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Australia Country Summary

78.34 Country Rating /100
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Sanctions

No

FATF AML Deficient List

No

Terrorism
Corruption
US State ML Assessment
Criminal Markets (GI Index)
EU Tax Blacklist
Offshore Finance Center

Background Information


Anti Money Laundering

FATF Status

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.

Sanctions

There are no international sanctions currently in force against this country.

Bribery & Corruption

Rating                                                                           (100-Good / 0-Bad)

Transparency International Corruption Index                           75

World Governance Indicator – Control of Corruption             95

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

Economy

Australia is generally welcoming to foreign investment, which is widely considered to be an essential contributor to Australia’s economic growth and productivity. The United States is by far the largest source of foreign direct investment (FDI) for Australia. According to the U.S. Bureau of Economic Analysis (BEA), the stock of U.S. FDI totaled USD 167 billion in 2021. The Australia-United States Free Trade Agreement (AUSFTA), which entered into force in 2005, establishes higher thresholds for screening U.S. investment for most classes of direct investment. While welcoming toward FDI, Australia does apply a “national interest” test to qualifying investment through its Foreign Investment Review Board screening process.

Various changes to Australia’s foreign investment rules, primarily aimed at strengthening national security, have been made in recent years. The Foreign Investment Reform (Protecting Australia’s National Security) Act 2020 broadens the classes of foreign investments that require screening, with a particular focus on defense and national security supply chains. All foreign investments in these industries now require screening, regardless of their value or national origin. Despite the increased focus on foreign investment screening, the rejection rate for proposed investments has remained low and there have been no cases of investment from the United States being rejected in recent years, although some U.S. companies have reported greater scrutiny of their investments in Australia.

Australia has increased funding for clean technology projects and both local and international companies can apply for grants to implement emission-saving equipment to their operations. Australia legislated both a national net-zero emissions target and an interim 2030 target in June 2022. Australia’s eight states and territories have similarly adopted net-zero targets and a range of interim emission reduction targets, accompanied by various incentive schemes available to U.S. investors.

The Australian government is strongly focused on economic recovery from the COVID-driven recession Australia experienced in 2020, the country’s first in three decades. The pandemic and the ongoing conflict in Ukraine have also seen the Australian government implement measures to secure critical supply chains. These have included grants and other funding support – such as the National Reconstruction Fund, passed into law in March 2023 – to new investments in these supply chains. U.S. involvement and investment in these fields is welcomed.

Although Australia has not experienced shortages of energy or other critical products, its inflation is at the highest level in 30 years, in part due to rising costs in international supply chains and logistics. Inflation sits at close to seven percent as of early 2023 and official forecasts show it returning only slowly to more normal levels. Australia’s labor market is also tight, with the unemployment rate at a record low 3.4 percent in early 2023. This has contributed to a skills shortage, with businesses across the economy complaining of a lack of access to suitable employees. Despite these challenges, Australia’s central bank forecasts the economy to grow by 1.5 percent in 2023.

 

Country Links

Reserve Bank of Australia

Australian Prudential Regulation Authority

The Australian Transaction Reports and Analysis Centre (AUSTRAC )

Search ASIC's Registers | ASIC 

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