austrac annual report 2005

2004-05A U S T R A C A n n u a l R e p o r t 2 0 0 4 - 0 5

A U S T R A C A N N U A L R E P O R T 2 0 0 4 - 0 5

2 0 0 4 - 0 5

8 November 2005

Senator the Honourable Chris EllisonMinister for Justice and CustomsParliament HouseCANBERRA ACT 2600

Dear Minister,

In accordance with section 40B of the Financial Transaction Reports Act 1988 andsection 63 of the Public Service Act 1999, I am pleased to submit the AnnualReport on operations of the Australian Transaction Reports and Analysis Centre forthe year ended 30 June 2005.

Yours faithfully,

Neil Jensen PSMDirectorAUSTRAC

OFFICE OF THE DIRECTORAUSTRAC • PO Box 5516 • West Chatswood NSW 1515 • Sydney Australia

Telephone 61 - 2 - 9950 0055 • Facsimile 61 - 2 - 9950 0073

Dear Reader,

AUSTRAC's roles as Australia’s anti-money laundering regulator and

financial intelligence unit are essential components of Australia's law

enforcement and security efforts. AUSTRAC's efforts in combating

money laundering, terrorist financing and other major crimes, make a

valuable contribution to the goal of protecting Australian interests at

home and throughout the region.

AUSTRAC’s Annual Report 2004-05 highlights its strong level of

commitment to achieving this goal through its partnerships with

Australian and international law enforcement, security, revenue and

social justice agencies. In Australia, AUSTRAC is a leader in the

provision of innovative and practical solutions for domestic regulation

through programs such as its AML eLearning application and in

developing new financial intelligence products for use by its partners.

AUSTRAC's continued work with international bodies such as the FATF, APG, and Egmont Group makes a

strong contribution on Australia's behalf, to the setting of new international AML standards. The operational

links AUSTRAC has forged with other financial intelligence units throughout the world, are also a vital part

of Australia's contribution to the international fight against terrorism, money laundering and organised

crime.

I congratulate AUSTRAC on an excellent 2004-05 Annual Report and for its success during the year.

Yours sincerely,

CHRIS ELLISON

Minister for Justice and Customs

Senator for Western Australia

M i n i s t e r ' s M e s s a g e


T A B L E O F C O N T E N T S

Introduction

Director's perspective ............................................................................................................x

Overview and reader's guide...............................................................................................xiii

Agency Overview

Overview of AUSTRAC..........................................................................................................1

2004-05 Business priorities ...................................................................................................4

Performance reporting

Outcome - Output structure ...................................................................................................7

Highlights ...............................................................................................................................8

Significant results .................................................................................................................11

Primary Output Group 1

Deterring money laundering, serious crime and tax evasion .......................................14

Collection of FTR information ..............................................................................................15

Financial Transaction Reports statistics ..............................................................................17

Promotion of Financial Transaction Reports Act compliance ..............................................20

Individual cash dealer compliance improvement.................................................................21

Future priorities....................................................................................................................22

Performance summary ........................................................................................................23


Targeting money laundering, serious crime and tax evasion.......................................26

Dissemination of Financial Transaction Reports information ..............................................27

Providing value added Financial Transaction Reports information .....................................29

Promotion of effective use of Financial Transaction Reports information ...........................34




Advice of the effectiveness of the Financial Transaction Reports Act ........................42

Reviewing Australia's anti-money laundering regime ..........................................................43

Building partnerships ...........................................................................................................44

Monitoring technological changes in the financial and gaming sectors ..............................46




Contribution to international efforts directed at the

suppression of money laundering, serious crime and tax evasion .............................52

International exchange of financial intelligence...................................................................52

Participation in international organisations ..........................................................................55

International visitors.............................................................................................................56


Building effective global anti-money laundering systems....................................................57



8. Primary Output Group 5

Privacy and Security .........................................................................................................62

Ensuring the security of AUSTRAC resources ....................................................................63

Ensuring the security of AUSTRAC data.............................................................................65

Ensuring privacy ..................................................................................................................66



Enabling Output

Information Technology ....................................................................................................71

Developing IT systems and solutions ..................................................................................71

Electronic data delivery........................................................................................................71

Data mining..........................................................................................................................72

International assistance .......................................................................................................72

Maintaining AUSTRAC’s facilities ........................................................................................72

Corporate Services............................................................................................................73

Human resource management ............................................................................................73

Financial management ........................................................................................................76

Information management.....................................................................................................77

Management and accountability ..............................................................................................78

AUSTRAC management......................................................................................................79

Internal controls ...................................................................................................................80

Freedom of information .......................................................................................................81

Commonwealth disability strategy .......................................................................................83

Ecologically sustainable development .................................................................................83

Financial Statements.................................................................................................................86

Appendices ..............................................................................................................................120

Appendix A - Staffing statistics...........................................................................................121

Appendix B - Resources for outcomes..............................................................................126

Appendix C - Committees and reports ..............................................................................127

Appendix D - Consultancy contracts for 2004-05..............................................................130

Appendix E - AUSTRAC's locations ..................................................................................132

Glossary ...................................................................................................................................134

Compliance Index....................................................................................................................136

Index .........................................................................................................................................138

I n t r o d u c t i o n

Director’s review

Reader’s guide

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D i r e c t o r ’ s r e v i e w

AUSTRAC's achievements towards creating an environment hostile to money laundering, tax evasion and other

major crime continued in 2004-05. We pursued regulatory procedures to eliminate false name and anonymous

accounts and to ensure that financial transaction reports of high quality are transmitted to AUSTRAC by cash

dealers. This regulatory work complements our financial intelligence unit role in which we have worked closely with

domestic law enforcement, revenue, national security and social justice agencies and with our international

counterparts to incorporate our financial intelligence into their investigations.

In 2004-05, AUSTRAC worked with the Attorney-General's Department on the review of Australia's anti-money

laundering and counter financing of terrorism framework. Next year AUSTRAC will continue its involvement with the

Attorney-General's Department in consultation with industry on the application of the revised Financial Action Task

Force on Money Laundering (FATF) 40 Recommendations and the Nine Special Recommendations. AUSTRAC will

meet industry representatives through Ministerial and other consultative forums, and through the AUSTRAC Provider

Advisory Groups involving the wider financial services sector and the gaming sector. In 2004-05 we undertook

scoping projects to determine the effects of potential changes to AUSTRAC's work that may result from Australia's

adoption of amendments to the global anti-money laundering and counter financing of terrorism standards.

AUSTRAC is now well positioned to be able to implement future change. We have focused strongly on corporate

governance matters, illustrated by the new focus of AUSTRAC's Leadership Group and the preparation of a new

business strategy and direction for AUSTRAC. This will also assist us in meeting these challenges.

Looking back on 2004-05, we led developments in the identification of the methods of money laundering and the

financing of terrorism through our strategic analysis and operational units. We continued to assist cash dealers

understand their legislative responsibilities through onsite visits focusing on compliance and education. In addition,

AUSTRAC's internet-based education resource (AML eLearning Application) was commissioned in early 2005 and is

now assisting cash dealers to better understand how to prevent money laundering and the financing of terrorism and

informing them of AUSTRAC's role in this process.

Technology is a vital part of our work, being essential to both our collection of financial transaction reports information

and our assessment of the data. In April 2005, AUSTRAC achieved Defence Signals Directorate certification of its

information technology gateway environment. The certification provides AUSTRAC with an independent verification of

its information technology security standard and supports AUSTRAC's governance program.

Over the year, AUSTRAC continued to build bilateral and multilateral relationships with our partner agencies. We also

contributed to these efforts by providing training on the use of our systems and data. Our partners continued to use

our data in most investigations, including the many significant drug related investigations reported by the media

during the year, and in the work of the Australian Taxation Office on tax havens and related schemes which involve

possible tax evasion amounting to hundreds of millions of dollars.

In March 2005, a FATF mutual evaluation team conducted an onsite visit to Australia as part of the FATF evaluation

of Australia's anti-money laundering and counter financing of terrorism systems. Mutual evaluations between member

countries are a vital component in strengthening international efforts against money laundering and the financing of

terrorism.


x i

Assisting our neighbours in the region and working with our international partners in tackling transnational organised

crime and terrorism plays a significant role in maintaining Australia's security. Some of our achievements have been:

• During 2004-05 AUSTRAC signed international exchange instruments with Bermuda, Brazil, Bulgaria, Chile,

Panama and Romania. This brings the number of jurisdictions with which we can exchange information and

financial intelligence to 41.

• Another highlight of the year was the expansion of the technical assistance and training program. This

program has begun to produce positive results in assisting developing financial intelligence units in South

East Asia and the Pacific.

• This year saw the completion of the Australia-Indonesia Financial Intelligence Unit Cooperation Project. The

Indonesian financial intelligence unit, PPATK, has made much progress in contributing to an effective regime

to counter money laundering and the financing of terrorism in Indonesia.

• AUSTRAC hosted visits from officers of overseas financial intelligence units including Cambodia, Canada,

Chile, China, Cyprus, Hong Kong, Indonesia, Italy, Japan, Lebanon, Malaysia, Philippines, Republic of Korea,

Russia, South Africa, Thailand, United States of America and Vanuatu. These visits are an opportunity for

overseas financial intelligence units to learn about AUSTRAC's systems and procedures and also to share

their knowledge and expertise, building international cooperation against transnational crime, money

laundering and the financing of terrorism.

Future outlook

AUSTRAC will continue to play an important role in ensuring that money trails can be traced domestically and

internationally. In the coming year our efforts will be focused on building on our already sound monitoring and

analytical programs to enhance the provision of financial intelligence and information to our domestic and

international partners.

AUSTRAC will continue to work closely with government agencies and industry in working towards compliance with

the revised global anti-money laundering and counter financing of terrorism standards. We will also refine our

scoping work to focus on the implementation of the standards in Australia.

We are constantly looking at methods for improving the value of our financial intelligence through our collection,

analysis and dissemination functions. New technologies and data sources will be incorporated into our work next

year. Combining these new technologies and data sources with current technologies such as data mining will result

in more sophisticated intelligence being provided to our partner agencies.


x i i

Conclusion

I would like to thank all AUSTRAC personnel for their continued dedication this year. Through the year, with the

constant change and challenges that it has brought, I have continued to rely on their commitment and

professionalism in ensuring AUSTRAC is transparent, accountable and successful.

Neil Jensen PSMDirector

A U S T R A C A N N U A L R E P O R T 2 0 0 4 - 0 5 : R E A D E R ’ S G U I D E

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The Australian Transaction Reports and Analysis Centre (AUSTRAC) Annual Report 2004-05 provides information to

Parliament and other stakeholders and measures AUSTRAC's performance against business priorities and the

outcome-output reporting structure. The annual report is structured as follows:

Introduction

This section gives an introduction to AUSTRAC. The Director's review contains a summary of the significant issues

which have faced AUSTRAC, its achievements in 2004-05 and outlines the future plans for the agency. This reader's

guide outlines the structure of the annual report.

AUSTRAC overview

This chapter provides an overview of AUSTRAC's structure, role, functions and activities.

Performance reporting - outcome

This section highlights major achievements and events that occurred during the year. It also provides case studies of

significant results that have been achieved through the use of AUSTRAC's information and support, both

domestically and internationally.

Performance reporting - primary output groups

This section provides a detailed examination of AUSTRAC's performance against its primary output groups.

Achievements are measured against the outcome-output objectives. AUSTRAC's outcome-output structure is noted

in this section on page 7.

Performance reporting - enabling output groups

This section reports on the achievements of AUSTRAC's information technology and corporate services enabling

outputs.

Management and accountability

This section provides a thorough analysis of AUSTRAC's corporate governance practices. Topics covered include

internal and external scrutiny, freedom of information, Commonwealth Disability Scheme, ecologically sustainable

development and service charter information.

Financial statements

The financial statements report on the 2004-05 financial performance as required under the Financial Management

and Accountability Act 1997 (FMA Act).

R e a d e r ’ s g u i d e

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Appendices

The appendices to the annual report contain additional information including staffing statistics; information regarding

AUSTRAC's membership of committees and organisations; resource tables; and details of AUSTRAC locations.

Compliance index

To assist readers to access the report, additional features have been incorporated in the indices. As well as the

alphabetical index and a glossary, there is a compliance index. The compliance index shows the location in the report

of the mandatory information specified by the Requirements for Annual Reports for Departments, Executive Agencies

and FMA Act Bodies released by the Department of Prime Minister and Cabinet.

A U S T R A C o v e r v i e w

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The Australian Transaction Reports and Analysis Centre (AUSTRAC) is an Australian Government agency within the

Attorney-General's Portfolio that reports to the Minister for Justice and Customs, Senator the Honourable Chris

Ellison. AUSTRAC was established in 1989 under section 35 of the Financial Transaction Reports Act 1988 (FTR

Act). The FTR Act provides AUSTRAC with the powers to perform a dual role; as Australia's financial intelligence unit

and regulator for anti-money laundering and countering the financing of terrorism. In these roles, AUSTRAC collects,

retains, analyses and disseminates financial transaction reports information.

Mission and functions

Assisting AUSTRAC to achieve this mission, the FTR Act requires financial, gaming and other specified cash dealers

to verify the identity of their customers, thereby increasing the risk involved in opening or operating accounts in false

names. The FTR Act also requires cash dealers to report certain financial transactions where the cash dealers are a

party to a transaction with their customers, including:

• suspect transactions - any transaction where there are reasonable grounds to suspect that the transaction

may be relevant to investigation of criminal offences, including the financing of terrorism, tax evasion,

corporate crime, or where there are reasonable grounds to suspect that the transaction may assist in

enforcing the Proceeds of Crime Act 2002;

• significant cash transactions - any transaction involving a cash component of A$10,000 or more, or the

foreign currency equivalent;

• international funds transfer instructions - any instruction for the transfer of funds, transmitted electronically

either into or out of Australia; and

• international currency transfers - a report involving cash of A$10,000 or more, or the foreign equivalent,

leaving or entering Australia through carriage, mailing or shipping.

A U S T R A C o v e r v i e w

AUSTRAC's mission

To make a valued contribution towards a financial environment hostile to money laundering, major crime and

tax evasion

Financial transaction reports


2

AUSTRAC identifies suspicious financial activity that may be linked to money laundering, the financing of terrorism,

tax evasion and other major crime; using a variety of analytical techniques and tools. Information about suspicious

financial activity forms the basis of AUSTRAC's financial intelligence that is compiled and then disseminated to

AUSTRAC's law enforcement, revenue, national security and social justice partner agencies. These partner agencies

are:

• Australian Crime Commission

• Australian Customs Service

• Australian Federal Police

• Australian Securities and Investments Commission

• Australian Security Intelligence Organisation

• Australian Taxation Office

• Centrelink

• Child Support Agency

• Crime and Misconduct Commission (Queensland)

• Corruption and Crime Commission (Western Australia)

• Independent Commission Against Corruption (New South Wales)

• New South Wales Crime Commission

• Police Integrity Commission (New South Wales)

• State and Territory Police Services (7)

• State and Territory Revenue Authorities (8)

As part of AUSTRAC's dissemination function, these partner agencies are provided with both general and specific

access to financial transaction reports information. This allows them to add AUSTRAC's financial intelligence to their

own intelligence, investigative and compliance activities.

AUSTRAC is at the forefront of Australia's work to contribute to the global fight against money laundering and the

financing of terrorism. To assist in achieving this goal, AUSTRAC develops and promotes mutually beneficial

relationships with our overseas counterparts. These relationships involve, among other things:

• implementing exchange instruments;

• exchanging financial intelligence and other information; and

• providing technical assistance and training.

Structure

AUSTRAC's organisational structure is aligned to its outcome-output structure. A copy of the outcome-output

structure is on page 7.


3

The Deputy Director, Money Laundering Targeting has responsibility for:

• Primary Output Group 2 - Targeting money laundering, serious crime and tax evasion; and

• Primary Output Group 4 - Contribution to international efforts directed at the suppression of money

laundering, serious crime and tax evasion.

The Deputy Director, Money Laundering Deterrence has responsibility for:

• Primary Output Group 1 - Deterring money laundering, serious crime and tax evasion;

• Primary Output Group 5 - Privacy and security; and

• Enabling Output - Corporate services.

The Deputy Director, Anti-Money Laundering Reform has responsibility for:

• Primary Output Group 3 - Advice on the effectiveness of the FTR Act.

The Deputy Director, Information Technology has responsibility for:

• Enabling Output - Information technology.

AUSTRAC : Management structure

AUSTRAC’S organisational chart as at 30 June 2005

D E P U T Y D I R E C T O R

Anti-Money Laundering Reform

Liz Atkins


Money Laundering Deterrence

John Visser (Acting)


Money Laundering Targeting

Ric Power

S E N I O R M A N A G E R

Strategic Coordination

Andrew Joyce

C H I E F F I N A N C E O F F I C E R

Alf Mazzitelli


Anti-Money Laundering Reform

Louise Link (Acting)


Reporting and Compliance

Iain McAlister (Acting)


Partner Liaison and Support

Wendy Ward (Acting)


Monitoring and Analysis

Claude Colasante (Acting)


International

Rachelle Boyle

D I R E C T O R

Neil Jensen PSM


Information Technology

Martin French

M A N A G E R

I.T. Facilities

Anthony Johnston

M A N A G E R

I.T. Systems

Kiru Manavalan


4

2004-05 business priorities

To reinforce the scope of AUSTRAC's diverse responsibilities, a Business Strategy and Directions document was

produced. This document outlined AUSTRAC's business priorities for 2004-05. These priorities included:

• participation in the development of new anti-money laundering and counter financing of terrorism legislation;

• leading developments in the identification of money laundering and the financing of terrorism;

• ensuring cash dealer compliance with the provisions of the FTR Act;

• ensuring that the operational and strategic value of financial transaction reports information is fully

appreciated and utilised by partner agencies;

• building bilateral relationships with domestic and international partner agencies;

• expanding the portfolio of data sources to better link financial and other sources of intelligence into

AUSTRAC'S analysis function;

• enhancing AUSTRAC's skill base;

• developing strategic analysis capabilities to ensure that AUSTRAC remains an effective intelligence analysis

organisation;

• providing technical assistance and training to international counterparts;

• conducting AUSTRAC's business with full regard to security and privacy requirements;

• improving feedback mechanisms between AUSTRAC and its cash dealers, partner agencies and other

stakeholders; and

• improving corporate governance practices.

P e r f o r m a n c e R e p o r t i n g

o u t c o m e

To create a financial environment hostile tomoney laundering, major crime and tax

evasion

Outcome-Output structure

Highlights

Significant results

I I I1 P r i m a r y O u t p u t G r o u p 1

Deterring money laundering, serious crime and tax evasion

• collection of FTR information

• promotion of FTR Act compliance

• individual cash dealer compliance improvement

2 P r i m a r y O u t p u t G r o u p 2

Targeting money laundering, serious crime and tax evasion

• dissemination of FTR information

• provision of value added FTR information through

analysis

• promotion of effective use of FTR information


Advice on the effectiveness of the FinancialTransaction Reports Act 1988


Contribution to international efforts directed at the

suppression of money laundering, serious crime

and tax evasion


Privacy and Security

I V E n a b l i n g O u p u t

Information technology

Corporate services

O u t p u t s a n d t h e i r

c o m p o n e n t s

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Performance reporting- outcome

Introduction

AUSTRAC's outcome is to create a financial environment hostile to money laundering, major crime and tax evasion.

Recently, the fight to counter the financing of terrorism has also been included within the scope of AUSTRAC's work.

AUSTRAC's work is based on five primary output groups. Through focused efforts towards these output groups,

AUSTRAC is able to achieve its outcome. The work undertaken by AUSTRAC during 2004-05 has had an effect on

those who seek to use the financial sector for the purposes of money laundering, financing of terrorism and other

major crime. In Australia it is now more difficult than ever for the financial and gaming sectors to be used to launder

money or transfer illicit funds without criminals coming to the notice of authorities.

Outcome-Output structure

AUSTRAC's five primary output groups combine in the following way to achieve its outcome.

Primary Output Group 1 - Deterring money laundering, serious crime and tax evasion

The work undertaken to support Primary Output Group 1 is focused on AUSTRAC's regulatory program.

Under this output, AUSTRAC ensures that the financial, gaming, legal and other sectors comply with the

provisions of the Financial Transaction Reports Act 1988 (FTR Act). These provisions include the Know Your

Customer provisions that prevent the opening of anonymous or false name accounts as well as requirements

to report certain financial transactions to AUSTRAC. This output is directed towards preventing the use of the

financial and other sectors to launder money or finance terrorism. The high quality data contained in the

reports which AUSTRAC collects from these sectors may indicate illegal activity. This information can be used

by AUSTRAC to develop intelligence that can be made available to partner agencies for use in their

investigations and compliance activities.

Primary Output Group 2 - Targeting money laundering, serious crime and tax evasion

This output refers to AUSTRAC's work with Australian law enforcement, revenue, national security and social

justice agencies to identify suspected criminal activity. AUSTRAC provides these agencies with financial

transaction reports information and intelligence for use in their operations and investigations. The work under

Primary Output Group 2 is directed towards ensuring that if alleged offenders are using the financial, gaming

or other sectors to launder funds, they are identified and prosecuted. This is an important component of the

strategy to combat crimes such as money laundering, financing of terrorism and major tax evasion.

Outcome

To create a financial environment hostile to money laundering, major crime and tax evasion


8

Primary Output Group 3 - Advice on the effectiveness of the Financial Transaction Reports Act 1988

The work under Primary Output Group 3 ensures that AUSTRAC is in the best position to achieve its outcome

of creating a financial environment hostile to money laundering, tax evasion and other major crime. The

provisions of the FTR Act govern AUSTRAC's operations. It is, therefore, imperative that this legislation

remains relevant in the ever-changing financial sector. AUSTRAC's work under this output group includes

contributing to the Government's review of Australia's anti-money laundering and counter financing of

terrorism framework.

Primary Output Group 4 - Contribution to international efforts directed at the suppression of money

laundering, serious crime and tax evasion

Because of the rapid expansion and global nature of the financial sector, it is now easier for funds to move

through many jurisdictions. The work undertaken to support Primary Output Group 4 recognises this. It makes

an important contribution to the achievement of AUSTRAC's outcome by strengthening the international

network of financial intelligence units and consequently increasing the amount of financial intelligence

available to Australian agencies. This is achieved through sharing financial intelligence, providing technical

assistance and training and participating in international forums.

Primary Output Group 5 - Privacy and security

As a financial intelligence unit that collects personal information contained in financial transaction reports,

AUSTRAC upholds the highest level of security and privacy of this information. Operating under government

security and privacy legislation and guidelines to ensure that the personal information collected is securely

managed and stored, and that personal privacy is protected, is vital for AUSTRAC to achieve its outcome.

Highlights

During 2004-05, AUSTRAC made significant progress towards achieving its outcome. Details of these achievements

are in the performance reporting chapters. However, a number of highlights are mentioned below.

Anti-Money Laundering Electronic Learning (AML eLearning) Application

The Minister for Justice and Customs launched AUSTRAC's AML eLearning application in

April 2005. This application is available to cash dealers, clients and the public through the

AUSTRAC website. This application has been well received by cash dealers as a tool in

providing basic education on the process of money laundering, the financing of terrorism and

the role of AUSTRAC in identifying and assisting investigations of these crimes.

Increased reporting volumes

This year, there was a significant increase in the total number of financial transaction reports

received by AUSTRAC. There was an 18 per cent increase in the number of international


funds transfer instructions noted this year. This increase can be attributed to enhancements in AUSTRAC's

compliance work and the continued identification and education of cash dealers providing remittance services. The

effectiveness of this program can be demonstrated by the 76 per cent increase in international funds transfer

instruction reports received from remittance dealers this year.

Certification of AUSTRAC systems

In April 2005 AUSTRAC achieved Defence Signals Directorate certification of its information technology gateway

environment. The certification provides AUSTRAC with an independent verification

of its information technology security posture and supports AUSTRAC's

governance program.

Australia-Indonesia Financial Intelligence Unit Cooperation Project

This year saw the completion of the Australia-Indonesia Financial Intelligence Unit

Cooperation Project. The aim of this project was to assist Indonesia to develop an

effective financial intelligence unit. Through the work of AUSTRAC and other

government agencies and anti-money laundering experts, the Indonesian financial

intelligence unit, PPATK, received international recognition for the implementation

and enhancement of its anti-money laundering and counter financing of terrorism

systems and procedures. The success of this project is shown by the progress the

PPATK has made in establishing an effective regime to counter money laundering

and the financing of terrorism. AUSTRAC will continue to work closely with PPATK in coming years under the

AUSTRAC South East Asia Counter Terrorism capacity building program.

Review of Australia's anti-money laundering and counter financing of terrorism framework

AUSTRAC worked with the Attorney-General's Department and the Department of the Treasury to provide an

operational perspective in developing proposals for government. AUSTRAC assisted the Attorney-General's

Department in its consultations with industry through participation in the Ministerial Advisory Group and the

establishment and administration of the Systems Working Group.

Mutual evaluation of Australia's anti-money laundering systems

In March 2005 a Financial Action Task Force on Money Laundering (FATF) mutual evaluation team conducted an

onsite visit to Australia as part of the FATF evaluation of Australia's anti-money laundering and counter financing of

terrorism systems. This evaluation required significant input from AUSTRAC in responding to questionnaires,

providing information to the evaluation team and participating in

meetings with the team. It is expected that the evaluation team will

report to the FATF plenary in October 2005.

Information exchange agreements

During 2004-05 the Director of AUSTRAC signed exchange

instruments with Bermuda, Brazil, Bulgaria, Chile, Panama and

Romania. This brings the number of jurisdictions with which

AUSTRAC can exchange information and financial intelligence to 41.

MOU Signing - Antonio Gustavo Rodrigues,Brazil with AUSTRAC Director Neil Jensen, June2005

9


1 0

Technical assistance program

Another highlight of the year was the expansion of the technical assistance and training program. This program

produced positive results in assisting developing financial intelligence units in South East Asia and the Pacific. Some

notable achievements included:

• Completion of phase one of the Pacific Island Financial Intelligence Unit Database Project. In this phase,

AUSTRAC completed an information technology needs assessment to determine the information technology

assistance that is required in the Pacific Islands.

• AUSTRAC provided a training officer to work in the Jakarta Centre for Law Enforcement Cooperation. This

officer participated in the provision of training on the collection and analysis of financial intelligence for use in

investigations.

• Completion of fact-finding missions and needs assessments for capacity building assistance to ten FIUs in

South East Asia and commencement of in-country mentoring programs for relevant FIUs.

AUSTRAC Annual Report 2003-04

AUSTRAC's Annual Report 2003-04 was recognised in the Institute of Public Administration of Australia's Annual

Report awards, receiving a Bronze Award. AUSTRAC is pleased to be recognised in these awards for its

accountability and performance reporting in its annual report.


1 1

Significant results

In 2004-05, AUSTRAC's FTR information was used in 2,224 investigations. Of these, 578 matters identified FTR

information as being very valuable to investigation outcomes. Results from the Australian Taxation Office alone

showed that FTR information contributed to more than $61.65 million in Australian Taxation Office assessments during

the year.

The cases below highlight where FTR information proved beneficial during the course of an investigation. These

cases reflect the outcome of lengthy investigations and court proceedings.

Suspect transaction report aids arrests over ecstasy importation

A Queensland resident opened a bank account and structured a series of deposits amounting to almost

$100,000 in just six days. The activity aroused the suspicion of the bank and it submitted a suspect

transaction report (SUSTR). The following day, another bank reported similar activity involving a company

account. Both the company and person were linked to the same Queensland address.

Within three months of the SUSTRs being reported, a parcel containing 4.5 kilograms of ecstasy tablets

was intercepted in Brisbane. The parcel contained two sports bags with false bottoms - used in an attempt

to conceal the drugs. The drugs had allegedly been sent from the United Kingdom to the Queensland

address.

The investigating law enforcement agency then made further enquiries through the AUSTRAC TRAQ

Enquiry System (TES) database to identify other associates. Transactions were found that showed a link to

an overseas company and another Queensland person. The intelligence gathered led the investigating

agency to undertake surveillance. A controlled delivery of the intercepted parcel was made which resulted

in the arrest of the person and his associate for conspiracy to import a prohibited drug.

The person was sentenced to seven years imprisonment for attempting to possess prohibited drugs. The

associate was sentenced to 11 years imprisonment for importing prohibited goods.

A win for the Child Support Agency

The Child Support Agency made an AUSTRAC enquiry in relation to a child support debtor. Searches of

the TES database were conducted which uncovered large international funds transfers. The transfers

provided sufficient evidence that the child support client had the capacity to pay his child support debt and

ongoing child support payments.

The TES database searches uncovered an account which led investigators to establish that the child

support debtor was using numerous aliases. As the investigation progressed, it became apparent that the

person was defrauding the Australian Government.


1 2

Before it conducted searches on the TES database, the Child Support Agency had been unable to establish

contact with the person of interest. The use of FTR information enabled the Child Support Agency to locate

the client who has now entered into an arrangement to pay child support.

Financial transaction reports lead to cannabis seizure

Several FTRs that were reported to AUSTRAC and referred to a state law enforcement agency have

resulted in the seizure of over 11 kilograms of cannabis. A criminal investigation was initiated as a direct

result of the FTRs. The FTRs implied possible structuring offences by two people.

The FTRs provided details of numerous cash deposits and withdrawals. This, along with other information

contained on the FTRs, did not appear consistent with the income capacity of the people. The investigating

agency made enquiries with other agencies which assisted in gathering evidence that the people had no

apparent lawful means of sourcing this amount of cash.

It was further noted on a number of the FTRs that the cash smelt strongly of marijuana. This led

investigators to suspect that the pair may have been involved in large-scale cannabis dealing within

Australia and possibly overseas.

A search warrant was obtained and executed on the suspects' premises at which time the cannabis, a large

amount of cash and two vehicles were seized. Both were arrested and charged with various offences under

the Misuse of Drugs Act 1990.

