

Planning and risk management .............................................................................. 43 

Guidance and procedures ....................................................................................... 47 

Management of the AUSTRAC Senior Liaison Officers ......................................... 48 

Agreements with domestic partners and international counterparts ....................... 52  Conclusion .............................................................................................................. 57 

3.  Workload Management of Financial Intelligence Assessments ............................. 60  Introduction ............................................................................................................. 60 

Assessed and unassessed workload ...................................................................... 62 

Processing times ..................................................................................................... 71 

Strategic intelligence and data mining .................................................................... 75 

Quality Assurance ................................................................................................... 80 

Conclusion .............................................................................................................. 80 

4.  Feedback, Performance Measurement and Reporting ........................................... 83 

Introduction ............................................................................................................. 83 

Engagement with partner agencies ........................................................................ 83 

Collecting and reviewing feedback ......................................................................... 85 

Measuring and reporting performance against program deliverables and key performance indicators ...................................................................................... 91 

ANAO Audit Report No.47 2012-13 AUSTRAC’s Administration of its Financial Intelligence Function

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AUDITING FOR AUSTRALIA

The Auditor-General is head of the Australian National Audit Office (ANAO). The ANAO assists the Auditor-General to carry out his duties under the Auditor-General Act 1997 to undertake performance audits, financial statement audits and assurance reviews of Commonwealth public sector bodies and to provide independent reports and advice for the Parliament, the Australian Government and the community. The aim is to improve Commonwealth public sector administration and accountability.

For further information contact: The Publications Manager Australian National Audit Office GPO Box 707 Canberra ACT 2601

Telephone: (02) 6203 7505 Fax: (02) 6203 7519

Email: webmaster@anao.gov.au

ANAO audit reports and information about the ANAO are available at our internet address:

http://www.anao.gov.au

Audit Team Celine Roach Meegan Reinhard Tom Clarke

 

   

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Conclusion .............................................................................................................. 97 

Appendices ............................................................................................................... 101 

Appendix 1:  Agency Response ............................................................................ 102 

Appendix 2:  Transaction Report Types ................................................................ 105 

Appendix 3:  Domestic partner agencies ............................................................... 106 

Appendix 4:  International partner counterparts .................................................... 107 

Appendix 5:  Financial transaction reports, 2007-08 to 2011-12 (number) ......... 108  Index ........................................................................................................................... 109 

Series Titles ................................................................................................................ 111 

Current Better Practice Guides .................................................................................. 117 

Tables

Table 1.1 Structure of the report ......................................................................... 38 

Table 2.1 Intelligence Branch sections after the February 2012 restructure...... 40  Table 2.2 AUSTRAC’s Intelligence Oversight Committee.................................. 42 

Table 2.3 Profile of the AUSTRAC Senior Liaison Officers ................................ 50 

Table 3.1 International intelligence exchanges, 2011-12 .................................. 70 

Table 4.1 Arrangements employed by AUSTRAC to identify partner agency needs ..................................................................................... 84 

Table 4.2 Arrangements employed by AUSTRAC to gain feedback .................. 86  Table 4.3 ANAO analysis of AUSTRAC FIU Program Deliverables, 2009-10 to 2011-12 ........................................................................... 92 

Table 4.4 ANAO analysis of AUSTRAC FIU key performance indicators, 2009-10 to 2011-12 ........................................................................... 95 

Table A.1 Summaries of the report types AUSTRAC receives and analyses............................................................................................ 105 

Table A.2 AUSTRAC domestic partner agencies ............................................. 106 

Table A.3 AUSTRAC international exchange agreements, as of 18 March 2013 .................................................................................. 107 

 

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Conclusion .............................................................................................................. 97 

Appendices ............................................................................................................... 101 

Appendix 1:  Agency Response ............................................................................ 102 

Appendix 2:  Transaction Report Types ................................................................ 105 

Appendix 3:  Domestic partner agencies ............................................................... 106 

Appendix 4:  International partner counterparts .................................................... 107 

Appendix 5:  Financial transaction reports, 2007-08 to 2011-12 (number) ......... 108  Index ........................................................................................................................... 109 

Series Titles ................................................................................................................ 111 

Current Better Practice Guides .................................................................................. 117 

Tables

Table 1.1 Structure of the report ......................................................................... 38 

Table 2.1 Intelligence Branch sections after the February 2012 restructure...... 40  Table 2.2 AUSTRAC’s Intelligence Oversight Committee.................................. 42 

Table 2.3 Profile of the AUSTRAC Senior Liaison Officers ................................ 50 

Table 3.1 International intelligence exchanges, 2011-12 .................................. 70 

Table 4.1 Arrangements employed by AUSTRAC to identify partner agency needs ..................................................................................... 84 

Table 4.2 Arrangements employed by AUSTRAC to gain feedback .................. 86  Table 4.3 ANAO analysis of AUSTRAC FIU Program Deliverables, 2009-10 to 2011-12 ........................................................................... 92 

Table 4.4 ANAO analysis of AUSTRAC FIU key performance indicators, 2009-10 to 2011-12 ........................................................................... 95 

Table A.1 Summaries of the report types AUSTRAC receives and analyses............................................................................................ 105 

Table A.2 AUSTRAC domestic partner agencies ............................................. 106 

Table A.3 AUSTRAC international exchange agreements, as of 18 March 2013 .................................................................................. 107 

 

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Figures

Figure 1.1 Flow of information and intelligence through AUSTRAC ................... 30  Figure 1.2 International funds transfer instructions, 2007-08 to 2011-12 .......... 31  Figure 1.3 AUSTRAC and FIU expenses and average staffing, for the period 2007-08 to 2012-13 .............................................................. 32 

Figure 1.4 Number of partner agency registered TES users, and the logons and searches conducted each year, for the period 2007-12 ............. 34  Figure 2.1 AUSTRAC Executive Structure, effective October 2012 .................... 41  Figure 3.1 Key steps of the Intelligence Branch processing of financial

intelligence .......................................................................................... 61 

Figure 3.2 The number of TargIT hits: new, unassessed and assessed each month, July 2011 to February 2013 ........................................... 63 

Figure 3.3 SMR/SUSTRs received and the percentage processed within five working days, for each month, July 2011 to January 2013 ......... 72  Figure 3.4 Average time taken by an ASLO to complete new requests, 2011-12 (working days) ..................................................................... 73 

 

   

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Abbreviations

ACC  Australian Crime Commission 

AFP  Australian Federal Police 

AML/CTF  Anti‐Money Laundering and Counter‐Terrorism Financing 

AML/CTF Act  Anti‐Money Laundering and Counter‐Terrorism Financing Act  2006 

ASIO  Australian Security Intelligence Organisation 

ASLO  AUSTRAC Senior Liaison Officer 

ATO  Australian Taxation Office 

AUSTRAC  Australian Transaction Reports and Analysis Centre 

EAC  Enhanced Analytical Capability 

EDRMS  Electronic Document Records Management System 

ExCom  Executive Committee 

FATF  Financial Action Task Force 

FIU  Financial Intelligence Unit 

FTR  Financial Transaction Report 

FTR Act  Financial Transaction Reports Act 1988 

IFTIs   International Funds Transfer Instructions 

IOC  Intelligence Oversight Committee 

KPI  Key Performance Indicator 

MOU  Memorandum of Understanding 

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NTA  National Threat Assessment on Money Laundering 

PBS  Portfolio Budget Statements 

SMR/SUSTR  Suspicious Matter Report / Suspect Transaction Report 

SOP  Standard Operating Procedures 

TargIT  AUSTRAC’s automated monitoring system 

TES  TRAQ Enquiry System 

TRAQ  Transaction Reports Analysis and Query database 

 

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NTA  National Threat Assessment on Money Laundering 

PBS  Portfolio Budget Statements 

SMR/SUSTR  Suspicious Matter Report / Suspect Transaction Report 

SOP  Standard Operating Procedures 

TargIT  AUSTRAC’s automated monitoring system 

TES  TRAQ Enquiry System 

TRAQ  Transaction Reports Analysis and Query database 

 

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Summary and Recommendations

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Summary

Introduction 1. The Australian Transaction Reports and Analysis Centre (AUSTRAC) is  Australiaʹs  anti‐money  laundering  and  counter‐terrorism  financing  (AML/CTF) regulator and specialist financial intelligence unit (FIU). Through  these  two  functions,  the  agency  seeks  to  promote  an  environment  that  is  hostile to money laundering, the financing of terrorism, major crime and tax  evasion. In 2013-14, the budgeted expenses for each function are $29.6 million  and $31.5 million respectively.1 

2. AUSTRAC  was  established  in  1989  under  the  Financial  Transaction  Reports  Act  1988  (FTR  Act)2  as  a  statutory  authority  within  the  Attorney‐General’s  portfolio  and  its  role  was  significantly  expanded  by  the  Anti‐Money  Laundering  and  Counter‐Terrorism  Financing  Act  2006  (AML/CTF Act).3 

3. Through its regulatory role, AUSTRAC oversees compliance with the  requirements  of  the  FTR  Act  and  the  AML/CTF  Act  across  four  industry  sectors:  banks  and  other  lenders;  non‐bank  financial  service  providers;  gambling and bullion service providers; and money service businesses. A key  requirement  is  that  regulated  entities4  provide  AUSTRAC  with  specified  financial transaction reports (FTRs).5 FTRs are required for all cash transactions  of $10 000 or more, all international funds transfers, cross border movements  of physical currency ($10 000 or more, or foreign currency equivalent), and  bearer n

egotiable instruments (of any value) as well as suspicious activity by  clients. A cost recovery regime applies to AUSTRAC’s regulatory functions6  and  has  been  the  subject  of  comment  by  the  financial  services  industry.7 

                                                       1 Attorney-General’s Portfolio Budget Statements 2013-14, p. 250. 2

The agency was established as the Cash Transaction Reports Agency, and was changed to its present name in 1992. 3 Both Acts were extended and amended through the Combating the Financing of People Smuggling and Other Measures Act 2011. 4

‘Regulated entities’ is a term used by AUSTRAC to refer to both ‘reporting entities’ (as defined in section 5 of the AML/CTF Act) and ‘cash dealers’ (as defined in section 3 of the FTR Act), as entities may have obligations under both Acts. 5

The report types are summarised in Appendix 2. 6 The AUSTRAC regulatory cost recovery model was announced as part of the 2010 Budget. Three separate pieces of legislation were introduced and passed by the Parliament enabling cost recovery from the 2011-12 financial year:

AUSTRAC’s Supervisory Cost Recovery Levy Act 2011; AUSTRAC Supervisory Cost Recovery Levy (Collection) Act 2011; and AUSTRAC’s Supervisory Cost Recovery Levy (Consequential Amendments) Act 2011. 7 Australian Financial Markets Association Ltd. Annual Report 2011, p. 5.

Summary

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AUSTRAC  considers  however  that  reporting  entities  also  obtain  a  benefit  through being regulated.8  Complying with the requirements of the AML/CTF  Act reduces the risk that a reporting entity will be used for money laundering  or terrorism financing purposes. 

4. In its role as a specialist FIU, AUSTRAC collates and assesses the FTRs  provided  by  regulated  entities  and  disseminates  the  resulting  financial  intelligence to its 39 domestic partner agencies (outlined in Appendix 3) to  assist  them  in  their  investigations.  AUSTRAC’s  partner  agencies  include  Australian  Government  law  enforcement,  national  security,  border  security,  revenue, regulatory and human service agencies, as well as state and territory  law enforcement and revenue agencies.9 Arrangements with partner agencies  are  governed  by  Memoranda  of  Understanding  (MOU).  AUSTRAC’s  cost  recovery regime does not apply to the costs associated with the administration  of its functions as an FIU.10 

5. AUSTRAC also has relationships with international FIU counterparts.  As  a  member  of  the  Egmont  Group11,  AUSTRAC  exchanges  financial  intelligence information with 65 international counterparts, with whom it has  formal exchange agreements in place. 

6. AUSTRAC’s operating environment is dynamic, shaped by changes in  domestic  policies  and  international  standards,  industry  expectations,  the  introduction  of  new  products  and  technologies   and  the  emergence  of  new  criminal threats and methodologies. These changes have increased the number  of international funds transfer instructions, which has subsequently driven the  growth in the number of FTRs in AUSTRAC’s data holdings. From 2007-08 to  2011-12,  there  has  been  an  approximate  230  per  cent  increase  in  the  total  number  of  FTRs  provided  by  regulated  entities,  from  18  million  to   over 59 million reports.12 AUSTRAC retains FTRs for lengthy periods and as at  the end of February 2013, the agency held approximately 254 million FTRs. 

                                                       8 AUSTRAC, Cost Recovery Impact Statement (January 2012), for the reporting period 1 July 2011 to 30 June 2012. 9

AUSTRAC Annual Report 2011-12, p. 12. 10 ibid.

11 The Egmont Group was established in 1995 by a group of FIUs that met at the Egmont Arenberg Palace in Brussels, to set-up an informal group for international co-operation. Now known as the Egmont Group of FIUs, they meet regularly to find ways to cooperate in the areas of information exchange, training and the sharing of expertise. The Egmont Group

has a current membership of 131 FIUs. 12 Over this period, for example, the number of reported international funds transfer instructions grew from under

15 million to over 53 million.

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Summary

Introduction 1. The Australian Transaction Reports and Analysis Centre (AUSTRAC) is  Australiaʹs  anti‐money  laundering  and  counter‐terrorism  financing  (AML/CTF) regulator and specialist financial intelligence unit (FIU). Through  these  two  functions,  the  agency  seeks  to  promote  an  environment  that  is  hostile to money laundering, the financing of terrorism, major crime and tax  evasion. In 2013-14, the budgeted expenses for each function are $29.6 million  and $31.5 million respectively.1 

2. AUSTRAC  was  established  in  1989  under  the  Financial  Transaction  Reports  Act  1988  (FTR  Act)2  as  a  statutory  authority  within  the  Attorney‐General’s  portfolio  and  its  role  was  significantly  expanded  by  the  Anti‐Money  Laundering  and  Counter‐Terrorism  Financing  Act  2006  (AML/CTF Act).3 

3. Through its regulatory role, AUSTRAC oversees compliance with the  requirements  of  the  FTR  Act  and  the  AML/CTF  Act  across  four  industry  sectors:  banks  and  other  lenders;  non‐bank  financial  service  providers;  gambling and bullion service providers; and money service businesses. A key  requirement  is  that  regulated  entities4  provide  AUSTRAC  with  specified  financial transaction reports (FTRs).5 FTRs are required for all cash transactions  of $10 000 or more, all international funds transfers, cross border movements  of physical currency ($10 000 or more, or foreign cur rency equivalent), and  bearer negotiable instruments (of any value) as well as suspicious activity by  clients. A cost recovery regime applies to AUSTRAC’s regulatory functions6  and  has  been  the  subject  of  comment  by  the  financial  services  industry.7 

                                                       1 Attorney-General’s Portfolio Budget Statements 2013-14, p. 250. 2

The agency was established as the Cash Transaction Reports Agency, and was changed to its present name in 1992. 3 Both Acts were extended and amended through the Combating the Financing of People Smuggling and Other Measures Act 2011. 4

‘Regulated entities’ is a term used by AUSTRAC to refer to both ‘reporting entities’ (as defined in section 5 of the AML/CTF Act) and ‘cash dealers’ (as defined in section 3 of the FTR Act), as entities may have obligations under both Acts. 5

The report types are summarised in Appendix 2. 6 The AUSTRAC regulatory cost recovery model was announced as part of the 2010 Budget. Three separate pieces of legislation were introduced and passed by the Parliament enabling cost recovery from the 2011-12 financial year:

AUSTRAC’s Supervisory Cost Recovery Levy Act 2011; AUSTRAC Supervisory Cost Recovery Levy (Collection) Act 2011; and AUSTRAC’s Supervisory Cost Recovery Levy (Consequential Amendments) Act 2011. 7 Australian Financial Markets Association Ltd. Annual Report 2011, p. 5.

Summary

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AUSTRAC  considers  however  that  reporting  entities  also  obtain  a  benefit  through being regulated.8  Complying with the requirements of the AML/CTF  Act reduces the risk that a reporting entity will be used for money laundering  or terrorism financing purposes. 

4. In its role as a specialist FIU, AUSTRAC collates and assesses the FTRs  provided  by  regulated  entities  and  disseminates  the  resulting  financial  intelligence to its 39 domestic partner agencies (outlined in Appendix 3) to  assist  them  in  their  investigations.  AUSTRAC’s  partner  agencies  include  Australian  Government  law  enforcement,  national  security,  border  security,  revenue, regulatory and human service agencies, as well as state and territory  law enforcement and revenue agencies.9 Arrangements with partner agencies  are  governed  by  Memoranda  of  Understanding  (MOU).  AUSTRAC’s  cost  recovery regime does not apply to the costs associated with the administration  of its functions as an FIU.10 

5. AUSTRAC also has relationships with international FIU counterparts.  As  a  member  of  the  Egmont  Group11,  AUSTRAC  exchanges  financial  intelligence information with 65 international counterparts, with whom it has  formal exchange agreements in place. 

6. AUSTRAC’s operating environment is dynamic, shaped by changes in  domestic  policies  and  international  standards,  industry  expectations,  the  introduction  of  new  products  and  technologies   and  the  emergence  of  new  criminal threats and methodologies. These changes have increased the number  of international funds transfer instructions, which has subsequently driven the  growth in the number of FTRs in AUSTRAC’s data holdings. From 2007-08 to  2011-12,  there  has  been  an  approximate  230  per  cent  increase  in  the  total  number  of  FTRs  provided  by  regulated  entities,  from  18  million  to   over 59 million reports.12 AUSTRAC retains FTRs for lengthy periods and as at  the end of February 2013, the agency held approximately 254 million FTRs. 

                                                       8 AUSTRAC, Cost Recovery Impact Statement (January 2012), for the reporting period 1 July 2011 to 30 June 2012. 9

AUSTRAC Annual Report 2011-12, p. 12. 10 ibid.

11 The Egmont Group was established in 1995 by a group of FIUs that met at the Egmont Arenberg Palace in Brussels, to set-up an informal group for international co-operation. Now known as the Egmont Group of FIUs, they meet regularly to find ways to cooperate in the areas of information exchange, training and the sharing of expertise. The Egmont Group

has a current membership of 131 FIUs. 12 Over this period, for example, the number of reported international funds transfer instructions grew from under 15 million to over 53 million.

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7. In  October  2012,  AUSTRAC  announced  a  reduction  in  staffing  of   31 positions and the AUSTRAC CEO reviewed the Executive structure of the  agency  and  reorganised  the  roles  and  responsibilities  and  reporting  arrangements  for  some  executives.  AUSTRAC  is  now  divided  into   two Divisions: Operations and Corporate. The Intelligence Branch, which is  responsible  for  monitoring  and  analysing  FTR  data,  producing  intelligence  products, and working with both domestic partner agencies and international  counterpart FIUs, comes under the purview of the Operations Division. 

Process for assessing FTRs and disseminating financial intelligence

8. Nearly  all  FTRs  are  transmitted  electronically  into  AUSTRAC’s  Transaction  Reports  Analysis  and  Query  (TRAQ)  database  by  regulated  entities.  As  of  30 June 2012,  AUSTRAC  reported  that  3266  authorised  personnel of AUSTRAC’s domestic partner agencies had online access to the  TRAQ  database  through  the  TRAQ  Enquiry  System  (TES)13,  with  differing  levels of access to this raw data, depending on their operational needs. 

9. In  addition  to  providing  online  access  to  FTR  data,  AUSTRAC’s  Intelligence  Branch  also  analyses,  evaluates  and  disseminates  suspicious  matter  reports14  to  partner  agencies  and  produces  more  complex  financial  intelligence  reports.  These  reports  are  based  on  its  assessment  of  the  data  included in FTRs, and incorporate other information and analysis undertaken  by  AUSTRAC  o n  specific  targets  and  patterns  of  transactions.15  The  preparation  of  a  financial  intelligence  report  can  be  triggered  through  a  number of mechanisms. These include detections by AUSTRAC’s automated  monitoring system (TargIT)16 and specific requests from partner agencies that  may  relate  to  an  ongoing  investigation.  AUSTRAC  also  proactively  disseminates  financial  intelligence  that  it  considers  may  be  relevant  to  a  partner agency’s areas of interest, as well as information from other AUSTRAC  business units and international FIUs.17  

                                                       13 During 2011-12, authorised personnel logged on to TES on 183 741 occasions and conducted 1 996 116 searches. AUSTRAC Annual Report 2011-12, p. 60. 14

Suspicious matter reports were introduced in December 2008 and, for most entities, SMRs have replaced suspicious transaction reports (SUSTRs), which are submitted by entities regulated under the FTR Act. 15 ibid, p. 66.

16 TargIT is a rules based system that uses ‘clauses’ (financial profiles) to identify particular types of suspicious financial activity. A TargIT clause can be triggered by names, bank account details or other identifying fields.

17 ibid.

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7. In  October  2012,  AUSTRAC  announced  a  reduction  in  staffing  of   31 positions and the AUSTRAC CEO reviewed the Executive structure of the  agency  and  reorganised  the  roles  and  responsibilities  and  reporting  arrangements  for  some  executives.  AUSTRAC  is  now  divided  into   two Divisions: Operations and Corporate. The Intelligence Branch, which is  responsible  for  monitoring  and  analysing  FTR  data,  producing  intelligence  products, and working with both domestic partner agencies and international  counterpart FIUs, comes under the purview of the Operations Division. 

Process for assessing FTRs and disseminating financial intelligence

8. Nearly  all  FTRs  are  transmitted  electronically  into  AUSTRAC’s  Transaction  Reports  Analysis  and  Query  (TRAQ)  database  by  regulated  entities.  As  of  30 June 2012,  AUSTRAC  reported  that  3266  authorised  personnel of AUSTRAC’s domestic partner agencies had online access to the  TRAQ  database  through  the  TRAQ  Enquiry  System  (TES)13,  with  differing  levels of access to this raw data, depending on their operational needs. 

9. In  addition  to  providing  online  access  to  FTR  data,  AUSTRAC’s  Intelligence  Branch  also  analyses,  evaluates  and  disseminates  suspicious  matter  reports14  to  partner  agencies  and  produces  more  complex  financial  intelligence  reports.  These  reports  are  based  on  its  assessment  of  the  data  included in FTRs, and incorporate other information and analysis undertaken  by  AUSTRAC  o n  specific  targets  and  patterns  of  transactions.15  The  preparation  of  a  financial  intelligence  report  can  be  triggered  through  a  number of mechanisms. These include detections by AUSTRAC’s automated  monitoring system (TargIT)16 and specific requests from partner agencies that  may  relate  to  an  ongoing  investigation.  AUSTRAC  also  proactively  disseminates  financial  intelligence  that  it  considers  may  be  relevant  to  a  partner agency’s areas of interest, as well as information from other AUSTRAC  business units and international FIUs.17  

                                                       13 During 2011-12, authorised personnel logged on to TES on 183 741 occasions and conducted 1 996 116 searches. AUSTRAC Annual Report 2011-12, p. 60. 14

Suspicious matter reports were introduced in December 2008 and, for most entities, SMRs have replaced suspicious transaction reports (SUSTRs), which are submitted by entities regulated under the FTR Act. 15 ibid, p. 66.

16 TargIT is a rules based system that uses ‘clauses’ (financial profiles) to identify particular types of suspicious financial activity. A TargIT clause can be triggered by names, bank account details or other identifying fields.

17 ibid.

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10. On  the  basis  of  AUSTRAC  statistics,  the  number  of  financial  intelligence reports produced by AUSTRAC has remained stable in the past  five  years,  while  disseminations  have  modestly  increased.18  Since  2008-09,  AUSTRAC has, on average, received 43 191 Suspicious Matter Reports19, and  disseminated 54 113 of these reports annually. In each of the past five years,  AUSTRAC  has  also,  on  average,  produced  945  more  complex  individual  financial intelligence products and disseminated 1374 intelligence products to  both domestic partner agencies and international counterparts.20  

Reported impact of disseminated intelligence

11. The  impact  of  AUSTRAC’s  financial  intelligence  on  partner  agency  operations  can  be  difficult  to  quantify,  particularly  for  law  enforcement  agencies where investigations can take many years, and intelligence is gained  from many sources. However, the Australian Taxation Office (ATO) and the  Department of Human Services (DHS)‐Centrelink report on the use and value  of  AUSTRAC’s  financial  intelligence  to  their  agencies’  own  operations  and  investigations. For example, in 2011-12 it has been reported that AUSTRAC’s  financial intelligence had been used by the ATO in 3745 cases, resulting in an  additional  $252 million  in  revenue  from  tax  assessments.  Similarly,   DHS‐Centrelink  reported  using  AUSTRAC  intelligence  in  973  cases  and  achieving total annualised savings of $3.1 millio n.21  

IT database upgrade—Enhanced Analytical Capability

12. On  1  July  2010,  AUSTRAC  embarked  on  a  change  program  to  its  intelligence systems. A total of $24 million has been provided to AUSTRAC  over four years, including capital funding of $17.5 million for the Enhanced  Analytical Capability project. This new capability is intended to provide more  effective monitoring and detection of changes in financial activity,  enabling  more targeted and timely analysis to be produced.22 

                                                       18 Disseminations reported in any given year may include financial intelligence reports that were produced in previous years. 19

Suspicious Matter Reports are reports submitted by a reporting entity when it forms a reasonable suspicion that a financial transaction relates to an offence, tax evasion or the proceeds of crime. 20 AUSTRAC usually disseminates more reports than it produces each year, as individual reports may be disseminated to

more than one partner agency. 21 In 2011-12, AUSTRAC reported that another 305 significant investigations were reportedly undertaken by AUSTRAC’s other law enforcement, human services and revenue partner agencies. 22

Budget Paper 2 2010-11, p. 315.

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Audit objective and criteria 13. The objective of the audit was to assess the effectiveness of AUSTRAC’s  arrangements for processing financial intelligence, to assist domestic partner  agencies and international counterparts in their operations and investigations.  The audit assessed whether AUSTRAC had: 

 established  effective  administrative  arrangements  to  support  the  financial intelligence function;  

 established  appropriate  arrangements  to  analyse  and  disseminate  financial  intelligence,  and  obtain  assurance  as  to  the  appropriate  handling of financial intelligence by partner agencies and international  counterparts; and 

 developed and applied sound processes for monitoring and reviewing  the feedback provided by partner agencies as to the use and value of  the intelligence disseminated. 

14. The audit focused on the arrangements around the assessment of FTRs  and dissemination of financial intelligence reports by AUSTRAC’s Intelligence  Branch. Other activities relating to the financial intelligence function, such as  AUSTRAC’s  International  Technical  Assistance  and  Training  team,  and  a  detailed  examination  of  the  FIU’s  current  IT  systems  and  databases  were  outside the scope of this audit. 

Overall conclusion 15. AUSTRAC plays an important part in the fight against organised crime  and  in  protecting  the  integrity  of  Australia’s  financial  environment.  Its  financial intelligence is intended to contribute to the operations of its partner  agencies in combating money laundering, the financing of terrorism and other  forms of serious and organised crimes. These crimes can range from tax and  welfare fraud, drug related crimes, to threats to national security, including  people smuggling. 

16. AUSTRAC’s financial intelligence is highly valued by partner agencies  for its contribution to their operations and management of risks.23 Through its 

                                                       23 Feedback from seven of AUSTRAC’s key domestic partner agencies regarding AUSTRAC’s relationship management, financial intelligence products and support was overwhelmingly positive. The seven partner agencies consulted by the

ANAO were: the Australian Crime Commission; Australian Federal Police; Australian Taxation Office; Australian Security Intelligence Organisation; Customs and Border Protection; Department of Human Services-Centrelink and the Victoria Police.

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Audit objective and criteria 13. The objective of the audit was to assess the effectiveness of AUSTRAC’s  arrangements for processing financial intelligence, to assist domestic partner  agencies and international counterparts in their operations and investigations.  The audit assessed whether AUSTRAC had: 

 established  effective  administrative  arrangements  to  support  the  financial intelligence function;  

 established  appropriate  arrangements  to  analyse  and  disseminate  financial  intelligence,  and  obtain  assurance  as  to  the  appropriate  handling of financial intelligence by partner agencies and international  counterparts; and 

 developed and applied sound processes for monitoring and reviewing  the feedback provided by partner agencies as to the use and value of  the intelligence disseminated. 

14. The audit focused on the arrangements around the assessment of FTRs  and dissemination of financial intelligence reports by AUSTRAC’s Intelligence  Branch. Other activities relating to the financial intelligence function, such as  AUSTRAC’s  International  Technical  Assistance  and  Training  team,  and  a  detailed  examination  of  the  FIU’s  current  IT  systems  and  databases  were  outside the scope of this audit. 

Overall conclusion 15. AUSTRAC plays an important part in the fight against organised crime  and  in  protecting  the  integrity  of  Australia’s  financial  environment.  Its  financial intelligence is intended to contribute to the operations of its partner  agencies in combating money laundering, the  financing of terrorism and other  forms of serious and organised crimes. These crimes can range from tax and  welfare fraud, drug related crimes, to threats to national security, including  people smuggling. 

16. AUSTRAC’s financial intelligence is highly valued by partner agencies  for its contribution to their operations and management of risks.23 Through its 

                                                       23 Feedback from seven of AUSTRAC’s key domestic partner agencies regarding AUSTRAC’s relationship management, financial intelligence products and support was overwhelmingly positive. The seven partner agencies consulted by the

ANAO were: the Australian Crime Commission; Australian Federal Police; Australian Taxation Office; Australian Security Intelligence Organisation; Customs and Border Protection; Department of Human Services-Centrelink and the Victoria Police.

Summary

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systems, AUSTRAC provides partner agencies with near real‐time access to  financial  transactions  data,  and  is  uniquely  positioned  to  prepare  financial  intelligence based on its analysis of this data. 

17. While  AUSTRAC’s  financial  intelligence  is  highly  valued  both  domestically  and  internationally,  its  effectiveness  in  terms  of  countering  money laundering and the financing of terrorism and other forms of serious  and  organised  crime  is  not  readily  quantifiable.  Data  on  the  impact  of  AUSTRAC’s  financial  intelligence  on  the  operations  of  law  enforcement  agencies  is  limited.  However,  the  ATO  and  DHS-Centrelink  have  reported  using AUSTRAC’s financial intelligence in more than 2700 cases in 2011-12,  resulting in savings of more than $255 million. 

18. AUSTRAC has well established and sound arrangements for processing  and  disseminating  its  financial  intelligence.  AUSTRAC  regularly  seeks  the  advice of its partner agencies as to their priorities for financial intelligence, and  is  continually  refining  its  approach  to  analysing  and  disseminating  its  intelligence to meet their requirements. The agency has mature arrangements  to  process  assessments,  and  disseminate  financial  intelligence  reports  to  domestic  partner  agencies  and  international  counterparts.  A  sound  quality  assurance  mechanism  is  also  in  place  for  all  financial  intelligence  reports.  However,  there  is  room  to  strengthen  the  administration  o f  the  financial  intelligence  function.  In  particular,  improvements  could  be  made  to:  the  arrangements  for  monitoring  access  to,  and  further  dissemination  of,  AUSTRAC’s data by partner agency personnel; workload management; and  performance  reporting.  In  addition,  attention  needs  to  be  given  to  the   long-term  contingency  management  of  the  agency’s  IT  infrastructure  (data  centre).  In  this  regard,  the  Government  announced  as  part  of  the  2013-14  Budget  that  it  will  invest  $16.1  million  over  four  years  to  establish  a  new  off‐site data centre. 

19. AUSTRAC has in place MOUs with each of its partner agencies, and  exchange  agreements  with  international  counterparts  which  clearly  set  out  respective  obligations  for  all  parties  in  respect  of  the  exchange  of  financial  intelligence.  Appropriately,  the  MOUs  set  out  arrangements  in  respect  to  AUSTRAC  and  partner  agencies’  obligations  in  safeguarding  AUSTRAC’s  financial intelligence. At present, assurance as to partner agency compliance in  this  regard  is  provided  by  way  of  a  letter  from  the  partner  agency  to  AUSTRAC. These arrangements would be enhanced by AUSTRAC exercising  its  right  to  periodically  review  access  to,  and  further  dissemination  of,  AUSTRAC’s data by partner agency personnel. 

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20. With over 59 million FTRs being provided annually, AUSTRAC is faced  with the challenge of maintaining assessment throughput and prioritising key  assessment types. A workload queue (backlog) developed for two key financial  intelligence  assessment  types,  and  agreed  processing  times  were  not  being  met.24  Management  reporting  did  not  provide  adequate  visibility  as  to  the  extent,  and  reasons  for  the  development  of  the  workload  queues  or  for  performance against agreed processing times. AUSTRAC has advised that its  Enhanced Analytics Capability Project is intended to improve administrative  arrangements including internal reporting. 

21. AUSTRAC has arrangements to monitor and review feedback provided  by  partner  agencies  about  the  intelligence  it  disseminates.  However,  these  arrangements are not yielding useful management information because of the  low  rates  of  feedback  being  returned  by  partner  agencies.  Reviewing  its  approach to gathering structured feedback from partner agencies would assist  AUSTRAC to better report the use and value of its financial intelligence. 

22. In  addition,  AUSTRAC’s  approach  to  measuring  and  reporting  its  performance  provides  only  limited  insight  into  whether  it  is  meeting  the  objectives of the FIU and the impact of the program overall. Reviewing the  performance indicators and setting appropriate targets would provide greater  assurance and transpar ency to its public reporting. 

23. The ANAO has made three recommendations that are directed towards  improving AUSTRAC’s arrangements for processing financial intelligence to  assist  domestic  partner  agencies  and  international  counterparts  in  their  operations and investigations. The recommendations relate to: strengthening  administrative  arrangements  in  relation  to  periodically  reviewing  access  to,  and  dissemination  of,  AUSTRAC  financial  intelligence;  improving  management of the assessment of financial intelligence; and providing greater  assurance and transparency to AUSTRAC’s public reporting of performance  against program deliverables and key performance indicators. 

                                                       24 For example, the TargIT workload queue (backlog) grew from 130 unassessed detections from the monitoring system in February 2011 and reached its peak in August 2011 when 16 461detections were yet to be assessed. Similarly, in

2011-12, there were 9214 SMRs/SUSTRs unassessed.

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20. With over 59 million FTRs being provided annually, AUSTRAC is faced  with the challenge of maintaining assessment throughput and prioritising key  assessment types. A workload queue (backlog) developed for two key financial  intelligence  assessment  types,  and  agreed  processing  times  were  not  being  met.24  Management  reporting  did  not  provide  adequate  visibility  as  to  the  extent,  and  reasons  for  the  development  of  the  workload  queues  or  for  performance against agreed processing times. AUSTRAC has advised that its  Enhanced Analytics Capability Project is intended to improve administrative  arrangements including internal reporting. 

21. AUSTRAC has arrangements to monitor and review feedback provided  by  partner  agencies  about  the  intelligence  it  disseminates.  However,  these  arrangements are not yielding useful management information because of the  low  rates  of  feedback  being  returned  by  partner  agencies.  Reviewing  its  approach to gathering structured feedback from partner agencies would assist  AUSTRAC to better report the use and value of its financial intelligence. 

22. In  addition,  AUSTRAC’s  approach  to  measuring  and  reporting  its  performance  provides  only  limited  insight  into  whether  it  is  meeting  the  objectives of the FIU and the impact of the program overall. Reviewing the  performance indicators and setting appropriate targets would provide greater  assurance and transpar ency to its public reporting. 

23. The ANAO has made three recommendations that are directed towards  improving AUSTRAC’s arrangements for processing financial intelligence to  assist  domestic  partner  agencies  and  international  counterparts  in  their  operations and investigations. The recommendations relate to: strengthening  administrative  arrangements  in  relation  to  periodically  reviewing  access  to,  and  dissemination  of,  AUSTRAC  financial  intelligence;  improving  management of the assessment of financial intelligence; and providing greater  assurance and transparency to AUSTRAC’s public reporting of performance  against program deliverables and key performance indicators. 

                                                       24 For example, the TargIT workload queue (backlog) grew from 130 unassessed detections from the monitoring system in February 2011 and reached its peak in August 2011 when 16 461detections were yet to be assessed. Similarly, in

2011-12, there were 9214 SMRs/SUSTRs unassessed.

Summary

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Key findings by Chapter

Administrative Arrangements (Chapter 2)

24. The  roles,  responsibilities  and  accountability  arrangements  within  AUSTRAC’s Intelligence Branch are well defined. The ANAO’s review of the  Intelligence  Branch  business  plans  and  risk  reporting  shows  that,  with   one exception, risks indicated in the plans align with the agency’s identified  corporate risks. AUSTRAC’s corporate risk plans appropriately identify a key  agency‐wide risk relating to the impact of a potential failure of the agency’s IT  infrastructure  (data  centre).  However,  this  risk  is  not  apparent  in  the  Intelligence Branch’s business and risk planning and reporting framework. 

