Austrac: says major banks are at a high risk of criminal activity

Austrac, the financial crimes agency said Australia’s major banks were at high risk to money laundering and terrorism financing activities  

This high rating is based on assessments of the criminal threat environment, inherent vulnerabilities in the subsector, and consequences associated with the criminal threat, Austrac said on Monday.  

The regulator cited large customer bases, high exposure to cash, and ‘very high’ exposure to foreign jurisdictions as reasons for this rating. 

According to Austrac, suspected money laundering was reported in 46 percent of suspicious matter reports sampled for its latest assessment, while major banks were identified in two-thirds of all money laundering-related intelligence reports. 

“Most major banks faced a high level of vulnerability when it comes to money laundering and terrorism financing risk and have a mixed record of applying risk mitigation strategies,” the regulator said.  

"There have been significant and systemic deficiencies detected in the subsector over recent years. Governance and assurance around [money laundering and terrorism financing] compliance has been identified as a particular concern, and risk mitigation strategies are not always applied consistently across a reporting entity," Austrac said in a report. 

The financial crimes regulator released four new banking sector risk assessments - the latest in a series of assessments developed to help identify, understand and disrupt serious criminal activity targeting Australia’s financial system and community. 

The new risk ratings for the banking sector range from medium (foreign subsidiary banks and foreign bank branches) to high (major banks and other domestic banks). 

As for terrorism-related financing, Austrac noted that much suspicious matter reports were based on adverse media about a customer rather than suspicious transactions.  

"Therefore, actual exploitation of the {major bank} subsector is likely to be more limited,” Austrac said. 

Vital that banks protect their business, customers and the community 

Austrac chief executive, Nicole Rose said it’s vital the banking sector in Australia uses these risk assessments to help them to protect their business, customers, and the Australian community from criminal threats. 

“Criminals will exploit any gaps and use sophisticated methods for their greed,” Rose said. 

“We are navigating a rapidly changing financial system and advances in technologies and platforms. That is why the government, law enforcement, and the finance sector must continue to work together to protect Australia’s financial system and Australians from serious and organised crime.” 


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