Superannuation cashback promoters jailed for 18 months and fined $200,000 for contempt of court

The Australian Securities and Investments Commission (ASIC) commenced an investigation into the

activities of a father and son after it was alleged they were involved in an unlicensed financial services

business offering people early access to their superannuation funds. ASIC obtained restraining orders in

the New South Wales Supreme Court, which prevented the father and son from leaving New South Wales

and dealing with or disposing of any money which they may hold on behalf of their clients, on the basis of

an ongoing investigation by ASIC.

During the course of the investigation, the TES database was used to identify and monitor financial activity

being undertaken by the father and son. The searches were successful in identifying new bank accounts.

The identification used to open the accounts included foreign and Australian passports that the father and

son had falsely applied for after surrendering their original passports to the Supreme Court. In addition,

other information obtained from the TES database identified over $780,000 being transferred out of

Australia to accounts in South East Asia in breach of the Court orders.

With the new information obtained from the TES database, passenger alerts were updated. This became a

crucial factor to the case when the pair was arrested attempting to board an international flight from Perth

to Singapore. They were extradited back to New South Wales to face charges for contempt of the Supreme

Court orders.

The father and son pleaded guilty and were convicted for contempt of Court and were jailed for 18 months

and fined $200,000. ASIC was also awarded its costs for the contempt proceedings.


1 3

Cash economy win - $4.6 million in tax and penalties recovered

As part of the Australian Taxation Office's (ATO) review of the 'Cash Economy', a project was undertaken to

identify if such activity occurred in the fishing industry. One area that was examined was the Tasmanian

abalone industry. To ensure the long-term viability of the industry a quota system was introduced in 1986.

This system provides for licences to take abalone for commercial purposes and quota 'units' equating to a

share of the total allowable catch. The income derived by a single quota unit in the period 1997 to 2005

averaged $25,000 - $30,000. In the 2005 year quota units were selling on the open market for

approximately $300,000. The holder of an Abalone Quota Unit (AQU) may either employ a diver and

arrange to have the molluscs harvested themselves, or sell the rights to harvest to a third party.

During the 'Cash Economy' review, a trust came to the attention of officers working on the project when it

was identified that it had sold AQUs. The principal in the trust had sold the rights to harvest his AQUs in

small parcels on a regular basis throughout each income year. He had also sold four of his AQUs in

succession. Subsequent checks showed that these sales of rights and the sales of the AQUs had not been

declared to the ATO and that the trust had not lodged income tax returns or business activity statements in

recent years. The principal in the trust, who also had investments in rental properties and shares, had also

failed to lodge income tax returns.

The ATO contacted the principal of the trust over this matter. Unfortunately he did not cooperate and after

the initial contact he actively avoided the ATO. However, the ATO auditor had also conducted a search on

the TES database and found a previously unknown address for the principal as well as previously

unidentified bank account and credit card information. Bank statements were obtained in respect of these

accounts and additional deposits/receipts were identified.

In addition, information was obtained from the Department of Primary Industry, Water and Environment,

which advised the amount of abalone caught per year on each AQU held, and the estimated beach price

that would have been received at that time.

The ATO used information obtained from the TES database and information obtained from the Department

of Primary Industry, Water and Environment to issue default Income Tax and GST assessments totalling

$4,658,983 in tax and penalties.


P r i m a r y O u t p u t

G r o u p O n e

Deterring money laundering, seriouscrime and tax evasion

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A U S T R A C A N N U A L R E P O R T 2 0 0 4 - 0 5 : P E R F O R M A N C E R E P O R T I N G : P R I M A R Y O U T P U T G R O U P O N E

1 5

Primary Output Group One


Introduction

This output reflects AUSTRAC's role as Australia's anti-money laundering regulator. AUSTRAC's regulatory

compliance program is responsible for ensuring that cash dealers, solicitors and members of the public understand

and meet their obligations under the Financial Transaction Reports Act 1988 (FTR Act). Effective liaison with the

financial and gaming sectors, solicitors and members of the public ensures that specific financial transactions are

reported to AUSTRAC.

AUSTRAC's regulatory compliance program is also responsible for ensuring cash dealers understand and comply with

the Know Your Customer provisions within the FTR Act. These provisions require cash dealers who offer 'products'

considered to be 'accounts' for the purposes of the FTR Act to obtain the prescribed account and signatory

information. This identification process is achieved by cash dealers primarily using the 100 point check identification

system.

The 2004-05 objectives of this output were to:

• improve the integrity of financial information reported by existing cash dealers, particularly the quality, timing

and volume of these reports; and

• improve the awareness and compliance of new and existing cash dealers, solicitors and the public with

respect to their obligations under the FTR Act.

Collection of financial transaction reports information

The foundation of AUSTRAC's work is the collection of financial transaction reports (FTR) information that can be

analysed and disseminated to partner agencies for use in investigations.

The transactions that AUSTRAC collects are:

• Suspect transactions - any transaction where there are reasonable grounds to suspect that the transaction

may be relevant to investigations of criminal offences, including the financing of terrorism, tax evasion, or

corporate crime, or where there are reasonable grounds to suspect that the transaction may assist in

enforcing the Proceeds of Crime Act 2002.

• Significant cash transactions - any transaction involving a cash component of A$10,000 or more, or the

foreign currency equivalent.

Mission

To deter money laundering, tax evasion and the financing of crime and terrorism by promoting awareness of

and compliance with Australia's anti-money laundering and counter financing of terrorism framework


1 6

• International funds transfer instructions - any instruction for the transfer of funds, transmitted electronically

either into or out of Australia.

• International currency transfers - a report involving cash of A$10,000 or more, or the foreign equivalent,

leaving or entering Australia through carriage, mailing or shipping.

On average, AUSTRAC received 48,367 FTRs per day, totalling 12,575,531 reports in 2004-05. AUSTRAC's success

in ensuring the timely reporting of these transactions is due to the use of technological solutions such as the

EDDSWeb system which allows for the electronic transmission of

reports through the internet. The value in the electronic transmission of

these FTRs not only assists cash dealers to comply with their reporting

obligations, but also assists AUSTRAC's partner agencies by providing

them with timely intelligence. This year, 99.5 per cent of reports were

submitted to AUSTRAC electronically.

Data integrity is of vital importance to AUSTRAC's success and has been an objective for the agency this year.

The following work was undertaken this year to meet this objective:

• additional resources were allocated to reviewing the reported FTR information and liaising with cash dealers

to rectify any reporting issues;

• internal training of data quality personnel to build AUSTRAC's data quality expertise in response to increased

reporting volumes; and

• timely analysis of FTR information, resulting in the immediate rectification of any data quality issues. This

rectification is undertaken by AUSTRAC or referred back to the cash dealer, with a request for remedial

action.

As a result of these measures, over 139,000 reports were rectified through AUSTRAC's data quality program during

2004-05.

Objective

Improve the integrity of the financial information reported by existing cash dealers, particularly the quality,

timing and volume of these reports

EDDSWEB - AUSTRAC receives over 99%of all reports electronically


1 7

Financial transaction report statistics

Suspect transaction reports

This year AUSTRAC received 17,212 suspect transaction reports (SUSTRs), an increase of 49.9 per cent from the

previous year. This increase reflects the awareness-raising work undertaken by AUSTRAC's regulatory program,

which included industry-specific education campaigns, general anti-money laundering (AML) education work in high

risk cash dealer sectors and the development of AUSTRAC's AML eLearning application.

Significant cash transaction reports

Significant cash transaction reports (SCTRs) account for 18 per cent of the total number of FTRs reported to

AUSTRAC each year and are reported by cash dealers and solicitors. This year, AUSTRAC received 2,288,373

SCTRs, an increase of 11.3 per cent from the previous year.

SUSTR reporting volumes 2000-2005

2000-01 2001-02 2002-03 2003-04 2004-05

Total no. of SUSTRs 7,247 7,809 8,054 11,484 17,212

Change from previous year 2.5% 7.8% 3.1% 42.5% 49.9%

20,000

15,000

10,000

5,000

2000-01 2001-02 2002-03 2003-04 2004-05

TO

TA

LN

UM

BE

RO

FS

US

TR

s

There was a 49.9%

increase in the

number of SUSTRs

reported to AUSTRAC

this year.

SUSTR reporting volumes 2000-2005


1 8

SCTR reporting volumes 2000-2005

2000-01 2001-02 2002-03 2003-04 2004-05

Total no. of SCTRs 1,681,024 1,850,208 1,979,446 2,056,617 2,288,373


2,500,000

2,000,000

1,500,000

1,000,000

500,000

2000-01 2001-02 2002-03 2003-04 2004-05

TO

TA

LN

UM

BE

RO

FS

CT

Rs

There was a 11.3%

increase in the

number of SCTRs

reported to AUSTRAC

this year.

SCTR reporting volumes 2000-2005

IFTI reporting volumes 2000-2005

2000-01 2001-02 2002-03 2003-04 2004-05

Total no. of IFTIs 6,107,534 7,057,084 7,493,765 8,685,843 10,243,774


International funds transfer instructions

Cash dealers are obliged to report all international funds transfer instructions (IFTIs) to AUSTRAC within a prescribed

timeframe. IFTIs are the largest volume of reports that AUSTRAC receives. With the expanding global economy and

the ease with which people are able to transfer or receive funds from overseas, the number of IFTIs that AUSTRAC

receives has greatly increased. This year, 10,243,774 IFTIs were reported to AUSTRAC. This represents a 17.9 per

cent increase from the previous year. This year's regulatory priorities included a sustained AML education campaign

for remittance dealers, which generated 1,229,592 IFTI reports from the remittance sector. This represents a 76 per

cent increase in the number of IFTI reports received from the remittance sector in the previous year.


1 9

12,000,000

10,000,000

8,000,000

6,000,000

4,000,000

2,000,000

2000-01 2001-02 2002-03 2003-04 2004-05

TO

TA

LN

UM

BE

RO

FIF

TIs

There was a 17.9%

increase in the

number of IFTIs

reported to AUSTRAC

this year.

IFTI reporting volumes 2000-2005

International currency transfer reports

International currency transfer reports (ICTR) are primarily declared to the Australian Customs Service by individuals

when they enter or depart from Australia. During 2004-05, AUSTRAC received 26,172 ICTRs, a 2.3 per cent increase

from the previous year.

ICTR reporting volumes 2000-2005

2000-01 2001-02 2002-03 2003-04 2004-05

Total no. of ICTRs 26,858 29,538 28,274 25,579 26,172

Change from previous year 29.3% 10.0% -4.3% -9.5% 2.3%

30,000

25,000

20,000

15,000

10,000

5,000

2000-01 2001-02 2002-03 2003-04 2004-05

TO

TA

LN

UM

BE

RO

FIC

TR

s

There was a 2.3%

increase in the

number of ICTRs

reported to AUSTRAC

this year.

ICTR reporting volumes 2000-2005


These statistics show a significant increase in the total number of FTRs that AUSTRAC received during 2004-05,

much of which can be attributed to continued liaison with cash dealers, and in particular the work undertaken to

promote compliance with the FTR Act.

Promotion of Financial Transaction Reports Act 1988 compliance

AUSTRAC achieves its output of deterring money laundering, serious crime and major tax evasion by effectively

liaising with cash dealers, with the aim of promoting and encouraging their compliance with the provisions of the FTR

Act. This is done in a number of ways including education engagements, advertising campaigns, industry consultation

and daily liaison with cash dealers, particularly those in high risk industries.

AUSTRAC has made significant progress in this area over the financial year and focused strongly on the education of

high risk and newly identified cash dealers. This program led to the detection of 70 previously unidentified cash

dealers, predominantly from the remittance sector. AUSTRAC provided education services to these cash dealers to

assist them in meeting their obligations under the FTR Act and ensuring that they were able to commence correct and

timely reporting of all prescribed financial transaction reports.

AUSTRAC also devoted significant resources to the education of the broader cash dealer community. This education

program included targeting cash dealer sectors that had demonstrated systemic non-compliance in relation to the

quality and/or timeliness of FTRs reported to AUSTRAC. These sectors included authorised deposit taking institutions,

casinos, bureax de change, insurance agents and remittance dealers.

As part of its regulatory education program, AUSTRAC conducted 122 educational engagements with cash dealers

this year. These cash dealers were provided with guidance and assistance regarding the requirements of the FTR Act,

particularly the reporting, Know Your Customer and document retention obligations of the Act. The success of this

program was apparent from the increase in volume and quality of financial transaction reports received during the

year.

Industry consultation is also an important tool in AUSTRAC's regulation role. This consultation occurs through the

Provider Advisory Group (PAG) and Gaming Provider Advisory Group (GPAG) meetings. These groups include

representatives from major cash dealers, gaming bodies, industry bodies, AUSTRAC and partner agencies. The PAG

met once during the year, mainly to discuss AUSTRAC's regulatory and international work (including the mutual

evaluation of Australia as reported on page 46). Meetings of the

GPAG were deferred at the request of the GPAG members due

to the sectors' involvement with the review of Australia's anti-

money laundering and counter financing of terrorism framework

(see page 43).

A major highlight of AUSTRAC's regulatory compliance program

was the launch of the Anti-Money Laundering Electronic

Objective

Improve the awareness and compliance of new and existing cash dealers, solicitors and the public with

respect to their obligations under the FTR Act

2 0


2 1

Learning Application (AML eLearning). This application has been designed to assist cash dealers, industry

associations, members of the public and other interested stakeholders in understanding the various reporting and

Know Your Customer obligations under the FTR Act. The

AML eLearning application provides a general understanding

of the broader anti-money laundering environment and

specific understanding of the various legislative obligations

imposed by the FTR Act. This application was launched on

AUSTRAC's website by the Minister for Justice and Customs,

Senator Chris Ellison, on 13 April 2005. Between its launch

and the end of the financial year, the AML eLearning

application webpage was accessed on 15,439 separate

occasions. AUSTRAC has received very positive feedback,

particularly from the financial sector, on the value of this service.

AUSTRAC's Help Desk has traditionally been a valuable tool in educating cash dealers and the public on the FTR Act

and how it applies to them. As reported in last year's annual report, the Help Desk function was automated to increase

the level of service provided. This year the automated help desk received 22,925 queries, of which 4,548 required

more detailed responses from AUSTRAC regulatory staff. A further 1,030 queries were received and responded to via

email.

The creation and distribution of AUSTRAC Information Circulars is another mechanism through which AUSTRAC

informs cash dealers of their obligations under the FTR Act and of significant developments in both Australian and

international regulatory practices. Six circulars were released during the year, being:

• AUSTRAC Information Circular No. 35 (amendment) - Reserve

Bank of Australia Media Release: Repeal of Sanctions Against the

National Union for the Total Independence of Angola (UNITA)

• AUSTRAC Information Circular No. 38 - Attorney-General's

Department Media Release: Palestinian Islamic Jihad Listed as a

Terrorist Organisation

• AUSTRAC Information Circular No. 39 - Update on the Financial

Action Task Force (FATF) on Money Laundering's Non-Cooperative

Countries and Territories (NCCTs) List

• AUSTRAC Information Circular No. 40 - Charter of the United

Nations (Anti-terrorism Persons and Entities) List

• AUSTRAC Information Circular No. 41 - Verification Requirements for Third Party Signatories

• AUSTRAC Information Circular No. 42 - Bribery of Foreign Public Officials

Individual cash dealer compliance improvement

The regulatory compliance program for this year specifically included an increased education presence in the field to

assist high risk cash dealers to understand and comply with the requirements of the FTR Act. This strategy has

proven successful in achieving these aims. Logically, the success of this strategy will now be reinforced through a

Minister for Justice and Customs, Senator Ellison and

AUSTRAC Director, Neil Jensen at the launch of AUSTRAC’s

AML eLearning Application


regulatory compliance program for 2005-06 which will include a stronger focus on compliance inspections, and if

necessary, formal enforcement action.

Identifying which industries have the highest risk of being used for money laundering, the financing of terrorism or

other serious crime is crucial in ensuring AUSTRAC's success. AUSTRAC's Regulatory Risk Assessment System

(ARRAS) has been developed to assess FTR compliance risk by individual entities and industries. ARRAS, although

still in prototype mode, has assisted AUSTRAC's regulatory program to detect high-risk entities and to address the

specific issues detected.

Complementary to ARRAS has been the use of the data mining tools implemented in previous years which has

provided significant benefits to AUSTRAC's regulatory work. The geocoding functionality of these tools has added a

further dimension to general analysis and enabled AUSTRAC to undertake more detailed industry analysis. The

benefits of these systems extend to the more effective use of AUSTRAC resources as this allows the determination of

the best areas on which to focus. Therefore, increased efficiencies within the processes have been observed.

Through the use of tools such as ARRAS and data mining, AUSTRAC has been able to conduct detailed analysis

resulting in the preparation of three industry analysis reports, focusing on the bullion, internet banking and motor

vehicle sectors. These reports have significantly assisted the regulatory compliance program in planning compliance

and education campaigns.

The regulatory compliance program also includes non-compliance rectification meetings and more formal compliance

inspections. These options complement the education engagements mentioned above and are used when AUSTRAC

detects systemic non-compliance.

Future priorities

To ensure that AUSTRAC remains effective, it is important that FTRs continue to be collected in a timely and complete

fashion. This data forms the basis of the intelligence used by our partner agencies and it is imperative that the quality

and completeness of the data is of the highest standard to assist investigations by these agencies. As Australia's AML

regulator, AUSTRAC is also responsible for ensuring industry awareness and compliance with the Know Your

Customer provisions of the FTR Act, which include the 100 point check and acceptable referee methods of signatory

verification.

AUSTRAC will continue to strive towards achieving Primary Output Group 1 - Deterring money laundering, serious

crime and tax evasion in 2005-06 through the following work.

• Increased focus on compliance inspections and enforcement of compliance with the FTR Act;

• Implementation of ProviderNet to expand the capacity of the EDDSWeb system. ProviderNet will improve the

ability for cash dealers to electronically report financial transactions and other relevant information to

AUSTRAC; and

• Further incorporating ARRAS into AUSTRAC's compliance work.

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A U S T R A C A N N U A L R E P O R T 2 0 0 4 - 0 5 : P R I M A R Y O U T P U T G R O U P O N E : P E R F O R M A N C E S U M M A R Y

2 3

Performance summary

Primary Output Group One


This output refers to the regulatory role of AUSTRAC in creating a climate of compliance with the reporting and other

provisions of the Financial Transaction Reports Act 1988 (FTR Act).

The price of achieving Primary Output 1 was $5.49 million.

Performance highlights

• The launch of AUSTRAC's Anti-Money Laundering Electronic Learning Application (AML eLearning)

on AUSTRAC's website. This tool will continue to educate cash dealers and the public on the

requirements and benefits associated with their obligations to identify customers and report high-

quality financial transaction reports to AUSTRAC.

• The prototype of the AUSTRAC Regulatory Risk Assessment System (ARRAS) was created during

the year. The development of ARRAS provides AUSTRAC with an objective risk assessment

system that highlights high-risk entities/ industries and allows AUSTRAC's regulatory compliance

program to effectively and efficiently allocate resources to address the evolving environment.

• Improvement in the data quality analysis of the FTR information received. AUSTRAC has also

been able to enhance data quality expertise in response to an increase in reporting volumes.

Achievement of 2003-04 listed future priorities

In the 2003-04 Annual Report, several future priorities were reported. These priorities are

listed below along with a summary of AUSTRAC's progress towards achieving them.

The implementation of AUSTRAC's Regulatory Risk Assessment System (ARRAS) to measure the

risk of individual cash dealers or industries and allocate resources accordingly.

ARRAS has now been developed to an operational prototype status and is supporting the regulatory

compliance program. ARRAS risk modules will be migrated to the AUSTRAC database during 2005-06.

Use of data mining capability within AUSTRAC to assist data quality and industry analysis programs.

Data mining tools have been further improved during the year. The introduction of geocoding

functionality has increased the capacity of AUSTRAC's regulatory program to provide high quality

industry analysis.


2 4

The release of the internet based Anti-Money Laundering eLearning Application to assist industry

understanding of the broader issues connected to combating money laundering, the financing of

terrorism and other major crimes.

The AML eLearning application was launched by the Minister for Justice and Customs, Senator Chris

Ellison, in April 2005.

Primary Output 1.1 Collection of FTR information

This output refers to the collection of transaction reports as required by the FTR Act.

Quantity Performance Measure - Volume of FTR reports

• AUSTRAC received 12,575,531 FTRs, a 16.6 per cent increase from the previous year.

Quality Performance Measure - Integrity of FTR reports

• This year, AUSTRAC worked closely with cash dealers to raise the quality of the FTR information

received. Education and training for cash dealers was expanded this year. AUSTRAC noted a higher

level of integrity of the data collected.

• 99.5 per cent of FTRs were reported to AUSTRAC electronically through the EDDSWeb system,

consequently resulting in timely dissemination of information to partner agency personnel. Electronic

reporting also ensures timely identification of any data quality or timing issues, and rectification by

AUSTRAC.

Primary Output 1.2 Promotion of FTR Act compliance

This output refers to the provision of advice and guidance to cash dealers and the public.

Quantity Performance Measure - Number of support functions provided

• During the year 22,925 calls were received through the AUSTRAC Help Desk, a decrease of 6.3 per

cent from the previous year.

• AUSTRAC released six information circulars in 2004-05.

• The AML eLearning application webpage was accessed on 15,439 separate occasions between its

launch on 13 April 2005 and the end of the financial year. These individual users generated 78,459 hits

against differing elements of the AML eLearning application indicating multiple access of differing

modules.

Quality Performance Measure - Feedback from cash dealers

• Feedback from education campaigns and presentations was positive and cash dealer personnel

subsequently had an improved awareness of their obligations under the FTR Act.


2 5

• Help Desk queries were addressed within 24 hours for telephone queries and 48 hours for email

queries. No complaints were received from cash dealers.

Primary Output 1.3 Individual cash dealer compliance

This refers to the range of AUSTRAC's regulatory and compliance activities - from cooperative compliance

inspections with cash dealers, to enforcement action - to ensure compliance with the provisions of the FTR

Act.

Quantity Performance Measure - Number of evaluations and compliance issues identified

• AUSTRAC conducted 161 educational engagements and compliance related meetings/inspections

during the year with members of the broader cash dealer community. The aim of this regulatory activity

was to raise awareness and improve cash dealer compliance with the provisions of the FTR Act. An

additional 41 educational engagements were conducted with stakeholders including industry

associations, partner agencies and overseas financial intelligence units.

• Three industry analysis reports were completed in 2004-05. These reports enabled AUSTRAC to

develop a targeted compliance program, aimed at high risk industries and cash dealers.

Quantity Performance Measure - Effectiveness of compliance improvement program

AUSTRAC implemented a number of systems this year to improve cash dealer compliance with the FTR Act.

These included the use of data mining tools and the prototype ARRAS system used to identify high risk cash

dealers.

AUSTRAC revised procedures to increase efficiency and strengthen the integrity of its regulatory processes. A

significant number of compliance issues were identified through data quality analysis, education engagements

and compliance inspections. Most of these issues were rectified by the respective cash dealers.



G r o u p T w o

Targeting money laundering, seriouscrime and tax evasion

2

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2 7

Primary Output Group Two

Targeting money laundering, serious crime and tax evasion

Mission

To maximise the timely provision of financial intelligence value to, and integration of financial transaction

reports information into the work of our partner agencies

Introduction

This output refers to AUSTRAC's role of providing financial transaction reports (FTR) information and intelligence to its

28 domestic partner agencies for use in their operational activities. These agencies are in Australia's law enforcement,

revenue, national security and social justice programs. A list of the agencies is on page 2. FTR information initiates

and adds value to the work of these agencies. AUSTRAC provides support to partner agencies in a number of ways.

This support is primarily conducted through:

• access to the TRAQ Enquiry System (TES). To ensure that they are receiving full value from this information,

AUSTRAC conducts training and support programs for key partner agency personnel; and

• dissemination of financial intelligence assessments to partner agencies.


• add financial analytical and intelligence value to partner agency operations and investigations;

• use data mining tools and extrinsic information sources to validate and analyse FTR information to enhance

the quality of financial intelligence assessments; and

• engage with partner agency representatives to develop strategies and initiatives to better integrate financial

intelligence sourced from AUSTRAC into their intelligence systems and investigations.

Disseminating financial transaction reports information

The provision of FTR information to partner agencies is a major component of AUSTRAC's work. AUSTRAC provides

access to FTR information to government agencies as permitted under section 27 of the Financial Transaction Reports

Act 1988 (FTR Act). The Director of AUSTRAC has signed a Memorandum of Understanding (MOU) with the heads of

each of these agencies. These MOUs include provisions governing the access to, and use of, FTR information. This

year AUSTRAC signed a new MOU with the New South Wales Police Service. This agreement expands the number of

personnel who can access TES to include key personnel from the Counter Terrorism Coordination Command and

intelligence analysts from the regional commands. AUSTRAC also agreed to increase the level of access and number

of designated personnel who can access TES from within the Australian Taxation Office (ATO), Centrelink, the Child

Support Agency and the New South Wales Crime Commission.

Objective

Add financial analytical and intelligence value to partner agency operations and investigations


2 8

All FTR information is stored in AUSTRAC's TRAQ database and is accessible through TES by designated partner

agency personnel. This year there was a small increase in the number of partner agency personnel accessing this

information and also an increase in the total enquiry and analysis activity on the database. There was also an increase

in AUSTRAC personnel using this information.

Number of officers with online access to FTR information as at 30 June

Registered users June 2002 June 2003 June 2004 June 2005

Australian Taxation Office 723 1,005 1,194 1,245

Australian Government agencies 725 757 825 847

Australian social justice agencies N/A N/A 45 88

State and Territory law 246 241 254 251

enforcement agencies

State and Territory revenue agencies 10 3 6 5

AUSTRAC 66 68 99 127

TOTAL 1,770 2,074 2,423 2,563

The statistics above indicate a 5.8 per cent overall increase in the number of online users who have access to FTR

information.

Agency

Australian Taxation

Office

Australian

Government agencies

Social justice agencies

State and Territory law

enforcement agencies

State and Territory

revenue agencies

AUSTRAC

TOTAL

Logons

46,803

61,014

6,175

11,549

32

30,801

156,374

TES total

searches

425,791

687,810

74,416

122,650

381

752,821

2,063,869

TES name

searches

106,431

197,478

18,049

32,858

89

63,493

418,398

TES other

searches

319,360

490,332

56,367

89,792

292

689,328

1,645,471

SMRs*

1,707

1,470

9

11

-

1,205

4,402

Active

Alerts at 30

June

44

N/A

N/A

N/A

N/A

274

318

Data

warehouse

searches

4,737

848

-

2

-

9,917

15,504

Total logons and TES searching activity 1 July 2004 - 30 June 2005

*SMR - Summary Management Report

Note: N/A is not applicable as these agencies cannot set up alerts


2 9

The figures above demonstrate the importance that partner agencies place on the availability and use of FTR

information. The intelligence value gained can be vital to partner agencies. For agencies such as the Australian

Customs Service and the ATO, searching TES has become an integral component of their intelligence gathering

capabilities. These agencies increased their overall TES activity this financial year by 55 per cent and 43.5 per cent

respectively. A number of other agencies also had dramatic increases in their use of TES. Victoria Police Service, with

an increase of 117 per cent in TES activity, and Queensland Police Service with an increase of 88 per cent, are two

such agencies. Both have benefited from having an AUSTRAC onsite presence and management who have promoted

the use of FTR information internally. When these figures are compared with those from 2003-04, the following trends

are evident:

• logons to TES have increased by 2.6 per cent;

• total TES searches have increased by 68.4 per cent;

• SMR searches have decreased by 16 per cent;

• active alerts have increased by 15.6 per cent; and

• data warehouse searches have decreased by 18.7 per cent.

The statistics above indicate a decrease in the use of AUSTRAC’s macro-analytical tools with both SMR and data

warehouse searches decreasing from the previous financial year. This decline was a result of AUSTRAC relying less

on traditional macro-analytical tools and more on the sophisticated data mining software now accessible to partner

agency personnel.

Data matching

During the year AUSTRAC worked with the ATO on a major data matching exercise. After consultation with the Office

of the Privacy Commissioner, 12 months worth of FTR name and address information was supplied to the ATO in

summary format. Following the initial analysis of the matched information, the ATO requested further details on a small

percentage of the summarised information. The ATO and AUSTRAC will continue to work on this project in the coming

year.

TES availability

To ensure that AUSTRAC is effective in providing access to FTR information, there is a need to maintain the

availability of the system. TES is generally available to online users 24 hours a day, 7 days a week. This year,

AUSTRAC continued to maintain a very high level of system availability. TES had an availability of approximately 99.3

per cent Monday to Friday and 94.1 per cent for weekends. Downtime was generally as a result of maintenance or

system upgrades. Improvements to the system mean that AUSTRAC continues to provide up-to-date and highly

effective ways for AUSTRAC and partner agencies to access FTR information.

Providing value added financial transaction reports information

AUSTRAC's work towards achieving its output of targeting money laundering, serious crime and tax evasion is

focused on providing detailed financial intelligence reports to partner agencies for use in investigations, intelligence

probes and compliance programs. This is achieved through the analysis of FTR information and extrinsic data to

produce financial intelligence assessments that are disseminated to partner agencies. This intelligence product is

additional to the database search capability AUSTRAC provides to partner agencies to enable them to add value to

their operational work.


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Analytical work

AUSTRAC continued to improve its analysis through the inclusion of technological solutions and data from extrinsic

sources into the analysis processes. This required extensive training and recruitment of analysts to undertake this

work. Through these initiatives, AUSTRAC continually improved the quality of its financial assessments.

During the year AUSTRAC produced 966 financial intelligence assessments. These assessments were produced for

intelligence purposes either by proactive dissemination or at the request of partner agencies. Of the total financial

intelligence assessments produced, 787 were considered relevant for dissemination to partner agencies.

NU

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Dissemination of assessments by partner agency 2004-05

AT

O

AF

P

AC

S

NS

WP

OL

VIC

PO

L

AS

IC

AC

C

AC

C F

IAT

CE

NT

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LIN

K

NS

WC

C

QL

DP

OL

SA

PO

L

WA

PO

L

NT

PO

L

CM

C

CS

A

SR

AN

SW

250

200

150

100

50

PARTNER AGENCIES

Suspect transaction reports dissemination

An important part of AUSTRAC's work is the analysis and dissemination of suspect transaction reports (SUSTRs) to

partner agencies. The information contained in SUSTRs may provide valuable intelligence to partner agencies

particularly as a trigger for identifying criminal activity and networks. SUSTR procedures include the review of TES and

other data sources to determine if any additional information is available that would be of value to partner agencies.

