What is AUSTRAC?

Australian Transaction Reports and Analysis Centre (AUSTRAC) is a statutory authority within the Department of Home Affairs.

Originally, the Centre was established as a financial intelligence unit (FIU) in 1989 under the Financial Transaction Reports Act of 1988 (FTR Act).

Later, under the Anti-Money Laundering and Counter-Terrorism Financing Act of 2006, its regulatory and enforcement powers were expanded in the anti-money laundering and counter-terrorism financing field.

AUSTRAC is on a mission to create a financial system free of criminal abuse. In achieving its goals, it uses financial intelligence and regulatory powers to detect, deter, and disrupt money laundering, terrorism financing, and serious organised crime.

AUSTRAC’s Core Functions

AUSTRAC’s mandate combines financial intelligence gathering with regulatory oversight across a wide spectrum of reporting entities. It plays a dual role:

1. Collection and Analysis of Financial Intelligence

• It collects and analyses financial transactions and suspicious activity data from more than 17,000 reporting entities.
• The Centre uses predictive analysis and advanced modelling techniques to identify potential criminal activities in the country and threats to its national security. Actionable intelligence is then shared with law enforcement, national security agencies, and foreign FIUs.

2. Regulatory and Compliance Oversight

• • Every business subject to Australia’s AML/CTF laws needs to be enrolled and registered with AUSTRAC.
  • AUSTRAC monitors and ensures businesses registered with it comply with their AML obligations, including customer due diligence (CDD), maintaining AML/CTF programs, and submitting suspicious and currency transaction reports.

In 2017, AUSTRAC was formally included in the National Intelligence Community of Australia along with nine other members, recognising its key role in financial intelligence gathering and national security.

AUSTRAC’s Mandatory Reporting Requirements

Every reporting entity registered with AUSTRAC is obliged to submit the following reports:

• Threshold Transaction Reports (TTRs): For physical currency transactions of AUD 10,000 or more (or equivalent in foreign currency).
• Suspicious Matter Reports (SMRs): Must be submitted when a transaction (or attempted transaction) raises suspicion, regardless of the amount or whether it was completed.
• International Funds Transfer Instructions (IFTIs): Required for any cross-border electronic fund transfers, regardless of initiator or amount.

These reports are very crucial for Australia’s financial intelligence and contribute directly to investigations into money laundering and terrorism financing.

How does AUSTRAC regulate businesses?

Australian FIU’s approach to supervision and regulation is in line with international standards set by FATF, that is, the risk-based supervision principle. This approach can be divided into three categories:

• It assists reporting entities in meeting their compliance obligation through collaboration, education, and guidance.
• Through supervision, it assesses AML compliance and requires remediation for identified deficiencies.
• It investigates alleged serious and systematic contraventions and takes enforcement actions, where necessary.

AUSTRAC’s regulatory approach depends on the level of risk posed and the circumstances of the reporting entity.

AUSTRAC in Action

Although enforcement actions are not the ultimate goal of supervision, AUSTRAC takes severe actions where it becomes necessary. Some of the notable enforcement actions by the Centre include:

• Westpac (2020): A fine of AUD 1.3 billion was imposed by the AUSTRAC due to breaching requirements concerning IFTI reports and inadequate monitoring of high-risk transactions.
• Crown Resorts (2023): Fined AUD 450 million for serious AML/CTF breaches within casino operations.

These cases highlight the Australian Regulator’s emphasis on institutional accountability and risk-based supervision.

Sectors Regulated by AUSTRAC

The authority supervises and regulates more than 17,000 businesses from a broad range of industries that include:

• Banks and Credit unions
• Non-bank lenders and financiers
• Remittance service providers
• Gambling operators
• Bullion dealers
• Digital currency exchange platforms
• Lawyers and accountants
• Fintech and neobanking entities
• Superannuation and investment funds

Regulation of both traditional financial institutions and the tranche two sectors enables AUSTRAC to effectively address the evolving financial crime risks.

Conclusion

AUSTRAC is the primary authority in Australia’s AML/CTF framework. Its regulatory role and financial intelligence not only enforce compliance but also help to counter financial crime, both domestically and at the international level.

Understanding AUSTRAC’s role helps reporting entities fulfil their obligations and reinforces trust in the Australian financial system.