By Brian Monroe
August 31, 2021
On the heels of a parliamentary inquiry into the country’s compliance defenses, Australia’s financial intelligence unit is tackling what many consider the beating electronic heart of the fight against financial crime: the depth, accuracy and timeliness of reports tied to suspicious activity.
The Australian Transaction Reports and Analysis Centre (Austrac) is engaging in a “System Transformation Program (STP)” that is designed to update and upgrade how the country’s financial sector files suspicious matter reports (SMRs), a potentially powerful first step to counter a regional negative narrative.
The reports – also called suspicious transaction reports (STRs) or suspicious activity reports (SARs) in some jurisdictions – are typically filed by banks and reviewed by law enforcement agencies, in all a foundational prong of global anti-money laundering (AML) efforts.
To read the full Austrac report, click here.
When it is finished, sharper and cleaner information, and more horsepower for data analytics, could also help the universe of Australian SMR filings become a catalyst to underpin more frequent and relevant sector guidance and divine and design a more approachable and functional dashboard to view past filings – and even update them.
The update is welcome news for the country’s fight against financial crime, but addresses only some of the perennial gaps in the region.
“Australia has dragged its feet for too long on implementing global standards and even now cannot find legislative time to enact commitments it made as a country years ago,” said John Cusack, Chair of the Global Coalition to Fight Financial Crime and Editor of the Financial Crime News.
“Every country faces unique challenges but largely the most effective response is the same,” said Cusack, who has also been Co-chair of the influential, Wolfsberg Group and is a former top fincrime compliance officer at several large, U.K.-based international banks.
So what would be the best strategy forward for Australia?
“Identify the real threat, prioritize it and work collaboratively across the public and private sectors allocating scarce resources to achieve positive outcomes,” he said. “Australia like many of its peers hasn’t yet achieved this clarity of purpose or focus.”
On the FCN site, Cusack just published a comprehensive, 60-page country financial crime and compliance risk assessment of Australia, available here for members. He also released a two-page summary of the longer report, available here.
The FCN report highlighted that Australia most recently passed AML reforms in December, a “step that’s been a long time coming” with changes recommended following a statutory review of the country’s primary AML/CTF legislation in 2014.
The update, which came into force in June 2021, addressed FATF criticisms including that designated non-financial businesses and professions (DNFBPs) were not included in the AML regime, a failing that “is still not remedied and may come in a future” update.
The latest improvements make it “explicit that reporting entities must not provide a service until after they perform the proper” depth of customer diligence, even if this part is outsourced to third parties.
Additionally, the new law “strengthens due diligence requirements for entering into correspondent banking relationships and bans FIs from entering into a relationship with an institution that permits shell banks to use their accounts,” according to the FCN report.