The SUSTR and any related assessment is then disseminated to the relevant partner agency.

This year AUSTRAC received 17,212 SUSTRs, an increase of 49.9 per cent from the previous year.

The significant increase in the number of SUSTRs provided by cash dealers resulted in a review of AUSTRAC

business and systems processes. As suspect reporting levels increased significantly over the past 12 months,

AUSTRAC sought more effective systems and processes to use the intelligence aspect of this SUSTR reporting,

commencing with a re-assessment of the SUSTR business processes. This resulted in the issue of new standard

operating procedures.


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AUSTRAC undertook a systems redevelopment project to enhance the computer systems processing of SUSTRs.

This project will be completed during the latter part of 2005 and will provide systems improvements to manage

increases in SUSTR reporting volumes. It will also enhance processing of SUSTRs in an effective and timely manner.

As a result 22,497 disseminations of SUSTRs occurred, a significant increase from the 16,637 SUSTRs disseminated

in 2003-04.

Partner agency 2004-05

Australian Taxation Office 16,304

Australian Federal Police 1,901

Australian Customs Service 874

Centrelink 697

NSW Police Service 648

Victoria Police Service 360

Australian Securities and Investments Commission 291

NSW Crime Commission 283

South Australia Police Service 227

Queensland Police Service 211

Australian Crime Commission Financial Intelligence Assessment Team (FIAT) 192

Corruption and Crime Commission 153

Western Australia Police Service 149

Australian Crime Commission 99

Northern Territory Police Service 32

Child Support Agency 25

State Revenue Authority NSW 16

Tasmania Police Service 11

State Revenue Authority Victoria 7

Police Integrity Commission 6

Crime and Misconduct Commission (QLD) 4

Independent Commission Against Corruption 3

State Revenue Authority ACT 2

State Revenue Authority South Australia 1

State Revenue Authority Western Australia 1

TOTAL 22,497

The above table outlines the number of SUSTRs disseminated to our partner agencies. Some reports may have been

disseminated to more than one agency.


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The graph below compares the number of SUSTR disseminations to AUSTRAC's partner agencies over the last two

years. As almost all SUSTRs received by AUSTRAC are disseminated to the Australian Taxation Office, it has been

excluded from the graph.

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SUSTR dissemination to major partner agencies for 2003-04 and 2004-05A

FP

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2,500

2,000

1,500

1,000

500

PARTNER AGENCIES

2004-05

2003-04

Activity type and statistics

The chart below shows a comparison of the classifications of activity types identified from SUSTRs that were reported

to AUSTRAC over the past two years.

Structuring

Tax evasion

Suspicious behaviour

Interesting country

Money laundering

Unusually large cash trans.

Other offence

Cheque fraud

Unusually large domestic trans.

Fraud - other

Common beneficiary /account

Refused to show ID

Social security fraud

OFAC list

Internet fraud

Remittance dealer activity

Unusually large FX trans.

DFAT list

1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000

2004-05

2003-04

Suspicion type classification

SU

SP

ICIO

N T

YP

E

NUMBER OF SUSPECT ACTIVITY


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Loan fraud

False name/s

False ID

No offence

Susp method of carrying/storage cash

Refused to sign SCTR

Cheque laundering

Use/exchange of old notes

Unusually large travellers cheque

Customer known/suspected criminal

Credit card fraud

Immigration related offences

Undeclared currency

Advance fee fraud

Corporate crime

Telegraphic transfers

0 50 100 150 200 250 300 350

2004-05

2003-04

SU

SP

ICIO

N

TY

PE

NUMBER OF SUSPECT ACTIVITY

An analysis of SUSTR suspicion types over the past three years indicates that the three major suspicion types have

consistently been 'tax evasion', 'structuring' and 'suspicious behaviour of customer'. However, the number of 'tax

evasion' suspicion type has steadily declined each year.

The suspicions of 'money laundering' and 'cheque fraud' have increased each year. SUSTRs relating to 'money

laundering' suspicion type have more than doubled between July 2002 and June 2004. A further 63 per cent increase

in this suspicion type was noted this year, and now accounts for more than 13 per cent of all disseminations.

Analytical tools

AUSTRAC has been developing its analytical capability over the last two years. A focus of this work has been

evaluating and implementing a range of analysis tools including data mining tools. Additional data mining functionality

such as text mining, geocoding and sophisticated software searching tools were introduced this year. Through these

enhancements to current data mining capabilities AUSTRAC has been able to improve the detail and sophistication of

the financial intelligence that is disseminated to partner agencies.

Objective

Use data mining tools and extrinsic information sources to validate and analyse FTR information to

enhance the quality of financial intelligence assessments

Suspicion type classification


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AUSTRAC uses a number of tools to provide meaningful intelligence to partner agencies. These intelligence tools

include:

• AUSTRAC's automated monitoring system for analysing FTR information. This tool was developed by

AUSTRAC to identify suspicious financial activity;

• data mining tools used to interrogate FTR information to find links and identify suspect activity relating to

individuals and networks; and

• extrinsic data sources to validate and further enhance the value of FTR information collected.

This year, AUSTRAC began seeking access to a wider range of data sources to supplement and complement the

financial intelligence generated from FTR information. These data sources include intelligence systems developed and

maintained by other government agencies. This work will continue in the future and will provide valuable input into

further improving the quality of the intelligence products that AUSTRAC disseminates.

Promotion of effective use of financial transaction reports information

This year AUSTRAC continued to work closely with partner agencies to better integrate financial intelligence into

operational matters. As in past years, this work focused on the outposting of AUSTRAC personnel, provision of training

and support in the use of TES, education and awareness programs and participation on committees and task forces.

Outposting arrangements

AUSTRAC personnel are co-located within various partner agency offices in Sydney, Melbourne, Adelaide, Brisbane,

Canberra and Perth. These partner agencies are:

• Australian Crime Commission

• Australian Customs Service

• Australian Federal Police

• Australian Securities and Investments Commission

• Australian Security Intelligence Organisation

• Centrelink

• New South Wales Crime Commission

• New South Wales Police Service

• Queensland Police Service; and

• Victoria Police Service.

Additional AUSTRAC personnel were employed during the year to undertake analysis, training and support functions

within the Partner Liaison and Support team. With additional personnel, resources were able to be reallocated to

provide onsite support to the Australian Securities and Investments Commission; the Australian Security Intelligence

Objective

Engage partner agency representatives to develop strategies and initiatives to better integrate financial

intelligence sourced from AUSTRAC into their intelligence systems and investigations


Organisation; Centrelink; the Queensland Police Service and the Victoria Police Service. These outposted personnel

also provide analytical support and training to other agencies in their regions.

In addition, personnel from the Australian Federal Police, Australian Crime Commission and ATO work onsite in

AUSTRAC's Sydney office, which enables cooperation and collaboration with AUSTRAC on joint initiatives. More

intensive training and support was also undertaken through short-term attachments of Centrelink and Australian

Security Intelligence Organisation personnel at AUSTRAC. The attached personnel were provided with a program,

which focused on analytical capabilities using FTR information.

AUSTRAC's outposting arrangements and the training of key partner agency personnel enhances information

exchange and supports anti-money laundering and counter terrorism initiatives. Through this work, AUSTRAC is able

to gain a greater understanding of the needs of partner agencies and direct its assistance accordingly. This enabled

AUSTRAC's outposted personnel to focus more on providing intensive analytical support and less on increasing

awareness among partner agency personnel.

Training and support

To ensure that partner agencies are obtaining the maximum value from the information they locate using TES,

AUSTRAC undertakes a comprehensive training, awareness and support program. This program has two components.

The first component is to conduct training sessions covering search techniques for interrogating the FTR information in

TES and the interpretation of the resulting information; and the second is to educate partner agency personnel on the

other tools and support AUSTRAC can provide.

In 2003-04, three new agencies were granted access to

FTR information. As a result, numerous training sessions

were conducted this year for personnel in these new

partner agencies. Overall, 251 training sessions were

conducted for partner agency personnel during the year.

To complement this training, AUSTRAC is updating the

TES training database to provide relevant and more

current case material. These cases will be used by

AUSTRAC when training key partner agency personnel.

Several detailed brochures were produced to assist

partner agencies in understanding the types of FTR information, tools and support available to them and to provide

guidelines for effective searching.

AUSTRAC also promoted its data mining capabilities to partner agencies this financial year. In conjunction with

outposted managers, data mining analysts gave information sessions to key partner agency personnel, providing them

with an understanding of the tools AUSTRAC now has available, how they work and how these tools can help partner

agencies with the work they undertake. With awareness raised, AUSTRAC's data mining analysts have been

undertaking wide-ranging analysis in collaboration with partner agencies.

Committees and task forces

AUSTRAC participated on a number of law enforcement committees and task forces during the year and provided

assessments and FTR intelligence input. Committees and task forces are established by law enforcement to allow for

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3 6

information to be shared and intelligence to be available for use in individual or joint operations and investigations.

These committees included:

• Australian Crime Commission Financial Intelligence Assessment Team (FIAT) - this team comprises

representatives of the Australian Crime Commission, Australian Customs Service, Australian Federal Police,

Australian Taxation Office, Australian Securities and Investments Commission, New South Wales Crime

Commission and AUSTRAC. Team members meet regularly in Melbourne and Sydney. AUSTRAC provided 28

assessments and 192 SUSTR matters to this team for further analysis and development.

• Australian Crime Commission National Criminal Intelligence and Operational Forum - the Australian Crime

Commission established this forum as there was a need for a parallel national consultative mechanism. This

forum includes the Attorney-General's Department as well as law enforcement and revenue agencies.

• Suspect Transaction Reports Groups - these groups include representatives from partner agencies who meet

to discuss how financial intelligence and suspect transaction reports are being incorporated into their work and

to ensure a coordinated approach to investigations initiated through SUSTRs. AUSTRAC assists in the

administration and organisation of these meetings.

• AUSTRAC has representation on the Australian Crime Commission's Joint Management Committee in South

Australia and the Joint Management Group in Victoria. The Committee/Group also includes representatives

from the Australian Federal Police, State Police, Australian Securities and Investments Commission, Australian

Customs Service and the Australian Taxation Office. The role of these groups is to maximise the effective use

of resources and capabilities of law enforcement and other agencies in the investigation of organised criminal

activity.

• Other committees that relate to the work of AUSTRAC are listed in Appendix C.

Feedback

AUSTRAC is not an investigative agency. Although results achieved by partner agencies through access to and use of

AUSTRAC's financial information and intelligence is not a key performance measure for AUSTRAC, AUSTRAC is often

questioned on these results. Therefore, feedback from partner agencies regarding the results they have achieved is

important to AUSTRAC. It:

• assists to show that AUSTRAC's collection, analysis and

dissemination is successful;

• provides AUSTRAC with information regarding the extent

and nature of criminal activity being investigated by partner

agencies;

• helps to improve the financial intelligence products being

delivered to partner agencies;

• feeds into AUSTRAC's strategic intelligence program;


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• provides indicators to focus AUSTRAC's systems and processes for improvement;

• provides a basis for developing feedback to cash dealers and the public; and

• provides AUSTRAC with input into the international anti-money laundering and counter financing of terrorism

typologies exercises.

This year, bilateral work with partner agencies continued to ensure that AUSTRAC is able to receive valuable feedback

from them. Work has already begun on the upgrade to information technology systems so that the feedback received

from partner agencies can be better managed and analysed.

The feedback received this year was very positive. Partner agencies commented on the value that they are receiving

from FTR information. AUSTRAC needs to continue to work towards raising the awareness within partner agencies as

to why feedback about the use of FTR information is of vital importance.

Below is a sample of some of the feedback received from partner agencies on the usefulness of FTR information:

• 'FTR information played a prominent role in the trail of finances throughout the investigation';

• 'There were no other obvious indicators that would have been noticed by police and it was only when we

started looking at them after receiving SUSTRs from AUSTRAC that we were able to detect their activities';

• 'FTRs helped corroborate information obtained from the other sources';

• 'FTR information will further enhance our control activities to address the risks associated with customers

involved in more serious fraud'; and

• 'The results of a successful operation may not have been possible without the availability of AUSTRAC's FTR

information.'

Feedback received from partner agencies during the year indicated that FTR information was used in 2,224

investigations, of which 578 matters identified FTR information as being very valuable to investigation outcomes. In

addition, FTR information contributed to ATO assessments of more than $61.65 million during the year.

Strategic capabilities

AUSTRAC's newly created Strategic Analysis Unit undertook research on issues related to money laundering and the

financing of terrorism and worked in conjunction with international bodies - the Financial Action Task Force on Money

Laundering, the Egmont Group of Financial Intelligence Units, and the Asia/Pacific Group on Money Laundering. The

unit coordinated contributions by AUSTRAC to the development of strategic intelligence by partner agencies, and also

conducted post operational analysis of a number of major cases completed by partner agencies.

AUSTRAC has committed to developing a strategic analysis capability to look at a much wider range of criminal

activities including the financing of terrorism. Two projects that have commenced this year include the vulnerability of

the securities industry and the vulnerability of the diamond and precious gems industries to money laundering and the

financing of terrorism.


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Future priorities

The provision of FTR information and financial intelligence is an important component of AUSTRAC's work towards

achieving this output to target money laundering, the financing of terrorism and other serious crime. The provision of

assessments, access to TES and the support of partner agencies in their use of FTR information and intelligence will

continue to be a priority for AUSTRAC. In the next financial year, AUSTRAC will:

• continue to improve TES to ensure that partner agencies can get the maximum benefit from this system. This

will include providing new functionality to partner agencies that is currently being tested internally;

• incorporate the access and use of additional extrinsic data sources to further AUSTRAC’s analytical work;

• improve and maintain an effective and efficient system for the collation and retrieval of valuable feedback;

• continue to raise the awareness level within partner agencies as to why feedback regarding the use of FTR

information is of vital importance to AUSTRAC; and

• provide partner agencies with strategic analysis products on a range of criminal activities focusing on financial

intelligence.

A U S T R A C A N N U A L R E P O R T 2 0 0 4 - 0 5 : P R I M A R Y O U T P U T G R O U P T W O : P E R F O R M A N C E S U M M A R Y

P e r f o r m a n c e s u m m a r y

P r i m a r y O u t p u t G r o u p T w o

T a r g e t i n g m o n e y l a u n d e r i n g , s e r i o u s c r i m e a n d t a x e v a s i o n

This output refers to the use of FTR information by AUSTRAC and partner agencies in identifying financial activities

indicative of money laundering, serious crime and tax evasion. Through the provision of FTR information and financial

intelligence to partner agencies, AUSTRAC makes a valuable contribution to their intelligence holdings and

investigations into money laundering, the financing of terrorism, tax evasion and other serious crimes.



• Implementation and promotion to partner agencies of new data mining functionality, including text

mining and geocoding. This additional functionality has greatly improved AUSTRAC's analytical

work and provides more detailed and sophisticated financial intelligence assessments to partner

agencies.

• Enhanced support to partner agencies through the extension of AUSTRAC's successful onsite

support program.

• The number of SUSTRs AUSTRAC analysed and disseminated to partner agencies increased from

16,637 in 2003-04 to 22,497 in 2004-05 - an increase of 5,860 disseminations.

• Establishment of AUSTRAC's strategic analysis capability.

• An increase of 68.4 per cent in total TES activity by online users.


In the 2003-04 Annual Report, several future priorities were reported. These priorities are listed

below along with a summary of AUSTRAC's progress towards achieving them.

Enhancing the value of financial intelligence in support of national security operations

AUSTRAC presented to a number of Australian Security Intelligence Organisation (ASIO) forums on

AUSTRAC's work, and conducted a number of training sessions to key ASIO personnel on use of TES.

AUSTRAC also placed a dedicated staff member onsite at ASIO. Financial intelligence relating to

suspect financial activity with possible links to terrorism was also proactively identified and

disseminated.

Training of AUSTRAC and partner agency personnel in the use of advanced FTR analytical tools.

AUSTRAC conducted 112 presentations and 251 training sessions during the year for partner agency

personnel. Approximately 27 per cent of the presentations promoted AUSTRAC's data mining and

advanced search capabilities. As a result, the demand for analytical work has increased significantly.

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AUSTRAC also authorised a greater number of personnel within Centrelink and the New South Wales

Crime Commission access to AUSTRAC's summary management report searches.

Increasing the internal use of data mining technologies and other advanced FTR analytical tools

The use of data mining technologies at AUSTRAC has increased considerably in the analytical area

and also in its regulatory work. Data mining applications are now in routine use and providing valuable

insight into the financial data held by AUSTRAC.

Increasing onsite presence within partner agencies through further outposting of AUSTRAC personnel

and marketing FTR analytical assessments to key partner agency personnel

AUSTRAC personnel were outposted to a further six partner agencies' offices throughout Australia,

bringing to 17 the number of offices at which AUSTRAC personnel are located. This has resulted in

closer cooperation and an enhanced working relationship between AUSTRAC and its partner agencies

in the use of FTR information and financial intelligence.

Focusing on corporate fraud and AUSTRAC’s relationship with the Australian Securities and

Investments Commission (ASIC)

During the year AUSTRAC personnel were outposted to ASIC in Melbourne and Sydney. This enabled

AUSTRAC to work more closely with ASIC to gain a greater understanding of their needs and priorities

and to better target assistance to ASIC.

Collaborating with partner agencies in the development of their FTR information management systems

Senior personnel within partner agencies were consulted during the year to give AUSTRAC an

understanding of the issues they face in incorporating FTR information into their systems. This work will

continue in the next financial year. AUSTRAC also provided guidelines to its partner agencies on

storage and use of FTR information stored in their case management systems.

Primary Output 2.1 Dissemination of FTR information

This refers to the provision of FTR information to partner agencies by means of AUSTRAC's online enquiry

system, TES.

Quantity Performance Measure - number of access logons and disseminations

• There were 125,573 access logons by partner agencies this year.

• Partner agency personnel conducted 2,063,869 TES searches this year.


Quality Performance Measure - level of system availability

• TES had an availability of 99.3 per cent Monday to Friday and 94.1 per cent on weekends.

Primary Output 2.2 Value added FTR information through analysis

This refers to AUSTRAC's analysis of FTR information using analytical tools and other specialist resources

undertaken by AUSTRAC.

Quantity Performance Measure - number of matters value added and the number of matters taken up

by partner agencies.

• This year, 966 assessments were produced by AUSTRAC, of which 787 were disseminated to partner

agencies for use in their operations and investigations.

• 22,497 SUSTRs were disseminations to partner agencies.

Quality Performance Measure - feedback from partner agencies

• Of the 392 requests for FTR information for which feedback was received - 188 were used for

intelligence purposes, 167 were for current investigations, and 19 were for initiating new investigations.

• Of the 1,446 AUSTRAC-initiated disseminations of FTR information from which feedback was received

- 1,022 were of use for intelligence purposes, 283 were for investigative purposes and 141 were of no

interest.

Primary Output 2.3 Promotion of effective use of FTR information

This refers to the promotion of the value and use of FTR information to partner agencies.

Quantity Performance Measure -increase in the number of accessions to the system and the number

of support functions provided

• Total TES searches increased by 68.4 per cent over the previous year.

• 251 training sessions were provided to partner agency personnel.

Quality Performance Measure - Feedback from partner agencies

• Feedback from partner agencies details that FTR information was used in 2,224 investigations during

the year.

• FTR information contributed to ATO assessments of more than $61.65 million during the year.

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G r o u p T h r e e

Advice on the effectiveness of theFinancial Transaction Reports Act 1988

3

A U S T R A C A N N U A L R E P O R T 2 0 0 4 - 0 5 : P E R F O R M A N C E R E P O R T I N G : P R I M A R Y O U T P U T G R O U P T H R E E

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Primary Output Group Three

Advice on the effectiveness of the

Financial Transaction Reports Act 1988

Mission

To manage AUSTRAC's contribution to the development of government policy on Australia's anti-money

laundering and counter financing of terrorism framework and, by doing so, assist AUSTRAC to achieve best

practice outcomes in both its financial intelligence and regulatory roles

Introduction

As a result of changing international circumstances in money laundering and terrorism, including a growing

recognition of the increasingly sophisticated and widespread avenues for money laundering and terrorism financing,

there has been a significant strengthening of the global response to anti-money laundering and counter financing of

terrorism standards. In particular, over the last few years, the Financial Action Task Force on Money Laundering

(FATF) revised its 40 Recommendations and developed Nine Special Recommendations on Terrorist Financing. In

response to these developments, the Australian Government approved a review of its anti-money laundering and

counter financing of terrorism framework in December 2003. The Attorney-General's Department is managing the

review process. AUSTRAC worked closely with the Attorney-General's Department on the review and will continue to

do so next year.


• influence the development of government policy with the aim of ensuring an environment hostile to financial

crime and terrorism;

• build stronger relationships with cash dealers, Australian Government agencies, partner agencies and

industry sectors to encourage awareness and engagement in the process of developing a new anti-money

laundering and counter financing of terrorism framework; and

• manage AUSTRAC's participation in Australia's anti-money laundering and counter financing of terrorism

reform process to ensure the agency is able to effectively meet any new requirements.

Reviewing Australia's anti-money laundering and counter financing of terrorism framework

Over the past 12 months AUSTRAC has worked with the Attorney-General's Department in the review of Australia's

anti-money laundering and counter financing of terrorism framework. During 2005-06 AUSTRAC will continue to

contribute to policy development and consultations with industry on the application of the revised FATF 40

Recommendations and the Nine Special Recommendations in Australia. AUSTRAC has well established forums with

industry to continue this consultation, such as AUSTRAC's Provider and Gaming Advisory Groups and Privacy

Objective

Influence the development of government policy with the aim of ensuring an environment hostile to financial

crime and terrorism


4 4

Consultative Committee, and is involved in the work of the recently established Systems Working Group.

The review of Australia's anti-money laundering and counter financing of terrorism framework requires a collaborative

approach from a number of Australian Government agencies. During the year, AUSTRAC's role in this review

included:

• Influencing - providing input to the Attorney-General's Department on issues to be considered in the review of

Australia's anti-money laundering and counter financing of terrorism framework. AUSTRAC's domestic and

international experience in respect of money laundering and terrorism financing enabled AUSTRAC to provide

an operational perspective on potential changes to the framework.

• Reviewing - planning for possible change in the anti-money laundering and counter financing of terrorism

framework by preparing for AUSTRAC's transition. AUSTRAC established a small team in September 2004 to

assess the possible impact of compliance with the revised FATF recommendations. The team developed a

draft plan for AUSTRAC to implement changes resulting from the possible new framework. These include

possible changes to business systems and practices, information technology systems, policies such as

AUSTRAC's enforcement and compliance policies and organisational structure and workforce planning to

take account of new skills which may be needed by AUSTRAC personnel.

Building partnerships

Throughout the year AUSTRAC assisted in convening working groups through which relevant industry and

government agencies contributed to the review of Australia's anti-money laundering and counter financing of terrorism

framework. This was an important step in ensuring that not only is future legislation responsive to the need to reduce

money laundering and the financing of terrorism but that it is also balanced by a consideration of the potential effects

on industry.

AUSTRAC continued its participation on the Ministerial Advisory Group (MAG) during the year. This group provides a

forum for a range of industry, government and other stakeholders to provide comment and advice directly to the

Minister for Justice and Customs on key issues during the anti-money laundering and counter financing of terrorism

reform process. In June 2004, the MAG established a working group to closely examine key issues relating to the

proposed reforms.

The resultant Systems Working Group (SWG) on Implementation of Anti-Money Laundering Reforms first met in

September 2004. The group consists of representatives from the financial, gaming, legal, accounting and real estate

sectors. The Attorney-General's Department chairs the SWG, with AUSTRAC undertaking the secretariat function.

The SWG's main objective is to examine key implementation issues arising from the reform process. In particular, the

SWG provided advice to the Minister for Justice and Customs on current systems and methods for establishing and

verifying customer identity and ensuring compliance with Know Your Customer policies in each industry sector. During

the year, the working group met three times and submitted an interim report to the Minister for Justice and Customs

in February 2005.

Objective

Build stronger relationships with cash dealers, Australian Government agencies, partner agencies and

industry sectors to encourage awareness and engagement in the process of developing a new anti-money

laundering and counter financing of terrorism framework


AUSTRAC continued its work with other industry and government forums during the year. This work allowed

AUSTRAC to effectively and appropriately perform its function in accordance with the provisions of the Financial

Transaction Reports Act 1988 (FTR Act) and to provide input to development of government policy about the

effectiveness of the anti-money laundering and counter financing of terrorism framework.

These forums included the:

• Australian Bankers' Association Fraud Taskforce - as a member of this taskforce, AUSTRAC continued to

pursue issues relating to reducing fraud in the financial sector.

• Proof of Identity Steering Committee - AUSTRAC continued to chair this committee. During the year, the

committee provided input into the anti-money laundering and counter financing of terrorism reform process.

Research continued under a grant from the Australian Research Council to address issues relating to identity

fraud profiling, fraud control systems, cost analysis for managing identity fraud and crime control policy.

Government and industry members of the Committee are partners in providing funds for this research, which

will continue next year.

• Commonwealth Reference Group on Identity Security - the aim of this group is to develop a national identity

security strategy. During the year, the reference group established a number of working groups. AUSTRAC

chairs one of them - the Working Group on the Proof of Identity Framework, which is developing a common

framework for government proof of identity models. This work will contribute to improved customer

identification and verification processes under the anti-money laundering and counter financing of terrorism

framework.

Managing change to the anti-money laundering and counter financing of terrorism

framework

While a key focus for AUSTRAC this year was assisting in the anti-money laundering and counter financing of

terrorism reform process, AUSTRAC also thoroughly investigated possible changes to its future operations. As

Australia's anti-money laundering regulator, AUSTRAC will play a lead role in the implementation of any new

requirements. AUSTRAC's role as a financial intelligence unit in analysing and disseminating financial intelligence

may also be affected by changes.

During the year, a large number of projects were undertaken to determine the effects of any new requirements on

AUSTRAC and how to prepare for change.

These projects covered issues such as:

• potential size and characteristics of the future regulatory environment;

• personnel levels, skills and training required to implement planned changes;

• organisational structure to be effective in the new environment;

• requirements for education and awareness campaigns; and

• potential changes to AUSTRAC's existing business and information technology processes and systems

including written material, publications and procedures.

Objective

Manage AUSTRAC's participation in Australia's anti-money laundering and counter financing of terrorism

reform process to ensure the agency is able to effectively meet any new requirements

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Financial Action Task Force on Money Laundering and Asia/Pacific Group on Money

Laundering mutual evaluation

The Financial Action Task Force on Money Laundering (FATF) sets international standards for creating environments

hostile to money laundering and the financing of terrorism and measures compliance against these standards. These

standards are comprised of the 40 Recommendations on Money Laundering and Nine Special Recommendations on

Terrorist Financing.

The FATF monitors the implementation of the Recommendations and assesses the effectiveness of the anti-money

laundering and counter financing of terrorism

systems in FATF member jurisdictions through

the process of mutual evaluation using the

Methodology for Assessing Compliance with

FATF Recommendations. The evaluation of

Australia, jointly conducted by the FATF and

Asia/Pacific Group on Money Laundering

(APG), commenced in November 2004.

AUSTRAC made a significant contribution to

this process by providing documentation,

answering questionnaires and providing other

information to the evaluation team. The results

of this evaluation will be finalised by FATF in

2005, with the report expected to be considered at the FATF Plenary meeting in October 2005.

Monitoring technological changes in the financial and gaming sectors

As part of the work to review Australia's anti-money laundering and counter financing of terrorism framework and to

ensure that AUSTRAC's enabling legislation, the FTR Act, remains relevant, analysis of the effects of technical

changes on AUSTRAC's operations continued to be undertaken. Electronic commerce is particularly relevant and

therefore continued to be a focus this year. The Action Group into the Law Enforcement Implications of Electronic

Commerce (AGEC) was the forum through which AUSTRAC continued to explore the effects of electronic commerce

and technological developments on the Government's revenue, regulatory and criminal law enforcement programs.

AUSTRAC chairs AGEC and its members include representatives from all Heads of Commonwealth Operational Law

Enforcement Agencies (HOCOLEA) members. A list of AGEC representatives is on page 125.

AUSTRAC continued its work through the four AGEC focus groups which met four times during the year.

FATF/APG Mutual Evaluation of Australia onsite visit, March 2005


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Financial Sector Focus Group - this group contributed to the anti-money laundering and counter financing of

terrorism reform process and undertook specific work in relation to new electronic payment systems.

Investigative Methodology Focus Group - this group conducted a survey on computer forensic training needs

across member agencies. They also conducted a survey of prosecutors from the Commonwealth Director of Public

Prosecutions on electronic evidence experience and training needs. The results of these surveys will be used next

year to establish best practice electronic investigation methods.

Legal and Procedural Focus Group - this group undertook extensive work during the year to produce law reform

business cases, which were provided to the Department of the Treasury and the Attorney-General's Department for

consideration.

Technical Developments Focus Group - this group finalised the input by member agencies into a technical issues

matrix. They also completed a number of issues papers about those issues which the matrix revealed as having a

significant effect on law enforcement and revenue agency operations.

In addition to the work of the focus groups, AGEC undertook a number of consultancy projects during the year. These

included:

• providing extensive assistance to the Department of Communications, Information Technology and the Arts in

its legislative review of spyware;

• maintaining AGEC's external profile in appropriate forums, including the Information Technology Security

Experts Advisory Group and the Authentication Working Group. An AGEC representative also presented a

paper to the Australian Taxation Office's Forensic Computing Workshop; and

• providing a submission to the 'Review of Access to Communications under the Telecommunications

(Interception) Act 1979'.

F u t u r e p r i o r i t i e s

AUSTRAC will continue to contribute to the review of the anti-money laundering and counter financing of terrorism

framework. This future work will include:

• extensive consultation with other government agencies and with industry;

• work on assessing the effect of any new legislation on AUSTRAC;

• providing guidance to industry and partner agencies as appropriate; and

• contributing through various forums to the development of a national identity security strategy and of

improved mechanisms for proof of identity.

