AUSTRAC upgrades data capture systems to track terrorism financing

Anti-money laundering watchdog investing in new IT systems

Australia's money laundering watchdog, the Australian Transaction Reports and Analysis Centre — AUSTRAC — will be boosting its IT systems using funding included in the $630 million counter-terrorism package announced by the government.

The government announced last week that AUSTRAC would receive $20 million in funding from the package. The funding will be used "to improve detection and disruption of terrorism financing", an AUSTRAC spokesperson said.

The organisation will use the funding to establish a new national intelligence team.

The government said AUSTRAC will work with security agencies to prevent Australians who are fighting overseas from receiving financial support, monitor financial activity related to overseas conflict 'hot spots' and "identify opportunities to disrupt attempts to undertake terrorism".

Earlier this week AUSTRAC took action to suspend the registration of Sydney based remittance provider Bisotel Rieh Pty Ltd because of the "risk the entity poses in relation to terrorism financing", federal justice minister Michael Keenan announced.

"AUSTRAC welcomes the opportunities provided through this funding to enhance its ongoing cooperation with law enforcement and intelligence agencies in identifying and combatting terrorism financing," the AUSTRAC spokesperson said.

"A portion of the new funding will be used to implement new data capture and enhancements systems. This will enhance and complement other IT systems designed to monitor financial transactions."

Coinciding with the funding announcement, AUSTRAC released a report (PDF) based on a on a classified national risk assessment of the "Australian terrorism financing environment".

AUSTRAC worked with a number of partner agencies including the Australian Federal Police to produce Terrorism financing in Australia 2014, which identified three key features of the terrorism financing environment.

Terrorism financing "is largely motivated by international tensions and conflicts", the report states, "conduit" countries are often used for transmitting funds on the way to their ultimate destination, and funds are often commingled with "legitimate" funds, such as donations to charities.

AUSTRAC's report also identified online payments and digital currencies as an "emerging terrorism financing risk".

"Many of these systems can be accessed globally and used to transfer funds quickly," the report states.

"A number of online payment systems and digital currencies are also anonymous by design, making them attractive for terrorist financing, particularly when the payment system is based in a jurisdiction with a comparatively weaker AML/CTF [anti-money laundering/counter-terrorism financing] regime."

However, "traditional financial channels" such as the banking and remittance sectors are still more likely to be used in terrorism financing, AUSTRAC's spokesperson said.

The organisation has previously indicated it considered digital currencies as being an emerging avenue for money laundering.

"Use of online payment systems and digital currencies for illicit purposes, including terrorism financing, is likely to increase as overall use of these systems grows," the spokesperson said.

"Online payment systems and digital currencies are at greatest risk of being used to solicit donations by extremist groups engaged in radicalisation, recruitment and communication online, especially through social media.

"There are also factors that limit the attractiveness of online payment systems and digital currencies for terrorism financing. Funds held in digital currencies often need to be converted to a mainstream global currency before they can be used, which provides opportunities for authorities to detect illicit activity.

"In conflict regions such as Syria and Iraq, it may be more difficult to convert funds held electronically into a readily useable format (such as cash) which will limit use of these products."

Asked whether AUSTRAC had specific programs to track the use of digital currencies such as Bitcoin, the spokesperson said the organisation "can track the use of digital currencies and other online payment systems where this activity intersects with the regulated financial sector."

"This has provided important intelligence leads to AUSTRAC’s partner agencies in criminal investigations," the spokesperson said.

Follow Rohan on Twitter: @rohan_p

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Tags digital currencycounter-terrorism financingcrimeterrorismAUSTRACcriminal activitymoney launderingBitcoin

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