We operate within a rapidly changing and complex environment that is influenced by:
- technology and digital disruption
- challenges to the traditional regulatory model
- the threat of terrorism
- serious and organised crime.
Technology and digital disruption
Current and emerging financial products and services may lead to criminal activities, such as money laundering and terrorism financing. They include financial technology (fintech), agile methodologies, big data, predictive analytics, distributed systems, and new payment platforms and biometrics. AUSTRAC is collaborating with the fintech sector to develop technologies and approaches that can effectively detect and deter financial crime.
- increasing speed of change and application of technology
- expanding digital transformation of the financial industry
- increasing use of non-cash transactions
- growing number of financial technology (fintech) start-ups
- changing payments systems and mobility
- use of new technologies, such as blockchain
- digital disruption and fintechs are transforming the financial services industry and economy
- big data is changing the way we do business and the way consumers use products and services
- new system and policy changes are required to regulate and support financial technology start-ups
- collaboration with industry is required to understand how new innovations alter the industry risk profile
- the dynamic change demands unprecedented, unconventional and innovative solutions, as well as building non-traditional partnerships
- technology and innovation is challenging traditional concepts of privacy and data security and ownership.
- proactively mitigate risks and enhance protection through engagement at the developmental stage in the fintech lifecycle
- access to real time data, new capability streams, identity verification, increased data security, and real time collection, analysis and dissemination of actionable financial intelligence
- develop the regulatory framework to address technology trends and minimise regulatory costs
- discovery activities in biometrics, identity, blockchain, risk modelling, analytics and machine learning
- engage new stakeholder groups who are unfamiliar with traditional financial services laws and networks
- establish a centre of excellence for intelligence.
Challenges to the traditional regulatory model
New technologies and new financial products are challenging the traditional regulatory model of governments. These models need to reflect the modern environment to facilitate legitimate business and competition, protect consumers and our economy, and keep Australia safe and secure.
- AML/CTF regulation in Australia is increasingly ‘unfit for purpose’ and struggling with new technology
- increasing industry expectation for simpler and more streamlined legislation and guidance
- growing expectation for consistency and conformity among various regulations
- effective legislation is required to respond to current and future needs
- legislation must be responsive to current technology
- industry expectations for a risk-based approach
- AUSTRAC will need to adapt to changes.
- implement the findings of the review of the AML/CTF regime
- provide regulatory relief where the ML/TF risk is low
- apply AML/CTF obligations to offshore-based businesses and digital currency services
- enhance the regulatory regime for remittance service providers
- reduce red tape to improve information sharing
- work with stakeholders to co-design and develop new regulatory approaches.
The threat of terrorism
Terrorist acts are increasing in both our country and our region. AUSTRAC’s work offers real opportunities to prevent terrorist acts at home and abroad by making best use of financial intelligence.
- increasing use of new technologies and methodologies by terrorist organisations
- continuing threat of terrorist organisations using and misusing non-profit organisations
- growing threat of terrorist organisations fundraising via social media and crowdfunding platforms
- a 300 percent increase in suspicious matter reports that relate to terrorism financing over the past two financial years
- digital currency and use of encryption pose an emerging terrorism financing threat
- increasing cross-border terrorism financing.
- crucial to partner with the financial industry and share latest learnings and observations about terrorism
- increased collaboration with our domestic and international partners in real-time
- update legislation and policy to ensure they respond to emerging trends
- increased reporting on suspicious matters relating to terrorism financing is a rich source of investigative leads for law enforcement and national security agencies.
- partner with regional counterparts to assess regional terrorism financing risks
- work innovatively with our partners to combat the threat of terrorism
- exploit advances in technology to share information that can directly target the highest risks and threats
- increase the scope and amount of digital information for analysis.
Serious and organised crime
The Australian Crime Commission’s 2013-14 report on the costs of serious and organised crime in Australia indicated such crimes cost the Australian economy more than $36 billion per year and affect Australians every day – through drugs, money laundering, people trafficking and cybercrime.
- more complex and pervasive serious and organised crime groups
- growing use of technology and cybercrime
- more criminal groups are targeting the Australian financial sector
- emerging globalised professional money laundering syndicates
- increasing prevalence and impact of drug trafficking
- increasing demand for AUSTRAC financial intelligence by law enforcement.
- cybercrime can be committed remotely and anonymously
- new money exchange platforms currently fall outside the regulatory framework
- criminals are often early adopters of technological developments, exploiting regulatory and law enforcement gaps
- changing nature of serious and organised criminal activity and advances in technology require ongoing review of our laws and regulation
- Australia’s response to serious and organised crime needs to be nationally and internationally coordinated.
- partnering with industry to tackle shared problem of serious organised crime, including cybercrime
- continued active membership of cross-agency task forces
- improve information sharing related to unexplained wealth and assets
- leverage our domestic and international footprint to provide value-added intelligence to partners
- improve cooperation and coordination with international partners
- continued participation at international forums to strengthen the connection between national and international efforts.