25. Given the dependency of the Branch on the IT systems infrastructure to  deliver financial intelligence to its partner agencies, AUSTRAC’s arrangements  to  manage  this  risk  should  be  appropriately  reflected  in  its  operational  planning  framework.  Other  risks  relating  to  changes  in  resourcing  or  the  priorities of partner agencies that could affect the acceptance of AUSTRAC’s  financial intelligence disseminations were also not included in the Intelligence  Branch risk planning. 

26. The  ANAO  examined  AUSTRAC’s  MOUs  with  seven  of  its  key  domestic  partner  agencies.  The  MOUs  provide  a  broad  and  generally  comprehensive framework for the exchange of financial intelligence between  AUSTRAC  and  its  partners.  Breaches  have,  however,  occurred  in  the  past  where partner agencies  have detected inappropriate use of AUSTRAC data by  their employees. To date, AUSTRAC has not exercised the right to view the  required audit log of AUSTRAC information that has been disseminated to  other  agencies,  or  requested  an  audit  of  online  access  to  AUSTRAC  information by partner agency officials. AUSTRAC advised that the MOUs are  in the process of being reviewed to maintain their currency. In light of the  current  review,  there  would  be  benefit  in  the  accountability  clause  which  addresses  the  arrangements  to  periodically  review  access  to,  and  further  dissemination of, AUSTRAC’s data by partner agency personnel, being subject  to closer scrutiny, given the sensitivity of the information. 

27. Similarly,  the  accountability  clauses  in  AUSTRAC’s  international  exchange agreements are based on a standard format and seek to provide a  framework to protect financial information disclosed to overseas counterparts.  The 10 international exchange agreements that the ANAO examined did not  contain a specific clause requiring the reporting of breaches to the agreement. 

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AUSTRAC  advised  that  the  exchange  agreement  template  now  includes  specific clauses that relate to the reporting of known unauthorised disclosures  and consequences. 

Processing of assessments and disseminations (Chapter 3)

28. In 2011-12, AUSTRAC produced 847 financial intelligence reports on  matters  of  interest  to  partner  agencies  and  disseminated  1513  financial  intelligence  products  to  them  for  further  investigation.25  These  reports  incorporate  AUSTRAC  information  and  include  analysis  undertaken  by  the  agency on specific targets and patterns of transactions, money laundering and  terrorism  financing  typologies,  and  strategic  assessments.26  The  ANAO  examined  the  workload  management  and  quality  assurance  mechanisms  in  place for the six types of financial intelligence assessments that include: TargIT  (AUSTRAC’s automated monitoring system) assessments; suspicious matters  and  suspect  transaction  reports  (SMRs/SUSTRs);  international  exchange  of  information; partner agency requests; strategic intelligence reports; and data  mining.  The  ANAO  observed  that  there  are  appropriate  arrangements  to  process  assessments,  and  disseminate  these  reports.  In  addition,  a  sound  quality assurance mechanism is adopted for all financial intelligence reports.  Various delegations are in place to review reports prior to dissemination for  accuracy  and  consistency.  However,  workload  management  could  be  improved. 

29. The increase in FTRs obtained from reporting entities, as well as the  level of in‐depth analysis and risk assessment t hat needs to be applied across  these  reports  has  affected  workloads  for  both  TargIT  assessments  and  SMRs/SUSTRs.  Although  there  is  continuous  risk  assessment  of  FTRs,  and  precedence is given to reports that are of a higher priority, backlogs increased,  particularly for SMRs/SUSTRs. AUSTRAC did not have the capacity to assess  all reports that related to specified key risks (business rules).27 

30. Agreed processing times were not met for TargIT and SMR/SUSTRs  assessments in 2011-12. Internal monitoring and reporting to management in  relation to the financial intelligence workload have not been consistent. For 

                                                       25 AUSTRAC Annual Report 2011-12, p. 66. 26

ibid.

27 AUSTRAC advised that there are ongoing refinements and measures employed by the agency and partner agencies to mitigate the risk of not assessing high value SMRs and SUSTRs. Designated partner agencies also have access to SMRs/SUSTRs.

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AUSTRAC  advised  that  the  exchange  agreement  template  now  includes  specific clauses that relate to the reporting of known unauthorised disclosures  and consequences. 

Processing of assessments and disseminations (Chapter 3)

28. In 2011-12, AUSTRAC produced 847 financial intelligence reports on  matters  of  interest  to  partner  agencies  and  disseminated  1513  financial  intelligence  products  to  them  for  further  investigation.25  These  reports  incorporate  AUSTRAC  information  and  include  analysis  undertaken  by  the  agency on specific targets and patterns of transactions, money laundering and  terrorism  financing  typologies,  and  strategic  assessments.26  The  ANAO  examined  the  workload  management  and  quality  assurance  mechanisms  in  place for the six types of financial intelligence assessments that include: TargIT  (AUSTRAC’s automated monitoring system) assessments; suspicious matters  and  suspect  transaction  reports  (SMRs/SUSTRs);  international  exchange  of  information; partner agency requests; strategic intelligence reports; and data  mining.  The  ANAO  observed  that  there  are  appropriate  arrangements  to  process  assessments,  and  disseminate  these  reports.  In  addition,  a  sound  quality assurance mechanism is adopted for all financial intelligence reports.  Various delegations are in place to review reports prior to dissemination for  accuracy  and  consistency.  However,  workload  management  could  be  improved. 

29. The increase in FTRs obtained from reporting entities, as well as the  level of in‐depth analysis and risk assessment t hat needs to be applied across  these  reports  has  affected  workloads  for  both  TargIT  assessments  and  SMRs/SUSTRs.  Although  there  is  continuous  risk  assessment  of  FTRs,  and  precedence is given to reports that are of a higher priority, backlogs increased,  particularly for SMRs/SUSTRs. AUSTRAC did not have the capacity to assess  all reports that related to specified key risks (business rules).27 

30. Agreed processing times were not met for TargIT and SMR/SUSTRs  assessments in 2011-12. Internal monitoring and reporting to management in  relation to the financial intelligence workload have not been consistent. For 

                                                       25 AUSTRAC Annual Report 2011-12, p. 66. 26

ibid.

27 AUSTRAC advised that there are ongoing refinements and measures employed by the agency and partner agencies to mitigate the risk of not assessing high value SMRs and SUSTRs. Designated partner agencies also have access to SMRs/SUSTRs.

Summary

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example,  the  TargIT  workload  is  monitored  by  the  TargIT  team.  However,  there  is  no  consistent,  structured  reporting  to  management  of  the  actual  workload, unassessed hits on hand (including the significance or priority), and  its effect, if any, to operations. As with the workload queues, internal reporting  to management on processing times could be improved. 

31. There has been varied management reporting on the processing times  for  the  assessment  and  dissemination  of  relevant  financial  intelligence.  Processing times are defined for requested and proactive TargIT assessments,  with requested disseminations to be processed within 10-15 working days, and  proactive  disseminations  within  10-30  working  days.  However,  there  is  no  documented,  consistent  internal  reporting  as  to  how  long  the  TargIT  assessments  are  taking  to  process  against  these  timeframes.  Management  reporting  focuses  on  the  number  of  actual  disseminations,  presented  as  a  percentage  of  the  planned  disseminations.  By contrast,  performance  against  the processing target for SMRs/SUSTRs was reported to management but the  reasons why the processing target are not being met were not documented.28  To  assist  management  in  making  informed  decisions  about  resourcing  or  reconsidering  the  agreed  timeframes—it  would  be  beneficial  to  formally  document the reasons why processing targets are not being met. 

32. A USTRAC advised that the Enhanced Analytics Capability Project is  intended  to  enhance  the  database  interface,  refine  business  rules  (for  SMRs/SUSTRs)  or  clauses  (for  TargIT  assessments)  and  improve  other  administrative arrangements including internal reporting. 

Feedback, Performance Measurement and Reporting (Chapter 4)

33. Feedback from partner agencies is important in gauging the impact of  AUSTRAC’s  financial  intelligence,  particularly  with  regards  to  the  use  and  value  of  the  intelligence  AUSTRAC  disseminates.  AUSTRAC  employs  a  number of methodologies for engaging with partner agencies to identify their  needs and requirements. Arrangements are in place to obtain feedback from  agencies about the specific contribution of AUSTRAC’s financial intelligence to  their  operations  and  investigations.  These  arrangements  included  acknowledgement receipts and feedback forms on individual disseminations 

                                                       28 From June 2011 to January 2013, only 57.7 per cent of SMRs/SUSTRs, on average, were processed within five working days, against a target of 90 per cent. However, management reporting did not include the reasons for failure to

meet this target.

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and more general quarterly feedback reports on the usefulness of AUSTRAC  information.  For  the  period  2011-12,  the  return  rate  of  acknowledgement  receipts and feedback forms was 16 per cent, with only 242 acknowledgement  receipts  and  feedback  forms  returned  by  domestic  partner  agencies  for  1513 intelligence  disseminations.  Some  AUSTRAC  officers  and  partner  agencies  advised  that  they  saw  little  value  in  the  forms,  and  AUSTRAC’s  analysis of those forms that were returned was poor. 

34. For the period 2011-12, the ANAO analysis showed that a total of only  eight quarterly feedback reports were provided to AUSTRAC by its 39 partner  agencies. While all eight reports provided positive feedback, the majority (five)  were of an operational nature, detailing the specific outcomes of individual  assessments. Only three reports, all from the ATO29, provided the more general  statistical  and  qualitative  feedback  expected  from  the  quarterly  reporting  process. AUSTRAC advised the ANAO that, from July 2012, other feedback  mechanisms such as a new domestic request form, a single feedback form, and  the ‘reason for access’ function replaced the quarterly feedback reports.30  

35.  The ANAO consulted with seven of AUSTRAC’s key domestic partner  agencies31  regarding  AUSTRAC’s  relationship  management,  financial  intelligence  products  and  support.  The  responses  t hat  the  ANAO  received  were overwhelmingly positive. AUSTRAC is viewed as a key support to its  partner agencies, and is able to give near real‐time information or updates on  national  security  issues,  and  provide  intelligence  products  that  are  unique.  Partner agencies advised that, internationally, AUSTRAC is a highly regarded  FIU. 

36. Only  three  of  the  seven  partner  agencies  that  the  ANAO  consulted  (ATO, DHS-Centrelink and Customs and Border Protection) have sought to  quantify the use and value of AUSTRAC’s financial intelligence to their own 

                                                       29 In 2011-12, the ATO provided three of their own Austracking newsletters to AUSTRAC, in place of the quarterly feedback reports. These newsletters detail the use and value of AUSTRAC financial intelligence to the ATO. 30

AUSTRAC advised that the main purpose of the new ‘domestic request form’ is to provide a structured template for partner agencies to make a formal request for AUSTRAC analysis, and to provide all the information that AUSTRAC requires to conduct such analysis (including a general overview of the case, such as the crime type) and the agency point of contact details. The ‘single feedback form’ is used to gather information on the quality of the written intelligence products produced by AUSTRAC analysts. It is also a mechanism by which AUSTRAC receives information on partner agency investigations that have been supported by AUSTRAC, including any charges or convictions obtained. The ‘reason for access’ function is intended to provide a better ability to monitor and audit searches conducted by users of the AUSTRAC database. 31

The seven partner agencies were: the Australian Crime Commission; Australian Federal Police; Australian Taxation Office; Australian Security Intelligence Organisation; Customs and Border Protection; Department of Human Services- Centrelink and the Victoria Police.

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and more general quarterly feedback reports on the usefulness of AUSTRAC  information.  For  the  period  2011-12,  the  return  rate  of  acknowledgement  receipts and feedback forms was 16 per cent, with only 242 acknowledgement  receipts  and  feedback  forms  returned  by  domestic  partner  agencies  for  1513 intelligence  disseminations.  Some  AUSTRAC  officers  and  partner  agencies  advised  that  they  saw  little  value  in  the  forms,  and  AUSTRAC’s  analysis of those forms that were returned was poor. 

34. For the period 2011-12, the ANAO analysis showed that a total of only  eight quarterly feedback reports were provided to AUSTRAC by its 39 partner  agencies. While all eight reports provided positive feedback, the majority (five)  were of an operational nature, detailing the specific outcomes of individual  assessments. Only three reports, all from the ATO29, provided the more general  statistical  and  qualitative  feedback  expected  from  the  quarterly  reporting  process. AUSTRAC advised the ANAO that, from July 2012, other feedback  mechanisms such as a new domestic request form, a single feedback form, and  the ‘reason for access’ function replaced the quarterly feedback reports.30  

35.  The ANAO consulted with seven of AUSTRAC’s key domestic partner  agencies31  regarding  AUSTRAC’s  relationship  management,  financial  intelligence  products  and  support.  The  responses  t hat  the  ANAO  received  were overwhelmingly positive. AUSTRAC is viewed as a key support to its  partner agencies, and is able to give near real‐time information or updates on  national  security  issues,  and  provide  intelligence  products  that  are  unique.  Partner agencies advised that, internationally, AUSTRAC is a highly regarded  FIU. 

36. Only  three  of  the  seven  partner  agencies  that  the  ANAO  consulted  (ATO, DHS-Centrelink and Customs and Border Protection) have sought to  quantify the use and value of AUSTRAC’s financial intelligence to their own 

                                                       29 In 2011-12, the ATO provided three of their own Austracking newsletters to AUSTRAC, in place of the quarterly feedback reports. These newsletters detail the use and value of AUSTRAC financial intelligence to the ATO. 30

AUSTRAC advised that the main purpose of the new ‘domestic request form’ is to provide a structured template for partner agencies to make a formal request for AUSTRAC analysis, and to provide all the information that AUSTRAC requires to conduct such analysis (including a general overview of the case, such as the crime type) and the agency point of contact details. The ‘single feedback form’ is used to gather information on the quality of the written intelligence products produced by AUSTRAC analysts. It is also a mechanism by which AUSTRAC receives information on partner agency investigations that have been supported by AUSTRAC, including any charges or convictions obtained. The ‘reason for access’ function is intended to provide a better ability to monitor and audit searches conducted by users of the AUSTRAC database. 31

The seven partner agencies were: the Australian Crime Commission; Australian Federal Police; Australian Taxation Office; Australian Security Intelligence Organisation; Customs and Border Protection; Department of Human Services- Centrelink and the Victoria Police.

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agency’s  operations  or  investigations.  The  ATO  and  DHS-Centrelink  have  reported using AUSTRAC’s financial intelligence in more than 2700 cases in  2011-12, resulting in savings of more than $255 million. In 2012, Customs and  Border  Protection  started  quantifying  the  number  of  cases  (or  agency  investigations)  that  are  linked  to  AUSTRAC  financial  intelligence.  Other  agencies,  particularly  the  law  enforcement  partner  agencies,  such  as  the  Australian  Federal  Police,  Victoria  Police  and  the  Australian  Crime  Commission  consider  that  they  could  not  immediately  ascertain  if  an  AUSTRAC financial intelligence report or assessment contributed to, or was  the catalyst for, an investigation resulting in a prosecution, as it could take  months, if not years, for these matters to be resolved.32  

37. AUSTRAC’s  program  deliverables  and  key  performance  indicators  (KPIs), as set out in its Portfolio Budget Statements (PBS), have changed over  time  to  reflect  the  priorities,  and  the  challenges,  of  the  FIU.  The  ANAO  assessed  AUSTRAC’s  reporting  of  its  performance  in  the  Annual  Report  against the FIU deliverables and KPIs. 

38. AUSTRAC’s program deliverables adequately capture the FIU’s major  activities. AUSTRAC has also developed three KPIs that are intended to enable  the  measurement  and  assessment  of  the  achievement  of  FIU’s  program  objective  in  support  of  its  respective  o utcomes.  Collectively,  while  the   three KPIs were relevant to the FIU program objective, they only addressed  two of the four specified activities.33 Consequently, the activities  relating to  ‘identifying emerging money laundering and terrorism financing trends’ and  ‘providing partner agencies access to, and support in the use of, AUSTRAC  databases’ are not addressed in the KPI framework. 

39. In  addition,  the  performance  targets  for  the  FIU’s  KPIs  were  not  included in AUSTRAC’s PBS, and only disclosed when reporting performance  in its Annual Reports. It is generally accepted better practice that targets be  included in the PBS to provide transparency and accountability, particularly to  assist  in  Parliamentary  scrutiny.  AUSTRAC  advised  that  it  is  planning  to  review the FIU’s KPIs. In conducting this review, it would also be appropriate 

                                                       32 AUSTRAC advised that while law enforcement agencies find it difficult to quantify operational matters which involve AUSTRAC information, they have provided examples for publication, in the yearly Typologies and Case Studies on how

AUSTRAC information ‘fed into successful operations’. 33 The activities that were covered by the KPIs were: ’identifying, monitoring and assessing financial transaction reporting to support partner agency and AUSTRAC regulatory priorities and interests’ and contributing to international efforts

directed at AML/CTF, including the international exchange of information with counterpart financial intelligence units and capacity building assistance for financial intelligence units in Africa, the Asia-Pacific region and elsewhere’.

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for AUSTRAC to focus its KPIs on the impact of its FIU program by aligning  the  indicators  with  the  program  objective,  and  setting  appropriate  performance targets. 

Summary of agency response 40. The full proposed report was provided to AUSTRAC for comment. The  agency’s full response to the audit is at Appendix 1. Its summary response is as  follows: 

AUSTRAC  welcomes  the  ANAO  audit  report  on  the  administration  of  the  agency’s  financial  intelligence  function.  The  report  notes  the  unique  contribution which AUSTRAC’s financial intelligence makes to our domestic  and  international  partners  in  combating  money  laundering,  terrorism  financing and other serious crime. Further, the report notes that the agency has  mature  arrangements  to  process  assessments  and  to  disseminate  financial  intelligence  reports  to  domestic  partner  agencies  and  international  counterparts, and that there is a sound quality assurance mechanism in place  for its financial intelligence reports. 

Having said this, the report also finds that there is room for AUSTRAC to  strengthen  the  administration  of  its  financial  intelligence  function.  The  recommended actions contained in the report provide valuable guidance on  further  measures  to  enhance  the  agency’s  governance  and  operational  procedures. AUSTRAC agrees with the report’s recommendations and notes  the following: 

 In  the  2013‐14  budget,  the  Gove rnment  announced  funding  of  $16.1 million  over  four  years  for  AUSTRAC  to  establish  a  new  off‐site  primary  data  centre.  Commissioning  of  the  new  data  centre  will  occur  during the 2013‐14 financial year and it is expected to be fully operational  by 30 June 2014. The new data centre will greatly enhance the security and  resilience of AUSTRAC’s critical data assets. 

 AUSTRAC’s  work  program  for  2013‐14  includes  the  review  and  re‐negotiation  of  MOUs  with  its  domestic  partner  agencies.  Updated  MOUs, combined with the introduction of enhanced audit and security  measures under the agency’s new Enhanced Analytical Capability (EAC)  system,  will  significantly  improve  the  overall  framework  for  protecting  AUSTRAC  information  and  monitoring  the  use  of  that  intelligence  by  partner agency personnel. 

 AUSTRAC  is  to  conduct  a  review  of  selected  partner  agencies’  records  relating to the further dissemination of AUSTRAC information by those  agencies. 

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for AUSTRAC to focus its KPIs on the impact of its FIU program by aligning  the  indicators  with  the  program  objective,  and  setting  appropriate  performance targets. 

Summary of agency response 40. The full proposed report was provided to AUSTRAC for comment. The  agency’s full response to the audit is at Appendix 1. Its summary response is as  follows: 

AUSTRAC  welcomes  the  ANAO  audit  report  on  the  administration  of  the  agency’s  financial  intelligence  function.  The  report  notes  the  unique  contribution which AUSTRAC’s financial intelligence makes to our domestic  and  international  partners  in  combating  money  laundering,  terrorism  financing and other serious crime. Further, the report notes that the agency has  mature  arrangements  to  process  assessments  and  to  disseminate  financial  intelligence  reports  to  domestic  partner  agencies  and  international  counterparts, and that there is a sound quality assurance mechanism in place  for its financial intelligence reports. 

Having said this, the report also finds that there is room for AUSTRAC to  strengthen  the  administration  of  its  financial  intelligence  function.  The  recommended actions contained in the report provide valuable guidance on  further  measures  to  enhance  the  agency’s  governance  and  operational  procedures. AUSTRAC agrees with the report’s recommendations and notes  the following: 

 In  the  2013‐14  budget,  the  Gove rnment  announced  funding  of  $16.1 million  over  four  years  for  AUSTRAC  to  establish  a  new  off‐site  primary  data  centre.  Commissioning  of  the  new  data  centre  will  occur  during the 2013‐14 financial year and it is expected to be fully operational  by 30 June 2014. The new data centre will greatly enhance the security and  resilience of AUSTRAC’s critical data assets. 

 AUSTRAC’s  work  program  for  2013‐14  includes  the  review  and  re‐negotiation  of  MOUs  with  its  domestic  partner  agencies.  Updated  MOUs, combined with the introduction of enhanced audit and security  measures under the agency’s new Enhanced Analytical Capability (EAC)  system,  will  significantly  improve  the  overall  framework  for  protecting  AUSTRAC  information  and  monitoring  the  use  of  that  intelligence  by  partner agency personnel. 

 AUSTRAC  is  to  conduct  a  review  of  selected  partner  agencies’  records  relating to the further dissemination of AUSTRAC information by those  agencies. 

Summary

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 The new EAC system will provide more sophisticated tools for managing  and  analysing  the  large  data  volumes  which  AUSTRAC  receives.  Limitations  in  AUSTRAC’s  existing  ‘legacy’  analytical  systems  have  constrained  its  ability  to  process  growing  data  volumes  and  meet  increasing demands for more sophisticated intelligence products. EAC will  also give AUSTRAC the capability to establish new performance targets  for monitoring, and reporting on, the processing of data and generation of  intelligence assessments. 

 To  reflect  the  recent  bringing  together  in  one  business  division  of  the  agency’s intelligence, compliance and supervision functions, AUSTRAC is  to review its standard operating procedures (SOPs). This review will take  into consideration observations regarding these SOPs made by the ANAO  in its report. 

 AUSTRAC will conduct a client survey to gather partner agency feedback  on the use, value, quality and relevance of its financial intelligence. 

 AUSTRAC  is  currently  undertaking  a  review  of  the  key  performance  indicators and targets for both its intelligence and regulatory functions. A  particular focus of this review will be the development of performance  indicators which reflect the intelligence contribution AUSTRAC provides  to its domestic and international partners. 

   

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Recommendations Recommendation No.1

Paragraph 2.55 

To  gain  assurance  that  obligations  to  safeguard  AUSTRAC’s  financial  intelligence  are  being  met,  the  ANAO  recommends  that  AUSTRAC  reviews  the  accountability  clauses  in  its  agreements  with  partner  agencies,  and  takes  steps  to  exercise  its  rights  to  periodically review access to, and further disseminations  of, AUSTRAC data by partner agency personnel. 

AUSTRAC response: Agreed 

Recommendation No. 2

Paragraph 3.60

To improve the assessment of financial intelligence, the  ANAO recommends that AUSTRAC: 

 establishes,  and  monitors  performance  against,  processing  time  targets  for  requested  financial  intelligence reports; and 

 monitors and reports on processing backlogs for  key financial intelligence assessment types, with  a  particular  focus  on  drawing  management  attention  to  delays  in  assessing  higher  priority  financial transaction reports. 

AUSTRAC response: Agreed 

Recommendation No.3

Paragraph 4.41

To provide greater assurance and transparency in public  reporting, the ANAO recommends that AUSTRAC: 

 reviews  its  approach  to  gathering  structured  feedback  from  partner  agencies  and  considers  alternatives for measuring the use, value, quality  and  relevance  of  AUSTRAC’s  financial  intelligence; and 

 develops appropriate key performance indicators  and targets to measure whether the objectives of  the  FIU  program  are  being  met  and  regularly  report against these. 

AUSTRAC response: Agreed 

 

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Recommendations Recommendation No.1

Paragraph 2.55 

To  gain  assurance  that  obligations  to  safeguard  AUSTRAC’s  financial  intelligence  are  being  met,  the  ANAO  recommends  that  AUSTRAC  reviews  the  accountability  clauses  in  its  agreements  with  partner  agencies,  and  takes  steps  to  exercise  its  rights  to  periodically review access to, and further disseminations  of, AUSTRAC data by partner agency personnel. 

AUSTRAC response: Agreed 

Recommendation No. 2

Paragraph 3.60

To improve the assessment of financial intelligence, the  ANAO recommends that AUSTRAC: 

 establishes,  and  monitors  performance  against,  processing  time  targets  for  requested  financial  intelligence reports; and 

 monitors and reports on processing backlogs for  key financial intelligence assessment types, with  a  particular  focus  on  drawing  management  attention  to  delays  in  assessing  higher  priority  financial transaction reports. 

AUSTRAC response: Agreed 

Recommendation No.3

Paragraph 4.41

To provide greater assurance and transparency in public  reporting, the ANAO recommends that AUSTRAC: 

 reviews  its  approach  to  gathering  structured  feedback  from  partner  agencies  and  considers  alternatives for measuring the use, value, quality  and  relevance  of  AUSTRAC’s  financial  intelligence; and 

 develops appropriate key performance indicators  and targets to measure whether the objectives of  the  FIU  program  are  being  met  and  regularly  report against these. 

AUSTRAC response: Agreed 

 

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Audit Findings

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1. Background and Context

This chapter provides an overview of the Australian Transaction Reports and Analysis  Centre  and  its  role  in  processing  financial  intelligence.  It  also  outlines  the  audit  objective, criteria and scope. 

Introduction 1.1 The Australian Transaction Reports and Analysis Centre (AUSTRAC) is  Australiaʹs  anti‐money  laundering  and  counter‐terrorism  financing  (AML/CTF) regulator and specialist financial intelligence unit (FIU). Through  these  two  functions,  the  agency  seeks  to  promote  an  environment  that  is  hostile to money laundering, the financing of terrorism, major crime and tax  evasion. In 2012-13, the budgeted expenses for each function are $30.3 million  and $24.6 million respectively.34 

1.2 AUSTRAC  was  established  in  1989  under  the  Financial  Transaction  Reports  Act  1988  (FTR Act)  as  a  statutory  authority  within  the  Attorney‐General’s portfolio35 and its role was significantly expanded by the  Anti‐Money  Laundering  and  Counter‐Terrorism  Financing  Act  2006  (AML/CTF Act). 36  

1.3 Through its regulatory role, AUSTRAC oversees compliance with the  requirements  of  the  FTR  Act  and  the  AML/CTF  Act  across  four  industry  sectors:  banks  and  other  lenders;  non‐bank  financial  service  providers;  gambling and bullion service providers; and money service businesses. A key  requirement  is  that  regulated  entities37  provide  AUSTRAC  with  specified  financial  transaction  reports  (FTRs).38  FTRs  are  requi red  for  all  cash  transactions of $10 000 or more, all international funds transfers, cross border  movements  of  physical  currency  ($10  000  or  more,  or  foreign  currency  equivalent)  and  bearer  negotiable  instruments  (of  any  value),  as  well  as  suspicious activity by clients. A cost recovery regime applies to AUSTRAC’s 

                                                       34 Attorney-General’s Portfolio Budget Statements 2012-13, p. 252. 35

The agency was established as the Cash Transaction Reports Agency, and was changed to its present name in 1992. 36 Both Acts were extended and amended through the Combating the Financing of People Smuggling and Other Measures Act 2011. 37

‘Regulated entities’ is a term used by AUSTRAC refer to both ‘reporting entities’ (as defined in section 5 of the AML/CTF Act) and ‘cash dealers’ (as defined in section 3 of the FTR Act), as entities may have obligations under both Acts. 38

The report types are summarised in Appendix 2.

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1. Background and Context

This chapter provides an overview of the Australian Transaction Reports and Analysis  Centre  and  its  role  in  processing  financial  intelligence.  It  also  outlines  the  audit  objective, criteria and scope. 

Introduction 1.1 The Australian Transaction Reports and Analysis Centre (AUSTRAC) is  Australiaʹs  anti‐money  laundering  and  counter‐terrorism  financing  (AML/CTF) regulator and specialist financial intelligence unit (FIU). Through  these  two  functions,  the  agency  seeks  to  promote  an  environment  that  is  hostile to money laundering, the financing of terrorism, major crime and tax  evasion. In 2012-13, the budgeted expenses for each function are $30.3 million  and $24.6 million respectively.34 

1.2 AUSTRAC  was  established  in  1989  under  the  Financial  Transaction  Reports  Act  1988  (FTR Act)  as  a  statutory  authority  within  the  Attorney‐General’s portfolio35 and its role was significantly expanded by the  Anti‐Money  Laundering  and  Counter‐Terrorism  Financing  Act  2006  (AML/CTF Act). 36  

1.3 Through its regulatory role, AUSTRAC oversees compliance with the  requirements  of  the  FTR  Act  and  the  AML/CTF  Act  across  four  industry  sectors:  banks  and  other  lenders;  non‐bank  financial  service  providers;  gambling and bullion service providers; and money service businesses. A key  requirement  is  that  regulated  entities37  provide  AUSTRAC  with  specified  financial  transaction  r eports  (FTRs).38  FTRs  are  required  for  all  cash  transactions of $10 000 or more, all international funds transfers, cross border  movements  of  physical  currency  ($10  000  or  more,  or  foreign  currency  equivalent)  and  bearer  negotiable  instruments  (of  any  value),  as  well  as  suspicious activity by clients. A cost recovery regime applies to AUSTRAC’s 

                                                       34 Attorney-General’s Portfolio Budget Statements 2012-13, p. 252. 35

The agency was established as the Cash Transaction Reports Agency, and was changed to its present name in 1992. 36 Both Acts were extended and amended through the Combating the Financing of People Smuggling and Other Measures Act 2011. 37

‘Regulated entities’ is a term used by AUSTRAC refer to both ‘reporting entities’ (as defined in section 5 of the AML/CTF Act) and ‘cash dealers’ (as defined in section 3 of the FTR Act), as entities may have obligations under both Acts. 38

The report types are summarised in Appendix 2.

Background and Context

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regulatory functions39 and has been the subject of comment by the financial  services industry.40 AUSTRAC considers however that reporting entities also  obtain a benefit through being regulated. 41 Complying with the requirements  of the AML/CTF Act reduces the risk that a reporting entity will be used for  money laundering or terrorism financing purposes. 

1.4 In  its  role  as  a  FIU,  AUSTRAC  collects  and  analyses  financial  information  provided  by  regulated  entities  through  FTRs.  Financial  intelligence  is  disseminated  by  AUSTRAC  to  Australian  Government  law  enforcement,  national  security,  border  security,  revenue,  regulatory  and  human services agencies as well as state and territory law enforcement and  revenue  agencies  (AUSTRAC’s  partner  agencies42)  and  international  counterparts43.  Arrangements  with  partner  agencies  are  governed  by  Memoranda of Understanding (MOU). AUSTRAC’s cost recovery regime does  not apply to the costs associated with the administration of its functions as an  FIU.44 Figure 1.1 illustrates the flow of information and intelligence through  AUSTRAC. 

                                                       39 The AUSTRAC regulatory cost recovery model was announced as part of the 2010 Budget.

Three separate pieces of legislation were introduced and passed by the Parliament enabling cost recovery from the 2011-12 financial year: AUSTRAC’s Supervisory Cost Recovery Levy Act 2011; AUSTRAC Supervisory Cost Recovery Levy (Collection) Act 2011; and AUSTRAC’s Supervisory Cost Recovery Levy (Consequential Amendments) Act 2011. 40 Australian Financial Markets Association Ltd. Annual Report 2011, p. 5. 41 AUSTRAC, Cost Recovery Impact Statement (January 2012), for the reporting period 1 July 2011 to 30 June 2012. 42 See Appendix 3 for a complete list of AUSTRAC’s 39 domestic partner agencies. 43 See Appendix 4 for a complete list of the 65 international FIUs with which AUSTRAC has 66 exchange agreements (the Canadian FIU FINTRAC has a second exchange agreement concerning the sharing of regulatory information). 44 ibid.

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Figure 1.1

Flow of information and intelligence through AUSTRAC

 

Source: ANAO analysis of AUSTRAC Intelligence Strategy 2012-14, p. 2. 

Financial Transaction Reports

1.5 As  of  February  2013,  there  were  12  953  businesses  enrolled  with  AUSTRAC as reporting entities, of which 4925 entries were remittance service  providers.  The  increase  in  FTRs  by  reporting  entities  has  substantially  increased  the  size  of  AUSTRAC’s  data  holdings,  which  at  the  end  of  February 2013 held approximately 254 million transaction reports.45 As can be  seen  in  Figure  1.2,  the  growth  in  international  funds  transfer  instructions  (IFTIs)46 has driven the subsequent growth in the annual total number of FTRs, 

                                                       45 In March 2013, AUSTRAC advised that the 254 million transaction reports held in the AUSTRAC database comprised: 220 million IFTI reports; 32 million threshold transaction reports; 388 000 SMR/SUSTRs; and the remaining transactions

relate to cross-border movements of physical currency and bearer negotiable instruments, threshold transaction reports concerning gambling, and solicitor reports. AUSTRAC further advised that a new retention policy was being developed and when finalised would have SMR/SUSTRs retained for 17 years rather than the current eight years. 46 Under the AML/CTF Act, if a reporting entity sends or receives an instruction to or from a foreign country, to transfer money or property, that entity must submit an IFTI report. IFTI reports were also previously required to be submitted under the FTR Act.

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Figure 1.1

Flow of information and intelligence through AUSTRAC

 

Source: ANAO analysis of AUSTRAC Intelligence Strategy 2012-14, p. 2. 

Financial Transaction Reports

1.5 As  of  February  2013,  there  were  12  953  businesses  enrolled  with  AUSTRAC as reporting entities, of which 4925 entries were remittance service  providers.  The  increase  in  FTRs  by  reporting  entities  has  substantially  increased  the  size  of  AUSTRAC’s  data  holdings,  which  at  the  end  of  February 2013 held approximately 254 million transaction reports.45 As can be  seen  in  Figure  1.2,  the  growth  in  international  funds  transfer  instructions  (IFTIs)46 has driven the subsequent growth in the annual total number of FTRs, 

                                                       45 In March 2013, AUSTRAC advised that the 254 million transaction reports held in the AUSTRAC database comprised: 220 million IFTI reports; 32 million threshold transaction reports; 388 000 SMR/SUSTRs; and the remaining transactions

relate to cross-border movements of physical currency and bearer negotiable instruments, threshold transaction reports concerning gambling, and solicitor reports. AUSTRAC further advised that a new retention policy was being developed and when finalised would have SMR/SUSTRs retained for 17 years rather than the current eight years. 46 Under the AML/CTF Act, if a reporting entity sends or receives an instruction to or from a foreign country, to transfer money or property, that entity must submit an IFTI report. IFTI reports were also previously required to be submitted under the FTR Act.

Background and Context

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to  over  59 million in  2011-12.47  AUSTRAC  reported  that  for  2011-12,  an  average of 226 980 reports were received each business day.48 

Figure 1.2

International funds transfer instructions, 2007-08 to 2011-12

 

Source: AUSTRAC Annual Report 2011-12, pp.32-33.

AUSTRAC and FIU’s expenses and staffing 1.6 Since  2006,  changes  in  AUSTRAC’s  expenses  and  staffing  have  primarily  been  driven  by  the  implementation  of  the  expanded  powers  and  regulatory coverage under the new AML/CTF Act (see Figure 1.3).49 AUSTRAC  advised that a concurrent slight increase in staffing numbers in the FIU from  2009-10 reflected the increased emphasis on technical assistance and training  efforts in the Asia, Pacific and Africa regions. Overall, AUSTRAC’s reported  expenses for the FIU ($36.33 million in 2011-12) have remained stable since  2009-10, comprising 55 per cent of the agency’s total expenses ($65.88 million  in 2011-12). 

                                                       47 The number of specific financial transaction reports received by AUSTRAC from 2007-08 to 2011-12 is set out in Appendix 5. 48

AUSTRAC Annual Report 2011-12, p. 31. 49 This included a largely new industry supervision function that resulted to recruiting new staff.

0

10

20

30

40

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2007-08 2008-09 2009-10 2010-11 2011-12

International funds transfer instructions Total Financial Transaction Reports

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Figure 1.3

AUSTRAC and FIU expenses and average staffing, for the period 2007-08 to 2012-13

 

Sources: AUSTRAC Annual Reports and Attorney-General’s Portfolio Budget Statements 2007-08 to 2012-13.