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Performance summary

Primary Output Group Three

Advice on the effectiveness of the FTR Act

This output refers to the work undertaken to ensure that the anti-money laundering and counter financing of terrorism

framework remains effective in the face of rapid change in both the financial services sector and the wider information

economy.



• Contributing to the FATF/APG mutual evaluation which assessed the effectiveness of Australia's

anti-money laundering and counter financing of terrorism systems. This evaluation required

significant input from AUSTRAC in responding to questionnaires, providing information to the

evaluation team and participating in meetings with the evaluation team. The results of this

evaluation are expected to be available in October 2005.

• AUSTRAC provided input to the review of Australia's anti-money laundering and counter financing

of terrorism framework.




Planning to address the issues involved in implementing the new anti-money laundering and counter

financing of terrorism framework

This work is ongoing and will remain a priority for AUSTRAC for a number of years. This year,

AUSTRAC worked towards achieving this objective through the establishment of internal planning

mechanisms and undertaking projects to assess the possible effects of any new framework on

AUSTRAC.

Expansion of AUSTRAC's internal Anti-Money Laundering Reform Team as the form of the new anti-

money laundering and counter financing of terrorism framework develops

The role and work of AUSTRAC's Anti-Money Laundering Reform Team grew this year. To reflect the

significance of the issue, a Deputy Director, Anti-Money Laundering Reform was appointed. In

addition, an outposted officer from the Australian Government Solicitor worked within the team for a

period during the year to provide expert advice. The team's primary focus was on the effects on

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AUSTRAC of possible changes to the anti-money laundering and counter financing of terrorism

framework, both in practical and legislative terms. Through this work, a number of significant issues

for AUSTRAC were identified.

Provision of information and advice to the Attorney-General's Department

During the year AUSTRAC provided significant input to the anti-money laundering and counter

financing of terrorism review. AUSTRAC also participated on numerous committees to provide input

into the reform process. This will continue to be a priority for AUSTRAC next year.

Continuing AGEC's work on new and emerging technology to ensure that Australia's anti-money

laundering legislation remains relevant and practical

AGEC continued its work during the year. The focus groups undertook surveys, provided input and

submissions on legislative reviews and completed a computer forensic training needs analysis for

member agencies. Its technological issues matrix provides an important reference for agencies in

assessing the risks relating to new technologies. The matrix will continue to be updated as new

technologies emerge or as agencies perceive new risks.

Provision of advice to the Australian Government's national security agenda, particularly on issues

associated with the financing of terrorism

AUSTRAC's work on providing advice in relation to the national security agenda continued this year.

AUSTRAC provided input and advice through participation on a number of interdepartmental

committees and working groups.

Importantly, AUSTRAC also strengthened its relationship with and provided advice directly to the

Department of Foreign Affairs and Trade and Australia's national security agencies on issues related

to the financing of terrorism.

Involvement with proof of identity issues within government and industry, particularly in customer

identification programs

As chair of the Commonwealth Reference Group on Identity Security's Working Group on the Proof

of Identity Framework, AUSTRAC commenced work on a common framework for proof of identity

models within government. This work will be completed next year.

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Quantity Performance Measure - number of issues identified and advised

• The focus of AUSTRAC's work under Primary Output Group 3 was to provide advice on the review of

Australia's anti-money laundering and counter financing of terrorism framework. Through this work

AUSTRAC produced 63 internal papers, as well as one submission to the Minister for Justice and

Customs; and provided seven papers to the Attorney-General's Department relating to issues arising

from this review. Several informal meetings and liaison activities to identify issues of concern and

determine solutions also were held. AUSTRAC attended one meeting of the Ministerial Advisory Group

and attended and provided support to three meetings of the Systems Working Group. Additional

support was also provided to the Systems Working Group in the preparation of its interim report to the

Minister for Justice and Customs.

• AUSTRAC provided both formal and informal input into a range of forums that deal with national

security, counter-terrorism, identity fraud and crime prevention. These forums include

interdepartmental committees and working groups, Australian Government initiatives, inter-

governmental liaison meetings and a range of Australian Government operational agency forums.

Quality Performance Measure - significance of issues and response to issues advised upon

• The FATF/APG mutual evaluation of Australia's anti-money laundering and counter financing of

terrorism framework and the work to review that framework were critical in the process to improve

Australia's anti-money and counter financing of terrorism laundering framework. The input that

AUSTRAC had into this event has been vital in the review of that framework.

• AUSTRAC provided timely advice to the Australian Government through its contributions to

interdepartmental committees, working groups and project teams. AUSTRAC provided advice on its

mission and operations, domestic and international counter-terrorism policy and legislation, identity

fraud, international conventions and coordination of legal services.

Involvement in all of these committees allowed AUSTRAC to effectively highlight the role of financial

intelligence and anti-money laundering and counter financing of terrorism legislation in contributing to

the whole-of-government efforts to combat the threats to Australia's security and financial systems.

The committees and working groups in which AUSTRAC was involved during 2004-05 are listed at

Appendix C.

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G r o u p F o u r

Contribution to international effortsdirected at the suppression ofmoney laundering, major crime andtax evasion

4

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Primary Output Group Four

Contribution to international efforts directed at the suppression of money laundering, major

crime and tax evasion

Mission

To advance international efforts to make the financial environment increasingly hostile to money laundering,

the financing of terrorism, other major crime and tax evasion

Introduction

Contributing to international initiatives is integral to AUSTRAC's work to combat money laundering, the financing of

terrorism and other major crimes. As the financial market becomes more complex and global it is vital that AUSTRAC

continues to play a role in international organisations and liaise with financial intelligence units (FIUs) to share

information and intelligence. Work in the international arena increased dramatically this year as AUSTRAC expanded

its international role to include the provision of more specialised technical assistance and training to developing FIUs.

AUSTRAC's international efforts this year have focused on three main areas: negotiating instruments for the

exchange of financial intelligence; exchanging ideas and best practice solutions; and providing assistance and

training. The technical assistance and training program is aimed at strengthening the capacity of FIUs to track

financial activity through domestic and international financial markets and to develop effective anti-money laundering

systems.


• contribute to establishing a global network of FIUs with a particular emphasis on the South East Asia and

Pacific regions;

• support international programs on anti-money laundering and counter financing of terrorism; and

• contribute to improving South East Asian and Pacific FIUs' capacity to detect and act on possible cases of the

financing of terrorism.

Creation of a global network of financial intelligence units

A large component of AUSTRAC's international success is its capacity to share information and ideas with

international counterparts. This is achieved through creating agreements with other FIUs for the bilateral exchange of

financial intelligence; and participation in international bodies where common issues are discussed and ideas are

shared between FIUs.

International exchange of financial intelligence

Negotiating exchange instruments with international counterparts is a vital component of AUSTRAC's international

efforts. These instruments outline the terms under which financial intelligence can be exchanged between the two

jurisdictions, and typically take the form of a Memorandum of Understanding. This year AUSTRAC entered into six

Objective

Contribute to establishing a global network of FIUs with a particular emphasis on the South East Asia and

Pacific regions


Argentina

Bahamas

Belgium

Bermuda

Brazil

Bulgaria

Canada

Chile

Colombia

Cook Islands

Croatia

Cyprus

Denmark

Estonia

France

Guernsey

Indonesia

Ireland

Isle of Man

Israel

Italy

Lebanon

Malaysia

Mauritius

Netherlands

New Zealand

Panama

Poland

Portugal

Republic of Korea

Romania

Singapore

Slovakia

Slovenia

South Africa

Spain

Thailand

United Kingdom

United States of America

Vanuatu

Venezuela

new exchange instruments with FIUs from Bermuda, Brazil,

Bulgaria, Chile, Panama, and Romania. A further three exchange

instruments are presently being negotiated with countries in the

Asia Pacific region. This brings the number of exchange

instruments to 41, as set out below:

Jurisdictions with which AUSTRAC has negotiated

exchange instruments for financial transaction reports

information

Through these exchange instruments AUSTRAC is able to receive financial

intelligence from, and provide financial intelligence to, these jurisdictions. The

financial intelligence exchanged has proved beneficial to the operational work

undertaken in Australia and by FIUs and law enforcement agencies within these

jurisdictions. AUSTRAC's ability to follow the money trail across international

boundaries has proved to be successful in preventing the use of international

banking, gaming and other sectors to launder funds and hide the proceeds of

crime. Through these exchange instruments, AUSTRAC is able to disseminate

financial transaction intelligence and information to overseas FIUs either on

request or as a spontaneous referral. Predominantly, requests are made to

AUSTRAC by FIUs for financial intelligence; however, several requests for general

information exchanges also were received this year. These information exchanges

related to the gathering of information about technology, procedures and

strategies to enable FIUs to adopt best practice solutions.

This year, there was a large increase in the number of intelligence exchange

requests received by AUSTRAC from overseas FIUs. The feedback received from

FIUs has highlighted the value they get from these intelligence exchanges.

Some of the comments AUSTRAC received were:

• 'This report was outstanding and was the best work product I have seen

of this type of report.'

• 'It confirmed a lot of suspicions and pointed us in the right direction

beyond Australia. It actually made our picture even higher from a global

perspective.'

• 'We were very happy with the help and cooperation provided by

AUSTRAC.'

• 'Your unit should be proud of the product you produce. The agent was

very pleased with the results and the format in which the report was

organised.'

Objective

Support international programs on anti-money laundering and counter

financing of terrorism

Bulgarian MOU Signing, Vasil Kirov (Head of BulgarianFinancial Intelligence Agency) and AUSTRAC Director,Neil Jensen

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2003-04 2004-05

Requests to overseas FIUs 33 27

Requests from overseas FIUs 45 77

Outgoing spontaneous exchanges 20 24

Incoming spontaneous exchanges 16 11

Intelligence exchanges 2003-2005

Participation in international organisations

Numerous international organisations aim to bring countries together to discuss issues surrounding money laundering,

the financing of terrorism and other major crimes and to ensure that global standards are met by all jurisdictions. The

three primary organisations in which AUSTRAC participates are the Financial Action Task Force on Money Laundering

(FATF), the Asia/Pacific Group on Money Laundering (APG) and the Egmont Group of Financial Intelligence Units

(Egmont Group).

Financial Action Task Force on Money Laundering

AUSTRAC continued to participate in Australia's delegation to the FATF. The FATF is an inter-governmental body

whose purpose is the development and promotion of national and international policies and standards to combat

money laundering and the financing of terrorism. The FATF's 40 Recommendations on Money Laundering and Nine

Special Recommendations on Terrorist Financing set the international standard for implementation throughout the

world. Throughout the year, AUSTRAC attended three FATF Plenary Meetings and Working Group Meetings in July

2004 and February and June, 2005; and attended the FATF Typologies Workshop in Russia in November 2004.

Asia/Pacific Group on Money Laundering

AUSTRAC has taken responsibility as head of Australia's delegation to the APG this year. The APG comprises 29

member jurisdictions and 25 observer jurisdictions and organisations. The purpose of the APG is to facilitate the

implementation of international standards against money laundering and the financing of terrorism, in particular the

FATF 40 Recommendations on Money Laundering and Nine Special Recommendations on Terrorist Financing. The

APG assists jurisdictions to enact anti-money laundering systems, often through the identification of technical

assistance requirements. During 2004-05 the APG held a joint meeting with the FATF in Singapore in June 2005. At

this meeting, the challenges to implementation of the 40 Recommendations on Money Laundering and Nine Special

Recommendations on Terrorist Financing were discussed. APG members provided feedback on the FATF's Non-

Cooperative Countries and Territories initiative. During the year, AUSTRAC contributed to the APG Annual Meeting

and Typologies workshop. AUSTRAC also participates in the APG Typologies working group, which is currently

developing typologies specific to Alternative Remittance Systems, Corruption, Wire Transfers and Charities.

AUSTRAC, as a recipient of large volumes of international funds transfer instructions, is involved in the development

of APG Wire Transfers Typologies.

Egmont Group of Financial Intelligence Units

AUSTRAC is an active member of the Egmont Group, the international body of FIUs committed to developing and

promoting best practice for the operational and information sharing capacity of FIUs around the world. Currently, the

Egmont Group comprises 101 FIUs. The Director of AUSTRAC continued to play a role in this group, as the Co-Vice

Chair of the Egmont Committee, Oceania regional representative and in June 2005 was appointed Chair of the


Egmont Training Working Group. AUSTRAC also participated in the Outreach, Information Technology, Operational

and Legal working groups. This year's Egmont Group plenary meeting was hosted by the United States FIU, the

Financial Crimes Enforcement Network, in Washington DC, in June 2005.

International visitors

AUSTRAC continued to develop its international visit and attachment program during the year. These visits are an

opportunity for overseas FIUs to learn about AUSTRAC's systems and procedures and also share their knowledge

and expertise. International attachments were a new component of the visit program this year. The benefits of these

attachments are that personnel from overseas FIUs are able to observe AUSTRAC at work, participate in simulated

activities where possible and appropriate, and consequently acquire more detailed knowledge of AUSTRAC and its

work.

Special Investigations Commision, Lebanon

Anti Money Laundering Office, Thailand

• Cambodia

• Canada ( 5 visits )

• Chile

• China (1 attachment, 2 visits )

• Cyprus

• Hong Kong

• Indonesia ( 2 attachments )

• Italy

• Japan ( 2 visits )

• Lebanon

• Malaysia

• Philippines

• Republic of Korea ( 2 visits )

• Russia

• South Africa ( 2 visits )

• Thailand ( 2 attachments )

• United States of America

• Vanuatu

AUSTRAC hosted visits from the following regional

bodies :

• World Bank

• KPMG International Forensic Training

• United Nations

• ASEAN Secretariat

During the year, AUSTRAC hosted visits and attachments from the following countries:

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Building effective global anti-money laundering systems

In order to be effective in creating a global environment hostile to money laundering, the financing of terrorism and

other major crime, it is important that individual countries have anti-money laundering and counter financing of

terrorism systems that meet global standards. To meet those global standards, FIUs are being developed. AUSTRAC,

as one of the world's first FIUs, plays a major role in assisting these new FIUs in developing their capacity to meet the

global standards. AUSTRAC has worked closely with one of our longstanding partners the Canadian FIU, FINTRAC,

which has benefited from AUSTRAC's information technology expertise. FINTRAC has studied AUSTRAC’s software

to support development of FINTRAC's next generation of information technology applications. Once completed, these

changes will strengthen the Canadian reporting and analysis of the information they receive. However, AUSTRAC's

efforts continue to be primarily focused on the South East Asian and Pacific regions.

Australia-Indonesia Financial Intelligence Unit Cooperation Project

The Australia-Indonesia Financial Intelligence Unit Cooperation Project was a two-year project aimed to assist

Indonesia in their development of an effective FIU. This project was completed in November 2004. AUSTRAC, along

with other Australian Government agencies and anti-money laundering experts, assisted the Indonesian FIU to

develop and implement procedures and technological solutions for receiving, analysing and disseminating financial

transaction reports. The success of this project is shown by the progress the Indonesian FIU has made in establishing

an effective regime to counter money laundering and the financing of terrorism.

Mentoring program

As part of its technical assistance and training program, AUSTRAC began work

with the ten member countries of the Association of South East Asian Nations

(ASEAN) to develop their FIUs. AUSTRAC's efforts are focused on working with

these countries to develop their capacity to create effective anti-money laundering

and counter financing of terrorism systems. These nations are:

• Brunei Darussalam

• Cambodia

• Indonesia

• Lao People's Democratic Republic

• Malaysia

AUSTRAC's mentoring assistance involved general assistance and customised assistance. The general assistance

was mainly in the form of awareness sessions which covered topics relating to the functions, purpose, structure and

goals of an FIU.

Objective

Contribute to improving South East Asian and Pacific FIUs' capacity to detect and act on possible cases of

the financing of terrorism

• Myanmar

• Philippines

• Singapore

• Thailand

• Vietnam


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An example was the awareness raising program undertaken in Laos which was attended by government officials and

banking executives. This session highlighted the global issues surrounding money laundering, the financing of

terrorism and the need for anti-money laundering systems to be developed.

The customised mentoring assistance that AUSTRAC conducted this year provided guidance on the establishment of

FIUs and offering technological solutions to help these countries develop their anti-money laundering and counter

financing of terrorism systems.

It is through this mentoring work, both general and customised, that AUSTRAC has been able to build a foundation of

strong relationships with these countries which will support the ongoing technical assistance AUSTRAC will provide in

the region.

Other technical assistance and training programs

In December 2004, AUSTRAC provided a training officer to work in the Jakarta Centre for Law Enforcement

Cooperation, an initiative being led by the Australian Federal Police. The officer took part in training law enforcement

personnel from the region in the collection and analysis of financial intelligence for use in investigations.

The Pacific Islands FIU Database Project commenced in late 2004 and provided assistance to Cook Islands, Fiji,

Marshall Islands, Palau, Samoa, Tonga and Vanuatu. Phase one of this project was completed. In this phase,

AUSTRAC undertook an information technology needs assessment which identified the technical assistance work

required by the countries. AUSTRAC will complete the second and third phases of this project, the provision of

technology to these countries and the training of FIU personnel in the use of such technology, by the end of 2005.

Future priorities

AUSTRAC's international work will continue to be an important

aspect in the global fight against the financing of terrorism and

money laundering. AUSTRAC will continue its work in the next year

to increase the number of FIUs with which intelligence and

information can be exchanged. The technical assistance program

also will expand. The specific priorities for the next year include:

• increasing the number of exchange instruments with

international counterparts;

• implementing programs to liaise with international

regulators to share information and investigate

standardising regulatory frameworks;

• developing and distributing technology solutions and procedures for new FIUs to use for collecting and

analysing financial transaction reports;

• developing workshops in ASEAN countries to raise awareness of anti-money laundering and counter

financing of terrorism standards and the operations of FIUs; and

• realign the international visit program to incorporate more visits by operations personnel from FIUs.

AUSTRAC International team

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Performance summary

Primary Output Group Four

Contribution to international efforts directed at the suppression of money laundering,

serious crime and tax evasion

This output refers to the role AUSTRAC plays internationally to strengthen Australia’s anti-money laundering and

counter financing of terrorism program. It includes the fostering of bilateral and multilateral relationships between

Australia and overseas FIUs to exchange ideas and intelligence. It also includes activities associated with the

provision of technical assistance and training to counterpart organisations.



• Exchange instruments were signed with six FIUs, bringing to 41 the number of jurisdictions with

which AUSTRAC can exchange financial intelligence;

• Completing the Australia-Indonesia Financial Intelligence Unit Cooperation Project. Through the

work of AUSTRAC and other agencies on this project, the Indonesian FIU received international

recognition for the implementation and enhancement of its anti-money laundering and counter

financing of terrorism systems and processes.

• Commencement of AUSTRAC's mentoring program offering assistance to ASEAN nations in the

development of their domestic FIUs.




Increasing the number of exchange instruments with international counterparts

Six new exchange instruments were signed this year - Bermuda, Brazil, Bulgaria, Chile, Panama and

Romania.

Responding to requests for information, hosting visits from international delegations and working

within multilateral anti-money laundering and counter financing of terrorism forums.

This priority was achieved this year. There was a 17 per cent increase in the number of exchanges

of financial intelligence and information between AUSTRAC and its international counterparts. The

international visit program grew, with an increased number of attachments occurring during the year,

which resulted in shared advantages for both AUSTRAC and the visiting FIU. AUSTRAC also

continued to participate in international forums including the Financial Action Task Force of Money

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Laundering, Asia/Pacific Group on Money Laundering and the Egmont Group of Financial

Intelligence Units.

Establishing a technical and information technology assistance program directed at developing FIUs

in South East Asia

AUSTRAC extended its technical assistance and training team. This team was effective in helping

establish and develop FIUs in the South East Asian region. The assistance provided during the year

included mentoring the development of anti-money laundering and counter financing of terrorism

programs, providing awareness and training sessions to highlight issues relating to the global

standards and the functions of an FIU, and providing technology advice and expertise to facilitate

the development of technology solutions for FIUs.

Quantity Performance Measure - number and extent of issues identified

• AUSTRAC participated in 19 meetings of international bodies including five meetings of the Egmont

Group of FIUs, four meetings of the Financial Action Task Force and two meetings of the Asia/Pacific

Group on Money Laundering.

• Six new international exchange instruments were signed during the year.

• Thirty-three delegations visited AUSTRAC during the year. Of these, 28 were visits and five were

attachments.

• AUSTRAC received 77 requests for information from international FIUs (a 71 per cent increase over

2003-04), made 27 requests to other FIUs (an 18 per cent decrease) and made 24 spontaneous

disseminations of information to FIUs (a 20 per cent increase). AUSTRAC also received 11

spontaneous disclosures of financial intelligence (a 31 per cent decrease).

Quality Performance Measure - significance of issues and response to issues

• AUSTRAC made a significant contribution to the leadership of the Egmont Group of FIUs. The

Director of AUSTRAC continued his role as Co-Vice Chair of the Egmont Committee, Oceania

Regional representative and was appointed Chair of the Egmont Training Working Group. AUSTRAC

also participated in the Outreach, Information Technology, Operational and Legal working groups.

• The establishment of further information exchange relationships enabled AUSTRAC to undertake more

spontaneous disseminations of information to FIUs. This exchange of intelligence and information is

vital in building a global network to fight money laundering and the financing of terrorism.

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G r o u p F i v e

Privacy and security

5

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Primary Output Group Five


Mission

To maintain a secure environment which supports and protects AUSTRAC's personnel, information and

resources

Introduction

AUSTRAC continued to maintain high security and privacy standards for its information, resources and personnel.

AUSTRAC's security and privacy programs apply to the collection, maintenance and dissemination of financial

transaction reports information and other functions that AUSTRAC carries out under the Financial Transaction Reports

Act 1988. During the year, the Government responded to the changing security environment by releasing revised

policies and procedures. Consequently, AUSTRAC reviewed and improved its security and privacy standards to meet

these new standards. This year AUSTRAC undertook a number of projects to evaluate the security environment and

implement improved procedures.


• create and maintain a physical environment that protects AUSTRAC and onsite partner agency personnel and

members of the public, AUSTRAC business functions and associated official resources;

• ensure all AUSTRAC personnel are suitable to have access to official information and resources and

understand their protective security responsibilities;

• revise current information technology policy framework, with the update to be consistent with the new

Australian Government Information and Communications Technology Security Manual;

• revise current information technology policies and architecture relating to the AUSTRAC gateway environment

to ensure compliance with the new Defence Signals Directorate (DSD) Gateway Certification Guide;

• revise and update the AUSTRAC Information Technology Training and Awareness program; and

• ensure compliance with the provisions of the Privacy Act 1988 and the web publishing guidelines.

Ensuring the security of AUSTRAC resources

AUSTRAC's security program is committed to achieving better practice in safeguarding its information, assets and

personnel.

In AUSTRAC's 2003-04 Annual Report it was reported that a Protective Security Risk Review had been undertaken.

This review identified the risks facing AUSTRAC and highlighted treatment options to be addressed.

Objective

Create and maintain a physical environment that protects AUSTRAC and onsite partner agency personnel

and members of the public, AUSTRAC business functions and associated official resources


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This year, AUSTRAC reviewed the treatment options that were recommended in that review and took appropriate

action to reduce risks. In addition, the 2004-05 site security plan was finalised. This operational plan, based on security

risk assessment work, identifies and directs the delivery of protective security strategies, priorities and activities and is

the basis for AUSTRAC's compliance with security legislation, policy, and guidelines. It ensures that the security of

AUSTRAC is maintained.

Through the continuous monitoring and revision of procedures, AUSTRAC is able to maintain a security environment

that safeguards information and protects personnel and assets. No significant security breaches or incidents were

reported during the year.

The importance of educating personnel in their security obligations and ensuring they have the appropriate security

clearance is paramount to a successful security program. AUSTRAC's security clearance program involves processing

security clearances for new personnel and re-validating existing clearances (periodic appraisal). During the year, 80

security clearances were granted and 28 periodic appraisals were conducted.

Education and training is fundamental in ensuring that personnel understand and meet their security responsibilities.

This year, AUSTRAC formalised its induction program, and protective security awareness training was incorporated

into this program. Consequently, all new personnel attended protective security training this year and their

understanding of their responsibilities was measured through responses to questionnaires. Six protective security

awareness sessions were conducted over the year, with 61 personnel completing the training. The results of the

questionnaire exercise showed that there was a 95 per cent level of understanding, indicating that AUSTRAC's

security culture will continue to be of a high standard. AUSTRAC's security awareness training program is part of its

defence-in-depth approach to security risk management.

Objective

Ensure all AUSTRAC personnel are suitable to have access to official information and resources and

understand their protective security responsibilities

Staff induction, August 2004


Ensuring the security of AUSTRAC's data

To ensure the confidentiality, integrity and availability of its data, AUSTRAC continued its focus on information

technology solutions to mange the security of the data.

This year, the Defence Signals Directorate released an updated version of the Australian Government Information and

Communications Technology Security Manual. All information technology projects undertaken by AUSTRAC are

designed to comply with the manual. A benchmarking exercise was conducted to ensure that all existing policies and

systems remain compliant with the updated version. This objective was successfully achieved with the policy

framework and systems being updated or adapted to meet the changes in the new manual.

AUSTRAC places heavy reliance on its information technology infrastructure. A

major part of this infrastructure is the AUSTRAC gateway environment. This year

AUSTRAC made major updates to technology used within this environment. In

addition, the entire supporting policy framework was rewritten. AUSTRAC

subsequently sought recertification of this environment by a DSD registered

assessor, AnswerZ Pty Ltd. The certification was granted in April 2005. This

certification contributes to AUSTRAC's governance program and provided an

independent verification of the high level of AUSTRAC's information technology

security.

AUSTRAC's rapid growth as well as the changing threat environment means that awareness and vigilance by its

personnel remains one of its key defences. As with protective security, training is an important component in the

successful management of the security of AUSTRAC's electronic data. This year a new Information Training and

Awareness Plan was developed. This plan included updates to the induction process and the introduction of various

awareness techniques such as briefings to AUSTRAC management and business unit meetings; and information

technology help desk notifications of security issues. This year, all new personnel completed the updated training.

Objective

Revise the existing information technology policy framework, with the update to be consistent with the new

Australian Government Information and Communications Technology Security Manual

Objective

Revise the existing information technology policies and architecture relating to the AUSTRAC gateway

environment to ensure compliance with the updated Defence Signals Directorate (DSD) Gateway

Certification Guide

Objective

Revise and update the AUSTRAC Information Technology Training and Awareness program

6 5


6 6

Ensuring privacy

AUSTRAC's role requires the collection of personal information predominately from financial transaction reports.

AUSTRAC recognises its obligation to protect the personal information collected. The strategies for maintaining a high

level of compliance with privacy legislation and guidelines include: ensuring that all AUSTRAC personnel undertake

training and are aware of their privacy obligations; facilitating internal and external consultation to ensure privacy

compliance when new procedures are introduced; and conducting regular internal reviews and audits.

During the financial year, AUSTRAC evaluated its compliance with the Privacy Act 1988 and the web publishing

guidelines developed by the Office of the Privacy Commissioner. All recommendations arising from this audit have

been addressed, and compliance with these requirements was achieved. AUSTRAC also conducted privacy audits on

all forms within AUSTRAC used to collect personal information from AUSTRAC personnel. The recommendations

from this audit have been addressed which has ensured that AUSTRAC remains compliant with the Privacy Act, for

both internal and external collection of information.

Privacy training sessions were conducted for all new personnel, with 55 personnel attending this training during the

year. AUSTRAC personnel achieved an 89 per cent level of understanding based on responses to a questionnaire

concerning their privacy obligations.

AUSTRAC's Privacy Consultative Committee includes representatives from AUSTRAC, partner agencies, civil liberties

groups and privacy groups. A list of its members is on page 125. This committee advises the Director of AUSTRAC on

privacy and civil liberties issues related to AUSTRAC's functions and activities. At the request of the committee

members no formal meetings were held during the year, the committee members reviewed all new AUSTRAC

Information Circulars to ensure that all privacy concerns were addressed.

There were no AUSTRAC privacy breaches during the year.

Future priorities

AUSTRAC will continue its work to maintain high standards of security and privacy of its information, assets and

personnel.

The objectives for the next financial year include:

• revising the existing security policy against the new Australian Government Protective Security Manual;

• developing electronic learning capability for security refresher training for all AUSTRAC personnel; and

• maintaining the currency of the Security Handbook.

Objective

Ensure compliance with the provisions of the Privacy Act 1988 and web publishing guidelines


Performance summary

Primary Output Group Five


This output refers to the central place of privacy and security in AUSTRAC's information collection, storage and

dissemination role.



• A review and update of the policy framework and architecture for the AUSTRAC gateway

environment, and subsequent re-certification. This provided an independent verification of

components of AUSTRAC's information technology security.

• Finalisation of AUSTRAC's site security plan.

• Formalisation of a Security Incident Policy.




Completion of the approved treatment options arising from the protective security risk review

AUSTRAC reviewed and actioned all treatment options that arose from the protective security risk

review.

Ongoing security and privacy awareness training

Sixty-one personnel received protective security awareness training, 42 personnel attended

information technology security training and 55 personnel attended privacy awareness training.

These programs will continue.

Revising the existing security policy against the new Australian Government Protective Security

Manual

The Attorney-General's Department did not release the new Australian Government Protective

Security Manual during the financial year. This priority will be carried over into 2005-06. However,

AUSTRAC's Security Policy was reviewed against the Australian Government Protective Security

Manual 2000.

6 7

Conducting privacy audits

Two privacy audits were conducted on the AUSTRAC website to gauge compliance with the

provisions of the Privacy Act and the web publishing guidelines. An audit of AUSTRAC forms was

also conducted.

Updating AUSTRAC's Security Handbook

Work began on revising the AUSTRAC Security Handbook during the year. This revision will be

finalised and a copy of the handbook distributed to all personnel early next year.

