FATF AML Deficiency List
US Dept of State Money Laundering assessment
Non - Compliance with FATF MER Recommendations
Australia is not on the FATF List of Countries that have been identified as having strategic AML deficiencies
Compliance with FATF Recommendations
The last Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Australia was undertaken in 2018. According to that Evaluation, Australia was deemed Compliant for 17 and Largely Compliant for 9 of the FATF 40 Recommendations. It was deemed Highly Effective for 1 and Substantially Effective for 4 of the Effectiveness & Technical Compliance ratings.
US Department of State Money Laundering assessment (INCSR)
Australia was deemed a Jurisdiction of Primary Concern by the US Department of State 2016 International Narcotics Control Strategy Report (INCSR). Key Findings from the report are as follows: -
Australia’s well-functioning financial markets include major products, such as money, debt, equities, foreign exchange, and derivatives. While not large compared to equivalent markets in economies such as the United States or Japan, trading activity in many Australian financial market sectors is higher than the size of the economy might indicate. For example, Australia's largest market sector is the foreign exchange market and the Australian dollar is the seventh most actively traded currency worldwide. Australia is also recognized internationally in areas such as infrastructure financing and structured products. As an emerging financial services center within the Asia-Pacific region, the country’s financial sector is supported by a number of government initiatives, such as the implementation of an investment manager regime and measures to provide tax exemption or tax relief for foreign managers. Finance and insurance, significant sectors in the Australian economy, are estimated to annually contribute some A$130 billion (approximately $92 billion) to the Gross Domestic Product, accounting for 9.3 percent of total value added. Australia has one of the largest pools of consolidated assets under management globally, valued at A$2.6 trillion (approximately $1.85 trillion). It is also a major destination for foreign direct investment.
According to the Australian Crime Commission (ACC), financial crimes continue to increase in diversity, scale, and the level of overall harm they cause Australia. The ACC conservatively estimates that serious and organized crime costs Australia approximately A$15 billion each year ($10.67 billion). Money laundering remains a key enabler of serious and organized crime.
The Australian Transaction and Reports Analysis Center (AUSTRAC) – the country’s financial intelligence unit (FIU) and the national anti-money laundering/countering the financing of terrorism (AML/CFT) regulator – identifies key features of money laundering in Australia in its Annual Report: intermingling legitimate and illicit financial activity through cash intensive businesses or front companies; engaging professional expertise, such as lawyers and accountants; the use of money laundering syndicates to provide specific money laundering services to terrorists and domestic and international crime groups; and the “internationalization” of the Australian crime environment, a reflection of the pervasive international money laundering ties of Australia-based organized criminal groups. The report also notes that major money laundering channels are prevalent in banking, money transfer and alternative remittance services, gaming, and luxury goods. Less visible conduits include legal persons and arrangements, cash intensive businesses, electronic payment systems, cross-border movement of cash and bearer negotiable instruments, international trade, and investment vehicles.
Trade-based money laundering (TBML), and its potential role in drug trafficking and importation, is a concern of law enforcement agencies. Australia’s lack of free trade zones is considered to have lowered the risk of TBML.
2017 APG Yearly Typologies Report
Emerging Trend: Money mules
Money mules from an Eastern European country open Australian bank accounts and receive fraudulently obtained funds from Australian victims via cybercrime. Typically, they withdraw the funds as cash or make electronic transfers to offshore beneficiaries. They may also purchase high value items such as watches.
Money mules from a second Eastern European country typically open multiple bank accounts to receive stolen funds from Australian victims. They often register businesses and open associated bank accounts to avoid detection by banks and law enforcement agencies. The stolen funds are typically washed through their accounts via cash withdrawals, electronic transfers and purchases of foreign currency.
Money mules from a third Eastern European country register an Australian business and open bank accounts with that business name, within two weeks of arriving in Australia. In some cases, they open multiple bank accounts at various financial institutions. They also open personal banking accounts. They use their business and personal bank accounts to transfer funds between each and to make large cash deposits and withdrawals. Some mules are sending funds to the same Hong Kong based companies. The funds appear to be derived from internet banking fraud, malware activity and fraudulent refunds from Australian government departments. Fraud victims include Australian citizens and businesses.
There are no international sanctions currently in force against this country.