Effect of the efficiency dividend increase

1.7 AUSTRAC,  like  most  agencies  in  the  Australian  Public  Service,  has  been required to absorb reductions in funding for its operations, known as the  ‘efficiency dividend’.50 To manage within its forward budget, in October 2012,  AUSTRAC announced that 31 staffing positions across the agency would be  made  redundant,  with  11 of  these  positions  coming  from  AUSTRAC’s  Intelligence Branch.51 

                                                       50 Commencing in the 1987-88 financial year, the efficiency dividend has been defined as an ‘annual reduction in funding for the overall running costs of an agency’. The efficiency dividend is applied before agencies’ appropriations are

subjected to indexation (the mechanism by which agencies’ appropriations are adjusted each year by wage cost indices). The efficiency dividend was 1.50 per cent in 2011-12, and due to an additional single-year impost of 2.50 per cent, the dividend was 4.00 per cent in 2012-13, reducing to 1.25 per cent in 2013-14. 51 AUSTRAC advised the ANAO in March 2013 that a revised figure of 13 of the 31 redundant positions were from the Intelligence Branch, including one position from the Technical Assistance & Training Team (a team which was outside the scope of this audit).

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AUSTRAC Expenses FIU Expenses

AUSTRAC Staff numbers Intelligence Branch Staff Numbers

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Figure 1.3

AUSTRAC and FIU expenses and average staffing, for the period 2007-08 to 2012-13

 

Sources: AUSTRAC Annual Reports and Attorney-General’s Portfolio Budget Statements 2007-08 to 2012-13.

Effect of the efficiency dividend increase

1.7 AUSTRAC,  like  most  agencies  in  the  Australian  Public  Service,  has  been required to absorb reductions in funding for its operations, known as the  ‘efficiency dividend’.50 To manage within its forward budget, in October 2012,  AUSTRAC announced that 31 staffing positions across the agency would be  made  redundant,  with  11 of  these  positions  coming  from  AUSTRAC’s  Intelligence Branch.51 

                                                       50 Commencing in the 1987-88 financial year, the efficiency dividend has been defined as an ‘annual reduction in funding for the overall running costs of an agency’. The efficiency dividend is applied before agencies’ appropriations are

subjected to indexation (the mechanism by which agencies’ appropriations are adjusted each year by wage cost indices). The efficiency dividend was 1.50 per cent in 2011-12, and due to an additional single-year impost of 2.50 per cent, the dividend was 4.00 per cent in 2012-13, reducing to 1.25 per cent in 2013-14. 51 AUSTRAC advised the ANAO in March 2013 that a revised figure of 13 of the 31 redundant positions were from the Intelligence Branch, including one position from the Technical Assistance & Training Team (a team which was outside the scope of this audit).

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AUSTRAC Staff numbers Intelligence Branch Staff Numbers

Expenses ($millions)

Background and Context

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The Intelligence Branch 1.8 AUSTRAC is Australia’s FIU, which has been defined as: 

a  central,  national  agency  responsible  for  receiving  (and  as  permitted,  requesting),  analysing  and  disseminating  to  the  competent  authorities,  disclosures of financial information: 

(i) concerning  suspected  proceeds  of  crime  and  potential  financing  of  terrorism; or 

(ii) required  by  national  legislation  or  regulation,  in  order  to  counter  money laundering and terrorism financing.52 

1.9 The  activities  of  the  FIU  are  performed  by  several  branches  within  AUSTRAC. The Intelligence Branch forms the core of the FIU. The branch is  responsible  for  monitoring  and  analysing  financial  transaction  reports  data,  producing  intelligence  products  and  working  with  both  domestic  partner  agencies  and  international  counterpart  FIUs.  The  branch  also  manages  the  administration  of  access  to  AUSTRAC  data  holdings  by  partner  agencies  through its on‐line enquiry system and provides training to them in its use. In  addition,  the  branch  produces  strategic  and  operational  intelligence  reports  independently or in concert with others, using a broader set of information  beyond  the  transaction  reports  captured  by  AUSTRAC.53  Other  parts  of  AUSTRAC  that  support  the  Intelligence  Branch’s  work  include  the  Supervisory Operations and Compliance branches.54 

Assessment of financial intelligence 1.10 Nearly  all  FTRs  are  transmitted  electronically  into  AUSTRAC’s  Transaction  Reports  Analysis  and  Query  (TR AQ)  database  by  reporting  entities.55 The financial intelligence assessments provided to partner agencies  by AUSTRAC may be initiated from a number of sources, including:  

 an  irregular  financial  transaction  detected  in  the  TRAQ  database  by  AUSTRAC’s automated monitoring system (TargIT); 

                                                       52 [accessed on 19 March 2013]. 53

This information may include feedback that AUSTRAC partner agencies provide in relation to both operational outcomes from the use of AUSTRAC information or themes and trends related to the financial aspects of crime and terrorism financing. 54

In addition, other branches support the Intelligence Branch’s work through the provision of information technology and legal services. 55 AUSTRAC advised the ANAO in March 2013 that 99 per cent of FTRs are submitted electronically.

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 high‐level  trends  of  financial  flows  detected  by  the  agency’s  data  mining teams;  

 analysis  of  suspicious  matter  reports  by  the  Suspicious  Reports  Analysis team; or 

 a request from a partner agency for analysis on a specified entity of  interest. 

Partner agencies’ access to AUSTRAC data

1.11 A key element of the financial intelligence model in Australia is the  direct  access  to  AUSTRAC  data  by  authorised  staff  in  partner  agencies.  Authorised partner agency personnel may have online access to AUSTRAC’s  financial intelligence within the TRAQ database through the TRAQ Enquiry  System  (TES).  This  allows  operational  analysts,  investigators  and  other  authorised  officers  in  partner  agencies  to  tailor  searches  of  AUSTRAC  data  relevant  to  their  intelligence  priorities  and  operational  needs.  It  also  frees  AUSTRAC intelligence analysts. 

1.12 The number of partner agency registered TES users, and the logons and  searches conducted each year, from 2007 to 2012 is shown in Figure 1.4 below. 

Figure 1.4

Number of partner agency registered TES users, and the logons and searches conducted each year, for the period 2007-12

 

Source: ANAO analysis of AUSTRAC Annual Reports 2007-08 to 2011-12.

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 high‐level  trends  of  financial  flows  detected  by  the  agency’s  data  mining teams;  

 analysis  of  suspicious  matter  reports  by  the  Suspicious  Reports  Analysis team; or 

 a request from a partner agency for analysis on a specified entity of  interest. 

Partner agencies’ access to AUSTRAC data

1.11 A key element of the financial intelligence model in Australia is the  direct  access  to  AUSTRAC  data  by  authorised  staff  in  partner  agencies.  Authorised partner agency personnel may have online access to AUSTRAC’s  financial intelligence within the TRAQ database through the TRAQ Enquiry  System  (TES).  This  allows  operational  analysts,  investigators  and  other  authorised  officers  in  partner  agencies  to  tailor  searches  of  AUSTRAC  data  relevant  to  their  intelligence  priorities  and  operational  needs.  It  also  frees  AUSTRAC intelligence analysts. 

1.12 The number of partner agency registered TES users, and the logons and  searches conducted each year, from 2007 to 2012 is shown in Figure 1.4 below. 

Figure 1.4

Number of partner agency registered TES users, and the logons and searches conducted each year, for the period 2007-12

 

Source: ANAO analysis of AUSTRAC Annual Reports 2007-08 to 2011-12.

0

700

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Background and Context

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Dissemination of financial intelligence 1.13 AUSTRAC  disseminates  the  information  it  collects  and  analyses  to  various national, state and territory law enforcement agencies and, national  security,  social  justice,  revenue  and  regulatory  partner  agencies  when  requested. AUSTRAC also pro‐actively disseminates financial intelligence that  it considers may be of interest to partner agencies. 

1.14 In addition, AUSTRAC Senior Liaison Officers (ASLOs) are outposted  to partner agency offices.56 ASLOs work with partner agency intelligence and  investigative  personnel  on  a  wide  range  of  criminal,  national  security  and  natural justice matters.57 ASLOs are responsible for providing training, liaison  and analytical support to partner agencies. This includes placing alerts on the  TES database and undertaking complex data searching and analysis on behalf  of partner agency personnel.  

1.15 AUSTRAC is also a member of the Egmont Group58, and disseminates  financial  intelligence  to  international  partners,  with  formal  exchange  agreements in place with 65 international counterpart FIUs.  

Reported impact of disseminated intelligence

1.16 The  impact  of  AUSTRAC’s  financial  intelligence  on  partner  agency  investigations  and  operations  can be  difficult  to  assess,  particularly  for  law  enforcement  agencies  where  investigations  can  take  many  years,  and  intelligence is gained from many sources. However, the Australian Taxation  Office  reported  in  2011-12  that  AUSTRAC’s  financial  intelligence  had  been  used in 3 745 cases resulting in an additional $252 million in revenue from tax  assessments.  For  the  same  period,  the  Department  of  Human  Services   (DHS)-Centrelink  reported  using  AUSTRAC  intelligence  in  973  cases  and  achieving total annualised savings of $3.1 million; and another 305 significant  investigations  were  reportedly  undertaken  by  AUSTRAC’s  other  law  enforcement, human services and revenue partner agencies.59 

                                                       56 At the time of audit fieldwork there were 22 ASLO positions. In March 2013 AUSTRAC advised that the number of ASLOs had been reduced to 19 positions. 57

The ASLO network is in addition to AUSTRAC personnel seconded to other Government agencies (such as the data mining analyst seconded to the Australian Taxation Office (ATO) to assist the Project Wickenby taskforce). 58 The Egmont Group is an FIU network established in 1995 by a group of FIUs that met at the Egmont Arenberg Palace

in Brussels, and decided to set-up an informal group for the stimulation of international co-operation. Now known as the Egmont Group of Financial Intelligence Units, these FIUs meet regularly to find ways to cooperate, especially in the areas of information exchange, training and the sharing of expertise. The Group has a current membership of 131 FIUs. 59

AUSTRAC Annual Report 2011-12, p. 58.

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IT database upgrade—Enhanced Analytical Capability 1.17 On 1 July 2010, AUSTRAC embarked on the largest change program to  its intelligence systems since the late 1990s. A total of $24 million has been  provided  to  AUSTRAC  over  four years,  including  capital  funding  of  $17.5 million, to provide more effective monitoring and detection of changes in  financial activity, enabling more targeted and timely analysis to be produced.60  

1.18 The  better  integration  of  AUSTRAC  data  and  information  from  domestic  partner  agencies  and  international  counterparts  is  expected  to  facilitate  the  earlier  identification  of  sophisticated  criminal  networks  and  terrorism  financiers  and  their  methodologies,  and  provide  more  timely  intelligence  to  support  partner  agencies’  operational  needs.  The  ability  to  follow the money trail in a timely way is critical to detection, investigation and  disruption of planned criminal and terrorist activity.61 AUSTRAC intends to  roll out functionality both internally and externally in 2013-14. 

Audit Objective, Criteria and Scope 1.19 The objective of the audit was to assess the effectiveness of AUSTRAC’s  arrangements for processing financial intelligence, to assist domestic partner  agencies and international counterparts in their operations and investigations.  The audit assessed whether AUSTRAC had: 

 established  effective  administrative  arrangements  to  support  the  financial intelligence function; 

 established  appropriate  arrangements  to  analyse  and  disseminate  financial  intelligen ce,  and  obtain  assurance  as  to  the  appropriate  handling of financial intelligence by partner agencies and international  counterparts; and  

 developed and applied sound processes for monitoring and reviewing  the feedback provided by partner agencies as to the use and value of  the intelligence disseminated.  

1.20 The  audit  focused  on  the  arrangements  for  assessing  FTRs  and  the  dissemination  of  financial  intelligence  reports  by  AUSTRAC’s  Intelligence  Branch. Other activities relating to the financial intelligence function, such as 

                                                       60 Budget Paper 2 2010-11, p. 315. 61

Attorney-General Portfolio Budget Statement 2012-13, p. 250.

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IT database upgrade—Enhanced Analytical Capability 1.17 On 1 July 2010, AUSTRAC embarked on the largest change program to  its intelligence systems since the late 1990s. A total of $24 million has been  provided  to  AUSTRAC  over  four years,  including  capital  funding  of  $17.5 million, to provide more effective monitoring and detection of changes in  financial activity, enabling more targeted and timely analysis to be produced.60  

1.18 The  better  integration  of  AUSTRAC  data  and  information  from  domestic  partner  agencies  and  international  counterparts  is  expected  to  facilitate  the  earlier  identification  of  sophisticated  criminal  networks  and  terrorism  financiers  and  their  methodologies,  and  provide  more  timely  intelligence  to  support  partner  agencies’  operational  needs.  The  ability  to  follow the money trail in a timely way is critical to detection, investigation and  disruption of planned criminal and terrorist activity.61 AUSTRAC intends to  roll out functionality both internally and externally in 2013-14. 

Audit Objective, Criteria and Scope 1.19 The objective of the audit was to assess the effectiveness of AUSTRAC’s  arrangements for processing financial intelligence, to assist domestic partner  agencies and international counterparts in their operations and investigations.  The audit assessed whether AUSTRAC had: 

 established  effective  administrative  arrangements  to  support  the  financial intelligence function; 

 established  appropriate  arrangements  to  analyse  and  disseminate  financial  intelligen ce,  and  obtain  assurance  as  to  the  appropriate  handling of financial intelligence by partner agencies and international  counterparts; and  

 developed and applied sound processes for monitoring and reviewing  the feedback provided by partner agencies as to the use and value of  the intelligence disseminated.  

1.20 The  audit  focused  on  the  arrangements  for  assessing  FTRs  and  the  dissemination  of  financial  intelligence  reports  by  AUSTRAC’s  Intelligence  Branch. Other activities relating to the financial intelligence function, such as 

                                                       60 Budget Paper 2 2010-11, p. 315. 61

Attorney-General Portfolio Budget Statement 2012-13, p. 250.

Background and Context

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AUSTRAC’s  International  Technical  Assistance  and  Training  team,  and  a  detailed  examination  of  the  FIU’s  current  IT  systems  and  databases  were  outside the scope of this audit. 

1.21 The  domestic  partner  agencies  that  were  included  in  the  audit  and  consulted as part of the audit process were the: Australian Crime Commission  (ACC);  Australian  Federal  Police  (AFP);  Australian  Taxation  Office  (ATO);  Australian Security Intelligence Organisation (ASIO); Australian Customs and  Border  ProtectionService  (Customs  and  Border  Protection);  Department  of  Human Services - Centrelink (DHS‐Centrelink) and the Victoria Police.62 

Audit methodology

1.22 In  undertaking  the  audit,  the  ANAO  reviewed  documentation  and  interviewed relevant staff from AUSTRAC (including all available ASLOs in  Sydney,  Melbourne,  Canberra  and  Adelaide).63  The  MOUs  with  specific  domestic  partner  agencies  and  its  exchange  agreements  with  selected  international counterparts were also examined. 

1.23 The  audit  undertook  quantitative  and  qualitative  analysis  of:  the  requested,  proactive  and  strategic  assessments  disseminated  in  2011-12  to  domestic agencies and selected international counterparts; feedback received  from key stakeholders for 2011-12; and financial intelligence disseminations  that led to actual investigations and prosecution of serious criminal activity,  including  money  laundering,  terrorism  financing,  organised  crime  and  tax  evasion. 

1.24 The  audit  was  conducted  in  accordance  with  ANAO  auditing  standards at a cost to th e ANAO of $393 000. 

1.25 The structure of the report is outlined in Table 1.1. 

 

 

                                                       62 These agencies were chosen to provide a cross-section of law enforcement, intelligence, revenue, human services and state-level agencies. 63

ASLOs outposted in Perth and Brisbane were interviewed by telephone.

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Table 1.1

Structure of the report

Chapter Chapter Overview

2. Administrative Arrangements This chapter examines the administrative arrangements underpinning AUSTRAC’s financial intelligence function.

3. Workload Management of Financial Intelligence Assessments

This chapter examines AUSTRAC’s workload management of financial intelligence assessments, including processing times and quality assurance processes.

4. Feedback, Performance Measurement and Reporting This chapter examines AUSTRAC’s arrangements for collaborating with partner agencies to set priorities,

collecting and reviewing feedback, and its approach to measuring and reporting on the performance of the FIU.

 

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Table 1.1

Structure of the report

Chapter Chapter Overview

2. Administrative Arrangements This chapter examines the administrative arrangements underpinning AUSTRAC’s financial intelligence function.

3. Workload Management of Financial Intelligence Assessments

This chapter examines AUSTRAC’s workload management of financial intelligence assessments, including processing times and quality assurance processes.

4. Feedback, Performance Measurement and Reporting This chapter examines AUSTRAC’s arrangements for collaborating with partner agencies to set priorities,

collecting and reviewing feedback, and its approach to measuring and reporting on the performance of the FIU.

 

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2. Administrative Arrangements

This chapter examines the administrative arrangements underpinning AUSTRAC’s  financial intelligence function. 

Introduction 2.1 AUSTRAC operates in a dynamic environment, shaped by changes in  domestic  policies  and  international  standards,  industry  expectations,  the  introduction  of  new  products  and  technologies  and  the  emergence  of  new  criminal  threats  and  methodologies.64  Having  sound  administrative  arrangements  to  manage  the  financial  intelligence  function,  and  the  way  it  deals  with  its  various  stakeholders  is  fundamental  to  the  success  of  its  operations. In this context, the ANAO examined AUSTRAC’s: 

 management structure for financial intelligence; 

 planning and risk management; 

 guidance and procedures;  

 management of AUSTRAC Senior Liaison Officers; and 

 arrangements with domestic partners and international counterparts. 

Management structure for financial intelligence 2.2 Since its inception, AUSTRAC’s powers and functions have broadened  with successive legislative amendments, such as the AML/CTF Act 2006 and  the Combating the Financing of People Smuggling and Other Measures Act 2011.  The increasing demand for financial intelligence from partner agencies, and  the  Government’s  tightening  fiscal  outlook,  has  required  AUSTRAC  to  restructure  its  Intelligence  Branch  to  be  more  responsive  and  adaptive  to  change.  

The Intelligence Branch restructure in February 2012

2.3 In February 2012, AUSTRAC’s Intelligence Branch was restructured. A  new Money Laundering Criminal Targeting function was created, to develop a  new monitoring and detection capability as part o f the Enhanced Analytical 

                                                       64 AUSTRAC Annual Report 2011-12, p. 6.

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Capability (EAC) project. Concurrently, an increase in the demand from, and  number  of,  partner  agencies and  strain  on  the  geographic alignment  of  the  ASLOs prompted a shift to grouping ASLOs into partner agency types (for  example, law enforcement, intelligence, revenue and regulatory agencies). In  late 2011, just prior to this restructure, responsibility for the MOU framework  governing the relationship with partner agencies was moved to AUSTRAC’s  policy  branch  to  allow  for  greater  consistency  across  the  agency.  The  Intelligence  Branch  structure  now  comprises  six  sections,  as  shown  in  Table 2.1. 

Table 2.1

Intelligence Branch sections after the February 2012 restructure

Section Responsibilities

Law Enforcement Operations Stakeholder relationship management by a network of AUSTRAC Senior Liaison Officers (ASLOs) for Federal and State Police

Services, Federal and State integrity and anticorruption agencies, and Customs and Border Protection.

Intelligence, Revenue and Regulatory Operations

Stakeholder relationship management by a network of ASLOs for the Australian Intelligence Community and other intelligence agencies (e.g. ACC and the New South Wales Crime Commission); the ATO and State/Territory Revenue Offices; and the regulatory agencies, Australian Prudential Regulation Authority, Australian Competition and Consumer Commission and Australian Securities and Investments Commission. Providing online and telephone support to the users of the TRAQ Enquiry System (TES), the team also provides training and education. Providing data mining and strategic support to inter-agency projects such as Project Wickenby. International exchange work and non-designated agency request work.

Analytics and Monitoring

AUSTRAC’s monitoring and analytical systems, including suspicious reports analysis, data mining and the monitoring team.

Strategic Assessments and Typologies

Production of typologies and strategic intelligence reports, including follow on of National Threat Assessment issues.

Money Laundering Criminal Targeting Developing new monitoring and detection capabilities in line with the Enhanced Analytics Capabilities project.

International Technical Assistance and Training(1)

Conducting technical assistance and training to assist Australia’s whole-of-government efforts to establish regional security and assist developing countries to achieve sustainable development through provision of AML/CTF capacity building to international Financial Intelligence Units, regulators and industry stakeholders.

Source: AUSTRAC.

Note:

(1) Outside the scope of this audit.

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Capability (EAC) project. Concurrently, an increase in the demand from, and  number  of,  partner  agencies and  strain  on  the  geographic  alignment  of  the  ASLOs prompted a shift to grouping ASLOs into partner agency types (for  example, law enforcement, intelligence, revenue and regulatory agencies). In  late 2011, just prior to this restructure, responsibility for the MOU framework  governing the relationship with partner agencies was moved to AUSTRAC’s  policy  branch  to  allow  for  greater  consistency  across  the  agency.  The  Intelligence  Branch  structure  now  comprises  six  sections,  as  shown  in  Table 2.1. 

Table 2.1

Intelligence Branch sections after the February 2012 restructure

Section Responsibilities

Law Enforcement Operations Stakeholder relationship management by a network of AUSTRAC Senior Liaison Officers (ASLOs) for Federal and State Police

Services, Federal and State integrity and anticorruption agencies, and Customs and Border Protection.

Intelligence, Revenue and Regulatory Operations

Stakeholder relationship management by a network of ASLOs for the Australian Intelligence Community and other intelligence agencies (e.g. ACC and the New South Wales Crime Commission); the ATO and State/Territory Revenue Offices; and the regulatory agencies, Australian Prudential Regulation Authority, Australian Competition and Consumer Commission and Australian Securities and Investments Commission. Providing online and telephone support to the users of the TRAQ Enquiry System (TES), the team also provides training and education. Providing data mining and strategic support to inter-agency projects such as Project Wickenby. International exchange work and non-designated agency request work.

Analytics and Monitoring

AUSTRAC’s monitoring and analytical systems, including suspicious reports analysis, data mining and the monitoring team.

Strategic Assessments and Typologies

Production of typologies and strategic intelligence reports, including follow on of National Threat Assessment issues.

Money Laundering Criminal Targeting Developing new monitoring and detection capabilities in line with the Enhanced Analytics Capabilities project.

International Technical Assistance and Training (1)

Conducting technical assistance and training to assist Australia’s whole-of-government efforts to establish regional security and assist developing countries to achieve sustainable development through provision of AML/CTF capacity building to international Financial Intelligence Units, regulators and industry stakeholders.

Source: AUSTRAC.

Note:

(1) Outside the scope of this audit.

Administrative Arrangements

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Staff and Executive structure changes from October 2012

2.4 In 2012, the CEO and the Executive re‐assessed the agency’s current  and future capability requirements. In October 2012, the CEO announced that  31  positions  across  the  agency  had  been  deemed  excess.65  Eleven  of  these  positions were from the Intelligence Branch.66 The new AUSTRAC Executive  Structure as at October 2012 is shown in Figure 2.1. 

Figure 2.1

AUSTRAC Executive Structure, effective October 2012

 

Source: ANAO representation of AUSTRAC executive structure provided on 12 March 2013.

Oversight of the financial intelligence function

2.5 In  March  2008,  AUSTRAC  completed  a  review  of  its  intelligence  function that identified opportunities to enhance AUSTRAC’s partner agency  arrangements and analytical capabilities.67 The 20 recommendations from the  review  covered  a  range  of  topics  including:  optimising  stakeholder  relationships and alignment of intelligence priorities; streamlining operational  workflow;  implementing  the  AML/CTF  Act;  and  analysing  and  handling  classified  and  national  security  information.68  Consequently,  AUSTRAC  established an Intelligence Oversight Committee (IOC) to oversee the future  implementation of the review’s recommendations.69 

                                                       65 AUSTRAC’s process for identifying employees who are likely to become excess falls into one of three categories, namely: a role that is substantively filled by an employee who has expressed an interest in a voluntary redundancy; a

role that is substantively filled by an employee and does not form part of a group of roles that perform similar or identical duties; and a role(s) that is substantively filled by an employee(s) that forms part of a group of roles that perform similar or identical duties. 66

As a result of the realignment, the total number of SES officers will be reduced by one and will take effect in February 2013. 67 AUSTRAC Annual Report 2007-08, pp. 52-53. 68

AUSTRAC, Intelligence Function Review Strategy Report, March 2008. 69 ibid.

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2.6 The IOC is responsible for reviewing and advising on (and approving  where necessary) items relating to AUSTRAC intelligence functions including: 

 Standard Operating Procedures (SOPs); 

 new and revised policies and strategies; and 

 papers relating to the delivery of strategic and operational intelligence  functions or specific intelligence activity.70 

The  IOC’s  membership  comprises:  the  Executive  General  Manager  of  Operations,  Executive  General  Manager  of  Corporate  and  the  General  Manager of Intelligence. Table 2.2 outlines the IOC’s full mandate. 

Table 2.2

AUSTRAC’s Intelligence Oversight Committee

Mandate of the Intelligence Oversight Committee

 Maintain effective executive oversight of AUSTRAC’s financial intelligence functions;

 Safeguard whole-of-agency interests and ensure a cohesive, responsive and accountable discharge of AUSTRAC’s financial intelligence functions;

 Review and monitor AUSTRAC’s intelligence functions, and where necessary consider specific matters that have significant or operational or policy implications;

 Develop highest level policy and strategy in relation to AUSTRAC’s interaction with the external environment including but not limited to the disclosure of AUSTRAC information to domestic and international partner agencies and non-designated agencies;

 Develop highest level policy and strategy in relation to the delivery of strategic and operational intelligence functions; and

 Oversee implementation of recommendations arising from AUSTRAC’s Intelligence Function review as agreed by the AUSTRAC CEO.

Source: AUSTRAC.

2.7 The ANAO’s review of the IOC records confirmed that the committee  met regularly, every two months in 2012, and monthly or every two months in  2010  and  2011.  Agendas  and  minutes  of  meetings  that  related  to  financial  intelligence policies and strategies were documented. There was also specific  oversight of the agency’s implementation of the recommendations made in the  2008 review of the intelligence function. 

2.8 At a higher level, and in addition to the IOC, there is the Executive  Committee (ExCom) that oversees the delivery of AUSTRAC’s program and 

                                                       70 AUSTRAC, Standard Operating Procedures-Intelligence Oversight Committee 2012, August 2012, pp. 4-5.

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2.6 The IOC is responsible for reviewing and advising on (and approving  where necessary) items relating to AUSTRAC intelligence functions including: 

 Standard Operating Procedures (SOPs); 

 new and revised policies and strategies; and 

 papers relating to the delivery of strategic and operational intelligence  functions or specific intelligence activity.70 

The  IOC’s  membership  comprises:  the  Executive  General  Manager  of  Operations,  Executive  General  Manager  of  Corporate  and  the  General  Manager of Intelligence. Table 2.2 outlines the IOC’s full mandate. 

Table 2.2

AUSTRAC’s Intelligence Oversight Committee

Mandate of the Intelligence Oversight Committee

 Maintain effective executive oversight of AUSTRAC’s financial intelligence functions;

 Safeguard whole-of-agency interests and ensure a cohesive, responsive and accountable discharge of AUSTRAC’s financial intelligence functions;

 Review and monitor AUSTRAC’s intelligence functions, and where necessary consider specific matters that have significant or operational or policy implications;

 Develop highest level policy and strategy in relation to AUSTRAC’s interaction with the external environment including but not limited to the disclosure of AUSTRAC information to domestic and international partner agencies and non-designated agencies;

 Develop highest level policy and strategy in relation to the delivery of strategic and operational intelligence functions; and

 Oversee implementation of recommendations arising from AUSTRAC’s Intelligence Function review as agreed by the AUSTRAC CEO.

Source: AUSTRAC.

2.7 The ANAO’s review of the IOC records confirmed that the committee  met regularly, every two months in 2012, and monthly or every two months in  2010  and  2011.  Agendas  and  minutes  of  meetings  that  related  to  financial  intelligence policies and strategies were documented. There was also specific  oversight of the agency’s implementation of the recommendations made in the  2008 review of the intelligence function. 

2.8 At a higher level, and in addition to the IOC, there is the Executive  Committee (ExCom) that oversees the delivery of AUSTRAC’s program and 

                                                       70 AUSTRAC, Standard Operating Procedures-Intelligence Oversight Committee 2012, August 2012, pp. 4-5.

Administrative Arrangements

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sets the entire agency’s strategic direction.71 ExCom holds monthly meetings,  monitors  the  agency’s  performance  against  key  performance  indicators  and  advises the AUSTRAC CEO on key policy and strategic management issues.72 

2.9 Overall,  the  ANAO  considers  that  roles,  responsibilities  and  accountability arrangements within AUSTRAC’s Intelligence Branch are well  defined. Arrangements to manage and report on key risks are discussed below. 

Planning and risk management 2.10 AUSTRAC’s Statement of Strategic Intent (SOSI) underpins the agency’s  planning  instruments  that  include  statutory  plans,  published  strategies  and  internal  plans.73  AUSTRAC’s  most  recent  SOSI  2013-16  emphasises  the  continuous  and  integrated  nature  of  planning  within  the  agency.  The  statement details the operational activities and performance measures required  to meet the following five strategic goals for 2013-16, namely that AUSTRAC: 

(a) is considered relevant and effective with key stakeholders; 

(b) influences  its  operating  environment  by  contributing  to  a  whole‐of‐government agenda; 

(c) assures its financial health both currently and into the future; 

(d) has a workforce appropriate to its strategic priorities and operational  activities; and 

(e) has the necessary business capacity to meet stakeholder expectations. 

2.11 The relevant strategic sub‐criteria for AUSTRAC’s five strategic goals  are reflected in the annual business plans for each branch.74 The Intelligence  Branch business plan for 2012-13 includes the appropriate sub‐criteria relevant  to  the  Branch  and  identifies  operational  projects  which  address  each  sub‐criterion,  the  staff  member  responsible  and  the  timeline  for  project  delivery. In addition, the plan lists the functions of the Branch, as well as the  objective, activities and timeframe of each function.75 An annual assessment of 

                                                       71 AUSTRAC Annual Report 2011-12, p. 14. 72

ibid.

73 AUSTRAC internal plans comprise branch, finance and program plans; business unit plans and individual performance plans.

74 The branch business plans are finalised between relevant general managers and directors, before discussion between general managers and relevant executive general managers.

75 For example, one of the functions listed is for the Branch to be the ‘Intelligence Oversight Committee Secretariat’.

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the  risks  that  were  associated  with  the  line  areas’  business  objectives  is  included  in  the  business  plans.  The  ANAO  considers  that  AUSTRAC’s  strategic and branch planning processes provides a sound foundation for the  agency’s operational activities. 

AUSTRAC’s overarching risk management framework

2.12 The effective management of risk requires a robust, agency‐wide risk  management  framework  where  decisions  are  based  on  the  accurate,  well  informed evaluation of associated risks.76 The ANAO examined AUSTRAC’s  approach  to  managing  risk  to  assess  the  extent  to  which  agency  risks,  including  the  Intelligence  Branch  risks,  have  been  identified,  and  are  incorporated into the ongoing operations and decision‐making processes of the  Intelligence Branch. 

2.13 Prior  to  2011,  a  section  within  AUSTRAC’s  Corporate  Branch  had  overall  responsibility  for  the  agency’s  risk  management  framework.  The  agency had a risk policy plan and an agency‐wide risk register that reflected  the  risks  identified  by  the  individual  branch  business  plans.  Using  this  information senior management would assess the strategic risks.  

2.14 AUSTRAC’s  risk  management  approach  from  2008  to  2011 was  informal  and  incomplete.77  There  is  also  no  documented  evidence  to  demonstrate  that  AUSTRAC’s  risks  were  actively  and  regularly  reviewed.  Deficiencies in the risk register included, but were not limited to: 

 A lack of dat es registered: The entire risk register was undated. It was  a multi‐year register, but there was no demarcation of the years when  risks were identified, or dates when individual business unit risks were  established.  In  addition,  the  completion  date  of  risk  mitigation  strategies taken for each of the risks were not stated.  

 No reflection of the agency’s risk appetite: There was a field in the  register that should reflect the agency’s risk appetite called ‘Required  risk level field, as determined by the Executive Committee’, but it was blank. 

2.15 Furthermore,  the  management  arrangements  surrounding  the  risk  register  did  not  identify  the  priority  of  individual  risks,  or  who  was 

                                                       76 ANAO and the Department of the Prime Minister and Cabinet, Implementation of Programme and Policy Initiatives- Making implementation matter, October 2006, p. 17. 77

Completeness is particularly relevant given the register is a live, monitoring tool.

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the  risks  that  were  associated  with  the  line  areas’  business  objectives  is  included  in  the  business  plans.  The  ANAO  considers  that  AUSTRAC’s  strategic and branch planning processes provides a sound foundation for the  agency’s operational activities. 

AUSTRAC’s overarching risk management framework

2.12 The effective management of risk requires a robust, agency‐wide risk  management  framework  where  decisions  are  based  on  the  accurate,  well  informed evaluation of associated risks.76 The ANAO examined AUSTRAC’s  approach  to  managing  risk  to  assess  the  extent  to  which  agency  risks,  including  the  Intelligence  Branch  risks,  have  been  identified,  and  are  incorporated into the ongoing operations and decision‐making processes of the  Intelligence Branch. 

2.13 Prior  to  2011,  a  section  within  AUSTRAC’s  Corporate  Branch  had  overall  responsibility  for  the  agency’s  risk  management  framework.  The  agency had a risk policy plan and an agency‐wide risk register that reflected  the  risks  identified  by  the  individual  branch  business  plans.  Using  this  information senior management would assess the strategic risks.  

2.14 AUSTRAC’s  risk  management  approach  from  2008  to  2011 was  informal  and  incomplete.77  There  is  also  no  documented  evidence  to  demonstrate  that  AUSTRAC’s  risks  were  actively  and  regularly  reviewed.  Deficiencies in the risk register included, but were not limited to: 

 A lack of dat es registered: The entire risk register was undated. It was  a multi‐year register, but there was no demarcation of the years when  risks were identified, or dates when individual business unit risks were  established.  In  addition,  the  completion  date  of  risk  mitigation  strategies taken for each of the risks were not stated.  

 No reflection of the agency’s risk appetite: There was a field in the  register that should reflect the agency’s risk appetite called ‘Required  risk level field, as determined by the Executive Committee’, but it was blank. 

2.15 Furthermore,  the  management  arrangements  surrounding  the  risk  register  did  not  identify  the  priority  of  individual  risks,  or  who  was 

                                                       76 ANAO and the Department of the Prime Minister and Cabinet, Implementation of Programme and Policy Initiatives- Making implementation matter, October 2006, p. 17. 77

Completeness is particularly relevant given the register is a live, monitoring tool.

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responsible for managing the risks, and there was no mechanism for bringing  the risks to the attention of senior management as part of its strategic reporting  process. 

A way forward—improving AUSTRAC’s overarching risk management process

2.16 In early 2011, in order to embed its risk management practices within  its  business  and  decision‐making  activities,  AUSTRAC  established  a  new  full‐time Agency Risk Advisor whose role was to coordinate risk management  initiatives, and assist executive management in bringing the agency to a higher  level of risk management maturity.78 Under the guidance of the Agency Risk  Advisor, AUSTRAC updated its risk management policy and risk management  plan in September 2012.79  

2.17 At the time of the audit, AUSTRAC was in the process of implementing  new  risk  management  software  (RMS)  to  manage  the  agency‐wide  risk  register. In March 2013, AUSTRAC advised that the RMS is fully functional,  and is available to manage and report all types of agency risk, project issues,  including  work  health  and  safety,  security  and  general  incidents.  Risk  identification workshops are also being conducted within each branch across  the agency, and the Intelligence Branch had its operational risk workshop in  February 2013. 

Managing risks relating to financial intelligence

2.18 Once identified in the risk register, significant risks relating to financial  intelligence (and their treatments) sh ould be reported to AUSTRAC Executive  and, where necessary, to government with the acceptable level of residual risk  documented  and  approved.  The  Intelligence  Branch  business  plans  from   2007-08 to the most recent 2012-13, show that risks indicated in the plans align  with the agency’s business objectives. However, there are gaps in the accurate  identification, linkages and reporting of risks, including:  

 An agency‐wide risk that is critical to the Intelligence Branch was not  directly  addressed  in  the  Branch’s  business  plan.  AUSTRAC’s  Intelligence Branch is heavily dependent on its data centre, and the risk  that the entire data centre holding all AUSTRAC IT systems could fail 

                                                       78 AUSTRAC Annual Report 2010-11, p. 105. 79

In conjunction with the policy and plan, guidance and information was provided on the agency’s intranet that included how to report risks; risk management learning and the risk management plan.