Revise AUSTRAC's information technology security policy to conform to changes in the Australian

Government Information Technology Security Manual (ACSI33)

In April 2005 AUSTRAC systems, policies and procedures received DSD Gateway Certification.

Quantity Performance Measure - number of significant issues and incidents identified and

addressed

• No serious security incidents occurred.

• No privacy complaints were received.

Quality Performance Measure - significance of risks identified, effectiveness of security

safeguards, level of compliance with government guidelines and extent to which AUSTRAC

adopts a security culture

• All approved treatment options identified in the Protective Security Risk Review were actioned.

• AUSTRAC's gateway policy framework and architecture was audited by a DSD registered assessor

and subsequently certified.

• The protective security program is compliant with the requirements of the Australian Government

Protective Security Manual.

• The security culture of the agency remains in place. The induction training incorporating protective

security, information technology security and privacy awareness training, has played a key role in

establishing a security culture. The responses to questionnaires during the training indicate that new

personnel achieved a good level of understanding of security and privacy requirements.

• AUSTRAC is compliant with legislation and guidelines relevant to privacy.

6 8


E n a b l i n g O u t p u t s


Corporate services

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Enabling Output


Introduction

The development of innovative information technology solutions has been a key component of AUSTRAC's work

since its inception. This, combined with the provision of information technology support for internal and external

stakeholders, has enabled AUSTRAC to achieve its outcome in an effective and efficient way. Information technology

is used to ensure increasing efficiencies in the way financial transaction reports information is collected, analysed,

stored and disseminated.

This year, the requirement for continuing improvement to

the functionality of AUSTRAC's systems was highlighted

through the increased volume and use of its financial

transaction reports data. There has been a 68.4 per cent

increase in the number of searches conducted by

partner agency personnel, and a 16.7 per cent increase

in financial transaction reports received by AUSTRAC.

These factors combined with an increase in the number

of AUSTRAC personnel and the addition of more

personnel working off-site has required a proactive

approach to the development and support of information

technology solutions. In addition, AUSTRAC's increased international technical assistance role has added to the need

for this approach.

Developing information technology systems and solutions

Several major projects were completed during the year to upgrade and enhance current systems.

Electronic data delivery

AUSTRAC uses an electronic data delivery solution that allows cash dealers to transmit financial transaction reports

to AUSTRAC through the internet. This year, AUSTRAC began to enhance this application to allow cash dealers to

submit required non-financial transaction information to AUSTRAC. In addtion to financial transaction reports, cash

dealers are required, under the Financial Transaction Reports Act 1988, to submit other information such as

applications for blocked accounts; referee information; and identifying cash dealer reports. Currently, this information

is being sent to AUSTRAC in paper format. Through the enhanced system, ProviderNet, cash dealers will be able to

transmit this information electronically. The development of this system will increase the timeliness of receipt, and

AUSTRAC's ability to easily retrieve, this information. Further enhancements and implementation of the ProviderNet

system will be completed next year.

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Data mining

Data mining applications have been successfully introduced into AUSTRAC over the last few years. Data mining

functionality has greatly strengthened AUSTRAC's ability to analyse data, identify financial networks and locate

reporting and compliance information to assist in its regulatory function. Due to the past success of these applications,

additional software was evaluated and integrated this year with the current data mining suite of applications. Through

the implementation of these tools AUSTRAC has increased its analytical and regulatory capacity.

International assistance

AUSTRAC began technical assistance to its international counterparts this year. AUSTRAC's information technology

mentoring program helped overseas financial intelligence units to improve technology solutions to support their work.

More detail on this work is on page 57.

Maintaining AUSTRAC's facilities

In 2004, AUSTRAC's three new partner agencies began to access financial transaction reports information through

the TRAQ Enquiry System (TES) database; and the number of partner agency personnel accessing this system

increased. Additional AUSTRAC personnel were also using this system. To ensure that AUSTRAC systems were still

operating effectively and efficiently, a hardware upgrade was successfully completed this year.

To ensure that AUSTRAC information continued to be available in a timely and readable fashion, an essential rewrite

of AUSTRAC applications was completed during the year. This will ensure that AUSTRAC systems are accessible

well into the future. It will also maintain AUSTRAC's ability to efficiently and effectively process financial transaction

reports information and help its interrogation.

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Enabling Output

Corporate services

Introduction

This enabling output focuses on delivering effective human resource and financial and information management to

AUSTRAC.

Human resource management

During the year AUSTRAC implemented a range of strategic human resource management initiatives aimed at

ensuring that AUSTRAC's personnel are able to undertake their work efficiently, ethically and in an environment

conducive to high levels of productivity.

Certified Agreement and Australian Workplace Agreements

The conditions of employment for AUSTRAC personnel are covered by a Certified Agreement. During the year,

negotiations between the Community and Public Sector Union, staff representatives and AUSTRAC management were

finalised in order to replace the existing agreement, which was due to expire on 30 June 2005. An in-principle

agreement was reached by Australian Public Service (APS) personnel and AUSTRAC management at the end of the

financial year. Upon certification by the Australian Industrial Relations Commission, this 33-month agreement will

outline the salary and non-salary conditions of APS employment at AUSTRAC. The non-salary conditions of the

proposed 2005-08 Certified Agreement included: home based work opportunities; an effective individual performance

management scheme; broadbanding of APS classifications; and a supportive and flexible work environment.

Eleven AUSTRAC personnel have entered into Australian Workplace Agreements. These agreements provide flexibility

to meet their needs and those of AUSTRAC. At 30 June 2005, two Senior Executive Service (SES) and nine non-SES

personnel were covered by Australian Workplace Agreements.

Productivity gains

The Certified Agreement negotiations were based upon agreed future productivity improvements by AUSTRAC

personnel.

These included:

• effective in-house induction, development and mentoring programs;

• development and implementation of new technology for AUSTRAC's information collection, analysis and

dissemination;

• streamlined personnel recruitment practices; and

• commitment to the implementation of future workforce planning strategies.


7 4

Ethics and conduct

All AUSTRAC personnel are expected to maintain a high standard

of ethics and conduct in their work and representations for

AUSTRAC. This has been reinforced in AUSTRAC's Certified

Agreement and Australian Workplace Agreements, which contain a

commitment from personnel to comply with the APS Code of

Conduct and Values. All personnel are provided with a copy of the

Code of Conduct, APS Values and the Public Service Act 1999 to

ensure that they are aware of their obligations. To further ensure

that AUSTRAC personnel maintain the highest levels of ethical

conduct, training on APS Values and Code of Conduct was

provided to all AUSTRAC personnel. In addition, an AUSTRAC

Ethics and Conduct Handbook was drafted during the year. This

handbook reinforces the standard of values and characteristics

which is expected of all AUSTRAC personnel. A copy of the

handbook will be distributed to all AUSTRAC personnel next year.

Workforce planning and retention

During the year AUSTRAC focused its efforts on developing a

workforce plan to ensure that the necessary skills, important to ensure AUSTRAC's operability, are identified and

developed within a wider human resource strategy. To facilitate this, AUSTRAC appointed a Senior Manager,

Workforce Planning to manage this process.

The Workforce Plan includes three phases, with the first phase finalised in June 2005. This phase involved a skills

audit conducted through consultations with AUSTRAC personnel to gauge current skills, required skills and strategies

to fill any skills gaps.

The second phase of the workforce planning project is to implement a series of strategies to address existing and

future skills gaps. The third phase is to provide strategies to support the long-term effectiveness of AUSTRAC's skill

base.

The separation rate for AUSTRAC personnel this year was 11 per cent; with 60 new personnel commencing at

AUSTRAC and 16 personnel departing. In recognition of the dedication of AUSTRAC personnel, long service awards

were presented during the year. Fourteen personnel received awards for five years of continual service and three

personnel received 15 year awards. As an agency that was created in 1989, and hence is only 16 years old, this

commitment by AUSTRAC personnel to long service demonstrates AUSTRAC's high retention rate for personnel.

Occupational health and safety

To support AUSTRAC's promotion of a healthy and safe workplace, several occupational health and safety initiatives

were implemented during the year. These included:

• implementation of the Elimination of Harassment Policy. As part of this policy, all AUSTRAC personnel

attended harassment awareness training during the year;

training

AUSTRAC personnel attending Code of Conduct training

varmonio

Rectangle


7 5

• regular assessments of workstations were undertaken to ensure ergonomic and safe systems are in place;

• one Occupational Health and Safety Officer, eight First Aid Officers and 13 Fire Wardens were appointed and

trained during the year; and

• influenza vaccinations were available to all personnel.

Further information regarding AUSTRAC's compliance with section 74 of the Occupational Health and Safety

(Commonwealth Employment) Act 1991 is in Appendix A.

Performance management and job evaluation

The performance of AUSTRAC personnel was appraised on a quarterly basis, against individual performance

agreements. Performance appraisal ensured that all personnel received regular and individual feedback on their

perfomance and provided personnel with an opportunity to discuss training requirements with their supervisor. Since

the implementation of the current performance management and appraisal policies and processes, there has been an

overall improvement in the performance characteristics displayed by AUSTRAC personnel.

As required under the Certified Agreement, the work values of all APS roles were evaluated during the year. This

program ensures that there is flexibilty in assessing the value of roles and that AUSTRAC management responds to

increases or decreases in the responsibility of roles.

Training and development

AUSTRAC's training and development program continued to provide personnel with access to focused development

opportunities. This helped personnel achieve their agreed performance outcomes. The induction program for new

personnel was successfully formalised during the year and all new personnel attended this induction training.

AUSTRAC personnel attending Records ManagementTraining, April 2005


7 6

Financial management

During the year AUSTRAC continued to manage its financial and property resources in a transparent and accountable

manner consistent with the Financial Management and Accountability Act 1997. AUSTRAC also received an

unqualified audit report from the Australian National Audit Office with respect to the financial records and reporting for

the 2004-05 financial year.

Analysis of financial performance

Section 57 of the Financial Management and Accountability Act 1997 requires a copy of the audited financial

statements and the Auditor-General's report to be included in each agency's annual report tabled in Parliament.

AUSTRAC's financial statements, commencing on page 86, have been prepared on an accrual basis in accordance

with the Finance Minister's Orders and Australian Accounting Standards.

The Agency Statement of Financial Performance shows the financial performance of AUSTRAC for items of revenue

and expense where direct responsibility for administration and management rests with AUSTRAC.

In 2004-05, AUSTRAC produced a net operating deficit of $0.64 million as compared to a net operating surplus of

$0.2 million in 2003-04. This deficit is primarily due to the $0.5 million decrement in fixed assets as determined by the

Australian Valuation Office in their valuation (which excluded capitalised software valued at cost).

Total revenue for 2004-05 was $21.5 million ($18 million in 2003-04). This increase is primarily due to additional

funding for the Strengthening Regional Financial Intelligence Units initiative. Employee expenses increased to $8.7

million ($6.4 million in 2003-04) mainly due to additional employee costs arising from the funding initiative noted

above.

The Agency Statement of Financial Position represents the financial position of AUSTRAC as at 30 June 2005 and

takes into account movements in assets, liabilities and equity. Total equity has decreased to $4.0 million compared to

$4.2 million in 2004. This decrease is primarily due to the drop in retained surpluses as a result of the operating deficit

noted above.

Events occurring after balance date

No significant events have occurred after balance date that would have an effect on the ongoing structure and

financial activities of AUSTRAC.

Consultancy services

AUSTRAC outsources a range of consultancy services where there is, for example, a lack of in-house resources or

expertise or the need for independent specialist advice. The contracted services provided include information

technology security, legal, financial sector and human resource advice as well as fraud and security risk assessments.

During 2004-05 six new consultancy contracts were entered into involving total expenditure of $137,765. In addition,

six ongoing consultancy contracts were active during the year involving total actual expenditure of $183,273. No

contracts were exempt from being reported in the Purchasing and Disposal Gazette.

Additional information regarding consultancy contracts and AUSTRAC’s policy on the selection and engagement of

consultants is in Appendix D.


Competitive tendering and contracting

During the year, AUSTRAC continued to improve its competitive tendering and contracting procedures. In particular,

the procedures outlined AUSTRAC's policy on the selection and engagement of consultants. The selection of

consultants was based upon value for money and expertise.

Annual reports must include a statement in relation to competitive tendering and contracting (CTC) undertaken during

the reporting period that has resulted in a contract being let. The Requirements for Annual Reports defines CTC

activity in this context as the contracting out of the delivery of government activities, previously performed by an

Australian Government agency, to another organisation. It may be undertaken for the provision of either goods or

services. During the reporting period, AUSTRAC did not undertake competitive tendering and contracting activities.

Purchasing

AUSTRAC complied with the procurement policies and principles outlined in the Commonwealth Procurement

Guidelines 2005. During the year, AUSTRAC continued to ensure its compliance with those guidelines by reviewing

and updating AUSTRAC's own procedures and guidelines, based on the Chief Executive Instructions. The instructions

ensure that procurement arrangements are based on value for money, encourage competition, efficiency and

effectiveness, ethics, accountability and transparency, and industry development.

Asset and property management

The sound management of AUSTRAC's assets and premises ensured that necessary resources were available to

meet the outcome and outputs. During the year AUSTRAC entered into a new lease agreement for the establishment

of premises in Canberra. Fitout works were completed in June 2005, with AUSTRAC occupying the premises shortly

thereafter.

Asset stocktakes were conducted during the year to maintain the accuracy of asset registers. All assets, including

property, plant and quipment, were revalued at fair value as at 30 June 2005.

Advertising and market research

This year, AUSTRAC placed a number of advertisements to recruit personnel for various roles. HMA Blaze was paid

$118,512 to provide this service. Educational campaigns aimed at raising awareness of obligations under the Financial

Transaction Reports Act 1988, also were conducted. The cost of these campaigns was $13,226.

Information management

One of AUSTRAC's strategic priorities for 2004-05 was the review of its knowledge and information management

services. As a result, detailed work on the ongoing Knowledge Management Project commenpced during the year. The

first phase of this work was to redevelop the AUSTRAC intranet site. A prototype was developed in consultation with

the business units and rolled out to the agency in June 2005. Further refinement of the intranet site and the

implementation of content management systems will continue next year.

The second component of this work was to undertake a requirements audit for records management. This audit was

conducted for all AUSTRAC business unit and the results of this audit will be used to develop further technological

solutions aimed at improving information capture, maintenance and retrieval.

7 7

M a n a g e m e n t a n d

a c c o u n t a b i l i t y

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7 9


Introduction

This section of the annual report outlines the main corporate governance practices in place at AUSTRAC. Further

specific details of AUSTRAC's work in directing, controlling and accounting for AUSTRAC's operations can be found in

the Enabling Output - Corporate Services section of the report.

AUSTRAC management

The AUSTRAC Executive manages the four main branches - Anti-Money

Laundering Reform, Money Laundering Deterrence, Money Laundering

Targeting and Information Technology. A Deputy Director oversees each

branch. The four Deputy Directors and the Director comprise the

AUSTRAC Executive Management Committee (referred to as the

AUSTRAC Management Board) which provides leadership and direction

for AUSTRAC.

The AUSTRAC Management Team comprises 11 Senior and National

Managers responsible for each business unit. The AUSTRAC

Management Team's role during the year was to provide leadership and

management to the sections under their immediate control. The

management team also worked closely with AUSTRAC's Executive in

strategic planning throughout the year to ensure that AUSTRAC

continues to achieve its outcome and outputs.

Strategic management

The AUSTRAC Leadership Group was formed during the year. This group comprises the AUSTRAC Management

Board and AUSTRAC Management Team. The brief of this team is to review AUSTRAC's strategic management

processes to implement strategies to improve AUSTRAC's organisational structure and culture; and to establish

business priorities.

During the year, AUSTRAC also formalised its strategic management function. The AUSTRAC Business Strategies

and Directions 2004-05 document outlined the focus of AUSTRAC's work for the year. An improved business planning

and quarterly reporting process was also introduced during the year for the AUSTRAC Management Team. This

process allowed the team to report on their progress towards meeting AUSTRAC business priorities and identifying

and effectively managing key strategic and operational risks.

Meetings of the AUSTRAC Leadership Group were held during the year to enhance communication across the

agency. This was an important process in ensuring effective progress towards meeting the AUSTRAC business

priorities.

AUSTRAC Executive Back (L-R): Ric Power, Martin French, John Visser, Paul RyanFront: Liz Atkins, Neil Jensen


8 0

Internal controls

Internal audit

The AUSTRAC Audit Committee comprises an independent Chair and two AUSTRAC members - the Deputy Director,

Money Laundering Targeting and the National Manager, Partner Liaison and Support. The role of the committee during

the year was to:

• enhance AUSTRAC's risk control framework;

• improve the objectivity and reliability of externally published financial information; and

• assist AUSTRAC to comply with all legislation and its obligations.

This committee also undertook a review of AUSTRAC's financial statements, fraud control plans, information security

and risk management processes. The AUSTRAC Audit Committee met four times during the year.

Fraud control

AUSTRAC continued to maintain appropriate controls and processes for fraud prevention, detection and investigation.

In accordance with the requirements of the Commonwealth Fraud Control Guidelines, AUSTRAC prepared an updated

fraud risk assessment and a new fraud control plan based on the fraud risk assessment. A Fraud and Corruption

Prevention Policy was also prepared during the year. This policy outlines the practices AUSTRAC has in place to

prevent, detect, investigate and report incidents of fraud and corruption.

Until the updated policy is formalised, the AUSTRAC Fraud and Corruption Prevention Policy from 2003-04 is current

and has been endorsed by the Director of AUSTRAC and complies with the Fraud Control Guidelines.

No incidents of fraud were identified during the year.

Business continuity planning

During the year, AUSTRAC began updating its Business Continuity Plan. A new policy framework was developed,

including specific plans and procedures for each business unit. Recovery plans were tested through exercises

involving different scenarios, and will continue to be developed. AUSTRAC engaged Comcover to ensure that policies,

plans, and procedures are consistent with Australian Government requirements as well as the requirements of the

agency. Comcover also provided AUSTRAC with a consultant to assist in the development and testing of the plans.

External scrutiny

AUSTRAC is subject to external scrutiny to ensure transparency in government and accountability for its work and

decisions. Primarily, this was undertaken through the Senate Budget Estimates process where AUSTRAC appeared

before the Senate Legal and Constitutional Legislation Committee several times this year to answer questions relating

to AUSTRAC's budget and operations. In addition to this process, other bodies scrutinise the activities of government

bodies. In relation to AUSTRAC:

• The Australian National Audit Office audited AUSTRAC's financial statements for 2004-05. AUSTRAC received

an unqualified audit report for the financial year.

• AUSTRAC was not the primary subject of any report by the Auditor-General tabled in Parliament during the

year.

• No matters went before the courts this year involving AUSTRAC.


8 1

• No reports by the Commonwealth Ombudsman directly related to the operations of AUSTRAC.

• No reports by Parliamentary Committees directly related to AUSTRAC's operations. However, a number of

Parliamentary Reports did mention AUSTRAC, and a list of these reports can be found in Appendix C.

AUSTRAC has successfully implemented processes to ensure it meets its monthly budget and actual expenditure

reporting requirements to the Department of Finance and Administration. These requirements are consistent with the

Government's agreement to the implementation of the Budget Estimates and Framework Review recommendations.

No significant variances were reported between budget and actual reporting during the year. This outcome has been

assisted by enhanced internal monthly budget reporting to the AUSTRAC Leadership Group.

Freedom of information

In accordance with section 8 (1) of the Freedom of Information Act 1982 (FOI Act) all Australian Government agencies

are required to report annually on:

• the organisation and functions of the agency;

• the arrangements that exist for outside participation in agency decision making;

• the categories of documents that are held by the agency; and

• how the public can gain access to information held by the agency.

Organisation and functions

Further information on AUSTRAC's functions and organisational structure can be found on page 1 of this annual

report.

Arrangements for external consultation

AUSTRAC has mechanisms in place to allow non-government organisations and private industry to provide advice to

the Director of AUSTRAC on the formulation and administration of AUSTRAC policy. These mechanisms include the

industry consultative bodies that AUSTRAC convenes: the Provider Advisory Group (PAG), Gaming Provider Advisory

Group (GPAG) and Privacy Consultative Committee (PCC). The PAG and GPAG are comprised of industry, law

enforcement and other government and non-government bodies that have a direct interest in AUSTRAC's work and

operational policies. The PCC comprises representatives of governement agencies, and civil liberties, consumer and

privacy interest groups.

The Australian Government Attorney-General's Department is responsible for the formulation and administration of

anti-money laundering and counter financing of terrorism policy and legislation.

Categories of documents

AUSTRAC is responsible for retaining numerous documents, including some that are available for inspection and/or

purchase, and others that are available free of charge.

Categories of documents include:

(i) financial transaction reports

(ii) corporate records including files, general operations documents and financial records

(iii) public records such as guidelines, information bulletins, newsletters and other AUSTRAC

publications.


8 2

Accessing documents

Many of the AUSTRAC's public records are available on AUSTRAC's website at www.austrac.gov.au Interested

parties may apply under the FOI Act for remaining documents. Any application must be made to AUSTRAC in writing

on the appropriate application form. AUSTRAC is not permitted under the FOI Act to release information until a written

request has been received. Details of how to make an FOI application can be found on AUSTRAC's website at:

http://www.austrac.gov.au/freedom_of_information

Access to a document may be refused if the document is subject to exemptions specified in the FOI Act. AUSTRAC

provides copies of documents where appropriate and inspection of documents only when necessary.

A $30 application fee applies to requests made under the FOI Act. In addition to the application fee, charges may be

imposed for the time spent in searching and retrieving relevant documents, decision-making time, photocopying and

postage.

If the request has incurred additional charges, a notification will be sent to the applicant providing an estimate of the

charges associated with processing the request as soon as possible. The request will not be processed until a

response to the notification has been received from the applicant.

Completed FOI applications, payments and/or applications for fee waiver should be sent to:

Freedom of Information Coordinator

AUSTRAC

PO Box 5516

West Chatswood NSW 1515

Email: [email protected]

AUSTRAC's Freedom of Information statistics 2004 - 05

Requests on hand 1 July 2005

Requests received

Granted in full

Granted in part

Refused (includes cases where no relevant documents were found)

Deferred

Transferred

Withdrawn or lapsed

Requests outstanding at 30 June 2005

Total

-

45

31

1

7

-

5

1

-

AUSTRAC's FOI statistics


8 3

Commonwealth Disability Strategy

AUSTRAC continued to implement procedures under the Commonwealth Disability Strategy to ensure that people with

disabilities are able to access AUSTRAC's services. The strategy identifies roles that agencies could perform. Listed

below are the three roles that AUSTRAC undertakes and the activities performed to ensure compliance with the

strategy and the Disability Discrimination Act 1992.

Regulator role

Liaison with cash dealers, solicitors and members of the public to educate and promote compliance with the Financial

Transaction Reports Act 1988 (FTR Act) is a vital component of AUSTRAC's regulatory role. All information that is

available to the public and clients of AUSTRAC is accessible to people with disabilities. AUSTRAC's website, which

communicates guidelines and other information, adheres to website accessibility standards for people with disabilities.

The AUSTRAC Help Desk is another method used to educate the public and cash dealers of their obligations under

the FTR Act.

Provider role

In the service provider role, AUSTRAC provides information and services to

government agencies, cash dealers and the public through its website and

Help Desk. AUSTRAC complies with the Commonwealth Disability Scheme

and Disability Discrimination Act 1992 by making AUSTRAC's website and

Help Desk available to people with disabilities.

Employer role

When recruiting personnel, AUSTRAC ensures that it accommodates the

requirements of people with disabilities who may be applying for advertised

positions. AUSTRAC's approach to the employment of people with disabilities

continued to be supported by:

• conducting assessments of workplace procedures and policies to support equitable working conditions for

AUSTRAC personnel with disabilities; and

• creating workplace diversity and elimination of harassment programs and disseminating this information to all

AUSTRAC personnel.

Ecologically sustainable development

AUSTRAC continued to ensure that its work practices and decision-making processes integrated both long-term and

short-term environmental considerations. In complying with the Environmental Protection and Biodiversity

Conservation Act 1999, AUSTRAC ensured that office administration was conducted in an environmentally friendly

manner. During the year AUSTRAC continued to implement policies, where possible, to reduce damage to the

environment.

• This year 99.5 per cent of financial transaction reports that AUSTRAC received were transmitted electronically.

This has reduced the amount of paper required for AUSTRAC to undertake its work.

• Recycling was encouraged at AUSTRAC. This involved, where possible, recycling waste paper, printer

cartridges and mobile phones.

• Preference is given to environmentally sound products when purchasing office supplies. Purchase of 'Energy

Star' rated office machines and equipment is encouraged, as are machines with power save features.

www.austrac.gov.au

Service Charter

AUSTRAC's Service Charter outlines the nature and level of service offered to

clients. These clients include cash dealers in the financial and gaming sectors

as well as members of the public. A copy of the charter can be found on

AUSTRAC's website at http://www.austrac.gov.au/about/servcharter.html

During the year AUSTRAC began a review of the charter and a new edition is

expected to be available next year.

AUSTRAC provided services to clients through the maintenance of the Help

Desk where clients were able to contact AUSTRAC to receive advice on their

obligations under the FTR Act. The Help Desk also serves as a conduit for

complaints from clients and members of the public. As noted in the Service

Charter, AUSTRAC must respond to all Help Desk enquiries in a timely

fashion. All telephone enquiries are responded to within 24 hours as noted in

the charter. All email enquiries were responded to within 48 hours, as per the

charter. Two complaints regarding AUSTRAC's automated Help Desk service

were received and responded to within 24 hours.


8 4

Complaints and feedback are receivedthrough help desk facilities. They arelogged and referred to management forresolution.

F i n a n c i a l S t a t e m e n t s

ANAO Independent Audit Report

Statement by the Director and Chief

Finance Officer

Statement of Financial Performance

Statement of Financial Position

Statement of Cash Flows

Schedule of Commitments

Schedule of Contingencies

Notes to and forming part of the

Financial Statements

A U S T R A C A N N U A L R E P O R T 2 0 0 4 - 0 5 : F I N A N C I A L S T A T E M E N T S

8 7

P a g e

ANAO Independent Audit Report ............................................................................................107

Statement by the Director and Chief Finance Officer...............................................................109

Statement of Financial Performance........................................................................................110

Statement of Financial Position................................................................................................111

Statement of Cash Flows ........................................................................................................112

Schedule of Commitments.......................................................................................................113

Schedule of Contingencies .....................................................................................................114

Notes to and forming part of the Financial Statements............................................................115

Financial Statements

Table of contents


8 8


8 9

9 0


Statement by the Director and Chief Finance Officer


9 1

AUSTRAC

STATEMENT OF FINANCIAL PERFORMANCE

for the year ended 30 June 2005

Revenues from ordinary activities

Revenues from Government

Revenue from sale of assets

Other revenues

Revenues from ordinary activities

Expenses from ordinary activities

Employees

Suppliers

Depreciation and amortisation

Write-down of assets

Value of assets sold

Expenses from ordinary activities

Net surplus/(deficit) from ordinary activities

Net credit to asset revaluation reserve

Total revenues, expenses and valuation adjustments

attributable to members of the parent entity and

recognised in equity

Total changes in equity other than those resulting

from transactions with the owners as owners

Notes

4A, 17

4B

4C

5A

5B

5C

5D

4B

10

10

2004

$'000

17,600

6

397

18,003

6,355

9,968

1,486

-

3

17,812

191

-

-

191

2005

$'000

20,826

-

749

21,575

8,706

11,406

1,575

529

2

22,218

(643)

457

457

(186)

The above statement should be read in conjunction with the accompanying notes.


9 2

AUSTRAC

STATEMENT OF FINANCIAL POSITION

as at 30 June 2005

ASSETS

Financial assets

Cash

Receivables

Other assets

Total financial assets

Non-financial Assets

Infrastructure, plant and equipment

Total non-financial assets

TOTAL ASSETS

LIABILITIES

Provisions

Employees

Other provisions

Total provisions

Payables

Suppliers

Other payables

Total payables

TOTAL LIABILITIES

NET ASSETS

EQUITY

Contributed equity

Reserves

Retained surpluses

TOTAL EQUITY

Current assets

Non-current assets

Current liabilities

Non-current liabilities

Notes

6A

6B

6C

7A, 7B

8A

8B

9A

9B

10

10

10

2004

$'000

2,478

423

571

3,472

3,171

3,171

6,643

1,746

249

1,995

433

47

480

2,475

4,168

2,528

41

1,599

4,168

3,472

3,171

1,743

732

2005

$'000

3,219

526

481

4,226

2,591

2,591

6,817

2,124

218

2,342

388

105

493

2,835

3,982

2,528

498

956

3,982

4,226

2,591

1,871

964



9 3

AUSTRAC

STATEMENT OF CASH FLOWS


OPERATING ACTIVITIES

Cash received

Appropriations

Net GST received from ATO

Other

Total cash received

Cash used

Employees

Suppliers

Total cash used

Net cash From operating activities

INVESTING ACTIVITIES

Cash received

Proceeds from sales of property, plant and equipment

Total cash received

Cash used

Purchase of property, plant and equipment

Total cash used

Net cash (used by) investing activities

FINANCING ACTIVITIES

Cash received

Appropriations – contributed equity

Total cash received

Cash used

Total cash used

Net cash from/(used by) financing activities

Net Increase in cash held

Cash at the beginning of the reporting period

Cash at the end of the reporting period

Notes

11

6A

2004

$'000

17,582

1,145

927

19,654

(5,798)

(11,943)

(17,741)

1,913

6

6

(3,097)

(3,097)

(3,091)

2,616

2,616

-

-

2,616

1,439

1,039

2,478

2005

$'000

20,805

1,065

1,233

23,103

(8,399)

(12,894)

(21,293)

1,810

-

-

(1,069)

(1,069)

(1,069)

-

-

-

-

-

741

2,478

3,219



9 4

AUSTRAC

SCHEDULE OF COMMITMENTS

as at 30 June 2005

BY TYPE

Other commitments

Operating leases 1

Total other commitments

Net commitments

BY MATURITY

Operating lease commitments

One year or less

From one to five years

Over five years

Net commitments by maturity

Notes 2004

$'000

2,218

2,218

2,218

1,340

878

-

2,218

2005

$'000

2,576

2,576

2,576

1,635

941

-

2,576

N.B. All commitments are GST exclusive where relevant.