BRIBERY & CORRUPTION
Rating (100-Good / 0-Bad)
Transparency International Corruption Index 77
World Governance Indicator – Control of Corruption 94
Corruption is not an obstacle to business in Australia, which is known for its well-functioning and independent judiciary, transparent regulatory climate and overall low levels of corruption. However, corruption risks exist in relation to foreign bribery and the mining industry. The Criminal Code covers bribery of foreign and domestic public officials, while each of Australia's states and territories has its own anti-corruption provisions. Public sector and private sector bribery are addressed, and both individuals and companies can be targeted. Persons convicted of corruption can receive a maximum penalty of 10 years' imprisonment and/or a fine of up to AUD 1.1 million. For a business, the penalty is a fine of up to AUD 17 million, three times the value of the obtained undue benefit, or 10% of the annual turnover of the company during the period in question. Australian political parties commonly receive gifts and hospitality, but there is little information available on gifts and hospitality in the private sector. Provided they are recorded, facilitation payments are legal in Australia. For further information - GAN Integrity Business Anti-Corruption Portal
Following two decades of continuous growth, low unemployment, contained inflation, very low public debt, and a strong and stable financial system, Australia enters 2016 facing a range of growth constraints, principally driven by a sharp fall in global prices of key export commodities. Demand for resources and energy from Asia and especially China has stalled and sharp drops in current prices have impacted growth.
The services sector is the largest part of the Australian economy, accounting for about 70% of GDP and 75% of jobs. Australia was comparatively unaffected by the global financial crisis as the banking system has remained strong and inflation is under control.
Australia benefited from a dramatic surge in its terms of trade in recent years, although this trend has reversed due to falling global commodity prices. Australia is a significant exporter of natural resources, energy, and food. Australia's abundant and diverse natural resources attract high levels of foreign investment and include extensive reserves of coal, iron, copper, gold, natural gas, uranium, and renewable energy sources. A series of major investments, such as the US$40 billion Gorgon Liquid Natural Gas project, will significantly expand the resources sector.
Australia is an open market with minimal restrictions on imports of goods and services. The process of opening up has increased productivity, stimulated growth, and made the economy more flexible and dynamic. Australia plays an active role in the World Trade Organization, APEC, the G20, and other trade forums. Australia’s free trade agreement (FTA) with China entered into force in 2015, adding to existing FTAs with the Republic of Korea, Japan, Chile, Malaysia, New Zealand, Singapore, Thailand, and the US, and a regional FTA with ASEAN and New Zealand. Australia continues to negotiate bilateral agreements with India and Indonesia, as well as larger agreements with its Pacific neighbors and the Gulf Cooperation Council countries, and an Asia-wide Regional Comprehensive Economic Partnership that includes the ten ASEAN countries and China, Japan, Korea, New Zealand and India. Australia is also working on the Trans-Pacific Partnership Agreement with Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the US, and Vietnam.
Agriculture - products:
wheat, barley, sugarcane, fruits; cattle, sheep, poultry
mining, industrial and transportation equipment, food processing, chemicals, steel
Exports - commodities:
coal, iron ore, gold, meat, wool, alumina, wheat, machinery and transport equipment
Exports - partners:
China 32.2%, Japan 15.9%, South Korea 7.1%, US 5.4%, India 4.2% (2015)
Imports - commodities:
machinery and transport equipment, computers and office machines, telecommunication equipment and parts; crude oil and petroleum products
Imports - partners:
China 23%, US 11.2%, Japan 7.4%, South Korea 5.5%, Thailand 5.1%, Germany 4.6% (2015)
Investment Climate - US State Department
Australia is generally welcoming to foreign investment and such investment is widely considered to be an essential contributor to Australia’s economic growth and productivity. The United States is the dominant source of FDI in Australia and U.S. direct investment totaled USD180.3 billion in 2014, an increase of 6.1 percent from 2013. In 2014, 38 percent of Australia’s total FDI was in the resources sector.
Australia has a well-established legal and court system for the conduct or supervision of litigation and arbitration, as well as alternate dispute processes. The country is recognized internationally as a leader in the development and provision of non-court dispute resolution mechanisms, and is a signatory to all the major international dispute resolution conventions. There are few disputes that involve foreign investors.
Australia has an AAA international credit rating with a well-developed, deep and sophisticated financial market, regulated in accordance with international norms.
The Australian government supports the negotiation of comprehensive Free Trade Agreements (FTAs) that are consistent with the World Trade Organization investment rules and guidelines and which complement and reinforce the multilateral trading system. Australia’s FTAs contain chapters on investment. The Australia-U.S. FTA (AUSFTA) establishes a dispute settlement mechanism for investment disputes arising under the Agreement. However, AUSFTA does not contain an investor-state dispute settlement (ISDS) mechanism that would allow individual investors to bring a case against the Australian government. Australia is one of 12 members in the Trans Pacific Partnership (TPP), which does include ISDS provisions.
Foreign investment in Australia is regulated by the Foreign Acquisitions and Takeovers Act 1975 and Australia’s Foreign Investment Policy. The Foreign Investment Review Board (FIRB), a division of Australia’s Treasury, is a non-statutory body established to advise the Treasurer and the Commonwealth Government on Australia’s foreign investment policy and its administration. The FIRB screens potential foreign investments in Australia above threshold values, and based on advice from the FIRB, the Treasurer may deny or place conditions on the approval of particular investments above that threshold on national interest grounds. Following a number of recent investments made by foreign companies in key sectors of Australia’s economy, the laws and regulations governing foreign direct investment have been subject to a wide ranging and on-going review.
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