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was almost realised during January 2012. In such an incident, internal  and external IT systems would be unavailable to AUSTRAC, reporting  agencies and AUSTRAC’s partner agencies would not have access to  AUSTRAC financial intelligence for an extended period. At the time of  audit fieldwork, AUSTRAC had no disaster recovery capability and no  back‐up facility. The ANAO was advised by AUSTRAC that there is a  long lead time (six months or more) to rebuild and restore the data  centre.  

Despite the critical impact of a failure of the data centre, the Intelligence  Branch risk reporting (as included in its business plans) did not directly  address this risk which was included in the agency’s risk management  plan, nor provide  linkages or references of this threat to an agency‐ wide risk management plan. From 2008-09 and 2009-10, the ‘loss of IT  systems’ was included, but it was generic and did not specifically refer  to the data centre. The ‘suggested strategy or control’ to mitigate the  risk was to ‘rely on back‐up systems’ which, in practical terms, did not  exist—the  only  recovery  solution  available  was  to  rebuild  the  data  centre. Neither the 2011-12 nor 2012-13 Intelligence Branch business  plans provide  linkages or referenced the data centre risk or the more  general  ‘loss  of  IT  system’  risk  to  an  agency‐wide  risk  management  plan.  

In  March  2013,  AUSTRAC  advised  that  the  data  centre  risk  is  now  being managed as an agency‐wide risk, and that two treatments were  identified and have been progressed by the agency. These treatments  include: improving AUSTRAC’s Business Continuity Management, and  improving the agency’s IT resilience and disaster recovery capability.80 

In the 2013-14 Budget, the Government announced that it will invest  $16.1 million over four years to establish a new off‐site data primary  centre  for  AUSTRAC  and  to  develop  a  disaster  recovery  capability  within its existing computer room.81 

                                                       80 AUSTRAC has also sought additional funding for a back-up data centre from government since

2009-10. However, all proposals to date have been unsuccessful. 81 The new data centre and enhanced disaster recovery capability are expected to be fully operational by the conclusion of the 2013-14 financial year. AUSTRAC advised that this investment will provide enhanced security for AUSTRAC’s data

holdings, and will assist in ensuring that the agency has robust and reliable technology infrastructure to continue providing financial intelligence and analysis to its partner agencies.

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was almost realised during January 2012. In such an incident, internal  and external IT systems would be unavailable to AUSTRAC, reporting  agencies and AUSTRAC’s partner agencies would not have access to  AUSTRAC financial intelligence for an extended period. At the time of  audit fieldwork, AUSTRAC had no disaster recovery capability and no  back‐up facility. The ANAO was advised by AUSTRAC that there is a  long lead time (six months or more) to rebuild and restore the data  centre.  

Despite the critical impact of a failure of the data centre, the Intelligence  Branch risk reporting (as included in its business plans) did not directly  address this risk which was included in the agency’s risk management  plan, nor provide  linkages or references of this threat to an agency‐ wide risk management plan. From 2008-09 and 2009-10, the ‘loss of IT  systems’ was included, but it was generic and did not specifically refer  to the data centre. The ‘suggested strategy or control’ to mitigate the  risk was to ‘rely on back‐up systems’ which, in practical terms, did not  exist—the  only  recovery  solution  available  was  to  rebuild  the  data  centre. Neither the 2011-12 nor 2012-13 Intelligence Branch business  plans provide  linkages or referenced the data centre risk or the more  general  ‘loss  of  IT  system’  risk  to  an  agency‐wide  risk  management  plan.  

In  March  2013,  AUSTRAC  advised  that  the  data  centre  risk  is  now  being managed as an agency‐wide risk, and that two treatments were  identified and have been progressed by the agency. These treatments  include: improving AUSTRAC’s Business Continuity Management, and  improving the agency’s IT resilience and disaster recovery capability.80 

In the 2013-14 Budget, the Government announced that it will invest  $16.1 million over four years to establish a new off‐site data primary  centre  for  AUSTRAC  and  to  develop  a  disaster  recovery  capability  within its existing computer room.81 

                                                       80 AUSTRAC has also sought additional funding for a back-up data centre from government since

2009-10. However, all proposals to date have been unsuccessful. 81 The new data centre and enhanced disaster recovery capability are expected to be fully operational by the conclusion of the 2013-14 financial year. AUSTRAC advised that this investment will provide enhanced security for AUSTRAC’s data

holdings, and will assist in ensuring that the agency has robust and reliable technology infrastructure to continue providing financial intelligence and analysis to its partner agencies.

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 Specific  risks  relating  to  partner  agencies’  resourcing  or  priorities  that  could  affect  the  assessment  and  dissemination  of  AUSTRAC  financial  intelligence  are  not  considered  or  reported.  The  risk  of  ‘partner  agencies  not  co‐ordinating  or  engaging  with  AUSTRAC  strategic planning and operational initiatives’ was identified as a risk  for  the  Intelligence  Branch  from  2010-11  to  2012-13  (but  not  prior).  However, specific risks relating to changes in resourcing or priorities of  partner  agencies  that  could  affect  the  acceptance  of  AUSTRAC’s  financial intelligence disseminations are not included in the Intelligence  Branch risk reporting. These risks are particularly pertinent to agencies  such as AUSTRAC, which must not only manage their own risks but  also the risks that come with inter‐agency partnerships.82  

2.19 The  ANAO  considers  that  AUSTRAC’s  approach  to  managing  risks  relating  to  the  Intelligence  Branch  would  benefit  from  better  identification,  assessment, linkages and reporting of agency‐wide and partner agency risks  that could adversely impact the Intelligence Branch operations. 

Guidance and procedures 2.20 AUSTRAC has various SOPs across its financial intelligence function  that provides technical information and direction to the Intelligence Branch  staff on various topics. SOPs cover issues such as: uploading Microsoft Word  and  Excel  files  into  TES;  responding  to  re quests  from  domestic  partner  agencies; administrative processes to be followed when requests are submitted  from  international  counterparts;  and  internal  and  external  reporting  on  performance targets. While the SOPs are generally comprehensive, the ANAO  found  that  many  of  the  ‘current’  SOPs  were  incomplete,  outdated  and  undated. 

2.21 There  were  SOPs  that  were  not  complete  which  led  to  inconsistent  implementation  practices.  For  example,  one  SOP  stipulates  the  method  for  determining the total number of disseminations occurring in a financial year  which is to be included in the AUSTRAC Annual Report. The SOP requires  extracting  disseminations  which  were  completed  by  the  ASLOs,  the  Data  Mining  team  and  Monitoring  teams.  The  ANAO  observed  that  three  other  intelligence analysis teams (Wickenby; Strategic Assessments; and Typologies) 

                                                       82 Auditor-General of Australia Ian McPhee, speech to the Heads of Cultural Organisations Meeting, Risk Management, 15 December 2005, p. 6.

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also disseminate financial intelligence assessments but were not listed in the  SOP.  Their  disseminations,  however,  were  included  in  the  total  number  of  disseminations in the Annual Report.  

2.22 There were also SOPs that were no longer current, but still in use. For  example,  a  SOP  titled  ‘Request  to  foreign  FIU  for  exchange  of  financial  intelligence’ had a date of effect of 11 May 2001 and was last reviewed on  27 June 2007. The date of next review was blank. The SOP referred to SILOs  (Senior  Intelligence  Liaison  Officers),  whose  functions  were  superseded  by  AUSTRAC Senior Liaison Officers (ASLOs).83 Further, there were a number of  SOPs  that  appeared  current,  but  had  no  dates  to  indicate  when  they  were  created,  finalised,  reviewed  or  approved  by  management.  For  example,  the  following SOPs were all undated: Monthly TargIT Output Statistics; Using the  TRAQ  output  processor;  and  the  Suspicious  Reports  Operating  Manual‐ Partner Agencies. 

2.23 There would be benefit in AUSTRAC reviewing that all instructional  SOPs are complete, and correctly record when they were last reviewed and  updated so staff are aware of the most current SOP. AUSTRAC advised that  the SOPs are being reviewed and updated.  

Management of the AUSTRAC Senior Liaison Officers 2.24 AUSTRAC  operates  a  network  o f  AUSTRAC  Senior  Liaison  Officers  (ASLOs) to promote the effective and efficient use of AUSTRAC information  and  intelligence  by  its  partner  agencies.84  ASLOs  are  outposted  to  partner  agencies85,  where  they  are  expected  to  build  and  maintain  effective  relationships and provide in‐house support to partner agency personnel.86 

   

                                                       83 The term SILO was last publicly mentioned in the AUSTRAC Annual Report 2007-08. 84

AUSTRAC Annual Report 2011-12, p. 62. 85 Currently, ASLOs are outposted to selected partner agencies in Sydney, Melbourne, Canberra, Brisbane, Adelaide and Perth. 86

AUSTRAC Annual Report 2011-12, p. 62.

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also disseminate financial intelligence assessments but were not listed in the  SOP.  Their  disseminations,  however,  were  included  in  the  total  number  of  disseminations in the Annual Report.  

2.22 There were also SOPs that were no longer current, but still in use. For  example,  a  SOP  titled  ‘Request  to  foreign  FIU  for  exchange  of  financial  intelligence’ had a date of effect of 11 May 2001 and was last reviewed on  27 June 2007. The date of next review was blank. The SOP referred to SILOs  (Senior  Intelligence  Liaison  Officers),  whose  functions  were  superseded  by  AUSTRAC Senior Liaison Officers (ASLOs).83 Further, there were a number of  SOPs  that  appeared  current,  but  had  no  dates  to  indicate  when  they  were  created,  finalised,  reviewed  or  approved  by  management.  For  example,  the  following SOPs were all undated: Monthly TargIT Output Statistics; Using the  TRAQ  output  processor;  and  the  Suspicious  Reports  Operating  Manual‐ Partner Agencies. 

2.23 There would be benefit in AUSTRAC reviewing that all instructional  SOPs are complete, and correctly record when they were last reviewed and  updated so staff are aware of the most current SOP. AUSTRAC advised that  the SOPs are being reviewed and updated.  

Management of the AUSTRAC Senior Liaison Officers 2.24 AUSTRAC  operates  a  network  o f  AUSTRAC  Senior  Liaison  Officers  (ASLOs) to promote the effective and efficient use of AUSTRAC information  and  intelligence  by  its  partner  agencies.84  ASLOs  are  outposted  to  partner  agencies85,  where  they  are  expected  to  build  and  maintain  effective  relationships and provide in‐house support to partner agency personnel.86 

   

                                                       83 The term SILO was last publicly mentioned in the AUSTRAC Annual Report 2007-08. 84

AUSTRAC Annual Report 2011-12, p. 62. 85 Currently, ASLOs are outposted to selected partner agencies in Sydney, Melbourne, Canberra, Brisbane, Adelaide and Perth. 86

AUSTRAC Annual Report 2011-12, p. 62.

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Roles and responsibilities

2.25 The roles and responsibilities for ASLOs are defined in their annual  Individual  Performance  Management  Agreements.  In  promoting  AUSTRAC  information to partner agencies, ASLOs are expected to: 

 provide support and liaison services as a partner agency’s first point of  contact for AML/CTF queries; 

 train  partner  agencies  in  accessing  and  analysing  reports  from  the  AUSTRAC database; and 

 work collaboratively with partner agency officers on a wide range of  serious  and  organised  crime,  terrorism  financing  and  tax  evasion  matters.87  

2.26 Having a clear understanding of these responsibilities is pivotal to the  success of an ASLO. The ANAO interviewed 21 ASLOs88 outposted to partner  agencies.89  The  profile  of  the  ASLOs,  including  years  of  experience  in  their  current  role,  work  backgrounds,  and  their  understanding  of  their  responsibilities, is shown in Table 2.3. 

     

                                                       87 ibid.

88 At the time of audit, AUSTRAC had a total of 22 ASLOs, with one on leave. In March 2013, AUSTRAC advised that the number of ASLOs had been reduced 19 positions.

89 Some ASLOs provide on-site support to more than one agency (for example, two days at one agency, three days at another) while other agencies may host more than one ASLO.

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Table 2.3

Profile of the AUSTRAC Senior Liaison Officers

Categories ASLOs’ response

Number of years as an ASLO At the time of audit, the ASLOs’ years of experience in their role ranged from three months to five years (60 months), with an average of 2.9 years (34.3 months) experience.

Background or work experience prior to becoming an ASLO

Previous work experiences are complementary to their current role, having worked in law enforcement, intelligence or with some of AUSTRAC’s partner agencies.

Knowledge of his/her responsibilities as an ASLO All the ASLOs advised that their responsibilities comprise the following:

 an analytical role: writing financial intelligence assessments; analysing financial transaction reports; assisting in interpreting financial results; creating alerts on behalf of the partner agency; and providing onsite analytical support.

 training and support: training and/or assisting partner agencies on the use of AUSTRAC’s database; assisting partner agencies in their AML/CTF queries; and working on partner agency’s taskforces.

 liaison: providing the first point of contact, or the conduit, between AUSTRAC and partner agencies; facilitating requests to other parts of AUSTRAC; disseminating AUSTRAC’s products; and discussing obligations in the MOU between AUSTRAC and the partner agency, particularly in relation to feedback.

Source: ANAO analysis of ASLO interviews.

2.27 The  ASLOs  had  a  clear  understanding  of  their  responsibilities,  particularly the support they are expected to provide to their partner agencies.  Although the current ASLOs have relevant skills gained from previous work  experiences  in  law  enforcement,  intelligence  or  with  some  of  AUSTRAC’s  partner agencies, the average work experience as an ASLO was quite short— less  than  three  years.  To  balance  this  lack  of  experience,  sufficient  and  appropriate training and guidance are required. 

Training and guidance for ASLOs

Buddy system

2.28 The  ASLOs  predominantly  get  on  the  job  training  at  their  place  of  work.  For  a  new  ASLO,  a buddy  system  is  also  in  place  where  he  or she  is  ‘partnered’  with  an  experienced  ASLO.  A  buddy’s  responsibilities  would  include showing a new ASLO how the AUSTRAC’s systems work, how to set  alerts and what the role entails. Although a buddy’s responsibilities are not 

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Table 2.3

Profile of the AUSTRAC Senior Liaison Officers

Categories ASLOs’ response

Number of years as an ASLO At the time of audit, the ASLOs’ years of experience in their role ranged from three months to five years (60 months), with an average of 2.9 years (34.3 months) experience.

Background or work experience prior to becoming an ASLO

Previous work experiences are complementary to their current role, having worked in law enforcement, intelligence or with some of AUSTRAC’s partner agencies.

Knowledge of his/her responsibilities as an ASLO All the ASLOs advised that their responsibilities comprise the following:

 an analytical role: writing financial intelligence assessments; analysing financial transaction reports; assisting in interpreting financial results; creating alerts on behalf of the partner agency; and providing onsite analytical support.

 training and support: training and/or assisting partner agencies on the use of AUSTRAC’s database; assisting partner agencies in their AML/CTF queries; and working on partner agency’s taskforces.

 liaison: providing the first point of contact, or the conduit, between AUSTRAC and partner agencies; facilitating requests to other parts of AUSTRAC; disseminating AUSTRAC’s products; and discussing obligations in the MOU between AUSTRAC and the partner agency, particularly in relation to feedback.

Source: ANAO analysis of ASLO interviews.

2.27 The  ASLOs  had  a  clear  understanding  of  their  responsibilities,  particularly the support they are expected to provide to their partner agencies.  Although the current ASLOs have relevant skills gained from previous work  experiences  in  law  enforcement,  intelligence  or  with  some  of  AUSTRAC’s  partner agencies, the average work experience as an ASLO was quite short— less  than  three  years.  To  balance  this  lack  of  experience,  sufficient  and  appropriate training and guidance are required. 

Training and guidance for ASLOs

Buddy system

2.28 The  ASLOs  predominantly  get  on  the  job  training  at  their  place  of  work.  For  a  new  ASLO,  a buddy  system  is  also  in  place  where  he  or she  is  ‘partnered’  with  an  experienced  ASLO.  A  buddy’s  responsibilities  would  include showing a new ASLO how the AUSTRAC’s systems work, how to set  alerts and what the role entails. Although a buddy’s responsibilities are not 

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documented or formalised, the feedback received from all ASLOs interviewed  of the effectiveness of the buddy system was uniformly positive. 

Documented guidance on the job

2.29 There  are  specific  SOPs  that  cover  some  of  the  tasks  that  ASLOs  undertake, such as the SOP for dissemination of intelligence reports, but there  is no formal, documented guidance on other important day to day functions.  AUSTRAC advised that the Managers provide work related guidance on a day  to day basis, and that Directors provide advice to the ASLOs on strategies and  outputs  required  by  the  team.  However,  the  absence  of  more  generalised  operational guidance on ‘how to do things’ was reflected in advice from some  ASLOs that ‘everything is in people’s heads’. For example, ASLOs advised that  there was a lack of guidance on how, when and who to contact in specialist  areas  of  AUSTRAC.  There  would  be  merit  in  AUSTRAC  preparing  more  complete operational guidance and procedures for the ASLOs.  

AML/CTF training

2.30 As  indicated  in  paragraph  2.25,  one  of  the  ASLO’s  responsibilities  includes providing support to partner agencies’ AML/CTF queries. At the time  of audit, only half (11 of the 21) of the ASLOs interviewed by the ANAO stated  that they received AML/CTF training90, either from AUSTRAC directly or from  partner agencies, such as the AFP.  

2.31 In March 2013, AUSTRAC advised that ASLOs have access to a range  of AML/CTF training tools that include newsletters, emails from directors and  an  AUSTRAC  online  training  platform.  In  the  same  month,  AUSTRAC’s  Intelligence  Branch  also  conducted  an  internal  survey  where  the  current  ASLOs  were  asked  about  specific  AML/CTF  training  they  had  undertaken  since  joining  AUSTRAC.91  Sixty-three  per  cent  (12  of  the  19)  of  the  ASLOs  responded,  listing  the  various  AML/CTF  training  they  had  received.  The  ANAO  considers  the  specific  AML/CTF  training  provided  to  ASLOs  to  be  comprehensive and extensive. 

                                                       90 Some ASLOs did not specifically state the AML/CTF training, but they indicated that they had the AUSTRAC induction and other intelligence related training, which would include the AML/CTF obligations under the AML/CTF Act. 91

The ASLOs were to include all types of training including through study assistance programs.

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Agreements with domestic partners and international counterparts

Domestic memoranda of understanding (MOUs)

2.32 AUSTRAC  has  MOUs  in  place  with  its  domestic  partner  agencies  (designated agencies) which provide a framework to support the exchange of  financial  intelligence  consistent  with  the  requirements  of the  AML/CTF  Act  and other relevant legislation.92 

2.33 The  ANAO  examined  AUSTRAC’s  MOUs  with  seven  key  domestic  partner  agencies:  ACC,  AFP,  ATO,  ASIO,  Customs  and  Border  Protection,  DHS‐Centrelink and the Victoria Police. All seven MOUs are current, with the  oldest MOU dated November 2008. AUSTRAC has advised that the MOUs are  in the process of being reviewed to maintain their currency. The seven MOUs  include clauses relating to: 

 access to AUSTRAC information (including online access); 

 provisions and restrictions concerning suspicious matter reports93; 

 use of AUSTRAC information collected by an international counterpart; 

 release of AUSTRAC information to a foreign intelligence agency94; 

 privacy and security;  

 accountability;  

 feedback; and 

 training and support for employees of both agencies.  

2.34 All  seven  of  the  MOUs  examined  provide  a  broad  and  generally  comprehensive framework for the exchange of financial intelligence between  AUSTRAC and its partners. However, as discussed below, the current review  by  AUSTRAC  of  the  domestic  MOUs  should  more  closely  examine  the  effectiveness

 of two clauses relating to accountability and feedback. 

                                                       92 AUSTRAC Annual Report 2011-12, p. 60. 93

Suspicious matter reports are a type of financial transaction report required to be submitted by reporting entities, see Appendix 2 for further details.

94   Three of the examined partner agencies (AFP, ACC and ASIO) are able to disseminate AUSTRAC intelligence to foreign intelligence agencies under sections 132 and 133 of the AML/CTF Act. 

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Agreements with domestic partners and international counterparts

Domestic memoranda of understanding (MOUs)

2.32 AUSTRAC  has  MOUs  in  place  with  its  domestic  partner  agencies  (designated agencies) which provide a framework to support the exchange of  financial  intelligence  consistent  with  the  requirements  of the  AML/CTF  Act  and other relevant legislation.92 

2.33 The  ANAO  examined  AUSTRAC’s  MOUs  with  seven  key  domestic  partner  agencies:  ACC,  AFP,  ATO,  ASIO,  Customs  and  Border  Protection,  DHS‐Centrelink and the Victoria Police. All seven MOUs are current, with the  oldest MOU dated November 2008. AUSTRAC has advised that the MOUs are  in the process of being reviewed to maintain their currency. The seven MOUs  include clauses relating to: 

 access to AUSTRAC information (including online access); 

 provisions and restrictions concerning suspicious matter reports93; 

 use of AUSTRAC information collected by an international counterpart; 

 release of AUSTRAC information to a foreign intelligence agency94; 

 privacy and security;  

 accountability;  

 feedback; and 

 training and support for employees of both agencies.  

2.34 All  seven  of  the  MOUs  examined  provide  a  broad  and  generally  comprehensive framework for the exchange of financial intelligence between  AUSTRAC and its partners. However, as discussed below, the current review  by  AUSTRAC  of  the  domestic  MOUs  should  more  closely  examine  the  effectiveness

 of two clauses relating to accountability and feedback. 

                                                       92 AUSTRAC Annual Report 2011-12, p. 60. 93

Suspicious matter reports are a type of financial transaction report required to be submitted by reporting entities, see Appendix 2 for further details.

94   Three of the examined partner agencies (AFP, ACC and ASIO) are able to disseminate AUSTRAC intelligence to foreign intelligence agencies under sections 132 and 133 of the AML/CTF Act. 

Administrative Arrangements

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Accountability clauses

2.35 The  accountability  clauses  in  the  MOUs  are  intended  to  provide  AUSTRAC  with  assurance  that  its  financial  intelligence  or  assessments  are  appropriately handled by its partner agencies. Under the MOUs the onus for  accountability resides with the partner agency: 

The [partner agency] is responsible for any mishandling or inappropriate use  by its authorised officials of AUSTRAC information.95 

2.36 In addition, partner agencies are required to maintain an audit log of  AUSTRAC  information  which  those  agencies  have  disseminated  to  other  agencies. AUSTRAC may view this log ‘upon written request’. Similarly, the  MOUs with six of the seven MOUs examined96 also include the requirement for  the partner agencies to ‘conduct regular audits of its authorised officials with  online  access  to  AUSTRAC  information  to  ensure  they  are  complying  with  [their] MOU, the FTR Act and the AML/CTF Act’. AUSTRAC may also request  an audit to be completed of the partner agency’s authorised officials who have  online access to AUSTRAC information.  

2.37 AUSTRAC has not exercised the right to view the required audit log of  AUSTRAC  information  that  has  been  disseminated  to  other  agencies,  or  requested  an  audit  of  online  access  to  AUSTRAC  information  by  partner  agency officials. AUSTRAC has sought assuran ce from its partner agencies of  its compliance with accountability obligations as stipulated in their MOU.97 For  example, AUSTRAC has required that the AFP and Victoria Police provide a  written outline of measures in place to meet their data security and reporting  obligations. While such correspondence would provide some comfort about  compliance  with  accountability  obligations,  it  is  at  a  lower  level  than  the  approaches set out in the MOUs. As such, AUSTRAC has limited assurance as  to partner agency compliance with the accountability clauses.  

2.38 Breaches  have  occurred  in  the  past  where  partner  agencies  have  detected  inappropriate  use  of  AUSTRAC  data  by  their  employees.  For  example,  in  April  2012  it  was  reported  in  the  media  that  AUSTRAC 

                                                       95 The MOU with the ATO has a variation to that wording, in that both parties will ‘take all reasonable measures to maintain the confidentiality of that data, and ensure that data is only used for the purposes for which that data was

provided and is only accessed by persons who have a legitimate “need-to-know” to perform their duties’. 96 The AUSTRAC MOU with the ATO instead includes the clause that ‘each party may review the systems, procedures

and security safeguards that the other party has in place for maintaining the confidentiality and integrity of its data’. 97 The only exception was the Inspector General of Intelligence and Security as their access is limited to checking

authorised access of the Australian Intelligence Community personnel, to ensure it is consistent with the AML/CTF Act.

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information  had  been  misused  by  an  AFP  employee.98  AUSTRAC  became  aware  of  this  breach  through  the  media.99  Conducting  periodic  reviews  of  partner agencies’ audit logs and online access would provide assurance that  partner agencies are using AUSTRAC information appropriately. 

2.39 In  addition,  staff  of  some  partner  agencies  were  unaware  of  responsibilities  with  regards  to  the  management  of  AUSTRAC  information  (including monitoring of possible breaches). For example, the MOUs state that  it is the responsibility of partner agencies to advise AUSTRAC of any detected  misuse  of  AUSTRAC  data  within  five  working  days.  However,  staff  of  one agency were not aware of this requirement, and incorrectly advised the  ANAO that AUSTRAC is responsible for advising of any breaches that occur  within that agency. 

New functionality introduced

2.40 In May 2012, AUSTRAC advised its key partner agencies that it would  introduce, on 4 June 2012, new functionality in the AUSTRAC database, where  the user would have to state their ‘reason for access’. The ‘reason for access’  function aims to provide governance and feedback benefits to both AUSTRAC  and its partner agencies, by providing a better ability to monitor and audit the  searches conducted by users of the AUSTRAC database.  

2.41 The  ‘reason  for  a ccess’  function  is  a  free‐text  field  which  if  used  appropriately, should be mutually beneficial to both AUSTRAC and its partner  agencies.  However,  to  be  effective,  the  function  requires  the  cooperation  of  staff  in  partner  agencies.100  Including  the  requirement  to  use  this  function  appropriately in the MOUs may assist in this regard. 

Feedback clauses

2.42 The  feedback  clauses  in  AUSTRAC’s  domestic  MOUs  require  that  partner agencies regularly compare their quarterly feedback report on the use 

                                                       98 Rudra, K, ‘Women in divorce row loses job fight’, Sydney Morning Herald, 26 April 2012

[accessed 20 June 2012]. 99 The AUSTRAC CEO wrote to the AFP Commissioner on 11 May 2012 to remind the AFP of the requirements of their

MOU, as clause 59 states that ‘The AFP agrees to advise AUSTRAC in writing of any incident involving a breach of the MOU or the FTR Act or AML/CTF Act within five working days of becoming aware of the incident’. 100 Such cooperation may include, for example, the partner agency staff cross-referencing the investigation case number

listed in the ‘reason for access’ field, to the entities searched upon. AUSTRAC alone does not have the ability to guarantee that there was an appropriate justification to conduct the search.

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information  had  been  misused  by  an  AFP  employee.98  AUSTRAC  became  aware  of  this  breach  through  the  media.99  Conducting  periodic  reviews  of  partner agencies’ audit logs and online access would provide assurance that  partner agencies are using AUSTRAC information appropriately. 

2.39 In  addition,  staff  of  some  partner  agencies  were  unaware  of  responsibilities  with  regards  to  the  management  of  AUSTRAC  information  (including monitoring of possible breaches). For example, the MOUs state that  it is the responsibility of partner agencies to advise AUSTRAC of any detected  misuse  of  AUSTRAC  data  within  five  working  days.  However,  staff  of  one agency were not aware of this requirement, and incorrectly advised the  ANAO that AUSTRAC is responsible for advising of any breaches that occur  within that agency. 

New functionality introduced

2.40 In May 2012, AUSTRAC advised its key partner agencies that it would  introduce, on 4 June 2012, new functionality in the AUSTRAC database, where  the user would have to state their ‘reason for access’. The ‘reason for access’  function aims to provide governance and feedback benefits to both AUSTRAC  and its partner agencies, by providing a better ability to monitor and audit the  searches conducted by users of the AUSTRAC database.  

2.41 The  ‘reason  for  a ccess’  function  is  a  free‐text  field  which  if  used  appropriately, should be mutually beneficial to both AUSTRAC and its partner  agencies.  However,  to  be  effective,  the  function  requires  the  cooperation  of  staff  in  partner  agencies.100  Including  the  requirement  to  use  this  function  appropriately in the MOUs may assist in this regard. 

Feedback clauses

2.42 The  feedback  clauses  in  AUSTRAC’s  domestic  MOUs  require  that  partner agencies regularly compare their quarterly feedback report on the use 

                                                       98 Rudra, K, ‘Women in divorce row loses job fight’, Sydney Morning Herald, 26 April 2012

[accessed 20 June 2012]. 99 The AUSTRAC CEO wrote to the AFP Commissioner on 11 May 2012 to remind the AFP of the requirements of their

MOU, as clause 59 states that ‘The AFP agrees to advise AUSTRAC in writing of any incident involving a breach of the MOU or the FTR Act or AML/CTF Act within five working days of becoming aware of the incident’. 100 Such cooperation may include, for example, the partner agency staff cross-referencing the investigation case number

listed in the ‘reason for access’ field, to the entities searched upon. AUSTRAC alone does not have the ability to guarantee that there was an appropriate justification to conduct the search.

Administrative Arrangements

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of AUSTRAC information with AUSTRAC’s Users Statistics Report101 so that  ‘effective feedback is provided’. However, compliance with this responsibility  has not been consistent. Most of the seven partner agencies did not provide  quarterly  feedback  reports  to  AUSTRAC  in  2011-12.  The  ATO  submitted  three periodic  feedback  reports  (titled  the  ‘Austracking’  newsletter)  to  AUSTRAC  in  2011-12,  none  of  which  made  comparison  to  the  number  of  registered and active users listed in AUSTRAC’s Users Statistics Report.102 In  early 2012, Customs and Border Protection altered their capture of the utility of  AUSTRAC  information in their investigations, but provided no feedback to  AUSTRAC on the number of users and searches conducted. 

2.43 In  March  2013,  AUSTRAC  advised  that  other  feedback  mechanisms  such as the new domestic request forms, a single feedback form, ‘reason for  access’ function and others have replaced the quarterly feedback reporting.103  Although these changes are not reflected in the MOUs that ANAO examined,  AUSTRAC advised that the MOUs will be updated in the near future to reflect  them. 

International exchange arrangements

2.44 AUSTRAC shares AML/CTF compliance‐related information, financial  transaction  information  and  intelligence  with  its  international  counterparts.  This  information  strengthens  the  global  effort  to  combat  money  laundering  and terrorism financing, and benefi ts the operational work of FIUs and law  enforcement agencies tracking the movement of the proceeds of crime.104 In  return, AUSTRAC receives valuable financial intelligence from its international  partners to assist in its own detection and analysis of illicit transactions.105 

                                                       101 The Users Statistic Report includes for each individual partner agency: the number of registered and active users accessing the AUSTRAC database, and the number of logons and the types of searches conducted, separated by each

geographical office, organisational unit, and employee level. 102 The July 2011 report, reported the number of searches performed by each of the ATO’s Business Service Lines during 2010-11. However, the report made no mention of reconciliation to AUSTRAC’s User Statistic Report. 103

The quarterly feedback reports have ceased since the implementation of the ‘reason for access’ function. AUSTRAC advised that the main purpose of the new ‘domestic request form’ is to provide a structured template for partner agencies to make a formal request for AUSTRAC analysis, and to provide all the information that AUSTRAC acquires to conduct such analysis (including a general overview of the case, such as the crime type) and the agency point of contact details. The ‘single feedback form’ is used to gather information on the quality of the written intelligence products produced by AUSTRAC analysts. It is also a mechanism by which AUSTRAC receives information on partner agency investigations that have been supported by AUSTRAC, including any charges or convictions obtained. The ‘reason for access’ function is intended to provide a better ability to monitor and audit searches conducted by users of the AUSTRAC database. 104

AUSTRAC Annual Report 2011-12, p. 80. 105 ibid.

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2.45 Before  exchanging  information  with  a  foreign  FIU,  AUSTRAC  negotiates an exchange agreement with that FIU, typically in the form of an  MOU106,  with  standard  clauses  common  to  Egmont  Group  members.  These  incorporate  Egmont’s  Principles  of  Information  Exchange,  but  have  been  expanded to meet Australian requirements and practices. As of March 2013,  AUSTRAC had exchange agreements with 65 international counterparts. Each  exchange agreement outlines specific guidelines for information exchange with  that international jurisdiction. 

2.46 The  ANAO  examined  AUSTRAC’s  MOUs  with  nine  existing  counterparts  and  one  draft  MOU  with  another  jurisdiction,  based  on  the  highest  number  of  international  exchanges  in  2011-12.  The  nine  existing  counterparts  are:  the  United  States  of  America;  Singapore;  Hong  Kong;  New Zealand;  the  United  Kingdom;  Canada;  Guernsey  Channel  Islands;  Malaysia; and Isle of Man.107 

2.47 The 10 international exchange agreements examined (which include the  draft MOU) contain clauses relating to:  

 information exchange; 

 making a request; 

 use and release of information; 

 confidentiality of information; 

 communication; and  

 audit trails.  

2.48 The  appropriate  handling  of  information  (financial  intelligence)  by  international  counterparts  is  referred  to  in  the  Egmont’s  Principles  of  Information Exchange, where the need for all information exchanges by FIU’s  is subject to strict contr

ols and safeguards to ensure that the information is  used  only  in  an  authorised  manner,  consistent  with  national  provisions  on  privacy  and  data  protection.  AUSTRAC  advised  that  it  also  undertakes  thorough  due  diligence  when  assessing  a  request  to  enter  an  exchange  agreement from a foreign FIU. In addition, the standardisation of key clauses 

                                                       106 ibid.

107 The draft MOU that the ANAO examined was with another jurisdiction that had ongoing negotiations with AUSTRAC at the time of audit.

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2.45 Before  exchanging  information  with  a  foreign  FIU,  AUSTRAC  negotiates an exchange agreement with that FIU, typically in the form of an  MOU106,  with  standard  clauses  common  to  Egmont  Group  members.  These  incorporate  Egmont’s  Principles  of  Information  Exchange,  but  have  been  expanded to meet Australian requirements and practices. As of March 2013,  AUSTRAC had exchange agreements with 65 international counterparts. Each  exchange agreement outlines specific guidelines for information exchange with  that international jurisdiction. 

2.46 The  ANAO  examined  AUSTRAC’s  MOUs  with  nine  existing  counterparts  and  one  draft  MOU  with  another  jurisdiction,  based  on  the  highest  number  of  international  exchanges  in  2011-12.  The  nine  existing  counterparts  are:  the  United  States  of  America;  Singapore;  Hong  Kong;  New Zealand;  the  United  Kingdom;  Canada;  Guernsey  Channel  Islands;  Malaysia; and Isle of Man.107 

2.47 The 10 international exchange agreements examined (which include the  draft MOU) contain clauses relating to:  

 information exchange; 

 making a request; 

 use and release of information; 

 confidentiality of information; 

 communication; and  

 audit trails.  

2.48 The  appropriate  handling  of  information  (financial  intelligence)  by  international  counterparts  is  referred  to  in  the  Egmont’s  Principles  of  Information Exchange, where the need for all information exchanges by FIU’s  is subject to strict contr

ols and safeguards to ensure that the information is  used  only  in  an  authorised  manner,  consistent  with  national  provisions  on  privacy  and  data  protection.  AUSTRAC  advised  that  it  also  undertakes  thorough  due  diligence  when  assessing  a  request  to  enter  an  exchange  agreement from a foreign FIU. In addition, the standardisation of key clauses 

                                                       106 ibid.

107 The draft MOU that the ANAO examined was with another jurisdiction that had ongoing negotiations with AUSTRAC at the time of audit.

Administrative Arrangements

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in the international exchange agreements provides some assurance as to the  consistency with which financial intelligence should be handled.  

2.49 However,  the  10  international  exchange  agreements  that  the  ANAO  examined did not contain a specific clause relating to the reporting of known  breaches to the agreement. AUSTRAC was made aware of one recent breach  by an international media article. A foreign FIU released information it had  received  from  AUSTRAC  to  one  of  the  foreign  country’s  law  enforcement  agencies  without  requesting  permission  from  AUSTRAC,  contrary  to  the  MOU.108 The foreign FIU advised AUSTRAC that since this incident they have  sought approval from AUSTRAC before disclosing AUSTRAC information to  their local law enforcement agencies. AUSTRAC is not aware of any additional  breaches to international exchange agreements since this incident. In May 2013,  AUSTRAC advised that, as part of the ongoing evolution of its international  exchange instruments, the current exchange agreement template now includes  specific clauses that relate to the reporting of known unauthorised disclosures  and its consequences. 