1 Operating leases included are effectively non-cancellable and comprise:

• leases for office accommodation

• leases for motor vehicles

• leases for information technology (IT) mainframe equipment

Nature of lease

Leases for office accommodation

Leases for motor vehicles and IT equipment

General description

Lease payments are subject to annual or bi-annual

increases in accordance with upwards movements

in lease market rental rates.

No contingent liabilities exist. There are no renewal

or purchase options available to AUSTRAC.

The above schedule should be read in conjunction with the accompanying notes.


9 5

AUSTRAC

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS


N o t e D e s c r i p t i o n

1 Summary of Significant Accounting Policies

2 Adoption of Australian Equivalents to International Financial Reporting Standards (AEIFRS) from 2005-2006

3 Events Occurring after Reporting Date

4 Operating Revenue

5 Operating Expenses

6 Financial Assets

7 Non-Financial Assets

8 Provisions

9 Payables

10 Equity

11 Cash Flow Reconciliation

12 Contingent Liabilities and Assets

13 Executive Remuneration

14 Remuneration of Auditors

15 Average Staffing Levels

16 Financial Instruments

17 Appropriations

18 Specific Payment Disclosures

19 Reporting of Outcome


9 6

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1.1 Objectives of AUSTRAC

The mission of the Australian Transaction Reports and Analysis Centre (AUSTRAC) is to make a valued contribution

towards a financial environment hostile to money laundering, major crime and tax evasion.

AUSTRAC was established under the Financial Transaction Reports Act 1988 (FTR Act). The FTR Act authorises the

collection, analysis and dissemination of certain financial information to assist in detecting and countering money

laundering and financing of terrorism.

AUSTRAC works with its law enforcement, revenue, national security and social justice partners to provide useful

financial intelligence in relation to matters involving money laundering and the financing of terrorism.

The continued existence of AUSTRAC in its present form, and with its present programs, is dependent on government

policy and on continuing appropriations by Parliament for AUSTRAC's administration and programs.

1.2 Basis of accounting

The financial statements are required by section 49 of the Financial Management and Accountability Act 1997 and are

a general purpose financial report.

The statements have been prepared in accordance with:

• Finance Minister's Orders (or FMOs, being the Financial Management and Accountability (Financial

Statements for reporting periods ending on or after 30 June 2005) Orders);

• Australian Accounting Standards (AAS) and Accounting Interpretations issued by the Australian Accounting

Standards Board (AASB); and

• Consensus Views of the Urgent Issues Group.

The statements have also been prepared having regard to the Explanatory Notes to Schedule 1 and Finance Briefs

issued by the Department of Finance and Administration.

The Statements of Financial Performance and Financial Position have been prepared on an accrual basis and are in

accordance with historical cost convention, except for certain assets which, as noted, are at valuation. Except where

stated, no allowance is made for the effect of changing prices on the results or the financial position.

Assets and liabilities are recognised in the Statement of Financial Position when and only when it is probable that

future economic benefits will flow and the amounts of the assets or liabilities can be reliably measured. Assets and

liabilities arising under agreements equally proportionately unperformed are however not recognised unless required

by an Accounting Standard. Assets and liabilities that are unrecognised are reported in the Schedule of Commitments

and the Schedule of Contingencies (other than unquantifiable or remote contingencies, which are reported at Note

12).


9 7

Revenues and expenses are recognised in the Statement of Financial Performance when and only when the flow or

consumption or loss of economic benefits has occurred and can be reliably measured.

1.3 Revenues

The revenues described in this note are revenues relating to the core operating activities of AUSTRAC.

Revenues from Government

Amounts appropriated for Departmental outputs appropriations for the year (adjusted for any formal additions and

reductions) are recognised as revenue, except for certain amounts that relate to activities that are reciprocal in nature,

in which case revenue is recognised only when it has been earned.

Resources received free of charge

Services received free of charge are recognised as revenue when and only when a fair value can be reliably

determined and the services would have been purchased if they had not been donated. Use of those resources is

recognised as an expense.

Contributions of assets at no cost of acquisition or for nominal consideration are recognised at their fair value when

the asset qualifies for recognition, unless received from another government agency as a consequence of a

restructuring of administrative arrangements (refer to Note 1.5).

Other revenue

Revenue from disposal of non-current assets is recognised when control of the asset has passed to the buyer.

Revenue from rendering of services is recognised by reference to the stage of completion of contracts or other

agreements to provide services. The stage of completion is determined according to the proportion that costs incurred

to date bear to the estimated total costs of the transaction.

Receivables for goods and services are recognised at the nominal amounts due less any provision for bad and

doubtful debts. Collectability of debts is reviewed at balance date. Provisions are made when collectability of the debt

is judged to be less rather than more likely.

1.4 Transactions by the Australian Government as owner

Equity injections

Amounts appropriated which are designated as 'equity injections' for a year (less any savings offered up in Portfolio

Additional Estimates Statements) are recognised directly in Contributed Equity in that year.

1.5 Employee benefits

Liabilities for services rendered by employees are recognised at the reporting date to the extent that they have not

been settled.


9 8

Liabilities for wages and salaries (including non-monetary benefits) and annual leave are measured at their nominal

amounts. Other employee benefits expected to be settled within 12 months of the reporting date are also measured at

their nominal amounts.

The nominal amount is calculated with regard to the rates expected to be paid on settlement of the liability.

All other employee benefit liabilities are measured at the present value of the estimated future cash outflows to be

made in respect of services provided by employees up to the reporting date.

Leave

The liability for employee benefits includes provision for annual leave and long service leave. No provision has been

made for sick leave as all sick leave is non-vesting and the average sick leave taken in future years by employees of

AUSTRAC is estimated to be less than the annual entitlement for sick leave.

The leave liabilities are calculated on the basis of employees' remuneration, including AUSTRAC's employer

superannuation contribution rates to the extent that the leave is likely to be taken during service rather than paid out

on termination.

The estimate of the present value of the liability takes into account attrition rates and pay increases through promotion

and inflation.

Superannuation

AUSTRAC employees are members of the Commonwealth Superannuation Scheme or the Public Sector

Superannuation Scheme. The liability for their superannuation benefits is recognised in the financial statements of the

Australian Governement and is settled by the Australian Governement in due course.

AUSTRAC makes employer contributions to the Australian Government at rates determined by an actuary to be

sufficient to meet the cost to the Australian Governement of the superannuation entitlements of the AUSTRAC's

employees.

The liability for superannuation recognised as at 30 June 2005 represents outstanding contributions for the final

fortnight of the year.

1.6 Leases

Operating lease payments are charged to the Statement of Financial Performance on a basis which is representative

of the pattern of benefits derived from the leased assets.

1.7 Financial instruments

Accounting policies for financial instruments are stated at Note 16.

1.8 Cash

Cash includes notes and coins held and deposits held at call with a bank or financial institution. Cash is recognised at

its nominal amount.


9 9

1.9 Other financial instruments

Trade creditors

Trade creditors and accruals are recognised at their nominal amounts, being the amounts at which the liabilities will be

settled. Liabilities are recognised to the extent that the goods or services have been received (irrespective of

whether they have been invoiced).

1.10 Bad and doubtful debts

Debts are written off as bad when so identified. The write-off is to expense or, to the extent a provision for a doubtful

debt already existed, as a reversal of the provision.

A provision is raised for any doubtful debts based on a review of all outstanding accounts at year end.

1.11 Acquisition of assets

Assets are recorded at cost on acquisition except as stated below. The cost of acquisition includes the fair value of

assets transferred in exchange and liabilities undertaken.

Assets acquired at no cost, or for nominal consideration, are initially recognised as assets and revenues at their fair

value at the date of acquisition, unless acquired as a consequence of restructuring of administrative arrangements. In

the latter case, assets are initially recognised as contributions by owners at the amounts at which they were

recognised in the transferor agency's accounts immediately prior to the restructuring.

1.12 Property, plant and equipment

Asset recognition threshold

Purchases of plant and equipment are recognised initially at cost in the Statement of Financial Position, except for

purchases costing less than $2,000 which are expended in the year of acquisition (other than when they form part of a

group of similar items which are significant in total).

Revaluations

Basis

Plant and equipment are carried at valuation. Plant and equipment are revalued annually so that the carrying amount

of each asset class is not materially different, at reporting date, from its fair value. Valuations undertaken in any year

are as at 30 June.

Fair values for each class of asset are determined as shown below.

Under fair value, assets which are surplus to requirements are measured at their net realisable value.

Asset class

Leasehold improvements

Plant and equipment

Fair value measured at:

Depreciated replacement cost


Deprival value measured at:




1 0 0

Frequency

Plant and equipment assets are being revalued by type of asset. In 2004-05 financial year, furniture and fittings,

information technology assets (not under operating leases) and non computing equipment were revalued.

Assets in each class acquired after the commencement of a progressive revaluation cycle are not captured by the

progressive revaluation then in progress.

Conduct

Leasehold improvements, computer and non-computer plant and equipment valuations are conducted by an

independent qualified valuer.

Depreciation

Depreciable plant and equipment assets are written-off to their estimated residual values over their estimated useful

lives to AUSTRAC using, in all cases, the straight-line method of depreciation. Leasehold improvements are

depreciated on a straight-line basis over the lesser of the estimated useful life of the improvements or the unexpired

period of the lease.

Depreciation rates (useful lives) and methods are reviewed at each reporting date and necessary adjustments are

recognised in the current, or current and future reporting periods, as appropriate. Residual values are re-estimated for

a change in prices only when assets are revalued.

Depreciation rates applying to each class of depreciable asset are based on the following useful lives:

The aggregate amount of depreciation allocated for each class of asset during the reporting period is disclosed in

Note 5C.

1.13 Impairment of non-current assets

Non-current assets carried at up to date fair value at the reporting date are not subject to impairment testing.

1.14 Intangibles

Software development costs are expended as incurred, except where future service potential, beyond any reasonable

doubt, exceeds those costs. Where software development costs are deferred, such costs are amortised over future

periods on a basis related to future service potential. Amortisation commences once a software project becomes fully

operational. AUSTRAC's intangibles comprise internally developed software for internal use. These assets are carried

at cost.

All software assets were assessed for impairment as at 30 June 2005. None were found to be impaired.

Software is amortised on a straight-line basis over its anticipated useful life.

Leasehold improvements

Plant and equipment

2005

Lease term

3 to 7 years

2004

Lease term

3 to 7 years


1 0 1

The useful lives of AUSTRAC software is 3 years (2004: 3 years).

1.15 Taxation

AUSTRAC is exempt from all forms of taxation except fringe benefits tax and the goods and services tax (GST).

Revenues, expenses and assets are recognised net of GST except for:

• where the amount of GST incurred is not recoverable from the Australian Taxation Office; and

• for receivables and payables.

1.16 Insurance

AUSTRAC has insured for risks through the Australian Government's insurable risk managed fund, Comcover.

Workers compensation is insured through the Australian Government's Comcare Australia.

1.17 Comparative figures

Where necessary, comparative figures have been adjusted to conform with changes in presentation in these financial

statements. Note 17A 'Annotations to net appropriations (FMA s31)' comparatives have been amended due to

reclassification of receipts received in the 2003-04 financial year.

1.18 Rounding

Amounts have been rounded to the nearest $1,000 with the exception of Notes 13 and 14 where amounts have been

rounded to the nearest dollar.

NOTE 2 - ADOPTION OF AEIFRS FROM 2005-2006.

The purpose of issuing Australian Equivalents to International Financial Reporting Standards (AEIFRS) is to enable

Australian entities reporting under the Corporations Act 2001 to be able to more readily access overseas capital

markets by preparing their financial reports according to accounting standards more widely used overseas.

For-profit entities complying with AEIFRS will be able to make an explicit and unreserved statement of compliance

with International Financial Reporting Standards (IFRS) as well as a statement that the financial report has been

prepared in accordance with Australian Accounting Standards (AAS).

AEIFRS contains certain additional provisions that will apply to not-for-profit entities, including Australian Government

agencies. Some of these provisions are in conflict with IFRS, and therefore AUSTRAC will only be able to assert that

the financial report has been prepared in accordance with Australian Accounting Standards.

Existing Australian Accounting Standards Board (AASB) standards that have no IFRS equivalent will continue to apply,

including in particular AAS 29 Financial Reporting by Government Departments.

Accounting Standard AASB 1047 Disclosing the impact of Adopting Australian Equivalents to IFRSs requires that the

financial statements for 2004-05 disclose:

• an explanation of how the transition to the AEIFRS is to be managed;

• narrative explanations of the key policy differences arising from the adoption of AEIFRS;


1 0 2

• any known or reliably estimable information about the impacts on the financial report had it been prepared

using AEIFRS; and

• if the impacts of the above are not known or reliably estimable, a statement to that effect.

Where an entity is not able to make a reliable estimate, or where quantitative information is not known, the entity

should update the narrative disclosures of the key differences in accounting policies that are expected to arise from

the adoption of AEIFRS.

The purpose of this Note is to make these disclosures.

Management of the transition to AEIFRSs

AUSTRAC has taken the following steps for the preparation towards the implementation of AEIFRS:

• AUSTRAC's Audit Committee is tasked with oversight of the transition to and implementation of AEIFRSs. The

Chief Finance Officer is formally responsible for the project and reports regularly to the Audit Committee on

progress against the formal plan approved by the Committee.

• The plan required the following key steps to be undertaken and sets deadlines for their achievement:

• Major accounting policy differences between current AASB standards and AEIFRSs were evaluated

by 24 August 2004.

• System changes necessary to be able to report under the AEIFRS, including those necessary to

capture data under both sets of rules for 2004-05 were completed on 15 October 2004.

• Preparation of a transitional balance sheet as at 1 July 2004, under Australian Equivalents was

completed on 20 January 2005.

• An AEIFRS compliant balance sheet as at 30 June 2005 was also prepared during the preparation of

the 2004-05 statutory financial reports.

• The 2004-05 Balance Sheet under AEIFRS will be reported to the Department of Finance and

Administration in line with their reporting deadlines.

• The plan will also address the risks to successful achievement of the above objectives and include strategies

to keep implementation on track to meet deadlines.

• Consultants were engaged where necessary to assist with each of the above steps.

Major changes in accounting policy

Changes in accounting policies under AEIFRS are applied retrospectively that is as if the new policy had always

applied except in relation to the exemptions available under AASB 1 First-time Adoption of Australian Equivalents to

International Financial Reporting Standards. This rule means that an AEIFRS compliant balance sheet had to be

prepared as at 1 July 2004. This will enable the 2005-06 financial statements to report comparatives under AEIFRS.

Changes to major accounting policies are discussed in the following paragraphs.

AUSTRAC management's review of the quantitative impacts of AEIFRS represents the best estimates of the impacts


1 0 3

of the changes as at reporting date. The actual effects of the impacts of AEIFRS may differ from these estimates due

to:

• continuing review of the impacts of AEIFRS on AUSTRAC's operations;

• potential amendments to the AEIFRS and AEIFRS Interpretations; and

• emerging interpretation as to the accepted practice in the application of AEIFRS and the AEIFRS

Interpretations.

Property, plant and equipment

It is expected that the Finance Minister's Orders will continue to require plant and equipment assets to be carried at

fair value in 2005-06. An assessment was undertaken of fair value of property plant and equipment held at 1 July

2004. No adjustments were necessary as the carrying balance did not materially differ from fair value.

Impairment of non-current assets

Under AEIFRS these assets will be subject to assessment for impairment and, if there are indications of impairment,

an assessment of the degree of impairment. (Impairment measurement must also be done, irrespective of any

indications of impairment, for intangible assets not yet available for use). The impairment test is that the carrying

amount of an asset must not exceed the greater of (a) its fair value less costs to sell and (b) its value in use.

However, an impairment assessment of the agency's assets indicated that no adjustments will be required.

NOTE 3 - EVENTS OCCURRING AFTER REPORTING DATE

AUSTRAC is not aware of any significant events that have occurred since reporting date which warrant disclosure in

these statements.


1 0 4

N O T E 4 - O P E R A T I N G R E V E N U E S

Note 4A – Revenues from Government

Appropriations for outputs

Resources received free of charge

Total revenues from Government

Note 4B – Net gains from sale of assets

Plant and equipment:

Proceeds from disposal

Net gain/(loss) of assets disposed

Total net gain/(loss) from disposal of assets

Note 4C – Other revenue

AusAID PPATK Technical Assistance Project

AusAID AMLO Project

AusAID Pacific Governance Project

AFP TCCC Project

AFP JCLEC Project

Other

Total other revenue

2004

$'000

17,582

18

17,600

6

(3)

3

260

-

-

90

-

47

397

2005

$'000

20,805

21

20,826

-

(2)

(2)

107

47

137

68

187

203

749


1 0 5

NOTE 5 - OPERATING EXPENSES

Note 5A - Employee expenses

Wages and salary

Superannuation

Other employee expenses

Total employee benefits expenses

Worker compensation premiums

Total employee expenses

Note 5B - Suppliers expenses

Supply of goods and services from related entities

Supply of goods and services from external entities

Operating lease rentals *

Total suppliers expenses

Note 5C - Depreciation and amortisation

Depreciation - of plant and equipment

Amortisation - of capitalised software

Total depreciation and amortisation

Note 5D - Write-down of assets

Non computer plant and equipment - revaluation decrement

Computer equipment - revaluation decrement

Total write-down of assets

2004

$'000

5,558

741

30

6,329

26

6,355

565

8,141

1,262

9,968

998

488

1,486

-

-

-

2005

$'000

7,440

1,171

52

8,663

43

8,706

653

9,269

1,484

11,406

1,408

167

1,575

206

323

529

* These comprise minimum lease payments only.


1 0 6

NOTE 6 - FINANCIAL ASSETS

Note 6A - Cash

Departmental

Total cash

Note 6B - Receivables

Goods and services

GST receivable from the ATO

Total receivables

Receivables are represented by:

Current

Non-current

Total receivables

Receivables are represented by:

Not overdue

Overdue by:

Less than 30 days

30 to 60 days

60 to 90 days

More than 90 days

Total receivables

Note 6C - Other assets

Prepayments

Accrued income

Total other assets

2004

$'000

2,478

2,478

258

165

423

423

-

423

299

111

-

-

13

423

571

-

571

2005

$'000

3,219

3,219

361

165

526

526

-

526

165

279

25

-

57

526

446

35

481


1 0 7

NOTE 7 - NON-FINANCIAL ASSETS

Note 7A – Infrastructure, plant and equipment

Computer plant and equipment

Computer plant and equipment - at cost

Less: Accumulated depreciation

Computer plant and equipment - at June 02 valuation (deprival)


Computer plant and equipment - at June 05 valuation


Total computer plant and equipment

Non-computer plant and equipment

Non-computer plant and equipment - at cost


Non-computer plant and equipment - at June 02 valuation (deprival)


Non-computer plant and equipment - at June 05 valuation


Total non-computer plant and equipment

Furniture and leasehold improvements

Furniture and Leasehold improvements - at cost


2004

$'000

1,813

(503)

1,310

1,052

(991)

59

-

-

1,369

446

(78)

368

364

(266)

98

-

-

466

1,343

(327)

1,016

2005

$'000

-

-

-

-

-

-

833

-

833

-

-

-

-

-

-

155

-

155

-

-


1 0 8

NOTE 7 - NON-FINANCIAL ASSETS (Cont.)

Furniture and leasehold improvements - at June 02 valuation (deprival)


Furniture and leasehold improvements - at June 05 valuation


Total furniture and leasehold improvements

Internally developed computer software

Internally developed computer software – at cost

Less: Accumulated amortisation

Total internally developed computer software

Total infrastructure, plant and equipment

2004

$'000

2005

$'000

-

-

1,486

-

1,486

3,075

(2,958)

117

2,591

526

(373)

153

-

-

1,169

2,959

(2,792)

167

3,171

As at 1 July 2004

Gross book value

Accumulated depreciation/amortisation

Net book value

Additions

by purchase

From acquisition of operations

Capitalised

software

$'000

2,959

(2,792)

167

117

-

Note 7B - Analysis of plant, equipment and intangibles

TABLE A - Reconciliation of the opening and closing balances of plant and equipment and intangibles

Plant and

equipment

$'000

5,264

(2,260)

3,004

955

-

Total

$'000

8,223

(5,052)

3,171

1,072

-

All revaluations were as at 30 June 2005 in accordance with the progressive revaluations policy stated in Note 1. The

valuations were completed by an independent valuer - the Australian Valuations Office.


1 0 9

Net revaluation increment/(decrement)

Depreciation/amortisation expense

Disposals

From disposals of operations

Other disposals

As at 30 June 2005

Gross book value


Net book value


TABLE A - Reconciliation of the opening and closing balances of plant and equipment and intangibles (cont.)

Capitalised

software

$'000

-

(167)

-

-

3,076

(2,959)

117

Plant and

equipment

$'000

(71)

(1,408)

-

(6)

2,474

-

2,474

Total

$'000

(71)

(1,575)

-

(6)

5,550

(2,959)

2,591


TABLE B - Assets at valuation

Plant and

equipment

$'000

Total

$'000

As at 30 June 2005

Gross value


Net book value

As at 30 June 2004

Gross value


Net book value

2,474

-

2,474

1,943

(1,632)

311

2,474

-

2,474

1,943

(1,632)

311


1 1 0

Note 8A - Employee provisions

Wages and salary

Leave

Superannuation

Aggregate employee benefit liability

Current

Non-current

Note 8B - Other liabilities *

AGEC project account - current liabilities

POI Study project account - current liabilities

Money laundering research project account – current liabilities

Total other liabilities

2004

$'000

241

1,413

92

1,746

1,013

733

185

40

25

250

2005

$'000

40

1,933

151

2,124

1,160

964

81

129

8

218

NOTE 8 - PROVISIONS

* AUSTRAC is a participant in these projects. It manages and controls the

funds and expenditures of these project accounts.

Note 9A - Suppliers payable

Accrued expenses

Total suppliers payable

Suppliers payable are represented by:

Current

Non-current

Total suppliers payable

Note 9B - Other payables

Prepayments received

Total other payables

2004

$'000

433

433

433

-

433

47

47

2005

$'000

388

388

388

-

388

105

105

N O T E 9 - P A Y A B L E S


1 1 1

Opening balance as at 1 July

Net surplus/deficit

Net revaluation increment/(decrement)

Transactions with owner:

Contributions by owner:

Appropriations (equity injections)

Closing balance as at 30 June

2005

$'000

1,599

(643)

-

-

956

NOTE 10 - EQUITY

2004

$'000

1,408

191

-

-

1,599

2005

$'000

41

-

457

-

498

2004

$'000

41

-

-

-

41

2005

$'000

2,528

-

-

-

2,528

2004

$'000

-

-

-

2,528

2,528

2005

$'000

4,168

(643)

457

-

3,982

2004

$'000

1,449

191

-

2,528

4,168

Accumulate results Asset revaluation Contributed equity TOTAL EQUITY

NOTE 11 - CASH FLOW RECONCILIATION

Reconciliation of cash per Statement of Financial Position to

Statement of Cash Flows

Cash at year end per Statement of Cash Flows

Statement of Financial Position items comprising above cash:

Financial assets - cash

Reconciliation of net surplus to net cash from operating activities:

Operating surplus (deficit)

Depreciation/amortisation

Net write down of non-financial assets

Net profit on disposal of non-financial assets

Changes in assets and liabilities

Increase / (decrease) in employee provisions

Increase / (decrease) in other liabilities

Decrease / (increase) in receivables

Decrease / (increase) in other assets

Increase / (decrease) in creditors

Net cash from operating activities

2004

$'000

2,478

2,478

191

1,486

-

(3)

454

175

(289)

(261)

160

1,913

2005

$'000

3,219

3,219

(643)

1,575

528

(2)

378

27

(102)

90

(41)

1,810


1 1 2

NOTE 12 - CONTINGENT LIABILITIES AND ASSETS

Quantifiable contingencies

There are no quantifiable contingencies as at 30 June 2005 (2004: Nil).

Unquantifiable contingencies

There are no unquantifiable contingencies as at 30 June 2005 (2004: Nil).

Remote contingencies

There are no remote contingencies as at 30 June 2005 (2004: Nil).

NOTE 13 - EXECUTIVE REMUNERATION

The number of executives who received or were due to receive total remuneration of $100,000 or more:

$100,000 to $109,999

$130,000 to $139,999

$170,000 to $179,999

$180,000 to $189,999

$190,000 to $199,999

$250,000 to $259,999

The aggregate amount of total remuneration of executives

The aggregate of separation and redundancy/termination benefit

payment during the year to executives.

2004

-

1

1

-

1

-

$503,547

Nil

2005

1

-

-

1

1

1

$726,841

Nil

NOTE 14 - REMUNERATION OF AUDITORS

Financial statement audit services are provided free of charge to

AUSTRAC.

The fair value of the services provided was:

No other services were provided by the Auditor-General.

2004

$

18,000

2005

$

21,000

NOTE 15 - AVERAGE STAFFING LEVELS

The average staffing levels for AUSTRAC during the year were:

2004

89

2005

117


1 1 3

NOTE 16 - FINANCIAL INSTRUMENTS

Note 16A - Terms, conditions and accounting polices

Accounting policies and methods

(including recognition criteria and

measurement basis)

Financial assets are recognised

when control over future economic

benefits is established and the

amount of the benefit can be reliably

measured.

Cash is recognised at its nominal

amounts.

These receivables are recognised at


These receivables are recognised at


Financial liabilities are recognised

when a present obligation to another

party is entered into and the amount

of the liability can be readily

measured.

Creditors and accruals are

recognised at their nominal amounts,

being the amounts at which the

liabilities will be settled. Liabilities are

recognised to the extent that the

goods or services have been

received (and irrespective of having

been invoiced).

Nature of underlying instrument

(including significant terms and

conditions affecting the amount,

timing and certainty of cash flows)

Monies in AUSTRAC's bank

accounts are swept into the Official

Public Account nightly. Interest is not

earned by AUSTRAC.

All receivables are with entities

external to the Commonwealth.

Credit terms are net 30 days (2004:

30 days).

Amounts appropriated by the

Parliament in the current or previous

years which are available to be

drawn down by AUSTRAC.

All creditors are entities that are not

part of the Commonwealth legal

entity. Settlement is usually made

net 30 days (2004: 30 days).

Notes

6A, 6C

6B

6B

9A

Financial instrument

Financial assets

Cash/investments

Receivables/other

Appropriations

receivable

Financial liabilities

Trade creditors

Note 16B - Interest rate risk

It is considered that there is no interest rate risk.


1 1 4

Note 16C - Net fair values of financial assets and liabilities

The net fair values of cash and non-interest bearing liabilities equate to their carrying amounts disclosed in the

financial statements.

Note 16D - Credit risk exposures

AUSTRAC's maximum exposures to credit risk at reporting date in relation to each class of recognised

financial assets is the carrying amount of those assets as indicated in the Statement of Financial Position.

AUSTRAC has no significant exposures to any concentrations of credit risk.

All credit risk figures referred to do not take into account the value of collateral or other security.

NOTE 17A - APPROPRIATIONS

Note 17A - Acquittal of authority to draw cash from the consolidated revenue fund for departmental outputs

(Appropriations) from Acts 1 and 3

Balance carried from previous year

Unspent receipts from 1999-2004 where no s31 agreement was in place

Adjusted balance carried from previous year

Appropriation for reporting period (Act 1)


GST credits (FMA s30A)

Annotations to ‘net appropriations’ (FMA s31)

Unspent receipts from 2005 where no s31 agreement was in place

Available for payments

Payments made

Balance carried to the next year

Represented by:

Cash

Less: Receipts from periods of no s31 agreements in years 1999-2005 not

currently available1

Total

2004

$'000

1,040

-

1,040

17,357

225

829

933

-

20,384

17,906

2,478

2,478

-

2,478

2005

$'000

2,478

(1,495)

983

20,805

-

1,065

1,233

(203)

23,883

22,362

1,521

3,219

(1,698)

1,521

FMA = Financial Management and Accountability Act 1997Act 1 = Appropriation Act (No. 1) 2004-2005Act 3 = Appropriation Act (No. 3) 2004-2005

Note:

(1) Under Section 31 of the FMA Act, the Minister for Finance may enter into a net appropriation agreement with an

agency Minister. Appropriation Acts nos. 1 and 3 (for the ordinary annual services of government) authorise the

supplementation of an agency's annual net appropriation by amounts received in accordance with its Section 31

Agreement e.g. receipts from charging for goods and services.


1 1 5

Although AUSTRAC operated and recorded receipts as though a Section 31 agreement was in place, receipts collected

in the period 1 July 1999 to 1 December 2004 have not been captured by a Section 31 agreement.

As a result:

• Receipts collected from 1 July 1999 up to 30 June 2004 under the departmental outputs appropriations regime

that were not captured by a Section 31 agreement amounted to $2.536m. Further, receipts totalling $0.474m in

2004-05 were not captured by a Section 31 agreement;

• Spending from 1 July 1999 to 30 June 2004 totalling $1.041m, and totalling $0.271 in 2004-05, was made

without the authority of the Parliament, in contravention of Section 83 of the Constitution;

• Section 48 of the FMA Act has also been breached, as a result of the contravention of Section 83 of the

Constitution.

A year-by-year analysis of overstatement of the departmental output appropriations and overspending is given below.

Departmental s31 receipts

Departmental s31 receipts - unspent

Amount spent without an appropriation

2000

$'000

103

103

-

2001

$'000

396

396

-

2002

$'000

397

397

-

2003

$'000

707

25

682

2004

$'000

933

574

359

Sub-total

$'000

2,536

1,495

1,041

2005

1/7/04 to 1/12/04

$'000

474

203

271

TOTAL

1/7/04 to 1/12/04

$'000

3,010

1,698

1,312

1 AUSTRAC's current Section 31 Agreement was made on 2 December 2004 between our Chief Executive for and on

behalf of the Minister for Justice and Customs and the Division Manager of Government and Defence delegate of the

Minister for Finance and Administration. It is understood that options are being examined for making available for

spending any unspent receipts not previously captured by an agreement, to enable them to be spent in accordance

with Section 83 of the Constitution.