Conclusion 2.50 The  roles,  responsibilities  and  accountability  arrangements  within  AUSTRAC’s Intelligence Branch are well defined. The ANAO’s review of the  Intelligence  Branch  business  plans  and  risk  reporting  shows  that,  with  one  exception,  risks  indicated   in  the  plans  align  with  the  agency’s  identified  corporate risks. AUSTRAC’s corporate risk plans appropriately identify a key  agency‐wide risk relating to the impact of a potential failure of the agency’s IT  infrastructure  (data  centre).  However,  this  risk  is  not  apparent  in  the  Intelligence  Branch’s  business  and  risk  planning  and  reporting  framework.  AUSTRAC  advised  that  the  data  centre  risk  is  being  managed  as  an  agency‐wide risk. 

2.51 Other  risks  relating  to  changes  in  resourcing  or  priorities  of  partner  agencies that could affect the acceptance of AUSTRAC’s financial intelligence  disseminations were also not included in the Intelligence Branch risk planning.  The Intelligence Branch would benefit from better identification, assessment,  linkages  and  reporting  of  agency‐wide  and  partner  agency  risks  that  could  adversely impact the Intelligence Branch operations. 

                                                       108 The information was subsequently used in court proceedings without AUSTRAC being advised, contravening the confidentiality clauses.

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2.52 Staff are supported by generally comprehensive operational guidance.  However, many of the current SOPs were incomplete, outdated or undated.  There would be benefit in AUSTRAC ensuring that all instructional SOPs are  complete, and correctly recording when SOPs were last reviewed and updated  so staff are aware of the most current SOPs. ASLOs have a clear understanding  of their roles and responsibilities. There are specific SOPs that cover some of  the tasks that ASLOs undertake, but there is no formal, documented guidance  on other important day to day functions. There would be merit in AUSTRAC  preparing  a  more  complete  operational  guidance  and  procedures  for  the  ASLOs. 

2.53 AUSTRAC’s  MOUs  with  seven  of  its  key  domestic  partner  agencies  provide a broad and generally comprehensive framework for the exchange of  financial intelligence between AUSTRAC and its partners. However, breaches  have occurred in the past where partner agencies have detected inappropriate  use  of  AUSTRAC  data  by  their  employees.  To  date,  AUSTRAC  has  not  exercised the right to view the required audit log of AUSTRAC information  that has been disseminated to other agencies, or requested an audit of online  access to AUSTRAC information by partner agency officials. 

2.54 Similarly,  the  accountability  clauses  in  AU STRAC’s  international  exchange agreements are based on a standard format and seek to provide a  framework to protect financial information disclosed to overseas counterparts.  The 10 international exchange agreements that the ANAO examined did not  contain a specific clause requiring the reporting of breaches to the agreement.  AUSTRAC  advised  that  the  exchange  agreement  template  now  includes  specific clauses that relate to the reporting of known unauthorised disclosures  and consequences. 

 

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2.52 Staff are supported by generally comprehensive operational guidance.  However, many of the current SOPs were incomplete, outdated or undated.  There would be benefit in AUSTRAC ensuring that all instructional SOPs are  complete, and correctly recording when SOPs were last reviewed and updated  so staff are aware of the most current SOPs. ASLOs have a clear understanding  of their roles and responsibilities. There are specific SOPs that cover some of  the tasks that ASLOs undertake, but there is no formal, documented guidance  on other important day to day functions. There would be merit in AUSTRAC  preparing  a  more  complete  operational  guidance  and  procedures  for  the  ASLOs. 

2.53 AUSTRAC’s  MOUs  with  seven  of  its  key  domestic  partner  agencies  provide a broad and generally comprehensive framework for the exchange of  financial intelligence between AUSTRAC and its partners. However, breaches  have occurred in the past where partner agencies have detected inappropriate  use  of  AUSTRAC  data  by  their  employees.  To  date,  AUSTRAC  has  not  exercised the right to view the required audit log of AUSTRAC information  that has been disseminated to other agencies, or requested an audit of online  access to AUSTRAC information by partner agency officials. 

2.54 Similarly,  the  accountability  clauses  in  AU STRAC’s  international  exchange agreements are based on a standard format and seek to provide a  framework to protect financial information disclosed to overseas counterparts.  The 10 international exchange agreements that the ANAO examined did not  contain a specific clause requiring the reporting of breaches to the agreement.  AUSTRAC  advised  that  the  exchange  agreement  template  now  includes  specific clauses that relate to the reporting of known unauthorised disclosures  and consequences. 

 

Administrative Arrangements

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Recommendation No.1 2.55 To gain assurance that obligations to safeguard AUSTRAC’s financial  intelligence are being met, the ANAO recommends that AUSTRAC reviews  the accountability clauses in its agreements with partner agencies, and takes  steps  to  exercise  its  rights  to  periodically  review  access  to,  and  further  disseminations of, AUSTRAC data by partner agency personnel. 

AUSTRAC’s response: 

2.56 Agreed. As part of its 2013‐14 program for introducing the new Enhanced  Analytical  Capability  (EAC)  system,  AUSTRAC  will  review  and  re‐negotiate  its  MOUs  with  domestic  partner  agencies.  EAC  will  provide  strengthened  audit  and  security  capabilities  to  bolster  the  protection  of  AUSTRAC  data  holdings  and  the  safeguards governing the use of that data by partner agency personnel. These MOUs  will also be updated to reflect the recently introduced ‘reason for access’ controls with  which partner agency personnel  must  comply when accessing AUSTRAC data. In  addition,  AUSTRAC  will  conduct  a  review  of  selected  partner  agencies’  records  relating to the further dissemination of AUSTRAC information by those agencies. 

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3. Workload Management of Financial Intelligence Assessments

This chapter examines AUSTRAC’s workload management of financial intelligence  assessments, including processing times and quality assurance processes. 

Introduction 3.1 As  discussed  in  Chapter  1  (paragraph  1.11),  authorised  domestic  partner  agency  personnel  may  have  online  access  to  AUSTRAC’s  financial  intelligence  within  the  TRAQ  database  through  the  TRAQ  Enquiry  System  (TES).  In  addition  to  providing  this  online  access  to  FTR  data,  AUSTRAC  analyses,  evaluates  and  disseminates  suspicious  matter  reports  to  partner  agencies, and produces a range of more complex financial intelligence reports  on matters of interest to partner agencies, and disseminates them for further  investigation.109 The intelligence reports are based on specialist assessments of  AUSTRAC’s data, and incorporate other information and analysis undertaken  by AUSTRAC on specific targets and patterns of transactions.  

3.2 In 2011-12, AUSTRAC received a total of 48 155 reports of suspicious  matters  reports  or  suspect  transaction  reports  (SMRs/SUSTRs)110,  and  disseminated a total of 59 180 SMRs/SUSTRs to partner agencies.111 In the same  year,  AUSTRAC  also  produced  847  financial  intelligence  reports  and  made  1513  disseminations  to  domestic  partner  agencies.112  The  analysis  and  dissemination of these reports was generated by various sources, including:  detections  by  AUSTRAC’s  monitoring  systems;  requests  from  partner  agencies; proactive disseminations relevant to partner agency areas o f interest;  information  referred  to  AUSTRAC’s  Intelligence  Branch  by  other  internal  business units; and information from international FIUs.113 

3.3 The  key  steps  of  the  Intelligence  Branch  processing  of  financial  intelligence are shown in Figure 3.1 below. 

                                                       109 AUSTRAC Annual Report 2011-12, p. 66. 110

These reports are a vital source of intelligence for AUSTRAC and its partner agencies as they often detail activity not recorded in other financial transaction report types AUSTRAC collects. 111 AUSTRAC Annual Report 2011-12, p. 68. 112

ibid.

113 AUSTRAC Annual Report 2011-12, p. 66.

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3. Workload Management of Financial Intelligence Assessments

This chapter examines AUSTRAC’s workload management of financial intelligence  assessments, including processing times and quality assurance processes. 

Introduction 3.1 As  discussed  in  Chapter  1  (paragraph  1.11),  authorised  domestic  partner  agency  personnel  may  have  online  access  to  AUSTRAC’s  financial  intelligence  within  the  TRAQ  database  through  the  TRAQ  Enquiry  System  (TES).  In  addition  to  providing  this  online  access  to  FTR  data,  AUSTRAC  analyses,  evaluates  and  disseminates  suspicious  matter  reports  to  partner  agencies, and produces a range of more complex financial intelligence reports  on matters of interest to partner agencies, and disseminates them for further  investigation.109 The intelligence reports are based on specialist assessments of  AUSTRAC’s data, and incorporate other information and analysis undertaken  by AUSTRAC on specific targets and patterns of transactions.  

3.2 In 2011-12, AUSTRAC received a total of 48 155 reports of suspicious  matters  reports  or  suspect  transaction  reports  (SMRs/SUSTRs)110,  and  disseminated a total of 59 180 SMRs/SUSTRs to partner agencies.111 In the same  year,  AUSTRAC  also  produced  847  financial  intelligence  reports  and  made  1513  disseminations  to  domestic  partner  agencies.112  The  analysis  and  dissemination of these reports was generated by various sources, including:  detections  by  AUSTRAC’s  monitoring  systems;  requests  from  partner  agencies; proactive disseminations relevant to partner age ncy areas of interest;  information  referred  to  AUSTRAC’s  Intelligence  Branch  by  other  internal  business units; and information from international FIUs.113 

3.3 The  key  steps  of  the  Intelligence  Branch  processing  of  financial  intelligence are shown in Figure 3.1 below. 

                                                       109 AUSTRAC Annual Report 2011-12, p. 66. 110

These reports are a vital source of intelligence for AUSTRAC and its partner agencies as they often detail activity not recorded in other financial transaction report types AUSTRAC collects. 111 AUSTRAC Annual Report 2011-12, p. 68. 112

ibid.

113 AUSTRAC Annual Report 2011-12, p. 66.

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Figure 3.1

Key steps of the Intelligence Branch processing of financial intelligence

 

Source: ANAO analysis of AUSTRAC advice and data.

Notes: 1. Cross-border movement of physical currency or bearer negotiable instrument (CBM-PC/BM-BNI) transaction reports are submitted by the Australian Federal Police and

Customs and Border Protection. 2 Requests can be made on behalf of partner agencies, Commonwealth taskforces and on-designated Commonwealth agencies. 3

Financial intelligence may be provided to non-designated Commonwealth agencies under Section 129 of the AML/CTF Act.

3.4 The ANAO examined AUSTRAC’s assessed and unassessed workload  and  the  processing  times  for  the  following  key  financial  intelligence  assessment  types:  TargIT  (AUSTRAC’s  automated  monitoring  system)  assessments;  suspicious  matters  and  suspect  transaction  reports  (SMRs/SUSTRs);  partner  agency  requests  (through  the  ASLO  network);  and  international exchange of information. The strategic intelligence reports, data  mining,  and  the  quality  assurance  mechanisms  in  place  for  all  financial  intelligence types were also examined. 

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Assessed and unassessed workload 3.5 The increase in financial transaction reports obtained from reporting  entities, as well as the level of in‐depth analysis and risk assessment that is  applied to these reports has affected workloads across the various financial  intelligence  assessments,  particularly  for  TargIT  assessments  and  SMRs/SUSTRs. 

TargIT assessments

3.6 Financial transaction data is primarily obtained from reporting entities  under the FTR Act and the AML/CTF Act and is stored in AUSTRAC’s TRAQ  database.  AUSTRAC  developed  TargIT  to  monitor  the  large  volume  of  financial transaction data held within TRAQ.  

TargIT is a rules based system that uses ‘clauses’ (financial profiles) to identify  particular  types  of  suspicious  financial  activity.  A  TargIT  clause  can  be  triggered by names, bank account details or other identifying fields, and each  ‘hit’ is assessed as either being of high, medium or low priority  

3.7 The monitoring team within the Analytics and Monitoring section of  AUSTRAC’s  Intelligence  Branch  is  responsible  for  reviewing  TargIT’s  daily  output of hits. Prior to writing up an assessment, the team flags the hit to a  partner agency through an ASLO, to minimise the risk of assessing a network  or entity which is of no interest to partner agencies. Where there is interest, the  team c onducts in‐depth analysis and disseminates the assessments to partner  agencies, in what is referred to as a proactive assessment. In addition, they also  produce  requested  assessments,  which  are  financial  intelligence  assessments  requested by partner agencies. The team disseminated 637 reports in 2011-12,  more than two‐thirds (441 of the 637) of which were of a proactive nature.  

3.8 The  TargIT  clauses  generated  an  average  of  136 hits  each  day  in   2011-12, giving a yearly total of 35 655 hits. AUSTRAC advised that there is no  requirement or expectation that all hits will be assessed. A large volume of  hits, have historically and continue to be, false/positives, generated by data  quality  issues.  Better  matching,  as  TargIT  clauses  have  been  refined114,  has  improved the reliability of the top performing clauses, but reliability issues still  occur. Consequently, it is not practical to expect that every hit will be assessed.  

                                                       114 TargIT clauses were refined in February 2012.

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Assessed and unassessed workload 3.5 The increase in financial transaction reports obtained from reporting  entities, as well as the level of in‐depth analysis and risk assessment that is  applied to these reports has affected workloads across the various financial  intelligence  assessments,  particularly  for  TargIT  assessments  and  SMRs/SUSTRs. 

TargIT assessments

3.6 Financial transaction data is primarily obtained from reporting entities  under the FTR Act and the AML/CTF Act and is stored in AUSTRAC’s TRAQ  database.  AUSTRAC  developed  TargIT  to  monitor  the  large  volume  of  financial transaction data held within TRAQ.  

TargIT is a rules based system that uses ‘clauses’ (financial profiles) to identify  particular  types  of  suspicious  financial  activity.  A  TargIT  clause  can  be  triggered by names, bank account details or other identifying fields, and each  ‘hit’ is assessed as either being of high, medium or low priority  

3.7 The monitoring team within the Analytics and Monitoring section of  AUSTRAC’s  Intelligence  Branch  is  responsible  for  reviewing  TargIT’s  daily  output of hits. Prior to writing up an assessment, the team flags the hit to a  partner agency through an ASLO, to minimise the risk of assessing a network  or entity which is of no interest to partner agencies. Where there is interest, the  team c onducts in‐depth analysis and disseminates the assessments to partner  agencies, in what is referred to as a proactive assessment. In addition, they also  produce  requested  assessments,  which  are  financial  intelligence  assessments  requested by partner agencies. The team disseminated 637 reports in 2011-12,  more than two‐thirds (441 of the 637) of which were of a proactive nature.  

3.8 The  TargIT  clauses  generated  an  average  of  136 hits  each  day  in   2011-12, giving a yearly total of 35 655 hits. AUSTRAC advised that there is no  requirement or expectation that all hits will be assessed. A large volume of  hits, have historically and continue to be, false/positives, generated by data  quality  issues.  Better  matching,  as  TargIT  clauses  have  been  refined114,  has  improved the reliability of the top performing clauses, but reliability issues still  occur. Consequently, it is not practical to expect that every hit will be assessed.  

                                                       114 TargIT clauses were refined in February 2012.

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3.9 A  senior  analyst  within  the  monitoring  team  is  responsible  for  tabulating each month how many hits have been triggered, assessed and are  still waiting to be assessed. The monthly TargIT team reporting shows that  there was a total of 8885 unassessed hits as at February 2013. The ANAO has  analysed  the  new  hits,  residual  unassessed  hits  and  the  number  of  hits  assessed each month from July 2011 to February 2013, as shown in Figure 3.2  below. 

Figure 3.2

The number of TargIT hits: new, unassessed and assessed each month, July 2011 to February 2013

 

Source: ANAO analysis of monthly reporting spreadsheets.

Note: In December 2011 the decision was made to focus on hits which had triggered in the preceding two months. Older hits were considered to be of low priority to partner agencies.

3.10 The number of hits per month was substantially reduced as a result of  the clause refinement in February 2012. The ANAO’s analysis shows that, for  the period from July 2011 to February 2013: 

 before  the  clauses  were  refined  (before  February  2012),  the  average  number of new hits per month was 3277 (range of 2059 to 5159); 

0

5000

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Feb-12

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Jul-12

Aug-12

Sep-12

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New Hits Unassessed older than 1 month, less than 2 months Unassessed older than 2 months Number of Hits Assessed

TargIT clauses refined

Decision to focus on hits triggered in past

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 after  the  clauses  were  refined,  the  average  number  of  new  hits  per  month was 2244 (range of 1677 to 4780);  

 all of the unassessed hits were initially triggered at least two months  prior115; and 

 ninety‐five  per  cent  of  the  unassessed  hits  (8480  of  8885)  had  been  triggered more than one year earlier.  

3.11 Although the TargIT workload, including the reasons for backlog, was  tabulated and routinely reported to line management, there was no consistent,  structured  reporting  to  agency  management  of  the  actual  workload,  unassessed hits on hand (including the significance or priority), and its effect,  if any, to operations. For example, the minutes of meetings of the Intelligence  Oversight  Committee  (IOC)  in  2011  and  2012,  or  the  ExCom  meetings  in   2011-12,  do  not  reflect  any  discussion  of  the  TargIT  workload  or  backlogs.  While backlogs can be expected to occur in an operations area, it is important  for management to be aware of any assessment backlogs so they can make  informed decisions on resourcing priorities when, and if, required.  

Suspicious matters and suspect transaction reports

3.12 Under the AML/CTF Act, a reporting entity must submit Suspicious  Matter Reports (SMRs) if, at any time when providing a designated service, the  entity

  forms  a  reasonable  suspicion  that  the  matter  may  be  related  to  an  offence, tax evasion, or the proceeds of crime.116 Suspicious matter reports were  introduced  in  December  2008  and,  for  most  entities,  SMRs  have  replaced  suspect  transaction  reports  (SUSTRs),  which  are  submitted  by  entities  regulated under the FTR Act.117 

3.13 Suspicious matters or suspect transaction reports are a critical source of  information  to  AUSTRAC  as  they  offer  detailed  descriptions  of  potentially  suspicious  activity,  and  enable  the  reporting  of  transactions  or  activity  not  otherwise captured under the FTR Act or the AML/CTF Act. For example, a  bank  teller  may  find  a  customer’s  behaviour  to  be  suspicious  if  they  make 

                                                       115 In December 2011, the Intelligence Branch decided to prioritise unassessed hits that were less than two months old, as older hits were unlikely to be of interest to partner agencies. 116

AUSTRAC Annual Report 2011-12, p. 30. 117 AUSTRAC Annual Report 2011-12, p. 30. Businesses that are classified as ‘cash dealers’ are regulated by the FTR Act but not all are covered by the AML/CTF Act. However, SMRs and SUSTRs are very similar and both are to be

submitted when activities are suspected to be an offence under Australian laws.

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 after  the  clauses  were  refined,  the  average  number  of  new  hits  per  month was 2244 (range of 1677 to 4780);  

 all of the unassessed hits were initially triggered at least two months  prior115; and 

 ninety‐five  per  cent  of  the  unassessed  hits  (8480  of  8885)  had  been  triggered more than one year earlier.  

3.11 Although the TargIT workload, including the reasons for backlog, was  tabulated and routinely reported to line management, there was no consistent,  structured  reporting  to  agency  management  of  the  actual  workload,  unassessed hits on hand (including the significance or priority), and its effect,  if any, to operations. For example, the minutes of meetings of the Intelligence  Oversight  Committee  (IOC)  in  2011  and  2012,  or  the  ExCom  meetings  in   2011-12,  do  not  reflect  any  discussion  of  the  TargIT  workload  or  backlogs.  While backlogs can be expected to occur in an operations area, it is important  for management to be aware of any assessment backlogs so they can make  informed decisions on resourcing priorities when, and if, required.  

Suspicious matters and suspect transaction reports

3.12 Under the AML/CTF Act, a reporting entity must submit Suspicious  Matter Reports (SMRs) if, at any time when providing a designated service, the  entity

  forms  a  reasonable  suspicion  that  the  matter  may  be  related  to  an  offence, tax evasion, or the proceeds of crime.116 Suspicious matter reports were  introduced  in  December  2008  and,  for  most  entities,  SMRs  have  replaced  suspect  transaction  reports  (SUSTRs),  which  are  submitted  by  entities  regulated under the FTR Act.117 

3.13 Suspicious matters or suspect transaction reports are a critical source of  information  to  AUSTRAC  as  they  offer  detailed  descriptions  of  potentially  suspicious  activity,  and  enable  the  reporting  of  transactions  or  activity  not  otherwise captured under the FTR Act or the AML/CTF Act. For example, a  bank  teller  may  find  a  customer’s  behaviour  to  be  suspicious  if  they  make 

                                                       115 In December 2011, the Intelligence Branch decided to prioritise unassessed hits that were less than two months old, as older hits were unlikely to be of interest to partner agencies. 116

AUSTRAC Annual Report 2011-12, p. 30. 117 AUSTRAC Annual Report 2011-12, p. 30. Businesses that are classified as ‘cash dealers’ are regulated by the FTR Act but not all are covered by the AML/CTF Act. However, SMRs and SUSTRs are very similar and both are to be

submitted when activities are suspected to be an offence under Australian laws.

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transactions in multiple amounts less than AUD$10 000 to the same recipient.  This  behaviour  may  suggest  that  the  customer  may  be  trying  to  avoid  the  submission  of  a  Threshold  Transaction  Report  to  AUSTRAC,  which  is  mandatory under the AML/CTF Act for all transactions of $10 000 or more.118  

3.14 AUSTRAC provides feedback to reporting entities about the types of  criminal activity detected by the submission of FTRs (including SMRs), in the  annual Typologies and Case Studies Report (discussed from paragraph 3.47).  The following case study illustrates how a criminal operation was investigated  by  AUSTRAC’s  law  enforcement  partners  as  a  result  of  the  submission  of  multiple SMR/SUSTRs by reporting entities. 

Case Study Tax fraud identified by the reporting of two SMRs

Two SMRs submitted by reporting entities triggered AUSTRAC’s monitoring system. Coupled with additional analysis of related financial activity, AUSTRAC identified 10 clothing manufacturing businesses in one geographic location which had been conducting large cash withdrawals over an extended period of time. The SMRs identified unusual financial activity involving members of the syndicate who were frequently depositing cheques into company accounts, followed by cash withdrawals equivalent in value to the cheque deposits, on the same day. This information prompted AUSTRAC to produce a finanical intelligence assessment report for law enforcement agencies concerning these businesses. The fraud allowed the companies to evade income tax and other taxation obligations, and move their profits into the cash economy. When law enforcement officers moved to stop the syndicate, they recovered more than AUD$1 million in cash, as well as a number of properties.

Source: AUSTRAC Typologies and Case Studies Report 2012, pp. 50-53.

                                                       118 Details about all report types required to be submitted to AUSTRAC are included in Appendix 2.

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3.15 Since  the  introduction  of  SMRs  in  2008,  AUSTRAC  has  reported  annually on both SMRs and SUSTRs that were received and disseminated by  the  agency.  Since  2008-09,  AUSTRAC  has,  on  average,  received  43 191 SMRs/SUSTRs,  and  disseminated  54 113  reports  annually.119  A  single  report may be disseminated to multiple agencies based on joint priorities and  areas  of  interest.120  Reports  received  in  previous  years  may  also  be  disseminated  in  response  to  partner  agency  requests  or  in  association  with  other  AUSTRAC  financial  intelligence  products.121  AUSTRAC  automatically  disseminates SMRs/SUSTRs to the ATO, as the agency is entitled under the  AML/CTF Act to access AUSTRAC information for any purpose relating to the  facilitation of the administration or enforcement of a taxation law.122 

3.16 All SMR/SUSTRs are entered into AUSTRAC’s TRAQ database, which  applies  a  series  of  ‘business  rules’,  to  categorise  reports  of  suspicious  matters.123 These rules are defined and continually rewritten by AUSTRAC in  collaboration with its partner agencies. The rules enable AUSTRAC’s system to  identify those reports that relate to specific key risks. The significance attached  to a business rule is based on AUSTRAC’s internal guidelines, and informed  by partner agencies’ operations and priorities.124  

3.17 AUSTRAC advised that SMRs which meet  business rules are triaged as  they  are  received  and  may  be  allocated  to  analysts  for 

evaluation. Reports which  have  triggered  rules  will  sit  in  the  work  queue  pending  further  assessment. Business  rules  are  designed  to  highlight  reports with  particular  risk  indicators.125  The  pre‐assigned  significance  (risk)  rating attached to a suspicious report as a result of a business rule may change  following evaluation by an analyst. Factors such as false positives, data quality  issues, timeliness and contextualising the reported SMR activity will influence  the ultimate risk rating assigned to a suspicious report. 

                                                       119 AUSTRAC usually disseminates more reports than it produces each year, as individual reports may be disseminated to more than one partner agency. 120

AUSTRAC Annual Report 2011-12, p. 69. 121 ibid.

122 Stated in subsection 125(1) of the AML/CTF Act. In 2011-12, AUSTRAC disseminated 48 010 suspect reports to the ATO, up by 8 per cent from the previous year.

123 ibid, p. 71.

124 The precise nature of the business rules is , for operational reasons. However, one example of a high priority business rule is the ‘unusual condition of cash’ provision, which searches the text provided in the SMR/SUSTR for descriptions of the cash. The SMR/SUSTRs which would be flagged by this business rule may mention substances on the notes, such

as drugs or blood, which would be of interest to law enforcement partners. 125 Business rules may be triggered by a single attribute or multiple attributes in a given report, such as a dollar amount, keyword or country.

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3.15 Since  the  introduction  of  SMRs  in  2008,  AUSTRAC  has  reported  annually on both SMRs and SUSTRs that were received and disseminated by  the  agency.  Since  2008-09,  AUSTRAC  has,  on  average,  received  43 191 SMRs/SUSTRs,  and  disseminated  54 113  reports  annually.119  A  single  report may be disseminated to multiple agencies based on joint priorities and 

areas  of  interest.120  Reports  received  in  previous  years  may  also  be  disseminated  in  response  to  partner  agency  requests  or  in  association  with  other  AUSTRAC  financial  intelligence  products.121  AUSTRAC  automatically  disseminates SMRs/SUSTRs to the ATO, as the agency is entitled under the  AML/CTF Act to access AUSTRAC information for any purpose relating to the  facilitation of the administration or enforcement of a taxation law.122 

3.16 All SMR/SUSTRs are entered into AUSTRAC’s TRAQ database, which  applies  a  series  of  ‘business  rules’,  to  categorise  reports  of  suspicious  matters.123 These rules are defined and continually rewritten by AUSTRAC in  collaboration with its partner agencies. The rules enable AUSTRAC’s system to  identify those reports that relate to specific key risks. The significance attached  to a business rule is based on AUSTRAC’s internal guidelines, and informed  by partner agencies’ operations and priorities.124  

3.17 AUSTRAC advised that SMRs which meet  business rules are triaged as  they  are  received  and  may  be  allocated  to  analysts  for 

evaluation. Reports which  have  triggered  rules  will  sit  in  the  work  queue  pending  further  assessment. Business  rules  are  designed  to  highlight  reports with  particular  risk  indicators.125  The  pre‐assigned  significance  (risk)  rating attached to a suspicious report as a result of a business rule may change  following evaluation by an analyst. Factors such as false positives, data quality  issues, timeliness and contextualising the reported SMR activity will influence  the ultimate risk rating assigned to a suspicious report. 

                                                       119 AUSTRAC usually disseminates more reports than it produces each year, as individual reports may be disseminated to more than one partner agency. 120

AUSTRAC Annual Report 2011-12, p. 69. 121 ibid.

122 Stated in subsection 125(1) of the AML/CTF Act. In 2011-12, AUSTRAC disseminated 48 010 suspect reports to the ATO, up by 8 per cent from the previous year.

123 ibid, p. 71.

124 The precise nature of the business rules is , for operational reasons. However, one example of a high priority business rule is the ‘unusual condition of cash’ provision, which searches the text provided in the SMR/SUSTR for descriptions of the cash. The SMR/SUSTRs which would be flagged by this business rule may mention substances on the notes, such

as drugs or blood, which would be of interest to law enforcement partners. 125 Business rules may be triggered by a single attribute or multiple attributes in a given report, such as a dollar amount, keyword or country.

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3.18 As AUSTRAC receives, on average, approximately 3600 SMRs/SUSTRs  monthly, it is not possible for the agency to assess and evaluate each and every  report  on  a  daily  basis.  At  any  point  in  time,  there  are  thousands  of  SMRs/SUSTRs  in  AUSTRAC’s  work  queue.  The  ANAO  was  advised  that  AUSTRAC analysts focus on assessing SMRs/SUSTRs that meet the business  rules. Precedence is given to reports that are of a higher priority, as the agency  does  not  have  the  capacity  to  look  at,  and  assess,  all  reports  that  meet  the  business  rules.  The  ANAO  examined  the  backlogs  for  SMRs/SUSTRs  from  July 2011 to February 2013 (as at March 2013).126 The ANAO analysis shows  that there are, 

 6384  unassessed  records  that  had  a  significance  rating  of  ‘very  high/high’; and 

 7247 unassessed records that had a significance rating of ‘moderate’.  

3.19 AUSTRAC advised that there are ongoing refinements and measures  employed  by  AUSTRAC  and  partner  agencies  to  mitigate  the  risk  of  not  assessing high value SMRs/SUSTRs. Designated partner agencies have access  to SMRs/SUSTRs, with the ATO having full unrestricted access, as discussed in  paragraph  3.15.  Therefore,  it  does  not  preclude  the  partner  agencies  from  looking at, or assessing, the reports t hat may relate to their own operations,  priorities or deemed of high significance to them.  

3.20 The priority of SMRs/SUSTRs (whether ‘very high/high’, ‘moderate’ or  ‘low/very  low’)  and  the  business  rules  that  trigger  them  requires  ongoing  assessment  and  review.  Suspect  reports  are  very  dynamic  as  they  detect  changes in behaviour, and their significance varies constantly, as discussed in  paragraph  3.17.  For  example,  the  ANAO  was  advised  that  although  a  SMR/SUSTR may be rated as ‘very high/high’ when it is first lodged into the  AUSTRAC systems—when it is examined by an AUSTRAC analyst, the latter  may  assess  it  as  a  suspect  report  of  a  lower  significance  rating  (that  is,  ‘moderate’ or lower) due to new information that the analyst may know of, at  that  particular  point  in  time.  AUSTRAC  advised  that  the  agency’s  new  capability,  the  Enhanced  Analytical  Capability  program,  is  expected  to  be  flexible and reflect real‐time changes in SMRs/SUSTRs business rules.  

                                                       126 The Suspicious Reports Work Queue has varying processing status, which could either be: complete; in progress; pending; system assessed; system processing and unassessed.

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3.21 Similar  to  TargIT  assessments,  there  is  no  consistent,  structured  reporting  to  management  of  the  actual  workload,  unassessed  hits  on  hand  (including  the  significance  or  priority  rating),  and  its  effect,  if  any,  to  operations. 

ASLO assessments and disseminations

3.22 As  previously  discussed  in  paragraph  2.25,  one  of  the  three  main  responsibilities for an ASLO is to provide analytical support to their partner  agencies  (along  with  relationship  management  and  training).127  While  the  ASLO may be outposted to the partner agency, they still have access to the  TRAQ Enquiry System (TES) through an online portal. The role of the ASLO is  to search this database to locate entities of interest to partner agencies along  with  their  associated  networks  and  any  financial  transactions  that  can  be  attributed to the entities. Depending on the complexity and timeframe of the  request, the intelligence disseminated can be provided in a number of formats,  ranging  from  formal  financial  intelligence  assessments,  to  the  essential  information simply being provided informally in a spreadsheet with a brief  explanation of the findings.  

3.23 The ASLO role has a different focus to the intelligence analysts who are  located  within  the  monitoring  team.  While  more  than  two‐thirds  of  the  disseminations produced by the  monitoring team are proactive in nature, the  ANAO’s analysis of ASLO disseminations for 2011-12 shows that 64 per cent  of  intelligence  reports  were  requested  by  partner  agencies.  This  difference  reflects the client support focus of the ASLO role. The ASLOs disseminated a  total of 506 financial intelligence reports for 2011-12. At the time of audit, there  was  no  unassessed  workload  queue  for  the  ASLOs’  assessments  and  disseminations.  

International exchange of information

3.24 AUSTRAC  plays  an  important  role  in  contributing  to  international  efforts  directed  at  preventing  money  laundering,  terrorism  financing,  major  crime  and  tax  evasion.  AUSTRAC  disseminates  intelligence  internationally, 

                                                       127 The analytical support provided includes: preparation and dissemination of detailed information reports for relevant operations and investigations; proactive identification, promotion and referral of matters that may be of interest to

partner agencies; creation of AUSTRAC alerts for ongoing matters; and responding to requests for assistance and/or interpretation of AUSTRAC information with respect to any intelligence matters.

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3.21 Similar  to  TargIT  assessments,  there  is  no  consistent,  structured  reporting  to  management  of  the  actual  workload,  unassessed  hits  on  hand  (including  the  significance  or  priority  rating),  and  its  effect,  if  any,  to  operations. 

ASLO assessments and disseminations

3.22 As  previously  discussed  in  paragraph  2.25,  one  of  the  three  main  responsibilities for an ASLO is to provide analytical support to their partner  agencies  (along  with  relationship  management  and  training).127  While  the  ASLO may be outposted to the partner agency, they still have access to the  TRAQ Enquiry System (TES) through an online portal. The role of the ASLO is  to search this database to locate entities of interest to partner agencies along  with  their  associated  networks  and  any  financial  transactions  that  can  be  attributed to the entities. Depending on the complexity and timeframe of the  request, the intelligence disseminated can be provided in a number of formats,  ranging  from  formal  financial  intelligence  assessments,  to  the  essential  information simply being provided informally in a spreadsheet with a brief  explanation of the findings.  

3.23 The ASLO role has a different focus to the intelligence analysts who are  located  within  the  monitoring  team.  While  more  than  two‐thirds  of  the  disseminations produced by the  monitoring team are proactive in nature, the  ANAO’s analysis of ASLO disseminations for 2011-12 shows that 64 per cent  of  intelligence  reports  were  requested  by  partner  agencies.  This  difference  reflects the client support focus of the ASLO role. The ASLOs disseminated a  total of 506 financial intelligence reports for 2011-12. At the time of audit, there  was  no  unassessed  workload  queue  for  the  ASLOs’  assessments  and  disseminations.  

International exchange of information

3.24 AUSTRAC  plays  an  important  role  in  contributing  to  international  efforts  directed  at  preventing  money  laundering,  terrorism  financing,  major  crime  and  tax  evasion.  AUSTRAC  disseminates  intelligence  internationally, 

                                                       127 The analytical support provided includes: preparation and dissemination of detailed information reports for relevant operations and investigations; proactive identification, promotion and referral of matters that may be of interest to

partner agencies; creation of AUSTRAC alerts for ongoing matters; and responding to requests for assistance and/or interpretation of AUSTRAC information with respect to any intelligence matters.

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providing  financial  intelligence  reports  to  any  of  the  65 international  counterpart FIUs that have exchange agreements in place with AUSTRAC. 

3.25 An international exchange can be one of five types:  

 a request from AUSTRAC, on behalf of one of their partner agencies, to  an international FIU seeking intelligence in regards to an investigation; 

 a  request  from  an  international  FIU  with  an  exchange  agreement,  seeking intelligence from AUSTRAC and/or a domestic partner agency; 

 a request from an international FIU without any exchange mechanisms  in  place,  to  which  AUSTRAC  will  in  most  circumstances  issue  a  response that they do not provide intelligence to FIUs with which they  do not have an exchange agreement128;  

 AUSTRAC, or a partner agency, analyse a financial entity and considers  that  one  of  their  international  counterpart  FIUs  or  foreign  law  enforcement partners would be interested in the intelligence, termed an  ‘outgoing spontaneous exchange’; or 

 an  international  FIU  or  law  enforcement  agency  considers  that  intelligence  which  they  have  analysed  would  be  beneficial  to  AUSTRAC  or  one  of  their  domestic  partner  agencies,  termed  an  ‘incoming spontaneous exchange’.129 

3.26 The  number  of  these  five  exchange  types  for  2011-12  are  shown  in  Table 3.1 below.130  

   

                                                       128 Where warranted by the significance of a matter, AUSTRAC will seek to obtain written assurance from an FIU in this category that it will comply with handling requirements, and provide information on a case by case basis. 129

ANAO inference from the AUSTRAC database.

130   Sections 132 and 133 of the AML/CTF Act specify that the AFP, ACC, ASIO, Australian Secret Intelligence Service, Office of National Assessments or any Defence intelligence agency may communicate AUSTRAC information to an international intelligence agency provided they are satisfied

with the security arrangements for, and the use of, the intelligence. As such, the number of international exchanges listed in Table 3.1 is not the complete picture of AUSTRAC intelligence exchanged with international counterparts.

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Table 3.1

International intelligence exchanges, 2011-12

Annual Report figure

Requests from overseas FIUs with an exchange agreement 97

Requests to overseas FIUs 49

Incoming spontaneous exchanges 47

Outgoing spontaneous exchanges 39

Total 232

Requests from overseas FIUs without an exchange agreement 22

Source: AUSTRAC Annual Report 2011-12, p. 82.

3.27 The  following  case  study  outlines  an  international  drug  importation  which was intercepted with the assistance of AUSTRAC and its international  counterpart FIUs. 

Case Study International cooperation to disrupt a drug importation

Two suspects in Australia inadvertently informed an undercover law enforcement officer of their plan to import more than 500kg of cannabis from Papua New Guinea. AUSTRAC information was used as a primary source of intelligence by domestic law enforcement agencies to link targets that had not previously been known to associates in Australia and operatives overseas. The street value of the cannabis could have exceeded $10 million had the importation reached Australia and not been disrupted by law enforcement. All four syndicate members pleaded guilty on charges of conspiring to import drugs, and were sentenced to imprisonment for between three and a half years and four years.

Source: AUSTRAC Typologies and Case Studies Report 2012, pp. 54-55.

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Table 3.1

International intelligence exchanges, 2011-12

Annual Report figure

Requests from overseas FIUs with an exchange agreement 97

Requests to overseas FIUs 49

Incoming spontaneous exchanges 47

Outgoing spontaneous exchanges 39

Total 232

Requests from overseas FIUs without an exchange agreement 22

Source: AUSTRAC Annual Report 2011-12, p. 82.

3.27 The  following  case  study  outlines  an  international  drug  importation  which was intercepted with the assistance of AUSTRAC and its international  counterpart FIUs. 

Case Study International cooperation to disrupt a drug importation

Two suspects in Australia inadvertently informed an undercover law enforcement officer of their plan to import more than 500kg of cannabis from Papua New Guinea. AUSTRAC information was used as a primary source of intelligence by domestic law enforcement agencies to link targets that had not previously been known to associates in Australia and operatives overseas. The street value of the cannabis could have exceeded $10 million had the importation reached Australia and not been disrupted by law enforcement. All four syndicate members pleaded guilty on charges of conspiring to import drugs, and were sentenced to imprisonment for between three and a half years and four years.

Source: AUSTRAC Typologies and Case Studies Report 2012, pp. 54-55.

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3.28 Overall, the topic of the international requests can range from specific  entity  names  or  businesses,  to  subjects being  investigated  in  relation  to  tax  evasion, stock market fraud, drug trafficking or the bribing of public officials.  At  the  time  of  the  audit,  there  was  no  unassessed  workload  queue  for  the  international exchange of information. 

Processing times 3.29 The  following  section  outlines  the  processing  times  and  internal  reporting  for  TargIT  assessments,  SMRs/SUSTRs,  ASLO  disseminations  and  the international exchange of information. 

TargIT assessments

3.30 In an internal SOP131, references are made to processing times of TargIT  assessments, namely that requested disseminations should be processed within  10 and 15 working days, and proactive disseminations assessed within 10 and  30 working days of being detected by TargIT. The ANAO examined processing  times for TargIT assessments for 2011-12. The ANAO ’s analysis shows that  for: 

 requested disseminations (processing target 10 and 15 working days):  the monitoring team disseminated 68 per cent within 10 working days  and 78 per cent within 15 working days, in 2011-12. 

 proactive dissemination (target to assess within 10 and 30 working  days  of  detection):  the  monitoring  team  assessed  18 per  cent  within  10 working days of detection and 43 per c ent within 30 working days,  in 2011-12. 

3.31 The ANAO observed that there is no documented, consistent internal  reporting as to how long the TargIT assessments are taking to process against  the  targets.  Management  reporting  focuses  on  the  number  of  actual  disseminations, presented as a percentage of the planned disseminations. 

Suspicious matters and suspect transaction reports

3.32 The  Suspicious  Reports  Analysis  team  have  an  agreed  performance  indicator  whereby  90 per  cent  of  reports  that  trigger  a  business  rule  are  expected to be processed within five working days, as shown in Figure 3.3.  

                                                       131 AUSTRAC Op. Intel Reporting SOP, 12 January 2011.

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Figure 3.3

SMR/SUSTRs received and the percentage processed within five working days, for each month, July 2011 to January 2013

 

Source: ANAO reconstruction of graph based on AUSTRAC internal reporting.

3.33 From July 2011 to January 2013, the Suspicious Reports Analysis team  has  not  met  the  target  of  processing  90  per  cent  of  received  SMRs/SUSTRs  within  five  working  days.  For  the  period  cited,  the  team  was  only  able  to  process,  on  average,  57.7  per  cent  of  received  reports  within  the  agreed  timeframes. Although the processing times were reported to management, the  reasons for not meeting the agreed turnaround times were not documented.  AUSTRAC advised that briefings to management may be verbal or written. To  assist management in making a decision as to whether the agreed timeframes  need to be reconsidered, formally documenting the reasons why processing  targets are not being met would be beneficial. 

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Figure 3.3

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Source: ANAO reconstruction of graph based on AUSTRAC internal reporting.

3.33 From July 2011 to January 2013, the Suspicious Reports Analysis team  has  not  met  the  target  of  processing  90  per  cent  of  received  SMRs/SUSTRs  within  five  working  days.  For  the  period  cited,  the  team  was  only  able  to  process,  on  average,  57.7  per  cent  of  received  reports  within  the  agreed  timeframes. Although the processing times were reported to management, the  reasons for not meeting the agreed turnaround times were not documented.  AUSTRAC advised that briefings to management may be verbal or written. To  assist management in making a decision as to whether the agreed timeframes  need to be reconsidered, formally documenting the reasons why processing  targets are not being met would be beneficial. 

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ASLO assessments and disseminations 

3.34 There is no documented guidance on the acceptable processing time for  requests made to ASLOs from partner agencies. The ANAO analysed the time  taken by ASLOs to complete a request for intelligence on an entity which had  not been requested before, as shown in Figure 3.4 below. 

Figure 3.4

Average time taken by an ASLO to complete new requests, 2011-12 (working days)

 

Source: ANAO analysis of AUSTRAC database.

Note: This analysis only includes requests that are the first dissemination of a particular assessment, so it is an indication of how long an intelligence request can take if it has not been previously assessed.

3.35 For  2011-12,  the  ANAO  calculated  that  the  average  processing  time  taken  by  ASLOs  for  new  requests  was  16.25  working  days  (based  on  the  211 requests for new intelligence).132  

International exchange of information

3.36 AUSTRAC has two internal performance indicators which relate to the  processing  times  for  international  intelligence  exchanges.  The  first  is  that 

                                                       132 As part of the AUSTRAC enterprise agreement, for the Christmas Closedown period over December 2011 to January 2012 normal operations were suspended for six working days. Those employees required to work were paid

overtime. For this analysis, the ANAO excluded the six working days for those disseminations active over the Christmas/New Year period.

0

5

10

15

20

25

30

35

40

45

Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun

2011 2012

Average working days taken to complete Number of Requests Disseminated

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requests  of  international  FIUs  from  domestic  partner  agencies  should  be  created within 10 working days of receipt133, and the second is that a request  for  intelligence  from  an  international  FIU  should  be  completed  within  35 working days. The ANAO analysis of AUSTRAC’s database found that: 

 requests  to  international  FIUs  from  domestic  partner  agencies  were  created within 10 working days for 95 per cent of cases (for 47 of the  49 requests) in 2011-12; and 

 requests for intelligence from international FIUs were completed within  35 working days for 85 per cent of cases (70 of 82 disseminations) in  2011-12.134 

3.37 Overall,  the  processing  times  for  the  TargIT  assessments;  SMRs/SUSTRs; and international exchange of information are clearly defined  and documented. However, the agreed processing times for requests made of  ASLOs  from  partner  agencies  are  not  specified.  In  addition,  there  is  no  documented,  consistent  internal  reporting  as  to  how  long  the  TargIT  assessments  are  taking  to  process  against  these  timeframes.  Management  reporting  focuses  on  the  number  of  actual  disseminations,  presented  as  a  percentage of the planned disseminations. 

3.38 There is also internal reporting to AUSTRAC management or Executive  of the processing times of SMRs/SUSTRs and for the I nternational exchange of  information. Performance against the processing target for SMRs/SUSTRs was  also reported to management, where the agreed processing time for received  reports has not been met from July 2011 to January 2013. However, the reasons  why processing targets were not being met were not formally documented.  

3.39 To make informed decisions relating to processing times, it would be  useful to consistently identify, document and provide regular reporting on the  processing times of all relevant intelligence assessments—and the reasons why  processing targets are not being met. 

3.40 AUSTRAC advised that the Enhanced Analytics Capability project is  intended  to  enhance  the  database  interface,  refine  business  rules  (for 

                                                       133 Whereby a member of the Operations Support team creates a record of the exchange in the database and assigns a case number to the assessment. 134

Does not include requests from international FIUs without an exchange agreement with AUSTRAC. The Annual Report stated that 97 exchanges of this type had occurred. The ANAO analysis found that there were 97 requests of this type, but only 82 of which were disseminated within 2011-12.

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requests  of  international  FIUs  from  domestic  partner  agencies  should  be  created within 10 working days of receipt133, and the second is that a request  for  intelligence  from  an  international  FIU  should  be  completed  within  35 working days. The ANAO analysis of AUSTRAC’s database found that: 

 requests  to  international  FIUs  from  domestic  partner  agencies  were  created within 10 working days for 95 per cent of cases (for 47 of the  49 requests) in 2011-12; and 

 requests for intelligence from international FIUs were completed within  35 working days for 85 per cent of cases (70 of 82 disseminations) in  2011-12.134 

3.37 Overall,  the  processing  times  for  the  TargIT  assessments;  SMRs/SUSTRs; and international exchange of information are clearly defined  and documented. However, the agreed processing times for requests made of  ASLOs  from  partner  agencies  are  not  specified.  In  addition,  there  is  no  documented,  consistent  internal  reporting  as  to  how  long  the  TargIT  assessments  are  taking  to  process  against  these  timeframes.  Management  reporting  focuses  on  the  number  of  actual  disseminations,  presented  as  a  percentage of the planned disseminations. 

3.38 There is also internal reporting to AUSTRAC management or Executive  of the processing times of SMRs/SUSTRs and for the I nternational exchange of  information. Performance against the processing target for SMRs/SUSTRs was  also reported to management, where the agreed processing time for received  reports has not been met from July 2011 to January 2013. However, the reasons  why processing targets were not being met were not formally documented.  

3.39 To make informed decisions relating to processing times, it would be  useful to consistently identify, document and provide regular reporting on the  processing times of all relevant intelligence assessments—and the reasons why  processing targets are not being met. 

3.40 AUSTRAC advised that the Enhanced Analytics Capability project is  intended  to  enhance  the  database  interface,  refine  business  rules  (for 

                                                       133 Whereby a member of the Operations Support team creates a record of the exchange in the database and assigns a case number to the assessment. 134

Does not include requests from international FIUs without an exchange agreement with AUSTRAC. The Annual Report stated that 97 exchanges of this type had occurred. The ANAO analysis found that there were 97 requests of this type, but only 82 of which were disseminated within 2011-12.

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SMRs/SUSTRs)  or  clauses  (for  TargIT  assessments)  and  improve  other  administrative arrangements including internal reporting. 

Strategic intelligence and data mining

Strategic intelligence

3.41 The  Strategic  Assessments  and  Typologies  section  within  the  Intelligence Branch conducts strategic analysis on a range of money laundering  and  terrorism  financing  matters,  including  assessments  of  the  environment  which  influences  these  two  threats.  The  section  comprises  two  teams:  the  Strategic  Assessments  and  Intelligence  Oversight  team  and  the  Typologies  team.  

Strategic Assessments and Intelligence Oversight Committee (IOC) team

3.42 The Strategic Assessments and IOC team primarily produces strategic  analysis and assessments including strategic intelligence briefs flowing from a  National  Threat  Assessment  on  Money  Laundering  (NTA)  2011;  acts  as  a  secretariat  support  for  the  IOC;  and  drafts  and  coordinates  the  delivery  of  AUSTRAC’s intelligence strategy.  

3.43 The  NTA  2011  was  AUSTRAC’s  first  national  threat  assessment  on  money laundering, and formed part of the Commonwealth’s Organised Crime  Response Plan of November 2010.135 It was developed in consultation with key  partner  agencies136,  and  provides  a  consolidated  and  comprehensive  intelligence  picture  of  the  Australian  money  laundering  environment.  The  NTA 2011 was also developed to complement the 2010 Financial Action Task  Force’s (FATF)137 ‘Global Money Laundering and Terrorist Financing Threat  Assessment’. Australia was the first country in the world to have completed  such an  assessment applying elements of the FATF framework and tools.  

                                                       135 The Commonwealth Organised Crime Response Plan, launched on 26 November 2010, is part of the Commonwealth’s comprehensive approach to combating organised crime in Australia. The Response Plan targets the three priority

organised crime risks, identified by the ACC in their Organised Crime Threat Assessment: amphetamine-type stimulants; money laundering; and identity crime. 136 The partner agencies consulted include the Attorney-General’s Department, ACC, AFP, Customs and Border

Protection, ATO and the NSW Crime Commission. Other federal, state and territory agencies were consulted and provided information. In addition, information from international law enforcement partners informed the NTA. 137 Australia was a founding member country of the Financial Action task Force (FATF), which was established in July 1989

by a Group of Seven (G-7) Summit in Paris, initially to examine and develop measures to combat money laundering;. In October 2001, the FATF expanded its mandate to incorporate efforts to combat terrorist financing. The FATF’s objectives are to set standards and promote effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system.

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3.44 The  Strategic  Assessments  team  produced  six  strategic  intelligence  briefs  during  2011-12.138  The  papers  aim  to  inform  AUSTRAC  and  partner  agencies,  on  current  and  emerging  trends  and  vulnerabilities  in  money  laundering, terrorism financing and other financial crimes. The briefs include a  summary,  key  findings,  methodologies,  case  studies  and  indicators  for  law  enforcement agencies.  

3.45 Also in November 2011, AUSTRAC released a public report based on  the NTA 2011, titled ‘Money Laundering in Australia 2011’. Its aim was to  contribute to greater public and industry knowledge about money laundering,  and  to  better  position  government,  industry  and  the  community  to  work  together  to  develop  and  strengthen  preventative  strategies  against  money  laundering.  The  report  draws  together  law  enforcement,  intelligence  and  regulatory  aspects  of  the  money  laundering  threat  into  a  single  public  resource.  

3.46 With  the  publication  of  the  NTA  2011,  a  three‐year  cycle  for  future  NTAs  focusing  on  money  laundering  risks  was  planned.  In  the  meantime,  AUSTRAC  has  begun  preparation  on  a  National  Threat  Assessment  on  Terrorism Financing, which will be smaller in scope than the 2011 NTA and is  expected to be released in 2013.  

Typologies team

3.47 The  Typologies  team  reviews  the  financial  methodology  reports139  completed by the ASLO s and other intelligence analysts, and sanitises the case  studies to look for emerging trends and indicators. These sanitised case studies  are publicly released to reporting entities by the annual Typologies and Case  Studies Report. This report is a key aspect for AUSTRAC complying with one  of FATF’s 40 Recommendations.140  

                                                       138 Reported to Operational Support for inclusion in the Annual Report dissemination figures, email dated 6 July 2012 (the six products apparently include the National Threat Assessment). The Strategic Assessment Team reported

58 domestic disseminations and eight international disseminations (of the National Threat Assessment). 139 The financial methodology reports detail the regulated industry sector targeted and the money laundering or terrorism financing technique used in each financial assessment.

140   Recommendation 34 states that authorities: should establish guidelines, and provide feedback, which will assist financial institutions and designated non-financial businesses and professions in applying national measures to combat money laundering and terrorist financing, and, in particular, in detecting and

reporting suspicious transactions. Other recommendations covered the national coordination and content of AML/CTF policies; definitions of, and measures for, preventing money laundering and terrorism financing; and forms of international cooperation. 

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3.44 The  Strategic  Assessments  team  produced  six  strategic  intelligence  briefs  during  2011-12.138  The  papers  aim  to  inform  AUSTRAC  and  partner  agencies,  on  current  and  emerging  trends  and  vulnerabilities  in  money  laundering, terrorism financing and other financial crimes. The briefs include a  summary,  key  findings,  methodologies,  case  studies  and  indicators  for  law  enforcement agencies.  

3.45 Also in November 2011, AUSTRAC released a public report based on  the NTA 2011, titled ‘Money Laundering in Australia 2011’. Its aim was to  contribute to greater public and industry knowledge about money laundering,  and  to  better  position  government,  industry  and  the  community  to  work  together  to  develop  and  strengthen  preventative  strategies  against  money  laundering.  The  report  draws  together  law  enforcement,  intelligence  and  regulatory  aspects  of  the  money  laundering  threat  into  a  single  public  resource.  

3.46 With  the  publication  of  the  NTA  2011,  a  three‐year  cycle  for  future  NTAs  focusing  on  money  laundering  risks  was  planned.  In  the  meantime,  AUSTRAC  has  begun  preparation  on  a  National  Threat  Assessment  on  Terrorism Financing, which will be smaller in scope than the 2011 NTA and is  expected to be released in 2013.  

Typologies team

3.47 The  Typologies  team  reviews  the  financial  methodology  reports139  completed by the ASLO s and other intelligence analysts, and sanitises the case  studies to look for emerging trends and indicators. These sanitised case studies  are publicly released to reporting entities by the annual Typologies and Case  Studies Report. This report is a key aspect for AUSTRAC complying with one  of FATF’s 40 Recommendations.140  

                                                       138 Reported to Operational Support for inclusion in the Annual Report dissemination figures, email dated 6 July 2012 (the six products apparently include the National Threat Assessment). The Strategic Assessment Team reported

58 domestic disseminations and eight international disseminations (of the National Threat Assessment). 139 The financial methodology reports detail the regulated industry sector targeted and the money laundering or terrorism financing technique used in each financial assessment.

140   Recommendation 34 states that authorities: should establish guidelines, and provide feedback, which will assist financial institutions and designated non-financial businesses and professions in applying national measures to combat money laundering and terrorist financing, and, in particular, in detecting and

reporting suspicious transactions. Other recommendations covered the national coordination and content of AML/CTF policies; definitions of, and measures for, preventing money laundering and terrorism financing; and forms of international cooperation. 

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3.48 In  2012,  AUSTRAC  released  the  sixth  Typologies  and  Case  Studies  Report that included condensed versions of five research papers141, as well as  21 case studies.142 By September 2012, preparation had already begun for the  July 2013 release of the annual Typologies and Case Studies Report, with the  draft  report  required  by  April  2013.  This  timeframe  allows  for  review  and  clearance processes both from within AUSTRAC and from the partner agencies  that are mentioned in the sanitised cases. The ANAO observed that there were  no  backlogs  or  defined  processing  times  for  preparing  strategic  intelligence  reports in 2011-12. 

Data Mining

3.49 Data  mining  supports  AUSTRAC  in  achieving  its  strategic  and  operational objectives by assisting whole of government initiatives, providing  macro analytical products and providing a knowledge discovery capability.143  At  the  time  of  this  audit,  there  were  three  data  mining  teams  within  the  Intelligence Branch, each with a different focus: 

 Wickenby  team  -  responsible  for  providing  macro  analysis144  to  the  Project Wickenby taskforce, headed by the ATO.145 

 Money Laundering Criminal Targeting - responsible for researching,  testing  and  developing  a  suite  of  automated  monitoring  profiles  to  detect suspicious entities, networks and activities in the new Enhanced  Analytical C apability environment.146 

 Data  Mining  -  responsible  for  completing  requests  from  partner  agencies or AUSTRAC internally, and producing proactive analysis to  demonstrate  AUSTRAC’s  capability  (which  also  contributed  to  the  2011 NTA).  

                                                       141 The topics of which were: cheques; third-party cash couriers; digital currencies and virtual worlds; voucher system products; and offshore online money remitters. 142

The case studies are categorised as being related to account and deposit-taking services (14 cases), gambling services (three cases) or remittance services (four cases). 143 Knowledge discovery refers to identifying financial intelligence within the AUSTRAC database that has not been

discovered by conventional analysis. 144 The macro analysis may include searching for entities transacting with a tax haven or country of interest, or country snapshots. 145

The Wickenby team are funded externally (Budget Paper No.2 2012-13, p.43), with the funding due to expire in 2015; it is anticipated that the activity will then become business as usual. 146 The Money Laundering Criminal Targeting team was established in February 2012 to assist in the preparation for the

Enhanced Analytical Capability implementation.

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3.50 In 2011-12, there were 265 data mining products disseminated by the  Data Mining and Wickenby teams to domestic partner agencies, with the ATO  as  the  largest  recipient  of  data  mining  intelligence  products.147  The  Data  Mining  team  responded  to  59 requests  for  products  from  their  total  of  102 disseminations for 2011-12. 

3.51 There  is  no  defined  processing  time  for  data  mining  requests  and  proactive  assessments.  AUSTRAC  advised  that  data  mining  often  involves  highly complex and challenging extraction of large data sets. A big part of their  work  is  ‘knowledge  discovery’,  and  significant  time  and  effort  can  be  expended on data cleansing, before analysis and interpretation are conducted.  Processing  times  for  proactive  assessments  are  also  difficult  to  determine.  Proactive  detections  may  range  from  a  basic  assessment  involving  a  single  report or entity, to a complex, in‐depth assessment involving a large network  of entities, or interlinked networks with large numbers of linked reports.  

3.52 The  following  case  study  illustrates  the  type  of  investigative  law  enforcement work which can be uncovered by data mining analysis. 

Case Study Data mining intelligence and Project Wickenby

AUSTRAC is a member of Project Wickenby, an Australian Government multi-agency taskforce established in February 2006 to protect the integrity of Australian financial and regulatory systems. The taskforce’s purpose is to prevent people from promoting and participating in the abusive use of overseas secrecy jurisdictions for tax avoidance and evasion. AUSTRAC’s data mining intelligence capability has produced valuable analysis for measuring the effect of the taskforce’s actions. AUSTRAC trend analysis of the international funds flows identified changes in the values of inward and outward transfers between Australia and 13 secrecy jurisdictions, including Vanuatu, Liechtenstein and Switzerland - three jurisdictions which have been subject to particular scrutiny under Project Wickenby. Overall, AUSTRAC’s analysis shows a declining trend in the total value of funds sent from Australia to 13 secrecy jurisdictions from 2007-08 to 2010-11. AUSTRAC analysis revealed an aggregate 22 per cent decrease in the total value of outbound funds for the 2010-11 financial year compared to the total value of outbound funds for 2007-08 to the 13 overseas secrecy jurisdictions. As shown below, this decrease represents a $12 billion reduction over three years in the annual value of funds transferred out of Australia to these secrecy jurisdictions.

                                                       147 In 2011-12, the ATO received 84 reports from the Wickenby team, and a further 20 from the Data Mining team.

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3.50 In 2011-12, there were 265 data mining products disseminated by the  Data Mining and Wickenby teams to domestic partner agencies, with the ATO  as  the  largest  recipient  of  data  mining  intelligence  products.147  The  Data  Mining  team  responded  to  59 requests  for  products  from  their  total  of  102 disseminations for 2011-12. 

3.51 There  is  no  defined  processing  time  for  data  mining  requests  and  proactive  assessments.  AUSTRAC  advised  that  data  mining  often  involves  highly complex and challenging extraction of large data sets. A big part of their  work  is  ‘knowledge  discovery’,  and  significant  time  and  effort  can  be  expended on data cleansing, before analysis and interpretation are conducted.  Processing  times  for  proactive  assessments  are  also  difficult  to  determine.  Proactive  detections  may  range  from  a  basic  assessment  involving  a  single  report or entity, to a complex, in‐depth assessment involving a large network  of entities, or interlinked networks with large numbers of linked reports.  

3.52 The  following  case  study  illustrates  the  type  of  investigative  law  enforcement work which can be uncovered by data mining analysis. 

Case Study Data mining intelligence and Project Wickenby

AUSTRAC is a member of Project Wickenby, an Australian Government multi-agency taskforce established in February 2006 to protect the integrity of Australian financial and regulatory systems. The taskforce’s purpose is to prevent people from promoting and participating in the abusive use of overseas secrecy jurisdictions for tax avoidance and evasion. AUSTRAC’s data mining intelligence capability has produced valuable analysis for measuring the effect of the taskforce’s actions. AUSTRAC trend analysis of the international funds flows identified changes in the values of inward and outward transfers between Australia and 13 secrecy jurisdictions, including Vanuatu, Liechtenstein and Switzerland - three jurisdictions which have been subject to particular scrutiny under Project Wickenby. Overall, AUSTRAC’s analysis shows a declining trend in the total value of funds sent from Australia to 13 secrecy jurisdictions from 2007-08 to 2010-11. AUSTRAC analysis revealed an aggregate 22 per cent decrease in the total value of outbound funds for the 2010-11 financial year compared to the total value of outbound funds for 2007-08 to the 13 overseas secrecy jurisdictions. As shown below, this decrease represents a $12 billion reduction over three years in the annual value of funds transferred out of Australia to these secrecy jurisdictions.

                                                       147 In 2011-12, the ATO received 84 reports from the Wickenby team, and a further 20 from the Data Mining team.

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Case Study Data mining intelligence and Project Wickenby

Figure 1: Money flows from Australia to 13 secrecy jurisdictions - 2007-08 to 2010-11

Financial year Total value of transactions

($billions)

Change in value

(compared to 2007-08)

2007-08 55 n/a

2008-09 46 -16%

2009-10 48 -12%

2010-11 43 -22%

* All values rounded to nearest billion

In 2010-11 AUSTRAC analysis (Figure 2) shows a reduction in fund flows since 2007-08 of 50% to Vanuatu, 79% to Liechtenstein, and 30% to Switzerland.

Figure 2: Money flows from Australia to Vanuatu, Liechtenstein and Switzerland

2008-09 to 2010-11

2008-09 2009-10 2010-11

Vanuatu -37% -34% -50%

Liechtenstein -45% -40% -79%

Switzerland -18% -12% -30%

Over the same period (2007-08 to 2010-11), AUSTRAC analysis shows the total annual value of funds transferred into Australia from the 13 secrecy jurisdictions increased by approximately 7 per cent (or $5 billion). This is the first year since Project Wickenby commenced that AUSTRAC has recorded an annual increase in funds flowing back to Australia from secrecy jurisdictions.

Figure 3: Money flows from 13 tax secrecy jurisdictions into Australia: 2007-08 to 2010-11

Financial year Total value of transactions

($billions)*

Change in value (compared to 2007-08)

2007-08 63 n/a

2008-09 53 -16%

2009-10 52 -17%

2010-11 68 7%

*All values rounded to nearest billion

Source: AUSTRAC.

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Quality Assurance 3.53 Quality assurance is an integral part of any business process. It is a  confirmation that a task, or parts of it, were accomplished in accordance with  the  standards  set  by  the  organisation.  The  ANAO  observed  that  a  sound  quality assurance mechanism has been adopted for all AUSTRAC’s financial  intelligence  assessments.  AUSTRAC  managers  have  been  appropriately  delegated  to  review  reports  prior  to  dissemination  for  accuracy  and  consistency. For example, each TargIT intelligence assessment is reviewed for  completeness  and  quality  control  purposes  by  the  delegate  (manager),  to  ensure  a  level  of  consistency  in  the  standard  of  assessments,  prior  to  any  dissemination.  

3.54 Similarly,  for  SMRs/SUSTRs,  ASLO  disseminations  and data  mining,  assessments are reviewed for appropriateness and checked for completeness  by  the  delegate  (manager  or  director)  prior  to  dissemination  to  partner  agencies. For the international exchange of information, the AUSTRAC CEO  has delegated the authority to release AUSTRAC intelligence to international  counterparts, or to sign the letter of non‐response to FIUs without an exchange  agreement, to the General Manager Intelligence. The AUSTRAC CEO has also  delegated the authority to release strategic intelligence products and typology  research papers, often after review and input from other intelligence managers  to the Director Strategic Assessme nts and Typologies. The nature of the NTA  publication and the annual Typologies and Case Studies Report means it is  closely  scrutinised  and  reviewed  by  senior  management,  which  provides  a  high level of quality assurance. 

Conclusion 3.55 There  are  appropriate  arrangements  to  process  assessments,  and  disseminate  financial  intelligence  reports.  A  sound  quality  assurance  mechanism is adopted for all financial intelligence reports. Various delegations  are  in  place  to  review  reports  prior  to  dissemination  for  accuracy  and  consistency. However, workload management could be improved.  

3.56 The increase in FTRs obtained from reporting entities, as well as the  level of in‐depth analysis and risk assessment that needs to be applied across  these  reports  has  affected  workloads  for  both  TargIT  assessments  and  SMRs/SUSTRs.  Although  there  is  continuous  risk  assessment  of  FTRs,  and  precedence is given to reports that are of a higher priority, backlogs increased, 

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Quality Assurance 3.53 Quality assurance is an integral part of any business process. It is a  confirmation that a task, or parts of it, were accomplished in accordance with  the  standards  set  by  the  organisation.  The  ANAO  observed  that  a  sound  quality assurance mechanism has been adopted for all AUSTRAC’s financial  intelligence  assessments.  AUSTRAC  managers  have  been  appropriately  delegated  to  review  reports  prior  to  dissemination  for  accuracy  and  consistency. For example, each TargIT intelligence assessment is reviewed for  completeness  and  quality  control  purposes  by  the  delegate  (manager),  to  ensure  a  level  of  consistency  in  the  standard  of  assessments,  prior  to  any  dissemination.  

3.54 Similarly,  for  SMRs/SUSTRs,  ASLO  disseminations  and data  mining,  assessments are reviewed for appropriateness and checked for completeness  by  the  delegate  (manager  or  director)  prior  to  dissemination  to  partner  agencies. For the international exchange of information, the AUSTRAC CEO  has delegated the authority to release AUSTRAC intelligence to international  counterparts, or to sign the letter of non‐response to FIUs without an exchange  agreement, to the General Manager Intelligence. The AUSTRAC CEO has also  delegated the authority to release strategic intelligence products and typology  research papers, often after review and input from other intelligence managers  to the Director Strategic Assessme nts and Typologies. The nature of the NTA  publication and the annual Typologies and Case Studies Report means it is  closely  scrutinised  and  reviewed  by  senior  management,  which  provides  a  high level of quality assurance. 

Conclusion 3.55 There  are  appropriate  arrangements  to  process  assessments,  and  disseminate  financial  intelligence  reports.  A  sound  quality  assurance  mechanism is adopted for all financial intelligence reports. Various delegations  are  in  place  to  review  reports  prior  to  dissemination  for  accuracy  and  consistency. However, workload management could be improved.  

3.56 The increase in FTRs obtained from reporting entities, as well as the  level of in‐depth analysis and risk assessment that needs to be applied across  these  reports  has  affected  workloads  for  both  TargIT  assessments  and  SMRs/SUSTRs.  Although  there  is  continuous  risk  assessment  of  FTRs,  and  precedence is given to reports that are of a higher priority, backlogs increased, 

Workload Management of Financial Intelligence Assessments

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particularly for SMRs/SUSTRs. AUSTRAC did not have the capacity to assess  all reports that related to specified key risks (business rules). 

3.57 Agreed processing times were not met for TargIT and SMR/SUSTRs  assessments in 2011-12. Internal monitoring and reporting to management in  relation  to  the  financial  intelligence  workload  has  not  been  consistent.  For  example,  the  TargIT  workload  is  monitored  by  the  TargIT  team.  However,  there  is  no  consistent,  structured  reporting  to  management  of  the  actual  workload, unassessed hits on hand (including the significance or priority), and  its effect, if any, to operations. As with the workload queues, internal reporting  to management on processing times could be improved. 

3.58 There has been varied management reporting on the processing times  for  the  assessment  and  dissemination  of  relevant  financial  intelligence.  Processing times are defined for requested and proactive TargIT assessments,  with requested disseminations to be processed within 10-15 working days, and  proactive  disseminations  within  10-30  working  days.  However,  there  is  no  documented,  consistent  internal  reporting  as  to  how  long  the  TargIT  assessments  are  taking  to  process  against  these  timeframes.  Management  reporting  focuses  on  the  number  of  actual  disseminations,  presented  as  a  percentage  of  the  planned  disseminations.  By contrast,  performance  against  the  processing  target  fo r  SMRs/SUSTRs  was  reported  to  management,  but  reasons why processing targets are not being met were not documented. To  assist  management  in  making  informed  decisions  about  resourcing  or  reconsidering  the  agreed  timeframes—it  would  be  beneficial  to  formally  document the reasons why processing targets are not being met. 

3.59 AUSTRAC advised that the Enhanced Analytical Capability Project is  intended  to  enhance  the  database  interface,  refine  business  rules  (for  SMRs/SUSTRs)  or  clauses  (for  TargIT  assessments)  and  improve  other  administrative arrangements including internal reporting. 

   

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Recommendation No.2 3.60 To  improve  the  assessment  of  financial  intelligence,  the  ANAO  recommends that AUSTRAC: 

 establishes, and monitors performance against, processing time targets  for requested financial intelligence reports; and 

 monitors  and  reports  on  processing  backlogs  for  key  financial  intelligence  assessment  types,  with  a  particular  focus  on  drawing  management attention to delays in assessing higher priority financial  transaction reports. 

AUSTRAC’s response: 

3.61 Agreed.  The  new  EAC  system  will  provide  more  sophisticated  tools  for  managing and analysing the large data volumes which AUSTRAC receives. This will  also  give  AUSTRAC  the  capability  to  establish  new  performance  targets  for  monitoring, and reporting on, the processing of data and generation of intelligence  assessments. 

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4. Feedback, Performance Measurement and Reporting

This  chapter  examines  AUSTRAC’s  arrangements  for  collaborating  with  partner  agencies  to  set  priorities,  collecting  and  reviewing  feedback,  and  its  approach  to  measuring and reporting on the performance of the FIU. 

Introduction 4.1 An  effective  feedback  mechanism  is  an  important  element  in  the  administration  of  programs,  particularly  where  the  services  provided  contribute  to  a  partner  agency’s  outcomes.  Quality  feedback  also  provides  important  information  that  enables  agencies  to  assess  and  report  on  its  performance  and  achievements.  AUSTRAC’s  2011-14  Statement  of  Strategic  Intent identified being considered relevant and effective by key stakeholders as  one of its five high‐level strategic goals for the period. 

4.2 The ANAO reviewed AUSTRAC’s: 

 engagement with partner agencies; 

 mechanisms for collecting and reviewing feedback; and 

 measuring  and  reporting  on  its  performance—deliverables  and  key  performance indicators. 

Engagement with partner agencies 4.3 AUSTRAC  employs  a  number  of  methodologies  for  engaging  with  partner  agencies  to  identify  their  needs  and  requirements,  and  to  gather  insight on the use and value of its financial intelligence. These arrangements  are described in Table 4.1. 

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Recommendation No.2 3.60 To  improve  the  assessment  of  financial  intelligence,  the  ANAO  recommends that AUSTRAC: 

 establishes, and monitors performance against, processing time targets  for requested financial intelligence reports; and 

 monitors  and  reports  on  processing  backlogs  for  key  financial  intelligence  assessment  types,  with  a  particular  focus  on  drawing  management attention to delays in assessing higher priority financial  transaction reports. 

AUSTRAC’s response: 

3.61 Agreed.  The  new  EAC  system  will  provide  more  sophisticated  tools  for  managing and analysing the large data volumes which AUSTRAC receives. This will  also  give  AUSTRAC  the  capability  to  establish  new  performance  targets  for  monitoring, and reporting on, the processing of data and generation of intelligence  assessments. 

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Table 4.1

Arrangements employed by AUSTRAC to identify partner agency needs

Arrangement Description

Strategic Priority Meetings Opportunity to discuss current and future cooperation between AUSTRAC and a partner agency, which would include for example:

liaison issues; AUSTRAC’s involvement in taskforces; and other AUSTRAC initiatives (such as new IT infrastructures) that could impact on a partner agency. Collaboration with partner agencies to combat money laundering and terrorism financing. Opportunity to discuss future collaborations and future strategic intelligence priorities.

Regional Intelligence Meetings

Forums in various states and territories where discussions are held between AUSTRAC and partner agencies around: news and updates that could have an impact on partner agencies, that include for example:

 methodologies adopted by domestic or foreign entities in money laundering and terrorism financing;

 new MOUs signed with domestic partner agencies;

 overview of new AUSTRAC financial intelligence products such as the National Threat Assessment;

 updates of AML/CTF legislation and system changes; and

 any other related topics that could be of interest to partner agencies.