1 1 6

NOTE 17B - APPROPRIATIONS

Note 17B - Acquittal of authority to draw cash from the consolidated revenue fund for departmental outputs

(Appropriations) from Acts 2 and 4

Balance carried from previous year



Adjustments by the Finance Minister

Amounts from Advance to the Finance Minister

Refunds credited (FMA s30)

GST credits (FMA s30A)

Annotations to ‘net appropriations’ (FMA s31)

Transfer to/from other agencies (FMA s32)

Available for payments

Payments made

Appropriations credited to special accounts

Balance carried to the next year

Represented by:

Cash

Add: Appropriations receivable

Add: Receivables – Goods and Services – GST receivable from customers

Add: Return of contributed equity

Less: Other payables - Net GST payable to the ATO

Less: Payable – Suppliers – GST portion

Add: Savings in Portfolio Additional Estimates Statement

Total

2004

$'000

88

2,498

30

-

-

-

316

2,932

2,932

-

-

-

-

-

-

-

-

-

-

2005

$'000

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

FMA = Financial Management and Accountability Act 1997Act 2 = Appropriation Act (No. 2) 2004-2005Act 4 = Appropriation Act (No. 4) 2004-2005

NOTE 17C - SPECIAL ACCOUNTS

AUSTRAC has an Other Trust Monies Special Account and a Services for Other Governments and Non-Agency BodiesAccount. These accounts were established under section 20 of the Financial Management and Accountability Act 1997(FMA Act). For the years ended 30 June 2005 and 30 June 2004, both special accounts had nil balances and there

were no transactions debited or credited to them.

The purpose of the Other Trust Monies Special Account is for expenditure of monies temporarily held on trust or

otherwise for the benefit of a person other than the Australian Government.

The purpose of the Services for Other Governments and Non-Agency Bodies Special Account is for expenditure in

connection with services performed on behalf of other Governments and bodies that are not agencies under the FMA

Act.


1 1 7

NOTE 18 - SPECIFIC PAYMENT DISCLOSURES

No 'Act of Grace' payments were made during the reporting period, and there are no amounts owing as at year end.

No waivers of amounts owing to the Australian Government were made pursuant to subsection 34(1) of the FinancialManagement and Accountability Act 1997.

NOTE 19 - REPORTING OF OUTCOME

Note 19A - Net cost of outcome delivery

OUTCOME

Total

$’000

22,218

22,218

749

-

-

-

749

749

749

21,469

Total

$’000

17,812

17,812

-

6

-

397

403

403

17,409

Output

Group 5

$’000

1,197

1,197

40

-

-

-

40

40

40

1,157

Output

Group 5

$’000

1,523

1,523

-

1

-

4

5

5

1,518

Output

Group 4

$’000

4,541

4,541

519

-

-

-

519

519

519

4,022

Output

Group 4

$’000

1,481

1,481

-

-

-

263

263

263

1,218

Output

Group 3

$’000

2,162

2,162

40

-

-

-

40

40

40

2,122

Output

Group 3

$’000

1,038

1,038

-

-

-

3

3

3

1,035

Output

Group 2

$’000

8,828

8,828

109

-

-

-

109

109

109

8,719

Output

Group 2

$’000

8,440

8,440

-

3

-

113

116

116

8,324

Output

Group 1

$’000

5,490

5,490

41

-

-

-

41

41

41

5,449

Output

Group 1

$’000

5,330

5,330

-

2

-

14

16

16

5,314

2005

Departmental expenses

Total expenses

Other external revenues

Departmental

Interest on cash deposits

Revenue from disposal of assets

Reversals of previous asset write-downs

Other

Total departmental

Total other external revenues

Net cost of outcome

2004


Total expenses

Other external revenues

Departmental

Interest on cash deposits

Revenue from disposal of assets

Reversals of previous asset write-downs

Other

Total departmental

Total other external revenues

Net cost of outcome

AUSTRAC allocates all expenditure across its five output groups. Direct costs including salary and operational specific

expenditure such as travel are attributed to the relevant output group in the first instance. Overheads which cannot be allocated

directly to an output group, including corporate and IT efforts to support the five output groups, other IT expenditure and property

operating expenses, are allocated to the five outputs using standard cost accounting methods.


1 1 8

Note 19B - Major classes of revenues and expenses by output group

OUTCOME

Total

$’000

8,706

11,406

1,575

531

22,218

20,826

749

21,575

Total

$’000

6,355

9,968

1,486

3

17,812

17,600

403

18,003

Output

Group 5

$’000

423

661

85

29

1,198

1,127

40

1,167

Output

Group 5

$’000

465

931

127

-

1,523

1,535

5

1,540

Output

Group 4

$’000

1,490

2,616

325

110

4,541

4,302

519

4,821

Output

Group 4

$’000

590

767

124

-

1,481

1,233

263

1,496

Output

Group 3

$’000

991

968

152

51

2,162

2,004

40

2,044

Output

Group 3

$’000

321

630

87

-

1,038

1,045

3

1,048

Output

Group 2

$’000

3,701

4,294

623

210

8,828

8,239

109

8,348

Output

Group 2

$’000

3,179

4,555

704

2

8,440

8,416

116

8,532

Output

Group 1

$’000

2,101

2,867

390

131

5,489

5,154

41

5,195

Output

Group 1

$’000

1,800

3,085

444

1

5,330

5,371

16

5,387

2005


Employees

Suppliers


Other expenses

Total departmental expenses

Funded by:

Revenues from government

Other non-taxation revenues

Total departmental revenues

2004


Employees

Suppliers


Other expenses

Total departmental expenses

Funded by:

Revenues from government

Other non-taxation revenues

Total departmental revenues

A p p e n d i c e s

Appendix AStaffing statistics

Appendix BResouces for outcome

Appendix CCommitees and reports

Appendix DConsultancy services

Appendix EAUSTRAC locations

V I

A U S T R A C A N N U A L R E P O R T 2 0 0 4 - 0 5 : A P P E N D I X A : S T A F F I N G S T A T I S T I C S

1 2 1

Appendix A

Staffing statistics

Historical profile from 2000 - 2005

AUSTRAC human resource statistics, showing operative and paid inoperative staff and unpaid inoperative staff as at

30 June from 2000-2005, are set out below.

In relation to the method of recording:

• the tables relating to operative and paid inoperative staff report actual occupancy as at 30 June each year, so

that when an officer was on paid leave as at 30 June and another acted in the position, two officers are

recorded against one position.

• the tables include staff employed under the Public Service Act 1999.

• non-ongoing, casual and part-time staff are included in the statistics; part-time staff are shown as full-time

equivalents.

• numbers have been rounded up, to whole numbers.

Operative and paid inoperative staff 2004-05

2000-01 2001-02 2002-03 2003-04 2004-05

Central office (NSW) 49 46 47 63 100

VIC regional office 9 10 12 19 26

ACT regional office 1 - 2 3 5

QLD regional office 1 1 1 1 2

WA regional office 1 1 1 2 1

SA regional office - - - 1 1

Total 61 58 63 89 135

Unpaid inoperative staff 2004-05

2004-05

Central office (NSW) 3

VIC regional office 1

ACT regional office -

QLD regional office -

WA regional office -

SA regional office -

Total 4


1 2 2

Staff figures at 30 June 2005

The table below provides a summary by classification and shows staff employed under the Public Service Act 1999,

reflecting full-time equivalent for part-time staff. It also includes non-ongoing and casual staff as well as paid

inoperatives and those acting in a higher position at 30 June 2005. Numbers have been rounded to whole numbers.

Staff figures at 30 June 2005

Central office (NSW)

VIC regional office

ACT regional office

QLD regional office

WA regional office

SA regional office

Total

Public office

holder

M F

- -

- -

- -

- -

- -

- -

1 -

Senior

executive

service

M F

1 1

1 -

- -

- -

- -

- -

2 1

AUSTRAC

Broadband 3

(EL2)

M F

5 4

1 -

1 1

- -

- -

- -

7 5

AUSTRAC

Broadband 2

(EL1 - APS Level 6)

M F

15 21

8 4

2 1

- 2

1 -

- 1

26 29

AUSTRAC

Broadband 1

(APS Levels 1 - 5)

M F

14 36

3 8

- -

- -

- -

- -

17 44

Total

97

26

5

2

1

1

132

Part-time and non-ongoing staff at 30 June 2005

The table below is the summary of part-time and non-ongoing staff by classification and state.

Part-time staff Non-ongoing staff

State Classification group M F Total M F Total

Senior Officer Grades andequivalent

APS 1-6 and equivalent











Central office (NSW)

VIC regional office

ACT regional office

QLD regional office

WA regional office

SA regional office

TOTAL

- - -

- 5 5

- - -

- 2 2

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- 7 7

1 - 1

8 7 15

- - -

1 1 2

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

10 8 18


1 2 3

Senior Executive Service staff figures 2004-05

The table below shows Senior Executive Service (SES) Officer numbers by gender and state at 30 June 2005.

There were no SES staff separations and

one non-ongoing SES staff commencement

during the year.

Equal Employment Opportunities (EEO) in engagements

The table below is a summary of the representation of EEO groups within classifications and includes ongoing

employees only. AUSTRAC currently holds EEO data for 100 per cent of ongoing staff.

Substantive SES officers at 30 June 2005

Band NSW VIC

SES 3 Male - -

SES 3 Female - -

SES 2 Male - -

SES 2 Female - -

SES 1 Male 1 1

SES 1 Female 1 -

Total 2 1

Classification

or Equivalent

Total no. of

staff

Women ROEB ATSI PWD Staff with

EEO data

APS1

APS2

APS3

APS4

APS5

APS6

EL 1

EL 2

SES andequivalent

Total

Nil

Nil

11

20

19

36

15

12

3

116

--

--

873%

1680%

1474%

2158%

640%

542%

133%

7161%

--

--

436%

1050%

526%

617%

427%

217%

--

3127%

--

--

--

15%

--

--

--

--

--

11%

--

--

--

--

--

--

--

--

--

--

--

--

11100%

20100%

19100%

36100%

15100%

12100%

3100%

116100%

EEO groups within classification levels at 30 June 2005

Note:ROEB Race or ethnicity background ATSI Aboriginal or Torres Strait IslanderPWD Person with a disability

APS Australian Public Service OfficerEL Executive Level

SES Senior Executive Service


1 2 4

Occupational Health and Safety

This report is presented in accordance with the requirements of section 74 of the Occupational Health and Safety

(Commonwealth Employment) Act 1991.

Reporting requirements under the Act

Section 68 occurrences

(Notification and reporting of accidents and

dangerous occurrences)

Investigations

Section 45 directions

(Power to direct that workplace not be disturbed)

Section 29 notices

(Provisional improvement notices)

Section 46 notices

(Power to issue prohibition notices)

Section 47 notices

(Power to issue improvement notices)

There were no occurrences during the year that

required giving notice to Comcare under section 68 of

the Act.

No investigation was conducted.

No direction was given to AUSTRAC under section 45

of the Act.

No notice was issued under section 29 of the Act.



AUSTRAC has acted in accordance with the Occupational Health and Safety (Commonwealth Employment) Act 1991.

Training and development programs - summary statement

Net eligible training expenditure by AUSTRAC in 2004-05 was $267,275. The total number of person-days spent by

personnel in training programs during the year was 1,117. All AUSTRAC personnel attended training and development

activities during the year.

Industrial relations

There are 131 staff covered by the AUSTRAC Certified Agreement 2002 as at 30 June 2005. Two SES and nine non-

SES staff were a party to an Australian Workplace Agreement (AWA) at 30 June 2005.

The table below provides a summary by classification structure of the salary ranges available for APS employees

under AUSTRAC's Certified Agreement or an AWA.

Classifications and salary ranges at 30 June 2005

Classification or equivalent Salary Range ($)

APS 1 33,017 - 36,131

APS 2 36,753 - 41,115

APS 3 41,737 - 44,852

APS 4 45,475 - 50,459

APS 5 51,082 - 60,480

APS 6 55,442 - 68,691

EL 1 69,483 - 79,067

EL 2 81,523 - 110,692


1 2 5

Non-salary benefits provided to staff by AUSTRAC under the Certified Agreement include:

• studies assistance

• home based work opportunities

• an effective individual performance management scheme

• broadbanding of APS classifications

• a supportive and flexible work environment

Performance pay

Performance pay is not available to AUSTRAC staff under our Certified Agreement. As a result, no AUSTRAC staff

received performance pay during the reporting period.

A U S T R A C A N N U A L R E P O R T 2 0 0 4 - 0 5 : A P P E N D I X B : R E S O U R C E S F O R O U T C O M E

1 2 6

Appendix B

Resources for outcome

(1) (2) = (2) - (1)

Budget Actual Variation Budget2004-05 Expenses 2005-06

2004-05

DEPARTMENTAL APPROPRIATIONS

Output 1.1: Deterring money laundering

Output 1.2: Targeting money laundering

Output 1.3: Advice on effectiveness of FTR Act

Output 1.4: Contribution to international efforts

Output 1.5: Privacy and security

Total revenue from government (appropriations)

contributing to price of outcome

REVENUE FROM OTHER SOURCES

Output 1.1: Deterring money laundering

Output 1.2: Targeting money laundering

Output 1.3: Advice on effectiveness of FTR Act

Output 1.4: Contribution to international efforts

Output 1.5: Privacy and security

Total revenue from other sources

Total price of departmental outputs

(Total revenue from government and other sources)

Total estimated resourcing for outcome 1

(Total administrered expenses)

Average Staffing Level

$'000

5,803

8,475

1,080

3,800

1,647

20,805

10

113

2

361

2

488

21,293

21,293

103

$'000

5,154

8,239

2,004

4,302

1,127

20,826

41

109

40

519

40

749

21,575

21,575

117

$'000

(649)

(236)

924

502

(520)

21

31

(4)

38

158

38

261

282

282

14

$'000

5,821

8,501

1,083

3,813

1,652

20,870

18

99

7

297

5

426

21,296

21,296

119

A U S T R A C A N N U A L R E P O R T 2 0 0 4 - 0 5 : A P P E N D I X C : C O M M I T T E E S A N D R E P O R T S

1 2 7

Appendix C

Committees and reports

Inquiries by parliamentary and other committees

• Senate Legal and Constitutional Legislation Committee Budget Estimates Hearings: Director, Neil Jensen and

Senior Manager Corporate Services, Alf Mazzitelli appeared.

Committees convened by AUSTRAC

• Action Group into the Law Enforcement Implications of Electronic Commerce (AGEC) comprising representa-

tives from the Australian Competition and Consumer Commission, Australian Crime Commission, Australian

Customs Service, Australian Federal Police, Australian High Tech Crime Centre, Australian Prudential

Regulation Authority, Australian Securities and Investments Commission, Australian Taxation Office,

Commonwealth Director of Public Prosecutions, Department of Immigration and Multicultural and Indigenous

Affairs and the Department of Communications, Information Technology and the Arts

• AUSTRAC Partner Liaison Groups comprising representatives of law enforcement, national security, social

justice and revenue agencies in each State/Territory

• AUSTRAC Privacy Consultative Committee, comprising representatives of the Victorian Council of Civil

Liberties, Office of the Privacy Commissioner, Australian Crime Commission, Australian Privacy Foundation,

Australian Consumers Association, Australian Taxation Office, Australian Federal Police, Australian Privacy

Charter Council and AUSTRAC

• AUSTRAC Provider Advisory Group, comprising representatives from the Australian Bankers' Association,

Credit Union Services Corporation (Australia) Ltd, Australian Association of Permanent Building Societies,

Australian Finance Conference, Australian Taxation Office, Australian Federal Police, Australian Crime

Commission, and individual cash dealer organisations

• Gaming Provider Advisory Group, comprising representatives from the Australian Taxation Office, Australian

Federal Police, Australian Crime Commission, Australian Casino Association, major casinos, TABs, bookmak-

ers and other gaming industry bodies

• Proof of Identity Steering Committee comprising representatives from the Attorney-General's Department,

Australasian Centre for Policing Research, Australian Bankers' Association, Australian Crime Commission,

Australian Federal Police, Australian Road Transportation Forum, Australian Taxation Office, Centrelink,

Department of Family and Community Services, Department of Immigration and Multicultural and Indigenous

Affairs, National Road Transport Commission, NSW Registry of Births Deaths and Marriages, South Australian

Police, and representatives from the major banks

• Systems Working Group on Anti-Money Laundering Reform comprising representatives from industry sectors

including the Australian Bankers' Association, Australian Casino Association, Financial Planning Association,

securities institutes, lawyers, accountants, real estates and banks


1 2 8

Committees in which AUSTRAC has a substantial role

• Heads of Commonwealth Operational Law Enforcement Agencies (HOCOLEA) Group

• Ministerial Advisory Group on Anti-Money Laundering Reform

• Commonwealth Reference Group on Identity Security, including Identity Security Steering Committee and

Working Group on Standard Proof of Identity Framework

• Australian Anti-Money Laundering/Counter Financing of Terrorism Coordination Committee

Other committees/working groups in which AUSTRAC participates

• Australian Bankers' Association Fraud Task Force

• Australian Crime Commission National Criminal Intelligence and Operational Forum

• Australian Government Counter-Terrorism Policy Committee

• Australian Government Interdepartmental Committee on the Organisation for Economic Co-operation and

Development Bribery Convention

• Australian Prudential Regulation Authority Serious White Collar Crime Committee (Queensland)

• Australian Taxation Office Cash Economy Taskforce

• Commercial Crime Committee (Western Australia)

• Commonwealth Counter-Terrorism Legal Working Group

• Geraldton Regional Intelligence Meeting (Western Australia)

• International Counter-Terrorism Coordination Group

• Law Enforcement and National Security Clearing House Group

• Office of Legal Services Coordination Discussion Group

• Organising Committee for the 2004 Forum of Commonwealth Agencies in New South Wales Government

Business Conference

• Rainbow Coast Intelligence Meetings (Western Australia)

• Senior Intelligence Officers Group (New South Wales)

• South-West Intelligence Meeting (Western Australia)

• Treasury/Industry Consultations on the Review of the FATF 40 Recommendations

• Various law enforcement agency committees

International groups in which AUSTRAC participates

• Asia/Pacific Group on Money Laundering (APG)

• Egmont Group of Financial Intelligence Units

• Financial Action Task Force on Money Laundering (FATF)


1 2 9

Reports concerning AUSTRAC

Reports involving or mentioning AUSTRAC, including reports tabled by parliamentary committees, royal commissions

and the Auditor-General, are:

• AUSTRAC's 2003-04 Annual Report, tabled in the House of Representatives and the Senate, October 2004

• Australian National Audit Office Report on Australian Taxation Office Tax File Number Integrity

• Parliamentary Joint Committee on the Australian Crime Commission - Examination of the Annual Report for

2003-2004 of the Australian Crime Commission, June 2005

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Appendix D

Consultancy contracts for 2004-05

Consultant Name Description Contract Price Selection process (1) Justification (2)

Aub Chapman ConsultingServices Pty Ltd

AustralianGovernmentSolicitor

Deloitte ToucheTohmatsu

John Walker CrimeTrends Analysis

Walter Turnbull PtyLtd

Specialist financial sectoradvice

Specialist legal advice

Internal audit services

Money laundering research

Fraud risk assessment

$67,725 (3)

$286,000

$40,326

$10,500

$26,240 (4)

Direct Sourcing

Direct Sourcing

Select Tender

Direct Sourcing

Select Tender

Notes

(1) Explanations of selection process terms drawn from the Commonwealth Procurement Guidelines (January 2005):

Open Tender: A procurement procedure in which a request for tender is published inviting all businesses that satisfy

the conditions for participation to submit tenders.

Select Tender: A procurement procedure in which the procuring agency selects which potential suppliers are invited

to submit tenders in accordance with the mandatory procurement procedures.

Direct Sourcing: A procurement process, available only under certain defined circumstances, in which an agency

may contact a single potential supplier or suppliers of its choice and for which conditions for direct sourcing apply

under mandatory procurement procedures.

Panel: An arrangement under which a number of suppliers, usually selected through a single procurement process,

may each supply property or services to an agency as specified in the panel arrangements.

(2) Justification of decision to use consultancy:

A - skills currently unavailable within agency

B - need for specialised or professional skills

C - need for independent research or assessment

(3) contract price exceeded due to additional agreed billable work performed

(4) contract price exceeded due to additional agreed billable travel costs

B

A, B

A

A, B

A, B

Consultancy services let during 2004-05 of $10,000 or more

1 3 0

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1 3 1

Summary of the Agency's policy on the selection and engagement of consultants

AUSTRAC policy requires that the delegate must ensure that the selections processes for consultants will promote

open and effective competition to the extent practicable and achieve the best possible outcome in terms of value for

money. The main categories of purposes for which consultants were engaged were internal audit services, risk

assessments, legal advice, financial sector advice and money laundering research.

Summary of AUSTRAC's selection procedures

Agency selection procedures are set out in its Chief Executive Instructions and refer to the Commonwealth

Procurement Guidelines which outline core policies and principles for purchasing activities, including the engaging of

consultants.

All consultants were engaged by AUSTRAC in accordance with appropriate principles and practices.

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Appendix E

AUSTRAC locations

Initial contact point

Enquiries concerning access to documents, matters relating to Freedom of Information or requests for additional

information should be directed to the initial contact officer:

Policy Officer

PO Box 5516

WEST CHATSWOOD NSW 1515

Telephone: (02) 9950 0055

Facsimile: (02) 9950 0054

Information on AUSTRAC can be found on the AUSTRAC website: http://www.austrac.gov.au

AUSTRAC offices

Sydney

Level 10, Tower A, Zenith Centre

821 Pacific Highway

CHATSWOOD NSW 2067

PO Box 5516

WEST CHATSWOOD NSW 1515

Ph. 02 9950 0055

Fax. 02 9950 0054

Melbourne

Customs House,

Level 4, 414 La Trobe Street

Melbourne VIC 3000

P.O. Box 13173

Law Courts P.O.

MELBOURNE VIC 8010

Ph. 03 8636 0500

Fax. 03 8636 0501

Adelaide

8th Floor East

55 Currie Street

Adelaide SA 5000

PO Box 200

KENT TOWN SA 5071

Ph. 08 8416 2958

Fax. 08 8416 2884

Brisbane

203 Wharf Street

Spring Hill QLD 4000

PO Box 451

SPRING HILL QLD 4004

Ph. 07 3222 1433

Fax. 07 3222 1234

Canberra

Boeing House Suite 301

Level 3, 55 Blackall Street

BARTON ACT 2600

PO Box 5085

BARTON ACT 2600

Ph. 02 6120 2600

Fax. 02 6120 2601

Perth

Level 1, 619 Murray Street,

West Perth WA 6005

PO Box 586

WEST PERTH WA 6872

Ph. 08 9320 3495

Fax. 08 9320 3518

1 3 2

A U S T R A C A N N U A L R E P O R T 2 0 0 4 - 0 5 : G L O S S A R Y O F T E R M S

1 3 4

Glossary of terms

ACC Australian Crime Commission

ACS Australian Customs Service

ADI Authorised Deposit-Taking InstitutionAs set out under Section 3 of the FinancialTransaction Reports Act 1988 which includes banks, building societies and credit unions

AFP Australian Federal Police

AGEC Action Group into the Law Enforcement Implications of Electronic Commerce

AML Anti-money laundering

APG Asia/Pacific Group on Money Laundering

AQU Abalone Quota Unit

APS Australian Public Service

ARRAS AUSTRAC's Regulatory Risk Analysis System

ASEAN Association of South East Asian Nations

ASIC Australian Securities and Investments Commission

ASIO Australian Security Intelligence Organisation

ATO Australian Taxation Office

AUSTRAC Australian Transaction Reports and Analysis Centre, an agency operating within the

Attorney-General's portfolio, created to administer and oversee the provisions of the

Financial Transaction Reports Act 1988AWA Australian Workplace Agreement

Cash dealer The term 'cash dealer' is defined in Section 3 of the FTR Act and refers to those

individuals and bodies who have obligations under the FTR Act to report specified

financial transactions and to identify certain customers

CCC Corruption and Crime Commission

CMC Crime and Misconduct Commission

CSA Child Support Agency

CTC Competitive Tendering and Contracting

DFAT Department of Foreign Affairs and Trade

DSD Defence Signals Directorate

EDDSWeb AUSTRAC's electronic data delivery system - a secure website used by cash dealers

for the submission of financial transaction reports

EEO Equal Employment Opportunity

Egmont Group The Egmont Group of Financial Intelligence Units facilitates cooperation in the

exchange of financial intelligence by its members

EL Executive Level

FATF Financial Action Task Force on Money Laundering

FIAT Financial Intelligence Assessment Team

FIU Financial intelligence unit

FMA Act Financial Management and Accountability Act 1997FOI Freedom of Information

FTR Financial Transaction Reports - a general reference to all reports required to be

submitted to AUSTRAC under the FTR Act

FTR Act Financial Transaction Reports Act 1988GPAG Gaming (Industry) Provider Advisory Group

GST Goods and Services Tax

HOCOLEA Heads of Commonwealth Operational Law Enforcement Agencies

ICAC Independent Commission Against Corruption

ICTR International Currency Transfer Report - a report of currency (coin or paper money) of

A$10,000 or more (or the foreign equivalent) leaving or entering Australia

A U S T R A C A N N U A L R E P O R T 2 0 0 4 - 0 5 : G L O S S A R Y O F T E R M S

IFTI International Funds Transfer Instruction - an instruction for the transfer of funds into or

out of Australia electronically or by telegraph, to be reported by cash dealers to

AUSTRAC

MAG Ministerial Advisory Group

MOU Memorandum of Understanding - a bilateral agreement AUSTRAC has with each of

its partner agencies and international counterparts, detailing, inter alia, conditions of

access to AUSTRAC's financial transaction reports information

NSWCC New South Wales Crime Commission

NSWPol New South Wales Police Service

NTPol Northern Territory Police Service

PAG Provider Advisory Group

Partner Agency The 28 law enforcement, revenue, national security and social justice agencies

to which AUSTRAC provides financial transaction reports information

PCC Privacy Consultative Committee

PIC Police Integrity Commission

POI Proof of Identity

PPATK Indonesia's financial intelligence unit

ProviderNet An enhancement to the EDDSWeb system. This enhancement gives cash dealers

increased flexibility in the levels of access that can be granted to individual employees.

ProviderNet will also progressively provide for two way communication including the

ability to generate reporting performance statistics.

QLDPol Queensland Police Service

Remittance dealer Businesses that effectively offer parallel banking services which allow individuals or

entities to remit funds internationally

SAPol South Australia Police Service

SCTR Significant Cash Transaction Report - a report submitted by cash dealers in respect of a

cash transaction involving A$10,000 or more

SES Senior Executive Service

SMR Summary Management Report - a system to extract financial transaction report

information in a summarised or aggregated form

SRA State Revenue Authority

SUSTR Suspect Transaction Report - a report by a cash dealer, sent to AUSTRAC when the

cash dealer has reasonable grounds to suspect that information it has concerning a

transaction may be relevant to investigation of an offence against a law of Australia

SWG Systems Working Group

TASPol Tasmania Police Service

TES TRAQ Enquiry System

TRAQ Transaction Reports Analysis and Query system - the AUSTRAC system which captures

and records information from reports provided under the FTR Act

VICPol Victoria Police Service

WAPol Western Australia Police Service

1 3 5

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1 3 6

C o m p l i a n c e I n d e x

This compliance index shows the location in the report of the mandatory information specified by the Requirements forAnnual Reports for Departments, Executive Agencies and FMA Act Bodies released in July 2005.