Joint Agency Intelligence Workshops

Discuss and recommend priority areas for operational efforts and intelligence targeting, including: intelligence collection and feedback to support legislative agenda; and operational and strategic intelligence requirements for AUSTRAC in its support of partner agencies. Present AUSTRAC’s understanding of the money laundering and terrorism financing environment and agree about practical efforts to address critical intelligence gaps.

Ad hoc meetings When required, AUSTRAC engages with partner agencies and discusses topics that may be of interest to one or both parties.

Source: ANAO analysis.

4.4 As the Strategic Priority Meetings are annual high‐level discussions of  priorities  and  future  direction  between  AUSTRAC  and  selected  partner  agencies,  they  are  attended  by  the  Intelligence  Oversight  Committee,  comprising  both  Executive  General  Managers  and  the  General  Manager,  Intelligence.  The  Regional  Intelligence  Meetings  are  organised  by  the  local  ASLOs  and  are  held  throughout  the  year  in  Sydney,  Melbourne,  Canberra,  Brisbane  and  Darwin,  with  representatives  from  each  local  partner  agency 

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Table 4.1

Arrangements employed by AUSTRAC to identify partner agency needs

Arrangement Description

Strategic Priority Meetings Opportunity to discuss current and future cooperation between AUSTRAC and a partner agency, which would include for example:

liaison issues; AUSTRAC’s involvement in taskforces; and other AUSTRAC initiatives (such as new IT infrastructures) that could impact on a partner agency. Collaboration with partner agencies to combat money laundering and terrorism financing. Opportunity to discuss future collaborations and future strategic intelligence priorities.

Regional Intelligence Meetings

Forums in various states and territories where discussions are held between AUSTRAC and partner agencies around: news and updates that could have an impact on partner agencies, that include for example:

 methodologies adopted by domestic or foreign entities in money laundering and terrorism financing;

 new MOUs signed with domestic partner agencies;

 overview of new AUSTRAC financial intelligence products such as the National Threat Assessment;

 updates of AML/CTF legislation and system changes; and

 any other related topics that could be of interest to partner agencies.

Joint Agency Intelligence Workshops

Discuss and recommend priority areas for operational efforts and intelligence targeting, including: intelligence collection and feedback to support legislative agenda; and operational and strategic intelligence requirements for AUSTRAC in its support of partner agencies. Present AUSTRAC’s understanding of the money laundering and terrorism financing environment and agree about practical efforts to address critical intelligence gaps.

Ad hoc meetings When required, AUSTRAC engages with partner agencies and discusses topics that may be of interest to one or both parties.

Source: ANAO analysis.

4.4 As the Strategic Priority Meetings are annual high‐level discussions of  priorities  and  future  direction  between  AUSTRAC  and  selected  partner  agencies,  they  are  attended  by  the  Intelligence  Oversight  Committee,  comprising  both  Executive  General  Managers  and  the  General  Manager,  Intelligence.  The  Regional  Intelligence  Meetings  are  organised  by  the  local  ASLOs  and  are  held  throughout  the  year  in  Sydney,  Melbourne,  Canberra,  Brisbane  and  Darwin,  with  representatives  from  each  local  partner  agency 

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invited to attend.148 The ANAO attended the Melbourne Regional Intelligence  Meeting  in  September  2012,  and  observed  a  high  level  of  audience  participation in the question and answer session after the presentations. 

4.5 The  annual  Joint  Agency  Intelligence  Workshops  are  held  by  the  General  Manager  Intelligence  and  intelligence  directors  and  have  been  attended  by  representatives  of:  the  ACC,  AFP,  ATO,  ASIO,  Customs  and  Border  Protection,  DHS‐Centrelink,  the  Department  of  Immigration  and  Citizenship,  the  NSW  Crime  Commission  and  the  Office  of  National  Assessments.149  

4.6 The ANAO consulted with seven of AUSTRAC’s key domestic partner  agencies:  the  ACC;  AFP;  ATO;  ASIO;  Customs  and  Border  Protection;   DHS-Centrelink and the Victoria Police. The feedback that the ANAO received  was  overwhelmingly  positive.  AUSTRAC  is  highly  valued  by  its  partner  agencies  for  its  contribution  to  their  operations  and  management  of  risks.  Through its systems, AUSTRAC provides partner agencies with near real-time  access  to  financial  transactions  data,  and  is  uniquely  positioned  to  prepare  financial intelligence based on its analysis of this data. 

4.7 Overall,  the  ANAO  considers  that  AUSTRAC  has  effective  arrangements  to  engage  with  its  partner  agencies  on  an  ongoing  basis.  Through  a  range  of  meetings,  workshops  and  more  informed  interactions,  AUSTRAC  is well  positioned to understand the intelligence priorities of its  partner  agencies  in  setting  its  intelligence  work  programs.  Feedback  from  partner  agencies  confirmed  this  positive  view  of  the  effectiveness  of  AUSTRAC’s engagement strategies. 

Collecting and reviewing feedback 4.8 In  addition  to  the  arrangement  to  engage  with  partner  agencies  on  intelligence  priorities  and  products,  AUSTRAC  also  has  arrangements  to  obtain feedback from agencies about the specific contribution of its financial  intelligence  and  analysis  to  their  investigations  and  operations.  These 

                                                       148 The content of the ASLO presentations vary, but they often cover topics related to emerging money laundering methodologies, new analytical capabilities being developed by AUSTRAC, and specific questions related to financial

intelligence assessments. 149 The workshops focus on operational priorities, such as the countries, crimes and methodologies of interest to each partner agency.

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arrangements  include  feedback  forms  and  quarterly  feedback  reports.150   Table 4.2 outlines these arrangements.  

Table 4.2

Arrangements employed by AUSTRAC to gain feedback

Arrangement Description

Feedback forms These forms are attached to AUSTRAC’s financial intelligence reports or assessments that are disseminated to partner agencies. They seek comments as to the use and value of AUSTRAC financial intelligence to the partner agencies.

Quarterly Feedback Reports provided to AUSTRAC

On a quarterly basis, as stipulated in their MOUs with AUSTRAC, partner agencies provide AUSTRAC a report of the usefulness of AUSTRAC information. This enables the capture of statistical and qualitative feedback compiled by the partner agency and the ASLOs.

Source: ANAO analysis.

4.9 The feedback forms and the quarterly feedback reports are structured  methods  of  gauging  a  partner  agency’s  feedback  on  the  usefulness  and  significance of AUSTRAC’s financial intelligence. The ANAO reviewed these  two  methods.  AUSTRAC’s  feedback  forms,  prior  to  2012,  were  termed  ‘acknowledgement  receipts’  rather  than  feedback  forms.  A  partner  agency  would acknowledge its receipt of an AUSTRAC financial intelligence product,  and tick a box as to whether the financial intelligence or information received:  may assist the partner agency; relates to an ongoing operation; is related to a  current investigation; is relevant as it relates to a suspected crime; is of no  interest to a partner agency; or may be disseminated to another agency. 

4.10 To  obtain  feedback  that  is  more  meaningful  to  AUSTRAC,  the  acknowledgment receipts were revised and renamed ‘partner agency feedback  forms’  to  better  reflect  partner  agencies’  comments  on:  the  quality  of  AUSTRAC’s  financial  intelligence;  its  relevance  to  partner  agency  investigations; additional feedback comments and outcomes.  

4.11 The  quarterly  feedback  reports  provided  to  AUSTRAC  by  partner  agencies  are  more  detailed  as  they  are  intended  to  include  statistical  and  qualitative feedback on the partner agency’s use of AUSTRAC information. For  example, partner agencies are asked to report on: the number o f operations  involving  AUSTRAC  financial  intelligence;  the  amount  of  savings  or 

                                                       150 AUSTRAC also has an online function that provides feedback on SMRs that have been accepted or declined by partner agencies. This functionality is only for SMRs and does not include feedback for the other financial intelligence

assessments disseminated to partner agencies.

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arrangements  include  feedback  forms  and  quarterly  feedback  reports.150   Table 4.2 outlines these arrangements.  

Table 4.2

Arrangements employed by AUSTRAC to gain feedback

Arrangement Description

Feedback forms These forms are attached to AUSTRAC’s financial intelligence reports or assessments that are disseminated to partner agencies. They seek comments as to the use and value of AUSTRAC financial intelligence to the partner agencies.

Quarterly Feedback Reports provided to AUSTRAC

On a quarterly basis, as stipulated in their MOUs with AUSTRAC, partner agencies provide AUSTRAC a report of the usefulness of AUSTRAC information. This enables the capture of statistical and qualitative feedback compiled by the partner agency and the ASLOs.

Source: ANAO analysis.

4.9 The feedback forms and the quarterly feedback reports are structured  methods  of  gauging  a  partner  agency’s  feedback  on  the  usefulness  and  significance of AUSTRAC’s financial intelligence. The ANAO reviewed these  two  methods.  AUSTRAC’s  feedback  forms,  prior  to  2012,  were  termed  ‘acknowledgement  receipts’  rather  than  feedback  forms.  A  partner  agency  would acknowledge its receipt of an AUSTRAC financial intelligence product,  and tick a box as to whether the financial intelligence or information received:  may assist the partner agency; relates to an ongoing operation; is related to a  current investigation; is relevant as it relates to a suspected crime; is of no  interest to a partner agency; or may be disseminated to another agency. 

4.10 To  obtain  feedback  that  is  more  meaningful  to  AUSTRAC,  the  acknowledgment receipts were revised and renamed ‘partner agency feedback  forms’  to  better  reflect  partner  agencies’  comments  on:  the  quality  of  AUSTRAC’s  financial  intelligence;  its  relevance  to  partner  agency  investigations; additional feedback comments and outcomes.  

4.11 The  quarterly  feedback  reports  provided  to  AUSTRAC  by  partner  agencies  are  more  detailed  as  they  are  intended  to  incl ude  statistical  and  qualitative feedback on the partner agency’s use of AUSTRAC information. For  example, partner agencies are asked to report on: the number of operations  involving  AUSTRAC  financial  intelligence;  the  amount  of  savings  or 

                                                       150 AUSTRAC also has an online function that provides feedback on SMRs that have been accepted or declined by partner agencies. This functionality is only for SMRs and does not include feedback for the other financial intelligence

assessments disseminated to partner agencies.

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additional revenue raised as a result of AUSTRAC financial intelligence; the  results  of  data  matching  exercises;  and  any  significant  cases  or  emerging  methodologies.  

4.12 The feedback forms and the quarterly feedback reports are intended for  management information purposes. However, the usefulness of the feedback  mechanisms  for  these  purposes  in  particular,  was  limited  for  the  following  reasons:  

 The return rate of domestic acknowledgement receipts and feedback  forms  was  very  low:  for  the  period  2011-12,  the  return  rate  was  16 per cent,  with  only  242  acknowledgement  receipts  and  feedback  forms  returned  to  AUSTRAC  by  domestic  partner  agencies  from  1513 intelligence disseminations.  151 Both ASLOs and partner agencies  advised that they do not see the value in the forms, and generally view  them as an administrative burden. 

 No  regular  monitoring  of  feedback  forms:  The  return  rate  is  not  reported internally or externally, and there is no regular monitoring or  review of the feedback forms or their contents, once they are filed by  the  ASLOs  in  AUSTRAC’s  Electronic  Document  and  Records  Management System. 

The  ANAO’s  analysis  of  the  feedback  forms  show  them  to  be  overwhelmingly  positive.  Of  the  173  forms  returned,  only  one respondent disagreed that the assessment had a c lear purpose and  one disagreed that the assessment had increased their understanding of  the  topic.  There  were  128  feedback  forms  returned  by  international  counterparts (from the 185 international exchanges where AUSTRAC  provided intelligence), and only five disagreed that the assessment had  increased their understanding of the topic.  

 Declining return of the quarterly feedback reports: the return rate for  these reports has been better than for the feedback forms. AUSTRAC’s  monitoring  of  the  reports  show  it  had  the  highest  return  rate  in   2009-10  (47.9 per cent),  with  declining  returns  in  following  years  (28.2 per cent  were  returned  in  2010-11  and  only  eight  reports  were 

                                                       151 The total of 242 comprise: 69 acknowledgement receipts and 173 feedback forms.

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submitted  to  AUSTRAC  in  2011-12,  representing  a  return  of  6.4 per cent). 

The ANAO’s analysis of the eight 2011-12 reports show them to be  very  positive.  Five  reports  were  operational  in  nature,  detailing  the  specific  outcomes  of  individual  cases.152  Only  the  three  Austracking  newsletters submitted by the ATO included the more general, statistical  and qualitative feedback expected from the quarterly review process.  The newsletter included information on the revenue raised as a result  of  AUSTRAC  financial  intelligence,  outcomes  from  data  matching  exercises and significant cases for the time period. The ANAO observed  that  both  DHS-Centrelink  and  Customs  and  Border  Protection  also  provided qualitative feedback separate from the quarterly reports. 

4.13 AUSTRAC advised that, from July 2012, other feedback mechanisms  such as a new domestic request form, a single feedback form, and the ‘reason  for  access’  function  replaced  the  quarterly  reports.153  The  MOUs  that  AUSTRAC have with its partner agencies will need to be updated to reflect  these new mechanisms, and to be aligned with the roll‐out of the Enhanced  Analytics Capability project.  

Measurement of impact of AUSTRAC financial intelligence by partner agencies

4.14 Three  of  the  domestic  partner  agencies  (ATO,  DHS-Centrelink  and  Customs and Border Protection) consulted by the ANAO advised that they are  able to q

uantify the use and value of AUSTRAC’s financial intelligence to their  own  agency’s  operations  or  investigations.  However,  four  agencies  (AFP,  ASIO, Victoria Police and ACC) were not in a position to do so. In particular,  AUSTRAC’s  law  enforcement  partner  agencies,  such  as  the  AFP,  Victoria  Police and the ACC, indicated that they could not immediately ascertain if an  AUSTRAC financial intelligence report or assessment contributed to, or was 

                                                       152 One quarterly report (from the Child Support Agency, CSA, for July-September 2011) detailed the number of active CSA users of the AUSTRAC database and audits conducted to detect instances of non-compliance (no instances of

non-compliance were detected by CSA). 153 AUSTRAC advised that the main purpose of the new ‘domestic request form’ is to provide a structured template for partner agencies to make a formal request for AUSTRAC analysis, and to provide all the information that AUSTRAC

requires to conduct such analysis (including a general overview of the case, such as the crime type) and the agency point of contact details. The ‘single feedback form’ is used to gather information on the quality of the written intelligence products produced by AUSTRAC analysts. It is also a mechanism by which AUSTRAC receives information on partner agency investigations that have been supported by AUSTRAC, including any charges or convictions obtained. The ‘reason for access’ function is intended to provide a better ability to monitor and audit searches conducted by users of the AUSTRAC database.

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submitted  to  AUSTRAC  in  2011-12,  representing  a  return  of  6.4 per cent). 

The ANAO’s analysis of the eight 2011-12 reports show them to be  very  positive.  Five  reports  were  operational  in  nature,  detailing  the  specific  outcomes  of  individual  cases.152  Only  the  three  Austracking  newsletters submitted by the ATO included the more general, statistical  and qualitative feedback expected from the quarterly review process.  The newsletter included information on the revenue raised as a result  of  AUSTRAC  financial  intelligence,  outcomes  from  data  matching  exercises and significant cases for the time period. The ANAO observed  that  both  DHS-Centrelink  and  Customs  and  Border  Protection  also  provided qualitative feedback separate from the quarterly reports. 

4.13 AUSTRAC advised that, from July 2012, other feedback mechanisms  such as a new domestic request form, a single feedback form, and the ‘reason  for  access’  function  replaced  the  quarterly  reports.153  The  MOUs  that  AUSTRAC have with its partner agencies will need to be updated to reflect  these new mechanisms, and to be aligned with the roll‐out of the Enhanced  Analytics Capability project.  

Measurement of impact of AUSTRAC financial intelligence by partner agencies

4.14 Three  of  the  domestic  partner  agencies  (ATO,  DHS-Centrelink  and  Customs and Border Protection) consulted by the ANAO advised that they are  able to q

uantify the use and value of AUSTRAC’s financial intelligence to their  own  agency’s  operations  or  investigations.  However,  four  agencies  (AFP,  ASIO, Victoria Police and ACC) were not in a position to do so. In particular,  AUSTRAC’s  law  enforcement  partner  agencies,  such  as  the  AFP,  Victoria  Police and the ACC, indicated that they could not immediately ascertain if an  AUSTRAC financial intelligence report or assessment contributed to, or was 

                                                       152 One quarterly report (from the Child Support Agency, CSA, for July-September 2011) detailed the number of active CSA users of the AUSTRAC database and audits conducted to detect instances of non-compliance (no instances of

non-compliance were detected by CSA). 153 AUSTRAC advised that the main purpose of the new ‘domestic request form’ is to provide a structured template for

partner agencies to make a formal request for AUSTRAC analysis, and to provide all the information that AUSTRAC requires to conduct such analysis (including a general overview of the case, such as the crime type) and the agency point of contact details. The ‘single feedback form’ is used to gather information on the quality of the written intelligence products produced by AUSTRAC analysts. It is also a mechanism by which AUSTRAC receives information on partner agency investigations that have been supported by AUSTRAC, including any charges or convictions obtained. The ‘reason for access’ function is intended to provide a better ability to monitor and audit searches conducted by users of the AUSTRAC database.

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the catalyst for, an investigation resulting in a prosecution, as it could take  months, if not years, for these matters to be resolved.154 

4.15 In contrast, the ATO, DHS-Centrelink and most recently, Customs and  Border Protection, have built capabilities to link monies recovered, revenue  collected and cases that are under investigation or will be investigated by their  agencies, to the financial intelligence received from AUSTRAC.  

4.16 For  example,  the  ATO  provides  a  quarterly  feedback  report  to  AUSTRAC through its Austracking Newsletter, which includes: total results for  the year to the end of quarter period; comparison of direct results for the last  four years; results from AUSTRAC data matching; reported AUSTRAC results  to  various  ATO  operations,  and  more.  The  newsletter  also  summarises  AUSTRAC’s direct monetary results to the ATO and the completed number of  cases. In 2011-12, the ATO reported that AUSTRAC financial intelligence had  been used in 3745 cases resulting in the raising of $252 million of additional  revenue from tax assessments.  

4.17 Similarly,  DHS-Centrelink  through  its  Business  Integrity  Fraud  and  Intelligence Branch, provides feedback to AUSTRAC that includes the number  of DHS‐Centrelink completed investigations directly linked to AUSTRAC data,  and  the  combined  value  of  customer  debts  b eing  raised  and  savings  to  its  future outlay. In 2011-12, DHS‐Centrelink was able to report to AUSTRAC that  their financial intelligence had been used in 973 cases with total annualised  savings of $3.1 million. 

4.18 Customs and Border Protection also provide feedback to AUSTRAC,  particularly on proactive SMRs and financial intelligence assessments. In early  2012,  Customs  and  Border  Protection  created  its  National  Assessments  and  Prioritisation Team, and has since provided to AUSTRAC regular feedback on:  the number of cases the agency has created based on the SMRs or assessments  received; and direct  linkages of AUSTRAC  information to its current cases,  investigations  and  operations.  For  example,  for  the  month  of  June  2012,  Customs and Border Protection were able to report to AUSTRAC that it had  assessed  102  SMRs  and  intelligence  assessments  and  created  11  cases  as  a  result, and that it had 16 current cases with SMRs attached.  

                                                       154 AUSTRAC advised that while law enforcement agencies find it difficult to quantify operational matters which involve AUSTRAC information, they have provided examples for publication, in the yearly Typologies and Case Studies on how

AUSTRAC information ‘fed into successful operations’.

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Partner agencies’ acceptance rates

4.19 There  are  also  benefits  in  AUSTRAC  measuring  partner  agencies’  acceptance of proactive disseminations.155 The acceptance rate is one possible  measure of determining the usefulness of AUSTRAC financial intelligence to a  partner  agency.  However,  AUSTRAC  is  not  able  to  accurately  gauge  or  measure partner agencies’ acceptance rate of proactive disseminations. Partner  agencies have also advised the ANAO that they are not always able to accept  referrals  or  proactive  assessments  disseminated  by  AUSTRAC  because  of  resource constraints or other priorities.  

Strengthening feedback methodologies

4.20 While  sound  in  concept,  the  present  low  rates  of  return  for  both  feedback  forms  and  quarterly  feedback  reports  limits  their  usefulness  to  AUSTRAC  as  a  source  of  management  and  performance  information,  and  AUSTRAC presently does not actively analyse the feedback received. There  would be merit in AUSTRAC reviewing its approach to gathering structured  feedback from partner agencies and considering alternatives for measuring the  use,  value,  quality  and  relevance  to  partner  agencies  of  its  financial  intelligence.  One  possible  alternative  approach  to  strengthen  feedback  methodologies  would  be  for  AUSTRAC  to  conduct  an  annual  high‐level  survey, similar to those conducted by law enforcement agencies, to assist in  gathering information on the useability and quality of its financial intelligence  as a wh

ole.156 An annual FIU survey could include: 

 the  use,  value,  quality  and  relevance  of  AUSTRAC  FIU’s  financial  intelligence; and 

 the effectiveness of AUSTRAC’s support (for example, the ASLOs) of,  and relationship with, domestic partner agencies.  

While  there  is  a  balance  to  be  struck  between  the  costs  and  benefits  of  obtaining performance information, such information would assist AUSTRAC 

                                                       155 In this context, the ‘acceptance’ of a proactive dissemination refers to partner agency investigations or operations which are initiated as a consequence of the financial intelligence provided by AUSTRAC, as well as when the financial

intelligence is retained by the partner agency for intelligence purposes. 156 AUSTRAC does not conduct regular surveys of its partner agencies to gauge the efficiency and effectiveness of the intelligence products and services it provides. In 2007, as part of AUSTRAC’s three-year Internal Audit Plan, a private

consulting firm conducted, on behalf of the agency, an AUSTRAC Partner Agency Feedback Survey that measured the effectiveness of AUSTRAC’s partner relationships. The key findings were the partner agencies understood what analysis AUSTRAC could perform, and rated the quality and usability of the assessments favourably. A follow-up survey of partner agency views of AUSTRAC and their financial intelligence has never been conducted.

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Partner agencies’ acceptance rates

4.19 There  are  also  benefits  in  AUSTRAC  measuring  partner  agencies’  acceptance of proactive disseminations.155 The acceptance rate is one possible  measure of determining the usefulness of AUSTRAC financial intelligence to a  partner  agency.  However,  AUSTRAC  is  not  able  to  accurately  gauge  or  measure partner agencies’ acceptance rate of proactive disseminations. Partner  agencies have also advised the ANAO that they are not always able to accept  referrals  or  proactive  assessments  disseminated  by  AUSTRAC  because  of  resource constraints or other priorities.  

Strengthening feedback methodologies

4.20 While  sound  in  concept,  the  present  low  rates  of  return  for  both  feedback  forms  and  quarterly  feedback  reports  limits  their  usefulness  to  AUSTRAC  as  a  source  of  management  and  performance  information,  and  AUSTRAC presently does not actively analyse the feedback received. There  would be merit in AUSTRAC reviewing its approach to gathering structured  feedback from partner agencies and considering alternatives for measuring the  use,  value,  quality  and  relevance  to  partner  agencies  of  its  financial  intelligence.  One  possible  alternative  approach  to  strengthen  feedback  methodologies  would  be  for  AUSTRAC  to  conduct  an  annual  high‐level  survey, similar to those conducted by law enforcement agencies, to assist in  gathering information on the useability and quality of its financial intelligence  as a wh

ole.156 An annual FIU survey could include: 

 the  use,  value,  quality  and  relevance  of  AUSTRAC  FIU’s  financial  intelligence; and 

 the effectiveness of AUSTRAC’s support (for example, the ASLOs) of,  and relationship with, domestic partner agencies.  

While  there  is  a  balance  to  be  struck  between  the  costs  and  benefits  of  obtaining performance information, such information would assist AUSTRAC 

                                                       155 In this context, the ‘acceptance’ of a proactive dissemination refers to partner agency investigations or operations which are initiated as a consequence of the financial intelligence provided by AUSTRAC, as well as when the financial

intelligence is retained by the partner agency for intelligence purposes. 156 AUSTRAC does not conduct regular surveys of its partner agencies to gauge the efficiency and effectiveness of the intelligence products and services it provides. In 2007, as part of AUSTRAC’s three-year Internal Audit Plan, a private

consulting firm conducted, on behalf of the agency, an AUSTRAC Partner Agency Feedback Survey that measured the effectiveness of AUSTRAC’s partner relationships. The key findings were the partner agencies understood what analysis AUSTRAC could perform, and rated the quality and usability of the assessments favourably. A follow-up survey of partner agency views of AUSTRAC and their financial intelligence has never been conducted.

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to  better  direct  the  efforts  and  resources  of  its  FIU,  and  assist  in  the  measurement and reporting of deliverables and key performance indicators. 

Measuring and reporting performance against program deliverables and key performance indicators 4.21 Since 2009-10, all agencies have been required to report in accordance  with  the  Outcomes  and  Programs  framework.  A  central  element  of  the  framework is that entities are required to identify and report against programs  that contribute to government outcomes over the Budget and forward years,  rather than against output groups that contributed to government outcomes.157 

4.22 Program deliverables are expected to bring about the results outlined in  the  program  objective,  which  can  be  identified  and  measured  through  the  program  performance  indicators.158  Reporting  on  the  performance  of  programs,  through  the  key  performance  indicators  (KPIs),  provides  an  indication  of  the  relative  success  of  particular  programs  in  achieving  its  objectives.159 

4.23 AUSTRAC’s program deliverables and KPIs, as set out in its Portfolio  Budget Statements (PBS), have changed over time to reflect the priorities, and  the challenges, of the FIU. The ANAO assessed the FIU program deliverables,  and AUSTRAC’s performance against its FIU KPIs. 

FIU program deliverables

4.24 The Department of Finance and Deregulation guidance for entities on  the  preparation  of  the  information  to  be  contained  in  the  PBS  identifies   a  number of required elements including that: 

 agencies are to outline the deliverables that will be produced over the  budget and forward years to achieve the program objectives; 

 deliverables should be measurable and quantifiable units or activities to  allow for consistent estimation over the budget and forward years; 

                                                       157 ANAO Report No.5 2011-12, Development and Implementation of Key Performance Indicators to Support the Outcomes and Programs framework, p. 15. 158

Department of Finance and Deregulation’s Guidance for the Preparation of the 2011-12 Portfolio Budget Statements, March 2011, p. 35. 159 ibid, p. 37.

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 agencies are to detail their deliverables in quantifiable, measurable and  consistent units or activities. Estimated results for current year are to be  included, along with budget and forward year estimates; and 

 deliverables  should  capture  the  entirety  of  the  program’s  major  activities.160 

4.25 The ANAO analysed each of the FIU deliverables against these criteria,  as shown in Table 4.3. 

Table 4.3

ANAO analysis of AUSTRAC FIU Program Deliverables, 2009-10 to 2011-12

AUSTRAC’s Financial Intelligence Unit objective: Countering money laundering and the financing of terrorism and other forms of serious and organised crime through:

 identifying, monitoring and assessing financial transaction reporting to support partner agency and AUSTRAC regulatory priorities and interests;

 identifying emerging money laundering and terrorism financing trends;

 providing partner agencies access to, and support in the use of, AUSTRAC databases; and

 contributing to international efforts directed at AML/CTF, including the international exchange of information with counterpart financial intelligence units and capacity-building assistance for financial intelligence units in Africa, the Asia-Pacific region and elsewhere.

Deliverables

Criteria1

Measureable Quantifiable Consistent

Comprehensive 2

1. High level of database availability.

  



2. Promote and support partner agency use of AUSTRAC databases and information.

o o 

3. Analysis and dissemination of matters of intelligence interest.

o o 

                                                       160 ibid, pp. 35-36.

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 agencies are to detail their deliverables in quantifiable, measurable and  consistent units or activities. Estimated results for current year are to be  included, along with budget and forward year estimates; and 

 deliverables  should  capture  the  entirety  of  the  program’s  major  activities.160 

4.25 The ANAO analysed each of the FIU deliverables against these criteria,  as shown in Table 4.3. 

Table 4.3

ANAO analysis of AUSTRAC FIU Program Deliverables, 2009-10 to 2011-12

AUSTRAC’s Financial Intelligence Unit objective: Countering money laundering and the financing of terrorism and other forms of serious and organised crime through:

 identifying, monitoring and assessing financial transaction reporting to support partner agency and AUSTRAC regulatory priorities and interests;

 identifying emerging money laundering and terrorism financing trends;

 providing partner agencies access to, and support in the use of, AUSTRAC databases; and

 contributing to international efforts directed at AML/CTF, including the international exchange of information with counterpart financial intelligence units and capacity-building assistance for financial intelligence units in Africa, the Asia-Pacific region and elsewhere.

Deliverables

Criteria 1

Measureable Quantifiable Consistent

Comprehensive 2

1. High level of database availability.

  



2. Promote and support partner agency use of AUSTRAC databases and information.

o o 

3. Analysis and dissemination of matters of intelligence interest.

o o 

                                                       160 ibid, pp. 35-36.

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AUSTRAC’s Financial Intelligence Unit objective: Countering money laundering and the financing of terrorism and other forms of serious and organised crime through:

 identifying, monitoring and assessing financial transaction reporting to support partner agency and AUSTRAC regulatory priorities and interests;

 identifying emerging money laundering and terrorism financing trends;

 providing partner agencies access to, and support in the use of, AUSTRAC databases; and

 contributing to international efforts directed at AML/CTF, including the international exchange of information with counterpart financial intelligence units and capacity-building assistance for financial intelligence units in Africa, the Asia-Pacific region and elsewhere.

Deliverables

Criteria1

Measureable Quantifiable Consistent

Comprehensive 2

4. Feedback on money laundering and terrorism financing methods and risk to reporting entities.

  

5. International relationships established and strengthened.

  

Source: AUSTRAC’s performance deliverables are listed in the Attorney-General Department’s Portfolio Budget Statement 2011-12, p. 259.

Notes: The criteria was:  = fully met; o = partially met;  = not met. 1 The Criteria are based on the Department of Finance and Deregulation’s Guidance for the Preparation of the 2011-12 Portfolio Budget Statements, March 2011, pp. 35-36.

2 The ‘comprehensive’ criteria refers to the entire suite of Program Deliverables. 

Assessment of FIU Program Deliverables

4.26 As shown in Table 4.3, program deliverables one, four and five met the  criteria  for  being  measurable,  quantifiable  and  consistent  from  2009-10  to  2011-12. The FIU was able to determine the units (that is, the percentages and  number)  and  used  these  to  assess  the  program’s  efficiency.  Program  deliverables two and three partially met the criteria for being measurable and  quantifiable. AUSTRAC quantified these for some years, but not for others. For  example, training and awareness sessions for program deliverable two were  measured and quantified for 2009-10 and 2010-11, but not for 2011-12. There 

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has also been varied reporting of these deliverables over the reported years.161  All deliverables met the criterion of comprehensiveness as they capture the  entirety of the FIU’s major activities, as defined in the FIU objective.  

FIU Key Performance Indicators (KPIs)

4.27 A  required  element  of  the  Outcomes  and  Programs  Framework  introduced  in  2009-10  is  the  use  of  KPIs  that  enable  the  measurement  and  assessment  of  the  achievement  of  the  program  objectives  in  support  of  respective outcomes.162 Under the framework, KPIs are not measures of the  inputs to a program, or their outputs. Rather, they are: 

... the basis on which to assess the effectiveness of the program in achieving its  objectives and involve measuring the impacts of these activities on the target  group.163 

4.28 The ANAO developed criteria used to evaluate the appropriateness of  Australian Government entities’ KPIs, and the completeness and accuracy of  their reporting as part of its KPI audit pilot project.164 Appropriate KPIs will  demonstrate  relevance,  reliability  and  completeness.  Table  4.4  outlines  the  ANAO’s  analysis  of  the  AUSTRAC  FIU’s  KPIs  for  2011-12  against  these  criteria. 

   

                                                       161 For example, for Program Deliverable 3, ‘analysis and dissemination of matters of intelligence interest’, the reporting in 2009-10 related to a target number of intelligence products, whereas the subsequent years, 2010-11 and 2011-12,

related to a target number of intelligence disseminations. 162 ANAO Report No.5 2011-12, Development and Implementation of Key Performance Indicators to Support the Outcomes and Programs framework, p. 47. 163

Department of Finance and Deregulation, Guidance for the Preparation of the 2011-12 Portfolio Budget Statements, March 2011, p. 29. 164 ibid, p. 62. The requirements of the Australian Standard on Assurance Engagements (ASAE) 3000 Assurance

Engagements other than Audits or Reviews of Historical Financial Information and other relevant standards and guidance were considered in the development of the audit criteria.

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has also been varied reporting of these deliverables over the reported years.161  All deliverables met the criterion of comprehensiveness as they capture the  entirety of the FIU’s major activities, as defined in the FIU objective.  

FIU Key Performance Indicators (KPIs)

4.27 A  required  element  of  the  Outcomes  and  Programs  Framework  introduced  in  2009-10  is  the  use  of  KPIs  that  enable  the  measurement  and  assessment  of  the  achievement  of  the  program  objectives  in  support  of  respective outcomes.162 Under the framework, KPIs are not measures of the  inputs to a program, or their outputs. Rather, they are: 

... the basis on which to assess the effectiveness of the program in achieving its  objectives and involve measuring the impacts of these activities on the target  group.163 

4.28 The ANAO developed criteria used to evaluate the appropriateness of  Australian Government entities’ KPIs, and the completeness and accuracy of  their reporting as part of its KPI audit pilot project.164 Appropriate KPIs will  demonstrate  relevance,  reliability  and  completeness.  Table  4.4  outlines  the  ANAO’s  analysis  of  the  AUSTRAC  FIU’s  KPIs  for  2011-12  against  these  criteria. 

   

                                                       161 For example, for Program Deliverable 3, ‘analysis and dissemination of matters of intelligence interest’, the reporting in 2009-10 related to a target number of intelligence products, whereas the subsequent years, 2010-11 and 2011-12,

related to a target number of intelligence disseminations. 162 ANAO Report No.5 2011-12, Development and Implementation of Key Performance Indicators to Support the Outcomes and Programs framework, p. 47. 163

Department of Finance and Deregulation, Guidance for the Preparation of the 2011-12 Portfolio Budget Statements, March 2011, p. 29. 164 ibid, p. 62. The requirements of the Australian Standard on Assurance Engagements (ASAE) 3000 Assurance

Engagements other than Audits or Reviews of Historical Financial Information and other relevant standards and guidance were considered in the development of the audit criteria.

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Table 4.4

ANAO analysis of AUSTRAC FIU key performance indicators, 2009-10 to 2011-12

Financial Intelligence Unit’s key performance indicators: The provision of financial intelligence to AUSTRAC’s partner agencies and counterpart financial intelligence units, coupled with technical assistance and training, leads to success in countering money laundering and terrorism financing as demonstrated through:

 ongoing value to partner agency and taskforce operations of financial intelligence products produced by AUSTRAC;

 increased targeted financial intelligence exchange which indicates the effectiveness of AUSTRAC’s international exchange instruments and the value of financial intelligence; and

 the effectiveness of AUSTRAC’s international technical assistance and training, as measured by the internationally accepted indicator of delivered outcomes against agreed program objectives and budget.

Key performance indicators

Criteria1

Relevant Reliable Complete

2

Focused Understandable Measureable Free from bias

Balanced Collective

1. Value of AUSTRAC information and financial intelligence to partner agency and taskforce operations.

  o o

o

2. Increased financial intelligence exchange with foreign financial intelligence units.

o o o o

3. International technical assistance and training builds capacity of recipient financial intelligence units and other stakeholders to meet international standards.

   

Source: AUSTRAC’s key performance indicators are listed in the Attorney-General Department’s Portfolio Budget Statement 2011-12, p. 260.

Notes: The criteria was:  = fully met; o = partially met;  = not met. 1 The Criteria are based on the ANAO draft Criteria for the assessment of the appropriateness of the KPIs.

2 The ‘complete’ criteria refers to the entire suite of key performance indicators. 

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Assessment of the FIU key performance indicators and its reported performance

4.29 As shown in Table 4.4, the AUSTRAC FIU KPI relating to the ‘value of  AUSTRAC  information  and  financial  intelligence  to  partner  agency  and  taskforce operations’ meets the criterion for being relevant, and partially meets  the  criterion  for  reliability.  The  KPI  assists  in  informing  whether  the  FIU  objective is being achieved. However, it does not capture the full extent of the  value  of  the  AUSTRAC  information  to  partner  agencies,  as  some  partner  agencies  are  not  able  to  quantify  the  importance  of  AUSTRAC’s  financial  intelligence. 