A n n u a l r e p o r t r e q u i r e m e n t L o c a t i o n

Letter of transmittal

Aids to access

• Table of contents iv

• Glossary 134

• Index 138

• Contact officer(s) 132

• Internet home page address and internet address for report 132

Review by Secretary x-xiii

Departmental overview

• Overview description of agency 1-4

• Role and functions 1-4, 7-8

• Organisational structure 3

• Outcome and output structure 6, 7-8

Report on performance

• Review of performance during the year in relation to See performance summary tables at

outputs and contribution to outcome end of chapters

• Actual performance in relation to performance targets set out in PBS See performance summary tables at

end of chapters

• Performance of purchaser/provider arrangements N/A

• Narrative discussion and analysis of performance 15-84

• Where performance targets differ from the PBS, details of both N/A

former and new targets and reasons for change

• Performance against service charter customer service standards, 84

complaints data and response to complaints

• Discussion and analysis of financial performance 76

• Summary resource tables by outcomes 126


Corporate governance

• Statement of the main corporate governance practices in place 79-84

• Names of senior executive and their responsibilities 3

• Certification of fraud measures in place 80

A U S T R A C A N N U A L R E P O R T 2 0 0 4 - 0 5 : C O M P L I A N C E I N D E X

1 3 7

External scrutiny

• Significant developments in external scrutiny 80

• Judicial decisions and decisions of administrative tribunals 80-81

• Reports by the Auditor-General, a Parliamentary Committee or the 80-81

Commonwealth Ombudsman

Management of human resources

• Assessment of effectiveness in managing and developing human 73-75

resources

• Workplace planning, staff turnover and retention 74

• Impact and features of Certified Agreement and AWAs 73, 124-125

• Occupational Health and Safety performance 74-75, 124

• Productivity gains 73

• Statistics on staffing 121-125

• Performance pay N/A

Asset Management

• Assessment of effectiveness of asset management 77

Purchasing

• Assessment of purchasing against core policies and principles 77

Consultants and Competitive Tendering and Contracting

• Number of consultancy service contracts let and the total 76, 130-131

expenditure

• Competitive tendering and contracting contracts let and outcomes 77

Financial Statements 86-118

Other Information

• Report on performance in implementing the Commonwealth 83

Disability Strategy

• Occupational health and safety (section 74 of the Occupational 124

Health and Safety (Commonwealth Employment) Act 1991)

• Freedom of Information 81-82

• Advertising and Market Research 77

• Ecologically sustainable development and environmental 83

performance

A U S T R A C A N N U A L R E P O R T 2 0 0 4 - 0 5 : I N D E X

I n d e x

1 3 8

A

accountability see managementaccounting policies (AUSTRAC), 96-101

adoption of AEIFRS, 101-103accounting sector, 44, 127Action Group into the Law Enforcement Implications of

Electronic Commerce (AGEC), 46-47, 49, 127active alerts, 28-29activity types, 32-33addresses (AUSTRAC), 132Adelaide see South Australiaadvertising

cash dealer promotions, 20recruitment, 77

AEIFRS, 101-103AGCTPC (Australian Government Counter-Terrorism

Policy Committee), 128AGEC (Action Group into the Law Enforcement

Implications of Electronic Commerce), 46-47, 49, 127

agreements see Memoranda of Understandingalerts, active, 28-29aliases see identity fraudAML eLearning Application, xi, 8, 17-18, 20-21, 23-24analysis of FTR information, xii, 2, 16, 23, 27, 29-30, 41

assessments see assessmentsmarketing, 40reports, 22staff training and development, 39-40tools, 33-34, 39-40see also data mining

annual report, 129award, 10

anonymous accounts see identity fraudanti-money laundering (AML)

AUSTRAC role, xi, 1-4, 7-9, 15deterring see deterring money laundering, serious crime and tax evasione-learning application see AML eLearning Applicationeducation, 17identification of methods, xiinternational initiatives, 43

Anti-Money Laundering Electronic Learning Application see AML eLearning Application

Anti-Money Laundering Reform branchexpansion, 48management structure, 2-3, 79responsibility, 3appropriations, 114-116, 126

Argentina, 54ARRAS see AUSTRAC'S Regulatory Risk Analysis

SystemASEAN (Association of South East Asian Nations), 56,

57, 59Asia/Pacific Group on Money Laundering (APG), 37, 46,

48, 50, 55, 60, 128Asia Pacific region see Pacific region; South-East Asia

assessments (financial intelligence), 27, 29-30,33, 36, 38-40

asset management, 77, 106-109Attorney-General, 1Attorney-General's Department (AGD)

anti-money laundering and counter financing ofterrorism review, xi, 9, 20, 43-44, 48-50AUSTRAC's relations with, 49, 81committees, 36, 127law reform business cases, 47media release, 21security, 67Systems Working Group, 44

Audit Committee, 80Auditor-General, 80auditors' remuneration, 112audits (AUSTRAC)

independent report, 88-89internal, 80

AUSTRAC Executive, 79AUSTRAC Leadership Group, xi, 79, 81AUSTRAC management see managementAUSTRAC Management Board (AMB), 79AUSTRAC Management Team (AMT), 79AUSTRAC Partner Liaison Groups, 127AUSTRAC's Regulatory Risk Analysis System (ARRAS),

22, 23, 25Australasian Centre for Policing Research, 127Australia-Indonesia Financial Intelligence Unit

Cooperation Project, xii, 9, 57, 59Australian Anti-Money Laundering/Counter Financing of

Terrorism Coordination Committee, 128Australian Association of Permanent Building Societies

(AAPBS), 127Australian Bankers' Association (ABA), 127

Fraud Taskforce, 45, 128Australian Capital Territory

AUSTRAC regional office, Canberra, 77, 121-122, 132outposting arrangements, 34State Revenue Authority, 31

Australian Casino Association, 127Australian Competition and Consumer Commission

(ACCC), 127Australian Consumers Association, 127Australian Crime Commission (ACC)AUSTRAC outposting arrangements, 34-35AUSTRAC partner agency, 2

committees, 36, 127-129Financial Intelligence Assessment Team (FIAT), 30-32, 36FTR information dissemination, 30-32National Criminal Intelligence and Operational Forum, 36

Australian Customs Service (ACS)AUSTRAC outposting arrangements, 34AUSTRAC relations, 2committees, 36, 127FTR information dissemination, 29-32international currency transfer reports (ICTRs), 19

Australian Federal Police (AFP)AUSTRAC outposting arrangements, 34-35


1 3 9

AUSTRAC relations, 2committees, 36, 127FTR information dissemination, 30-32international co-operation, 38

Australian Finance Conference (AFC), 127Australian Government Counter-Terrorism Policy

Committee (AGCTPC), 128Australian Government Information and Communications

Technology Security Manual, 63, 65, 68Australian Government Interdepartmental Committee on

the OECD Bribery Convention, 128Australian Government Solicitor, 48, 130Australian High Tech Crime Centre, 127Australian National Audit Office (ANAO), 76, 80, 88-89,

129Australian Privacy Charter Council, 127Australian Privacy Foundation, 127Australian Prudential Regulation Authority (APRA), 127-

128Australian Public Service (APS), 73-75Australian Research Council, 45Australian Road Transportation Forum, 127Australian Securities and Investments Commission

(ASIC)AUSTRAC outposting arrangements, 34AUSTRAC relations, 2, 40committees, 36, 127financial intelligence dissemination, 30-32significant results, 12

Australian Security Intelligence Organisation (ASIO)AUSTRAC outposting arrangements, 34-35AUSTRAC relations, 2FTR information dissemination, 39

Australian Taxation Office (ATO)assessments, 11, 37, 41AUSTRAC relations, xi, 2, 35Cash Economy review, 13, 128committees, 36, 127Forensic Computing Workshop, 47FTR information dissemination, 27-32significant results, 11, 13tax file number integrity, 129

Australian Valuation Office, 76Australian Workplace Agreements (AWAs), 73-74, 124Authentication Working Group, 47authorised deposit taking institutions, 20

B

Bahamas, 54banks

committees, 127internet banking, 22see also Australian Bankers' Association; cash dealers; Reserve Bank of Australia

Belgium, 54Bermuda, xii, 9, 54, 59betting organisations see gaming industrybookmakers, 125. see also gaming industryBrazil, xii, 9, 54, 59bribery of foreign public officials, 21Brisbane see Queensland

Brunei Darussalam, 57budget (AUSTRAC) see financial managementBudget Estimates and Framework Review (BEFR), 81Bulgaria, xii, 9, 54, 59bullion dealers, 22bureaux de change (money exchangers, currencydealers), 20business continuity planning, 80business planning, 79business priorities, 4, 79Business Strategy and Directions document, xi, 4, 79business systems and practices, 44, 45

C

Cambodia, xii, 56, 57Canada, xii, 56, 57Canberra see Australian Capital Territorycash dealers

AUSTRAC advice and guidance, 24AUSTRAC relationship with, xi, 1, 43-44, 127AUSTRAC support functions, 21, 24compliance see compliance (cash dealers)education and awareness raising, 8-9, 20-25feedback from, 4, 24-25identification, 20inspections see compliance (cash dealers)reporting, xi, 17-18, 20. see also electronicreportingservice charter, 84see also authorised deposit taking institutions; banks; bureaux de change; casinos; identification of customers; insurance agents; Provider Advisory Groups (PAG); remittance dealers; securities industry; totalisator agency boards

Cash Economy review (ATO), 13cash flows, 93, 111-112casinos, 20, 127. see also gaming industryCentrelink

AUSTRAC outposting arrangements, 34-35AUSTRAC relations, 2committees, 127FTR information dissemination, 27, 30-32, 40

Certified Agreement, 73-75, 124-125CFT see counter financing of terrorismchange, identification and adaptation to, 45, 48. see also

technological changecheque fraud, 32-33Chief Finance Officer, 3, 90Child Support Agency (CSA), 2

FTR information dissemination, 27, 30-31significant results, 11-12

Chile, xii, 9, 54, 56, 59China, xii, 56Code of Conduct and Values (APS), 74Colombia, 54Comcover, 80Commercial Crime Committee (WA), 128commitments, 94committees and taskforces, 34-36, 44-45, 47, 49-50,

127-128


1 4 0

Commonwealth Counter-Terrorism Legal Working Group, 128Commonwealth Director of Public Prosecutions (DPP),

47, 127Commonwealth Disability Strategy, 83Commonwealth Fraud Control Guidelines, 80Commonwealth Ombudsman, 81Commonwealth Procurement Guidelines, 77Commonwealth Reference Group on Identity Fraud, 45Commonwealth Reference Group on Identity Security,

49, 128. see also Working Group on the Proof of Identity Framework

communication, 79Community and Public Sector Union, 73competitive tendering and contracting (CTC), 77complaints handling, 84compliance (cash dealers)

AUSTRAC business priorities, 4AUSTRAC operations, xiAUSTRAC promotion of, 9, 15, 20-21, 24-25AUSTRAC regulatory program, 7, 15improvement, 21-22, 25inspections, 22, 25

consultancy servicesAUSTRAC, 76, 130-131

consultation see also industry consultation and education; Provider Advisory Groups

contact points (AUSTRAC), 132contracts see consultancy servicesCook Islands, 54, 58corporate crime, 33corporate database see TRAQcorporate governance, xi, 4corporate information management see knowledge

managementcorporate services, 3, 73-77Corruption and Crime Commission (WA), 2counter financing of terrorism (CFT), xi-xii

AUSTRAC work, 1-2committees, 50financial intelligence, 37international cooperation, 9, 43, 53national security, 49

court proceedings, 80credit card fraud, 33Credit Union Services Corporation (Australia) Ltd

(CUSCAL), 127crime

AUSTRAC's role, xi, 1-3, 7-8committees and task forces, 36control policy, 45-46, 50financial intelligence, 12, 30, 37-38international, xiiknown/suspected criminals, 33

Crime and Misconduct Commission (Queensland), 2, 30-31

Croatia, 54CTC (competitive tendering and contracting), 77customer identification see identification of customersCustoms see Australian Customs ServiceCyprus, xii, 54, 56

D

data matching, 29data mining, xii

financial intelligence, 29, 39information technology, 72use, 22-23, 25, 27, 33-35, 40

data quality, 16, 23-24data security, 65data sources, xii, 4, 27, 29-30, 33-34, 38data warehouse, 28-29 see also TRAQdatabase see TRAQDefence Signals Directorate (DSD) certification, xi, 9, 63,

65, 68Denmark, 54Department of Communications, Information Technology

and the Arts, 47, 127Department of Family and Community Services, 127Department of Finance and Administration (DoFA), 81Department of Foreign Affairs and Trade (DFAT), 49Department of Immigration and Multicultural and

Indigenous Affairs, 127Department of Primary Industry, Water and Environment,

13Department of the Treasury, 9, 47, 128deterring money laundering, serious crime and tax

evasion, 3, 7, 14-25. see also MoneyLaundering Deterrence (MLD) branch

diamond and precious gems industry, 37Director, AUSTRAC

AML eLearning Application, 21external consultation, 81financial statements, 90international exchange agreements, 9, 54Memoranda of Understanding, 27organisational structure, 3privacy and civil liberties, 66review of year, xi-xiii

Director of Public Prosecutions (DPP), Commonwealth, 47, 127

disability services, 83dissemination of information see financial intelligencedocument retention, 20drug trafficking, xi, 11, 12

E

ecologically sustainable development, 83e-commerce, 46EDDSWeb system (electronic reporting), 16, 22, 24, 71,

83education see trainingEgmont Group of Financial Intelligence Units, 37, 55-56,

60, 128electronic commerce (e-commerce), 46Electronic Data Delivery System (EDDSWeb), 16, 22, 24,

71, 83electronic evidence, 47electronic investigation, 47electronic learning, 66. see also AML eLearning

Application


1 4 1

electronic payment systems, 47electronic reporting (EDDSWeb system), 16, 22, 24, 71,

83Elimination of Harassment Policy, 74Ellison, Chris, Senator (Minister for Justice and

Customs), iii, 1, 8, 21, 24, 44, 50message, v

email enquiries, 21, 25, 84employees see staffenforcement policy, 44enquiries (to AUSTRAC), 21, 25, 84environmentally sound procedures, 83Equal Employment Opportunity (EEO), 123equity (AUSTRAC), 111Estonia, 54ethics, conduct and values, 74executive remuneration, 112expenses (AUSTRAC), 105. see also financial

managementexternal scrutiny, 80-81extrinsic data sources, xii, 4, 27, 29-30, 33-34, 38

F

false identity see identity fraudfeedback

from cash dealers, 4, 24-25from partner agencies, 4, 36-38, 41

FIAT , 30-32, 36Fiji, 58Financial Action Task Force on Money Laundering

(FATF), 55, 59-60, 128mutual evaluation, xi, 9, 20, 46, 48, 50Non-Cooperative Countries and Territories (NCCT) List, 21, 55recommendations, xi, 43-44, 46, 55, 128strategic capabilities, 37typologies development, 55

financial instruments (AUSTRAC), 113-114financial intelligence, xi-xii, 2, 7-8, 22, 43, 45

access to, 27-28, 40dissemination, 27-30, 36, 40-41international exchange of, 2, 53-55, 58-60national security, xi, 27, 39tools, 33-34see also financial transaction reports (FTR) information

financial intelligence assessments, 27, 29-30, 33, 36, 38-40

Financial Intelligence Assessment Team (FIAT), 30-32, 36financial intelligence units (FIU) see international

cooperationfinancial management (AUSTRAC), 76-77, 81financial performance, 76, 91Financial Planning Association, 127financial position, 76, 92financial sector

AUSTRAC consultation, xi, 44-45AUSTRAC role, 1, 7, 15, 47change in, 46-48, 53feedback, 21

financial statements (AUSTRAC), 86-118

notes to and forming part of, 95-118reporting, 80

Financial Transaction Reports Act (FTR Act)AUSTRAC advice on effectiveness, 3, 8, 42-50AUSTRAC's functions and operations, 1, 20-21, 23-25, 63, 71, 83compliance with see compliance (cash dealers)education and advice on provisions, 77, 84

financial transaction reports (FTR) information, 7access to, 2, 27-28analysis & monitoring see analysis of FTR informationAUSTRAC's role, 1collection & storage, xii, 15-16, 22, 24, 28dissemination see financial intelligenceinformation technology, 71integrity of reports, 24management, 40privacy, 66quality, xi, 4, 7, 16, 20, 22-24significant results, 12statistics, 17-20timeliness, 16use of, 7, 27-29, 34, 38, 41value adding see analysis of FTR informationvolume of reporting, 8-9, 16, 20, 24, 71see also financial intelligence; international currency transfer reports (ICTRs); international funds transfer instructions (IFTIs); significant cash transaction reports (SCTRs); suspect transaction reports (SUSTRs); TRAQ

foreign financial intelligence units seeinternational cooperation

Forum of Commonwealth Agencies in New South Wales, 128

France, 54fraud, 11, 32-33, 37, 40, 45fraud control (AUSTRAC), 80freedom of information (FOI) statement, 81-82FTR Act see Financial Transaction Reports Actfunding see appropriations; financial management

G

gaming industry xi, 1, 7, 15, 44, 46-47, 127. see also casinos; totalisator agency boards

Gaming Provider Advisory Group (GPAG), 20, 44, 81, 127

gateway, xi, 9, 63, 65, 67-68geocoding, 22, 33, 39Geraldton Regional Intelligence Meeting (WA), 128government departments and agencies, liaison with, xii,

27-28, 34, 43-44, 47, 57see also partner agencies

government policy development, 43-46, 49-50Guernsey, 54

H

harassment, 74


1 4 2

Heads of Commonwealth Operational Law Enforcement Agencies (HOCOLEA), 46, 128

Help Desk, 21, 24-25, 83-84highlights of the year, 8-10HOCOLEA (Heads of Commonwealth Operational Law

Enforcement Agencies), 46, 128home based work policies, 73Hong Kong, xii, 56human resource management, 73. see also staff

I

ICTRs see international currency transfersidentification of customers, 1, 15, 44-45, 47, 49. see also

identity fraudidentity fraud, xi, 7, 11, 33, 45, 50Identity Security Steering Committee, 128IFTIs see international funds transfer instructionsimmigration related offences, 33Independent Commission against Corruption (ICAC,

NSW), 2, 31Indonesia

Australia-Indonesia Financial Intelligence Cooperation Project, xii, 9, 57, 59exchange of financial intelligence, 54Jakarta Centre for Law Enforcement Cooperation, 10, 58mentoring, 57visits and attachments, xii, 56

industrial relations, 124-125industry consultation and education, xi-xii, 9, 20-22, 25,

43-45, 47information circulars, 21, 24, 66information economy, 48information management see knowledge managementinformation security, 80information technology (IT), 3, 71-72

feedback management and analysis, 37gateway see gateway

international assistance, 10, 57, 58, 60, 72maintaining facilities, 72managing change, 45security, 63, 65, 68systems and solutions, 44, 71-72systems redevelopment, 31training and awareness program, 63, 65see also data mining; electronic reporting; gateway; Summary Management Reports (SMR); TRAQ

Information Technology (IT) branch, 3, 79Information Technology (IT) Facilities section, 3Information Technology (IT) Systems section, 3Information Technology Security Experts Advisory Group,

47inquiries (to AUSTRAC), 21, 25, 84inspections see compliance (cash dealers)Institute of Public Administration of Australia annual

report awards, 10insurance agents, 20intelligence see financial intelligenceinternal audit, 80internal controls, 80

internal planning, 48international accounting standards, 101-103international co-operation, xi-xii, 2-4, 8, 52-60

changing circumstances, 43, 54exchange of financial intelligence, 2, 53-55, 58-60future priorities, 58global anti-money laundering systems, 57

information exchange agreements, 2, 9, 54, 58-60mentoring program, 10, 57-58, 60participation in international organisations, 55-56, 59-60performance summary, 59-60standards, 46technical assistance and training programs, xii,2, 4, 8, 10, 25, 53, 58-60, 71-72typologies, 37, 55visits and attachments, xii, 56, 58-60see also Asia Pacific Group on Money Laundering; Egmont Group; Financial Action Task Force on Money Laundering (FATF)

International Counter-Terrorism Coordination Group (ICTCG), 128

international currency transfer reports (ICTRs)collection, 16definition, 1statistics, 19international funds transfer instructions (IFTIs)collection, 16definition, 1statistics, 8-9, 18-19use of data, 11

International section, 3internet

AUSTRAC sites, 8, 23-24, 66banking, 22fraud, 32see also ALM eLearning application; EDDSWeb; websites

intranet (AUSTRAC), 77investigationsinternational cooperation, 10

partner agencies, xi, 2, 7, 11-12, 22, 27, 29, 36-37, 47

Ireland, 54Isle of Man, 54Israel, 54IT see information technologyItaly, xii, 54, 56

J

Jakarta Centre for Law Enforcement Cooperation, 10, 58Japan, xii, 56job evaluation, 75

K

Know your Customer provisions, 7, 13, 20-22, 44


1 4 3

knowledge discovery see data miningknowledge management, 77Korea, Republic of, xii, 54, 56KPMG International Forensic Training, 56

L

Laos, 57-58law enforcement agencies (LEA)

AUSTRAC relationships with, xi, 2, 7, 46, 127-128committees and task forces, 35-36financial intelligence, 27-28FTR information use, 11-12see also Action Group into the Law Enforcement Implications of Electronic Commerce (AGEC); Australian Crime Commission; Australian Customs Service; Australian Federal Police; Australian Securities and Investments Commission; Heads of Commonwealth Operational Law Enforcement Agencies (HOCOLEA); investigations; partner agencies

Law Enforcement and National Security Clearing House Group, 128

law reform business cases, 47lawyers see solicitorsLeadership Group, xi, 79, 81Lebanon, xii, 54, 56legal sector see solicitorslegislation and regulations, 4, 8, 44, 46-47, 80. see also:

Financial Transaction Reports Actlocations (AUSTRAC), 132

M

Malaysia, xii, 54, 56, 57management, 78-84

see also organisational structure; strategic management and analysis

market research, 77Marshall Islands, 58Mauritius, 54Melbourne see VictoriaMemoranda of Understanding (MOUs)

international, 54partner agencies, 27

mentoring program, 10, 57-58, 60Minister for Justice and Customs (Sen. Chris Ellison), iii,

1, 8, 21, 24, 44, 50message, v

Ministerial Advisory Group (MAG) on AML reform, 9, 44, 50, 128see also Systems Working Group

Misuse of Drugs Act 1990, 12money laundering

statistics and trend, 32-33see also anti-money laundering (AML)

Money Laundering Deterrence (MLD) branchorganisational structure, 3, 79

overview, 3see also deterring money laundering

Money Laundering Targeting (MLT) branchinternal audit, 80organisational structure, 3, 79overview, 3see also targeting money laundering

money transmitters see cash dealers; remittance dealersmonitoring system, xii, 12, 34Monitoring and Analysis section, 3motor vehicle sector, 22mutual evaluation (FATF), xi, 9, 20, 46, 48, 50Myanmar, 57

N

national security agenciesAUSTRAC relationship with, 2, 7, 49-50, 127financial intelligence, xi, 27, 39international cooperation, xii

Netherlands, 54New South Wales

AUSTRAC central office, Sydney, 121-122, 132Crime Commission (NSWCC), 2, 27, 30-32, 34,36, 40Independent Commission against Corruption (ICAC), 2, 31outposting arrangements, 34, 40partner agencies' personnel, 35Police Integrity Commission (PIC), 2, 31Police Service (NSWPOL), 27, 30-32, 34Registry of Births, Deaths and Marriages, 127State Revenue Authority (SRANSW), 30-31Supreme Court, 12

New Zealand, 54Non-Cooperative Countries and Territories (NCCT) List,

21, 55Northern Territory Police Service (NTPOL), 30-32

O

occupational health and safety (OH&S), 74-75, 124OECD Bribery Convention, 128Office of Legal Services Coordination Discussion Group,

128Office of the Privacy Commissioner, 29, 66, 127offices (AUSTRAC), 132Ombudsman (Commonwealth), 81online access see TESorganisational structure, 2-3, 44, 45

chart, 3outcome-output structure, 2, 7-8

components of outputs, 6financial reporting, 117-118resources for outcome, 126see also performance summaries

outposted staff, 29, 34-35, 40, 48outputs see outcome-output structureoutsourcing see consultancy services


1 4 4

overseas co-operation see international co-operation

P

Pacific Islands Financial Intelligence Unit DatabaseProject, 10, 58Pacific region, xii, 9, 53-58, 60Palau, 58Palestinian Islamic Jihad, 21Panama, xii, 9, 54, 59parliamentary committees & reports, 80-81, 127, 129partner agencies

AUSTRAC relationships, xi-xii, 2, 4, 7, 40-41, 43-44, 47committees and task forces, 36feedback, 4, 36-37, 41financial intelligence dissemination & use, 16, 22, 27-34, 39, 72industry consultation, 20privacy, 66training and support, xi, 25, 27, 34-35, 38-39, 49see also investigations; law enforcement agencies; Memoranda of Understanding; revenue agencies

Partner Liaison and Support (PLS) section, 3, 34, 80Partner Liaison Groups, 127payables, 110performance management (staff), 73, 75performance measurement see performance summariesperformance pay, 125performance reporting, 6-13performance summaries

advice on FTR Act effectiveness, 48-50deterrence, 23-25international cooperation, 59-60privacy and security, 67-68targeting, 39-41

Perth see Western AustraliaPhilippines, xii, 56, 57POISC see Proof of Identity Steering CommitteePoland, 54Police Integrity Commission (NSW), 2, 31Portugal, 54PPATK see Indonesiapredictive analyses see data miningprice performance measures see performance

measurementprivacy, 3-4, 8, 63, 66-68Privacy Commissioner, 29, 66, 127Privacy Consultative Committee, 44, 66, 81, 127Proceeds of Crime Act 2002, 1, 15productivity gains, 73proof of identity see identification of customersProof of Identity Steering Committee (POISC), 45, 127property management, 77protective security see security (AUSTRAC)Protective Security Manual (PSM), 66-67Protective Security Risk Review, 63, 67-68Provider Advisory Group (PAG), xi, 20, 44, 81, 127provisions, 110

ProviderNet, 22, 71public

advice & guidance to, 24reporting obligations, 15, 19-21, 23service charter, 84

publications, 45purchasing, 76, 77

Q

quality & quantity performance measures. seeperformance summaries

QueenslandAUSTRAC regional office (Brisbane), 121-122, 132Crime and Misconduct Commission (CMC), 2, 30-31outposting arrangements, 34Police Service (QLDPOL), 29-32, 34-35significant results, 11

queries, 21, 25

R

Rainbow Coast Intelligence Meetings (WA), 128real estate sector, 44, 127records management, 75, 77recovery plans, 80recruitment, 30, 73, 77reform process see government policy developmentregional bodies see international cooperationregulatory role (AUSTRAC), 1, 15, 43, 45-46remittance dealers, 9, 18, 20reporting see financial transaction reports (FTR)

informationReporting and Compliance (R&C) section, 3reports concerning AUSTRAC, 127, 129research projects, 45Reserve Bank of Australia (RBA), 21revenue (AUSTRAC), 104, 126revenue agencies, xi, 2, 7, 27-28, 36, 46, 127. see also

Australian Taxation Office (ATO); investigations; partner agencies

review of Australia's anti-money laundering and counter financing of terrorism framework, xi, 9, 20, 43-44, 48-50

risk management, 22-23, 25, 64, 79-80Romania, xii, 9, 54, 59Russia, xii, 55, 56

S

Samoa, 58searching databases see TESsecurities industry, 37, 127security (AUSTRAC), 3-4, 8, 63-68Senate, 80, 127Senior Executive Service (SES), 73, 123Senior Intelligence Officers Group (NSW), 128


1 4 5

senior staff, 3, 73, 79, 112, 123service charter, 84signatories

third party, 21verification, 22see also identification of customers

significant cash transaction reports (SCTRs)collection, 16definition, 1statistics, 17-18

significant results (2004-05), 11-13Singapore, 54, 55, 57skills, 4, 44-45, 74Slovakia, 54Slovenia, 54social justice agencies, xi, 2, 7, 27-28, 127social security fraud, 32solicitors, 15, 17, 20, 44, 127South Africa, xii, 54, 56South Australia

AUSTRAC regional office, Adelaide, 121-122, 132committees, 36outposting arrangements, 34Police Service (SAPOL), 30-32, 36, 127State Revenue Authority, 31

South-East Asia, xii, 12Counter Terrorism capacity building program, 9developing FIUs, 10, 53-54, 57, 60, 76

South-West Intelligence Meeting (WA), 128Spain, 54special accounts, 116specific payment disclosures, 117sports betting see gamingspyware, 47staff, xiii

Equal Employment Opportunity (EEO), 123home based work, 73human resource management, 73industrial relations, 124-125job evaluation, 75managing change, 45occupational health and safety (OH&S), 74-75, 124outposted, 29, 34-35, 40, 48performance management, 73, 75performance pay, 125productivity gains, 73public service classifications, 73, 75recruitment, 30, 71, 73, 77security, 63-66, 68skills, 4, 44-45, 74statistics, 112, 121-125training and development, 45, 66, 68, 73, 124work environment, 73workforce planning and retention, 44, 73-74see also consultancy services

State and Territory agencies, 2Steering Committee on Proof of Identity (POISC), 45, 127Strategic Analysis Unit, xi, 37Strategic Coordination section, 3strategic management and analysis, 4, 36, 38-39, 79

Strengthening Regional Intelligence Units initiative, 76structuring of financial transactions, 11-12, 32-33Summary Management Reports (SMRs), 28-29superannuation cashback promoters, 12suspect transaction reports (SUSTRs)

activity types, 32-33analysis, 36collection, 15definition, 1dissemination and use, 30-32, 36-37

significant results, 11statistics and trends, 17, 39Suspect Transaction Reports Groups, 36suspicion type classification, 32-34suspicious behaviour of customer, 32-33Sydney see New South Walessystems see information technologySystems Working Group (SWG) on Implementation of

Anti-Money Laundering Reforms, 9, 44, 50, 127. see also Ministerial Advisory Group

T

TABs (totalisator agency boards), 127. see also gamingindustry

targeting money laundering, serious crime & tax evasion, 3, 7, 26-41

taskforces see committees and taskforcesTasmania

abalone industry, 13Police Service (TASPOL), 31-32tax evasionAUSTRAC's role, xi, 1-3, 7-8statistics and trends, 32-33see also Australian Taxation Office

tax havens, xitechnical assistance and training see international

cooperationtechnological change, xii, 16, 30, 45-47, 49, 73Telecommunications (Interception) Act 1979

Review of Access to Communications, 47telephone queries, 25, 84terrorism see counter financing of terrorism (CFT)TES (TRAQ Enquiry System), 27-30, 39-41

availability, 28-29, 41future priorities, 38information technology, 71-72searching activity, 28-29, 71searching tools, 33significant results, 11-13training and support, 35use, 34

text mining, 33, 39Thailand, xii, 54, 56, 57Tonga, 58totalisator agency boards (TABs), 127. see also gaming

industrytraining, 45

awareness of obligations under FTR Act, 77cash dealers, xiinternational see international cooperation


1 4 6

partner agencies, 34-35, 39-40, 47staff, 16, 30, 39-40, 75see also AML eLearning Application

TRAQ (Transaction Reports Analysis and Query) database, 27-28enquiry system see TES

travellers cheques, 33Treasury, 9, 47Treasury/Industry Consultations on the Review of the

FATF 40 Recommendations, 128typologies, 37, 55

U

UNITA (National Union for the Total Independence of Angola), 21

United Kingdom (UK), 11, 54United Nations (UN), 56

Charter of the United Nations (Anti-terrorism Persons and Entities) List, 21

United States (USA), xii, 54, 56users of FTR information see partner agencies

V

value added information see analysis of FTR informationVanuatu, xii, 54, 56, 58Venezuela, 54Victoria

AUSTRAC regional office, Melbourne, 121-122,132committees, 36outposting arrangements, 34, 40Police Service (VICPOL), 29-32, 34-35, 36State Revenue Authority, 31

Victorian Council of Civil Liberties, 127Vietnam, 57

W

web-based reporting system see also EDDSWebwebsites

AML e-Learning Application, 24AUSTRAC, 8, 23publishing, 63, 66

Western AustraliaAUSTRAC regional office, Perth, 121-122, 132Commercial Crime Commission, 128committees, 128Corruption and Crime Commission, 2, 31-32outposting arrangements, 34Police Service (WAPOL), 30-32State Revenue Authority (SRAWA), 31

workforce planning and retention, 44, 73-74Working Group on the Proof of Identity Framework, 45,

49, 128World Bank, 56

austrac annual report 2005

Documents