4.30  The  KPI  relating  to  ‘increased  financial  intelligence  exchange  with  foreign  financial  intelligence  units’  partially  meets  the  criteria  for  being  relevant  and  reliable.  However,  it  is  not  apparent  whether  a  consistent  ‘increase’ in the exchange of financial intelligence is, on its own, an appropriate  indicator  of  AUSTRAC’s  performance.  In  addition,  it  is  not  clear  whether  meeting the unpublished target number of intelligence exchanges with foreign  FIUs, which is 200 for each year in the period examined, is indicative of good  performance. For example, a decrease in the number of intelligence exchanges  with foreign FIUs does not necessarily equate to a poor performance by the  AUSTRAC  FIU,  as  an  exchange  of  financial  intelligence  internationally  is  reliant on th

e number of financial assessments made, in any given year, that  may be requested or deemed relevant (or not) to an international FIU. 

4.31 The  KPI  relating  to  ‘international  technical  assistance  and  training  builds capacity of recipient financial intelligence units and other stakeholders  to meet international standards’, meets the criteria for relevance and reliability.  It provides sufficient information and allows for results to show trends when  measured over time. 

4.32 Collectively, while the three KPIs were relevant to the FIU program  objective,  they  were  not  complete,  in  that  they  only  addressed  two  of  the  four specified  activities.  Consequently,  the  activities  relating  to  ‘identifying  emerging money laundering and terrorism financing trends’ and ‘providing  partner agencies access to, and support in the use of, AUSTRAC databases’ are  not addressed in the KPI framework. 

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Assessment of the FIU key performance indicators and its reported performance

4.29 As shown in Table 4.4, the AUSTRAC FIU KPI relating to the ‘value of  AUSTRAC  information  and  financial  intelligence  to  partner  agency  and  taskforce operations’ meets the criterion for being relevant, and partially meets  the  criterion  for  reliability.  The  KPI  assists  in  informing  whether  the  FIU  objective is being achieved. However, it does not capture the full extent of the  value  of  the  AUSTRAC  information  to  partner  agencies,  as  some  partner  agencies  are  not  able  to  quantify  the  importance  of  AUSTRAC’s  financial  intelligence. 

4.30  The  KPI  relating  to  ‘increased  financial  intelligence  exchange  with  foreign  financial  intelligence  units’  partially  meets  the  criteria  for  being  relevant  and  reliable.  However,  it  is  not  apparent  whether  a  consistent  ‘increase’ in the exchange of financial intelligence is, on its own, an appropriate  indicator  of  AUSTRAC’s  performance.  In  addition,  it  is  not  clear  whether  meeting the unpublished target number of intelligence exchanges with foreign  FIUs, which is 200 for each year in the period examined, is indicative of good  performance. For example, a decrease in the number of intelligence exchanges  with foreign FIUs does not necessarily equate to a poor performance by the  AUSTRAC  FIU,  as  an  exchange  of  financial  intelligence  internationally  is  reliant on th

e number of financial assessments made, in any given year, that  may be requested or deemed relevant (or not) to an international FIU. 

4.31 The  KPI  relating  to  ‘international  technical  assistance  and  training  builds capacity of recipient financial intelligence units and other stakeholders  to meet international standards’, meets the criteria for relevance and reliability.  It provides sufficient information and allows for results to show trends when  measured over time. 

4.32 Collectively, while the three KPIs were relevant to the FIU program  objective,  they  were  not  complete,  in  that  they  only  addressed  two  of  the  four specified  activities.  Consequently,  the  activities  relating  to  ‘identifying  emerging money laundering and terrorism financing trends’ and ‘providing  partner agencies access to, and support in the use of, AUSTRAC databases’ are  not addressed in the KPI framework. 

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4.33 In addition, Australian Government agencies are required to publish,  as part of their annual report, results for all performance indicators included in  agencies’ budget statements, and a review of their performance in relation to  the  performance  indicators.165  In  practice,  AUSTRAC  has  only  specified  the  target for its FIU KPIs when reporting the outcome (in the annual reports) and  not before (in the PBS). It is generally accepted better practice that targets be  included in the PBS to provide transparency and accountability, particularly  for  targets  that  are  quantifiable.  For  example,  the  target  of  ‘200 intelligence  exchanges’  for  KPI  three  was  only  stated  in  the  annual  reports  and  not  in  AUSTRAC’s PBS for the three years examined.  

4.34 AUSTRAC  advised  that  it  is  planning  to  review  the  FIU’s  KPIs,  however, at the time of the audit, the terms of reference for this review were  yet to be determined.  

Conclusion 4.35 AUSTRAC  employs  a  number  of  methodologies  for  engaging  with  partner agencies to identify their needs and requirements. Arrangements are in  place  to  obtain  feedback  from  agencies  about  the  specific  contribution  of  AUSTRAC’s financial intelligence to their operations and investigations. These  arrangements  included  acknowledgement  receipts  and  feedback  forms  on  individual disseminatio ns and more general quarterly feedback reports on the  usefulness of AUSTRAC information. For the period 2011-12, the return rate of  acknowledgement  receipts  and  feedback  forms  was  16  per  cent,  with  only  242 acknowledgement  receipts  and  feedback  forms  returned  by  domestic  partner  agencies  from  1513 intelligence  disseminations.  Some  AUSTRAC  officers and partner agencies advised that they saw little value in the forms,  and AUSTRAC’s analysis of those forms that were returned was poor.  

4.36 For the period 2011-12, the ANAO analysis showed that a total of only  eight quarterly feedback reports were provided to AUSTRAC by its 39 partner  agencies. While all eight reports provided positive feedback, the majority (five)  were of an operational nature, detailing the specific outcomes of individual  assessments. Only three reports, all from the ATO, provided the more general  statistical  and  qualitative  feedback  expected  from  the  quarterly  reporting  process. In March 2013, AUSTRAC advised that other feedback mechanisms 

                                                       165 Department of Prime Minister and Cabinet, Requirements for Annual Reports for Departments, Executive Agencies, and FMA Act Bodies, 28 June 2012, p.6, available from http://www.dpmc.gov.au/guidelines/ [accessed 15 February 2012].

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such as a new domestic request form, a single feedback form, and the ‘reason  for access’ function have replaced the quarterly feedback reports.  

4.37  The ANAO consulted with seven of AUSTRAC’s key domestic partner  agencies (ATO, DHS-Centrelink, Customs and Border Protection, AFP, ACC,  ASIO  and  Victoria  Police)  regarding  AUSTRAC’s  relationship  management,  financial  intelligence  products  and  support.  The  responses  that  the  ANAO  received were overwhelmingly positive.  

4.38 The  ATO  and  DHS-Centrelink  have  reported  using  AUSTRAC’s  financial intelligence in more than 2700 cases in 2011-12, resulting in savings of  more  than  $255  million.  In  2012,  Customs  and  Border  Protection  started  quantifying the number of cases (or agency investigations) that are linked to  AUSTRAC  financial  intelligence.  Other  agencies,  particularly  the  law  enforcement  partner  agencies,  such  as  the  AFP,  Victoria  Police  and  the  Australian  Crime  Commission  consider  that  they  could  not  immediately  ascertain  if  an  AUSTRAC  financial  intelligence  report  or  assessment  contributed  to,  or  was  the  catalyst  for,  an  investigation  resulting  in  a  prosecution,  as  it  could  take  months,  if  not  years,  for  these  matters  to  be  resolved.  

4.39 AUSTRAC’s  Program  Deliverables  and  key  performance  indicators  (KPIs), as set out in its Portfolio Budget Statements (PBS), have changed over  time  to  refl ect  the  priorities,  and  the  challenges,  of  the  FIU.  AUSTRAC’s  program  deliverables  adequately  captures  the  FIU’s  major  activities.  AUSTRAC  has  also  developed  three  KPIs  that  are  intended  to  enable  the  measurement  and  assessment  of  the  achievement  of  the  activities  underpinning  the  FIU’s  program  objective  in  support  of  its  respective  outcomes. Collectively, while the three KPIs were relevant to the FIU program  objective, they were not complete, in that they only addressed two of the four  specified  activities.  Consequently,  the  activities  relating  to  ‘identifying  emerging money laundering and terrorism financing trends’ and ‘providing  partner agencies access to, and support in the use of, AUSTRAC databases’ are  not addressed in the KPI framework. 

4.40 In  addition,  the  performance  targets  for  the  FIU’s  KPIs  were  not  included in AUSTRAC’s PBS, and only disclosed when reporting performance  in its Annual Reports. It is generally accepted better practice that targets be  included  in  the  PBS  so  as  to  provide  transparency  and  accountability,  particularly to assist in Parliamentary scrutiny. AUSTRAC advised that it is  planning to review the FIU’s KPIs. In conducting this review, it would also be 

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such as a new domestic request form, a single feedback form, and the ‘reason  for access’ function have replaced the quarterly feedback reports.  

4.37  The ANAO consulted with seven of AUSTRAC’s key domestic partner  agencies (ATO, DHS-Centrelink, Customs and Border Protection, AFP, ACC,  ASIO  and  Victoria  Police)  regarding  AUSTRAC’s  relationship  management,  financial  intelligence  products  and  support.  The  responses  that  the  ANAO  received were overwhelmingly positive.  

4.38 The  ATO  and  DHS-Centrelink  have  reported  using  AUSTRAC’s  financial intelligence in more than 2700 cases in 2011-12, resulting in savings of  more  than  $255  million.  In  2012,  Customs  and  Border  Protection  started  quantifying the number of cases (or agency investigations) that are linked to  AUSTRAC  financial  intelligence.  Other  agencies,  particularly  the  law  enforcement  partner  agencies,  such  as  the  AFP,  Victoria  Police  and  the  Australian  Crime  Commission  consider  that  they  could  not  immediately  ascertain  if  an  AUSTRAC  financial  intelligence  report  or  assessment  contributed  to,  or  was  the  catalyst  for,  an  investigation  resulting  in  a  prosecution,  as  it  could  take  months,  if  not  years,  for  these  matters  to  be  resolved.  

4.39 AUSTRAC’s  Program  Deliverables  and  key  performance  indicators  (KPIs), as set out in its Portfolio Budget Statements (PBS), have changed over  time  to  refl ect  the  priorities,  and  the  challenges,  of  the  FIU.  AUSTRAC’s  program  deliverables  adequately  captures  the  FIU’s  major  activities.  AUSTRAC  has  also  developed  three  KPIs  that  are  intended  to  enable  the  measurement  and  assessment  of  the  achievement  of  the  activities  underpinning  the  FIU’s  program  objective  in  support  of  its  respective  outcomes. Collectively, while the three KPIs were relevant to the FIU program  objective, they were not complete, in that they only addressed two of the four  specified  activities.  Consequently,  the  activities  relating  to  ‘identifying  emerging money laundering and terrorism financing trends’ and ‘providing  partner agencies access to, and support in the use of, AUSTRAC databases’ are  not addressed in the KPI framework. 

4.40 In  addition,  the  performance  targets  for  the  FIU’s  KPIs  were  not  included in AUSTRAC’s PBS, and only disclosed when reporting performance  in its Annual Reports. It is generally accepted better practice that targets be  included  in  the  PBS  so  as  to  provide  transparency  and  accountability,  particularly to assist in Parliamentary scrutiny. AUSTRAC advised that it is  planning to review the FIU’s KPIs. In conducting this review, it would also be 

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appropriate for AUSTRAC to focus its KPIs on the impact of its FIU program  by aligning the indicators with the program objective, and setting appropriate  performance targets. 

Recommendation No.3 4.41 To provide greater assurance and transparency to its public reporting,  the ANAO recommends that AUSTRAC: 

 reviews  its  approach  to  gathering  structured  feedback  from  partner  agencies  and  considers  alternatives  for  measuring  the  use,  value,  quality and relevance of AUSTRAC’s financial intelligence; and 

 develops  appropriate  key  performance  indicators  and  targets  to  measure whether the objectives of the FIU program are being met and  regularly report against these. 

AUSTRAC’s response: 

4.42 Agreed. AUSTRAC will take a number of steps to improve feedback from its  partner  agencies.  The  review  of  its  MOUs  with  partner  agencies  will  include  an  examination  of  mechanisms  for  strengthening  the  feedback  provisions  in  those  instruments. AUSTRAC will also conduct a client survey to gather partner agency  feedback on the use, value, quality and relevance of its financial intelligence.  

4.43 AUSTRAC  is  currently  undertaking  a  review  of  the  key  performance  indicators and targets for both its intelligence and regulatory functions. A particular  focus of this review will be the development of performance indicators which reflect the  intelligence  contribution  AUST RAC  provides  to  its  domestic  and  international  partners.  

 

Ian McPhee 

Auditor‐General 

Canberra ACT 

18 June 2013 

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Appendices

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Appendix 1: Agency Response

 

 

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Appendix 1: Agency Response

 

 

Appendix 1: Agency Response

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Appendix 2: Transaction Report Types

Table A.1

Summaries of the report types AUSTRAC receives and analyses.

Report Type Description

International funds transfer instruction (IFTI) reports

Under the AML/CTF Act, if a reporting entity sends or receives an instruction to or from a foreign country, to transfer money or property, that entity must submit an IFTI report. IFTI reports were also previously required to be submitted under the FTR Act.

Suspicious matter reports (SMRs) Under the AML/CTF Act, a reporting entity must submit an SMR if, at any time while dealing with a customer, the entity forms a reasonable

suspicious that the matter may be related to an offence, tax evasion, or the proceeds of crime. Entities must submit SMRs to AUSTRAC within three days of forming the suspicion (or within 24 hours for matters related to the suspected financing of terrorism). SMRs were introduced in December 2008 and for most entities, SMRs have replaced suspect transaction reports (SUSTRs), which are submitted by entities regulated under the FTR Act.

Threshold transaction reports (TTRs)

Under the AML/CTF Act, if a reporting entity provides a designated service to a customer involving the transfer of physical currency (or e-currency) of AUD10 000 or more (or the foreign currency equivalent), then the reporting entity must submit a TTR. For most entities, TTRs (introduced in December 2008) have replaced significant cash transaction reports (SCTRs), which are submitted by entities regulated under the FTR Act.

Cross-border movement of physical currency (CBM-PC) reports

Under the AML/CTF Act, CBM-PC reports are submitted when currency (coin or paper money) of AUD10 000 or more (or the foreign currency equivalent) is carried, mailed or shipped into or out of Australia. When a person carries the currency, a CBM-PC report must be completed at the first Customs and Border Protection examination area upon entry into Australia or before leaving Australia. When a person mails or ships the currency into or out of Australia, a CBM-PC report must be submitted within five business days of the currency being received in Australia, or at any time before the currency is sent out of Australia. In December 2006, CBM-PC reports replaced international currency transfer reports (ICTRs), which were submitted by entities regulated under the FTR Act.

Cross-border movement of bearer negotiable instrument (CBM-BNI) reports

Under the AML/CTF Act, CBM-NBI reports must be completed by persons entering or leaving Australia who are carrying bearer negotiable instruments (such as travellers cheques, cheques or money orders) of any amount, if asked by a Customs and Border Protection or police officer to complete such a report.

Source: AUSTRAC Annual Report 2011-12, pp.30-31.

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Appendix 3: Domestic partner agencies

Table A.2

AUSTRAC domestic partner agencies

Australian Government agencies

Australian Commission for Law Enforcement Integrity Australian Competition and Consumer Commission

Australian Crime Commission

Australian Customs and Border Protection Service Australian Federal Police Australian Prudential

Regulation Authority

Australian Secret Intelligence Service Australian Securities and Investments Commission

Australian Security Intelligence Organisation

Australian Taxation Office Defence Imagery and Geospatial Organisation Defence Intelligence

Organisation

Defence Signals Directorate Department of Foreign Affairs and Trade Department of Human

Services

Department of Immigration and Citizenship

Foreign Investment and Trade Policy Division, Department of Treasury

Inspector-General of Intelligence and Security^

Office of National Assessments

State and Territory agencies

ACT Revenue Office

Corruption and Crime Commission (WA) Crime and Misconduct Commission (QLD)

Independent Commission Against Corruption (NSW) New South Wales Crime Commission

Northern Territory Police

NSW Office of State Revenue

NSW Police Force

Office of State Revenue (QLD)

Office of State Revenue (WA) Police Integrity Commission (NSW)

Queensland Police Service

Revenue SA South Australia Police State Revenue Office (TAS)

State Revenue Office (VIC) Tasmanian Police Territory Revenue Office (NT)

Victoria Police Western Australia Police

Source: AUSTRAC Annual Report 2011-12, p.173

Note: ^ Special partner agency only able to access AUSTRAC information for auditing purposes.

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Appendix 3: Domestic partner agencies

Table A.2

AUSTRAC domestic partner agencies

Australian Government agencies

Australian Commission for Law Enforcement Integrity Australian Competition and Consumer Commission

Australian Crime Commission

Australian Customs and Border Protection Service Australian Federal Police Australian Prudential

Regulation Authority

Australian Secret Intelligence Service Australian Securities and Investments Commission

Australian Security Intelligence Organisation

Australian Taxation Office Defence Imagery and Geospatial Organisation Defence Intelligence

Organisation

Defence Signals Directorate Department of Foreign Affairs and Trade Department of Human

Services

Department of Immigration and Citizenship

Foreign Investment and Trade Policy Division, Department of Treasury

Inspector-General of Intelligence and Security^

Office of National Assessments

State and Territory agencies

ACT Revenue Office

Corruption and Crime Commission (WA) Crime and Misconduct Commission (QLD)

Independent Commission Against Corruption (NSW) New South Wales Crime Commission

Northern Territory Police

NSW Office of State Revenue

NSW Police Force

Office of State Revenue (QLD)

Office of State Revenue (WA) Police Integrity Commission (NSW)

Queensland Police Service

Revenue SA South Australia Police State Revenue Office (TAS)

State Revenue Office (VIC) Tasmanian Police Territory Revenue Office (NT)

Victoria Police Western Australia Police

Source: AUSTRAC Annual Report 2011-12, p.173

Note: ^ Special partner agency only able to access AUSTRAC information for auditing purposes.

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Appendix 4: International partner counterparts

Table A.3

AUSTRAC international exchange agreements, as of 18 March 2013

Countries with an agreement to exchange financial intelligence

Albania Argentina Armenia Bahamas Belgium Bermuda

Brazil

British Virgin Islands Bulgaria Canada

Cayman Islands

Chile

Colombia Cook Islands Croatia Cyprus

Czech Republic

Denmark

Egypt* Estonia Fiji France Germany Guatemala

Guernsey Hong Kong India Indonesia Ireland Isle of Man

Israel Italy Japan

Korea (Republic of) Latvia Lebanon

Macedonia Malaysia

Marshall Islands

Mauritius Mexico Netherlands

New Zealand Norway Panama Philippines Poland Portugal

Romania

Saint Kitts and Nevis Serbia* Singapore Slovakia Slovenia

South Africa Spain Sri Lanka Sweden Thailand Turkey

Ukraine

United Kingdom

United States of America

Vanuatu Venezuela

Countries with an agreement to exchange regulatory information

Canada

Source: AUSTRAC Annual Report 2011-12, p.81 and AUSTRAC website [accessed on 8 January 2013].

Note: * MOU with Egypt was signed on 29 August 2012, and the MOU with Serbia was signed on 31 July 2012.

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Appendix 5: Financial transaction reports, 2007-08 to 2011-12 (number)

2007-08 2008-09 2009-10 2010-11

2011- 12

Financial transaction reports

International funds transfer instruction 14 963 719 16 325 870 18 095 756 35 666 743 53 770

266

Suspicious matters reports / suspect transaction reports 29 089 32 449 47 386 44 775 48 155

Threshold transaction reports / significant cash transaction reports 2 934 955 3 373 280 3 375 447 8 325 621

5 395 630

SUB-TOTAL 17 927 763 19 731 599 21 518 589 44 037 139

59 214 051

Cross-border movements

Cross-border movement of physical currency 36 131 38 669 35 527 30 342 29 525

Cross-border movement of bearer negotiable instrument* 1 479 1 635 918 850 659

SUB-TOTAL 37 610 40 304 36 445 31 192 30 184

TOTAL 17 965 373 19 771 903 21 555 034 44 068 331

59 244 235

Source: AUSTRAC Annual Report 2011-12, pp.32-33.

Notes: The 2010-11 figures include reporting by PayPal and Western Union who previously had not reported to AUSTRAC, and they also submitted reports from previous years. AUSTRAC attributes the spike in threshold transaction reports in 2010-11 to this back capture.

  * CBM-NBI reports need to be submitted on request only.

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Appendix 5: Financial transaction reports, 2007-08 to 2011-12 (number)

2007-08 2008-09 2009-10 2010-11

2011- 12

Financial transaction reports

International funds transfer instruction 14 963 719 16 325 870 18 095 756 35 666 743 53 770

266

Suspicious matters reports / suspect transaction reports 29 089 32 449 47 386 44 775 48 155

Threshold transaction reports / significant cash transaction reports 2 934 955 3 373 280 3 375 447 8 325 621

5 395 630

SUB-TOTAL 17 927 763 19 731 599 21 518 589 44 037 139

59 214 051

Cross-border movements

Cross-border movement of physical currency 36 131 38 669 35 527 30 342 29 525

Cross-border movement of bearer negotiable instrument* 1 479 1 635 918 850 659

SUB-TOTAL 37 610 40 304 36 445 31 192 30 184

TOTAL 17 965 373 19 771 903 21 555 034 44 068 331

59 244 235

Source: AUSTRAC Annual Report 2011-12, pp.32-33.

Notes: The 2010-11 figures include reporting by PayPal and Western Union who previously had not reported to AUSTRAC, and they also submitted reports from previous years. AUSTRAC attributes the spike in threshold transaction reports in 2010-11 to this back capture.

  * CBM-NBI reports need to be submitted on request only.

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Index A 

anti‐money laundering, 12, 28 

AUSTRAC Senior Liaison Officer, 8, 35,  39, 48, 50 

Australian Crime Commission, 23, 37,  98, 106 

Australian  Customs  and  Border  Protection, 37, 106 

Australian  Security  Intelligence  Organisation, 37, 106 

Australian Taxation Office, 15, 35, 37,  106 

counter‐terrorism financing, 12, 28 

Department of Human Services, 15, 35,  37 

disseminations, 15, 19, 20, 21, 26, 37, 47,  57, 59, 60, 68, 71, 73, 74, 76, 78, 80, 81,  87, 90, 94, 97 

Enhanced Analytical Capability, 8, 15,  24, 36, 40, 59, 67, 77, 81 

ExCom, 8, 42, 64 

FATF, 8, 75, 76 

financial intelligence, 12, 13, 14, 15, 16,  17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 28,  33, 34, 35, 36, 37, 38, 39, 41, 42, 45, 46,  47, 48, 50, 52, 53, 55, 56, 57, 58, 59, 60,  61, 62, 66, 68, 69, 77, 80, 81, 83, 84, 85,  86, 88, 89, 90, 92, 95, 96, 97, 98, 99,  107 

Financial Intelligence Unit, 8, 92, 95 

financial transaction reports, 12, 26, 28,  31, 33, 50, 62, 82 

FTRs, 12, 13, 14, 16, 18, 20, 28, 29, 30,  33, 36, 65, 80 

Intelligence  Branch,  14,  16, 19, 32, 33 ,  36, 39, 40, 41, 43, 44, 45, 46, 47, 51, 57,  60, 61, 62, 64, 75, 77, 89 

Intelligence  Oversight  Committee,  8,  41, 42, 43, 64, 75, 84 

international exchange of information,  20, 23, 61, 71, 74, 80, 92 

international  funds  transfer  instructions, 13, 30 

key performance indicators, 18, 23, 25,  26, 43, 83, 91, 95, 96, 98, 99 

KPIs, 23, 91, 94, 95, 96, 97, 98 

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MOU, 8, 13, 29, 40, 50, 52, 53, 54, 56, 57,  107 

National Threat Assessment on Money  Laundering, 9, 75 

Portfolio Budget Statements, 32, 91, 93,  98 

SMR/SUSTR, 9, 66, 67 

strategic intelligence, 20, 40, 61, 75, 76,  77, 80, 84 

TargIT, 9, 14, 18, 20, 21, 33, 48, 61, 62,  63, 64, 68, 71, 74, 75, 80, 81 

TRAQ Enquiry System, 9, 14, 34, 40, 60,  68 

Victoria Police, 16, 22, 23, 37, 52, 53, 85,  88, 98, 106 

 

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MOU, 8, 13, 29, 40, 50, 52, 53, 54, 56, 57,  107 

National Threat Assessment on Money  Laundering, 9, 75 

Portfolio Budget Statements, 32, 91, 93,  98 

SMR/SUSTR, 9, 66, 67 

strategic intelligence, 20, 40, 61, 75, 76,  77, 80, 84 

TargIT, 9, 14, 18, 20, 21, 33, 48, 61, 62,  63, 64, 68, 71, 74, 75, 80, 81 

TRAQ Enquiry System, 9, 14, 34, 40, 60,  68 

Victoria Police, 16, 22, 23, 37, 52, 53, 85,  88, 98, 106 

 

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Series Titles

ANAO Audit Report No.1 2012-13  Administration of the Renewable Energy Demonstration Program  Department of Resources, Energy and Tourism 

ANAO Audit Report No.2 2012-13  Administration of the Regional Backbone Blackspots Program  Department of Broadband, Communications and the Digital Economy 

ANAO Audit Report No.3 2012-13  The Design and Conduct of the First Application Round for the Regional Development  Australia Fund  Department of Regional Australia, Local Government, Arts and Sport 

ANAO Audit Report No.4 2012-13  Confidentiality in Government Contracts: Senate Order for Departmental and Agency  Contracts (Calendar Year 2011 Compliance)  Across Agencies 

ANAO Audit Report No.5 2012-13  Management of Australia’s Air Combat Capability—F/A‐18 Hornet and Super  Hornet Fleet Upgrades and Sustainment  Department of Defence  Defence Materiel Organisation 

ANAO Audit Report No.6 2012-13  Management of Australia’s Air Combat Capability—F‐35A Joint Strike Fighter  Acquisition   Department of Defence  Defence Materiel Organisation 

ANAO Audit Report No.7 2012-13  Improving Access to Child Care—the Community Support Program  Department of Education, Employment and Workplace Relations 

ANAO Audit Report No.8 2012-13  Australian Government Coordination Arrangements for Indigenous Programs  Department of Families, Housing, Community Services and Indigenous Affairs 

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ANAO Audit Report No.9 2012-13  Delivery of Bereavement and Family Support Services through the Defence  Community Organisation  Department of Defence  Department of Veterans’ Affairs 

ANAO Audit Report No.10 2012-13  Managing Aged Care Complaints  Department of Health and Ageing 

ANAO Audit Report No.11 2012-13  Establishment, Implementation and Administration of the Quarantined Heritage  Component of the Local Jobs Stream of the Jobs Fund  Department of Sustainability, Environment, Water, Population and  Communities 

ANAO Audit Report No.12 2012-13  Administration of Commonwealth Responsibilities under the National Partnership  Agreement on Preventive Health  Australian National Preventive Health Agency  Department of Health and Ageing 

ANAO Audit Report No.13 2012-13  The Provision of Policing Services to the Australian Capital Territory  Australian Federal Police 

ANAO Audit Report No.14 2012-13  Delivery of Workplace Relations Services by the Office of the Fair Work Ombudsman  Department of Education, Employment and Workplace Relations  Office of the Fair Work Ombudsman 

ANAO Audit Report No.15 2012-13  2011-12 Major Projects Report   Defence Materiel Organisation 

ANAO Audit Report No.16 2012-13  Audits of the Financial Statements of Australian Government Entities for the Period  Ended 30 June 2011  Across Agencies 

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ANAO Audit Report No.9 2012-13  Delivery of Bereavement and Family Support Services through the Defence  Community Organisation  Department of Defence  Department of Veterans’ Affairs 

ANAO Audit Report No.10 2012-13  Managing Aged Care Complaints  Department of Health and Ageing 

ANAO Audit Report No.11 2012-13  Establishment, Implementation and Administration of the Quarantined Heritage  Component of the Local Jobs Stream of the Jobs Fund  Department of Sustainability, Environment, Water, Population and  Communities 

ANAO Audit Report No.12 2012-13  Administration of Commonwealth Responsibilities under the National Partnership  Agreement on Preventive Health  Australian National Preventive Health Agency  Department of Health and Ageing 

ANAO Audit Report No.13 2012-13  The Provision of Policing Services to the Australian Capital Territory  Australian Federal Police 

ANAO Audit Report No.14 2012-13  Delivery of Workplace Relations Services by the Office of the Fair Work Ombudsman  Department of Education, Employment and Workplace Relations  Office of the Fair Work Ombudsman 

ANAO Audit Report No.15 2012-13  2011-12 Major Projects Report   Defence Materiel Organisation 

ANAO Audit Report No.16 2012-13  Audits of the Financial Statements of Australian Government Entities for the Period  Ended 30 June 2011  Across Agencies 

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ANAO Audit Report No.17 2012-13  Design and Implementation of the Energy Efficiency Information Grants Program  Department of Climate Change and Energy Efficiency 

ANAO Audit Report No.18 2012-13  Family Support Program: Communities for Children  Department of Families, Housing, Community Services and Indigenous Affairs 

ANAO Audit Report No.19 2012-13  Administration of New Income Management in the Northern Territory  Department of Human Services 

ANAO Audit Report No.20 2012-13  Administration of the Domestic Fishing Compliance Program  Australian Fisheries Management Authority 

ANAO Audit Report No.21 2012-13  Individual Management Services Provided to People in Immigration Detention  Department of Immigration and Citizenship 

ANAO Audit Report No.22 2012-13  Administration of the Tasmanian Forests Intergovernmental Contractors Voluntary  Exit Grants Program  Department of Agriculture, Fisheries and Forestry 

ANAO Audit Report No.23 2012-13  The Australian Government Reconstruction Inspectorate’s Conduct of Value for  Money Reviews of Flood Reconstruction Projects in Victoria  Department of Regional Australia, Local Government, Arts and Sport 

ANAO Audit Report No.24 2012-13  The Preparation and Delivery of the Natural Disaster Recovery Work Plans for  Queensland and Victoria  Department of Regional Australia, Local Government, Arts and Sport 

ANAO Audit Report No.25 2012-13  Defence’s Implementation of Audit Recommendations  Department of Defence 

   

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ANAO Audit Report No.26 2012-13  Remediation of the Lightweight Torpedo Replacement Project  Department of Defence; Defence Material Organisation 

ANAO Audit Report No.27 2012-13  Administration of the Research Block Grants Program  Department of Industry, Innovation, Climate Change, Science, Research and  Tertiary Education 

ANAO Report No.28 2012-13  The Australian Government Performance Measurement and Reporting Framework:  Pilot Project to Audit Key Performance Indicators 

ANAO Audit Report No.29 2012-13  Administration of the Veterans’ Children Education Schemes  Department of Veterans’ Affairs 

ANAO Audit Report No.30 2012-13  Management of Detained Goods  Australian Customs and Border Protection Service 

ANAO Audit Report No.31 2012-13  Implementation of the National Partnership Agreement on Homelessness  Department of Families, Housing, Community Services and Indigenous Affairs 

ANAO Audit Report No.32 2012-13  Grants for the Construction of the Adelaide Desalination Plant  Department of Sustainability, Environment, Water, Population and  Communities  Department of Finance and Deregulation  Department of the Prime Minister and Cabinet 

ANAO Audit Report No.33 2012-13  The Regulation of Tax Practitioners by the Tax Practitioners Board  Tax Practitioners Board  Australian Taxation Office 

ANAO Audit Report No.34 2012-13  Preparation of the Tax Expenditures Statement  Department of the Treasury  Australian Taxation Office 

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ANAO Audit Report No.26 2012-13  Remediation of the Lightweight Torpedo Replacement Project  Department of Defence; Defence Material Organisation 

ANAO Audit Report No.27 2012-13  Administration of the Research Block Grants Program  Department of Industry, Innovation, Climate Change, Science, Research and  Tertiary Education 

ANAO Report No.28 2012-13  The Australian Government Performance Measurement and Reporting Framework:  Pilot Project to Audit Key Performance Indicators 

ANAO Audit Report No.29 2012-13  Administration of the Veterans’ Children Education Schemes  Department of Veterans’ Affairs 

ANAO Audit Report No.30 2012-13  Management of Detained Goods  Australian Customs and Border Protection Service 

ANAO Audit Report No.31 2012-13  Implementation of the National Partnership Agreement on Homelessness  Department of Families, Housing, Community Services and Indigenous Affairs 

ANAO Audit Report No.32 2012-13  Grants for the Construction of the Adelaide Desalination Plant  Department of Sustainability, Environment, Water, Population and  Communities  Department of Finance and Deregulation  Department of the Prime Minister and Cabinet 

ANAO Audit Report No.33 2012-13  The Regulation of Tax Practitioners by the Tax Practitioners Board  Tax Practitioners Board  Australian Taxation Office 

ANAO Audit Report No.34 2012-13  Preparation of the Tax Expenditures Statement  Department of the Treasury  Australian Taxation Office 

Series Titles

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ANAO Audit Report No.35 2012-13  Control of Credit Card Use  Australian Trade Commission  Department of the Prime Minister and Cabinet  Geoscience Australia 

ANAO Audit Report No.36 2012-13  Commonwealth Environmental Water Activities  Department of Sustainability, Environment, Water, Population and  Communities 

ANAO Audit Report No.37 2012-13  Administration of Grants from the Education Investment Fund  Department of Industry, Innovation, Climate Change, Science, Research and  Tertiary Education 

ANAO Audit Report No.38 2012-13  Indigenous Early Childhood Development: Children and Family Centres  Department of Education, Employment and Workplace Relations 

ANAO Audit Report No.39 2012-13  AusAID’s Management of Infrastructure Aid to Indonesia  Australian Agency for International Development (AusAID) 

ANAO Audit Report No. 40 2012-13  Recovery of Centrelink Payment Debts by External Collection Agencies  Department of Human Services 

ANAO Audit Report No.41 2012-13  The Award of Grants Under the Supported Accommodation Innovation Fund  Department of Families, Housing, Community Services and Indigenous Affairs 

ANAO Audit Report No.42 2012-13  Co‐location of the Department of Human Services’ Shopfronts  Department of Human Services 

ANAO Audit Report No.43 2012-13  Establishment, Implementation and Administration of the General Component of the  Local Jobs Stream of the Jobs Fund  Department of Education, Employment and Workplace Relations 

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ANAO Audit Report No. 44 2012-13  Management and Reporting of Goods and Services Tax and Fringe Benefits Tax  Information  Australian Taxation Office 

ANAO Audit Report No. 45 2012-13  Cross‐Agency Coordination of Employment Programs  Department of Education, Employment and Workplace Relations  Department of Human Services 

ANAO Audit Report No. 46 2012-13  Compensating F‐111 Fuel Tank Workers  Department of Veterans’ Affairs  Department of Defence 

 

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ANAO Audit Report No. 44 2012-13  Management and Reporting of Goods and Services Tax and Fringe Benefits Tax  Information  Australian Taxation Office 

ANAO Audit Report No. 45 2012-13  Cross‐Agency Coordination of Employment Programs  Department of Education, Employment and Workplace Relations  Department of Human Services 

ANAO Audit Report No. 46 2012-13  Compensating F‐111 Fuel Tank Workers  Department of Veterans’ Affairs  Department of Defence 

 

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Current Better Practice Guides

The following Better Practice Guides are available on the ANAO website. 

 

Public Sector Internal Audit  Sep 2012 

Public Sector Environmental Management  Apr 2012 

Developing and Managing Contracts - Getting the right  outcome, achieving value for money  Feb 2012 

Public Sector Audit Committees  Aug 2011 

Human Resource Information Systems - Risks and Controls  Mar 2011 

Fraud Control in Australian Government Entities  Mar 2011 

Strategic and Operational Management of Assets by Public  Sector Entities - Delivering agreed outcomes through an  efficient and optimal asset base 

Sept 2010 

Implementing Better Practice Grants Administration  Jun 2010 

Planning and Approving Projects - an Executive Perspective  Jun 2010 

Innovation in the Public Sector - Enabling Better Performance,  Driving New Directions  Dec 2009 

Preparation of Financial Statements by Public Sector Entities  Jun 2009 

SAP ECC 6.0 - Security and Control  Jun 2009 

Business Continuity Management - Building resilience in public  sector entities  Jun 2009 

Developing and Managing Internal Budgets  Jun 2008 

Agency Management of Parliamentary Workflow  May 2008 

Fairness and Transparency in Purchasing Decisions - Probity in  Australian Government Procurement  Aug 2007 

Administering Regulation  Mar 2007 

Implementation of Program and Policy Initiatives - Making  implementation matter  Oct 2006   

   

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