AUSTRAC's administration of its financial intelligence function

Information technology Crime Tax evasion Counter-terrorism Australia
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This audit assessed the effectiveness of the Australian Transaction Reports and Analysis Centre's (AUSTRAC) arrangements for processing financial intelligence, to assist domestic partner agencies and international counterparts in their operations and investigations.

Overall conclusion:

AUSTRAC plays an important part in the fight against organised crime and in protecting the integrity of Australia’s financial environment. Its financial intelligence is intended to contribute to the operations of its partner agencies in combating money laundering, the financing of terrorism and other forms of serious and organised crimes. These crimes can range from tax and welfare fraud, drug related crimes, to threats to national security, including people smuggling.

AUSTRAC’s financial intelligence is highly valued by partner agencies for its contribution to their operations and management of risks. Through its systems, AUSTRAC provides partner agencies with near real-time access to financial transactions data, and is uniquely positioned to prepare financial intelligence based on its analysis of this data.

While AUSTRAC’s financial intelligence is highly valued both domestically and internationally, its effectiveness in terms of countering money laundering and the financing of terrorism and other forms of serious and organised crime is not readily quantifiable. Data on the impact of AUSTRAC’s financial intelligence on the operations of law enforcement agencies is limited. However, the ATO and DHS–Centrelink have reported using AUSTRAC’s financial intelligence in more than 2700 cases in 2011–12, resulting in savings of more than $255 million.

AUSTRAC has well established and sound arrangements for processing and disseminating its financial intelligence. AUSTRAC regularly seeks the advice of its partner agencies as to their priorities for financial intelligence, and is continually refining its approach to analysing and disseminating its intelligence to meet their requirements. The agency has mature arrangements to process assessments, and disseminate financial intelligence reports to domestic partner agencies and international counterparts. A sound quality assurance mechanism is also in place for all financial intelligence reports. However, there is room to strengthen the administration of the financial intelligence function. In particular, improvements could be made to: the arrangements for monitoring access to, and further dissemination of, AUSTRAC’s data by partner agency personnel; workload management; and performance reporting. In addition, attention needs to be given to the long–term contingency management of the agency’s IT infrastructure (data centre). In this regard, the Government announced as part of the 2013–14 Budget that it will invest $16.1 million over four years to establish a new off‑site data centre.

AUSTRAC has in place MOUs (Memorandum of Understanding) with each of its partner agencies, and exchange agreements with international counterparts which clearly set out respective obligations for all parties in respect of the exchange of financial intelligence. Appropriately, the MOUs set out arrangements in respect to AUSTRAC and partner agencies’ obligations in safeguarding AUSTRAC’s financial intelligence. At present, assurance as to partner agency compliance in this regard is provided by way of a letter from the partner agency to AUSTRAC. These arrangements would be enhanced by AUSTRAC exercising its right to periodically review access to, and further dissemination of, AUSTRAC’s data by partner agency personnel.

With over 59 million FTRs being provided annually, AUSTRAC is faced with the challenge of maintaining assessment throughput and prioritising key assessment types. A workload queue (backlog) developed for two key financial intelligence assessment types, and agreed processing times were not being met. Management reporting did not provide adequate visibility as to the extent, and reasons for the development of the workload queues or for performance against agreed processing times. AUSTRAC has advised that its Enhanced Analytics Capability Project is intended to improve administrative arrangements including internal reporting.

AUSTRAC has arrangements to monitor and review feedback provided by partner agencies about the intelligence it disseminates. However, these arrangements are not yielding useful management information because of the low rates of feedback being returned by partner agencies. Reviewing its approach to gathering structured feedback from partner agencies would assist AUSTRAC to better report the use and value of its financial intelligence.

In addition, AUSTRAC’s approach to measuring and reporting its performance provides only limited insight into whether it is meeting the objectives of the FIU and the impact of the program overall. Reviewing the performance indicators and setting appropriate targets would provide greater assurance and transparency to its public reporting.

The ANAO has made three recommendations that are directed towards improving AUSTRAC’s arrangements for processing financial intelligence to assist domestic partner agencies and international counterparts in their operations and investigations. The recommendations relate to: strengthening administrative arrangements in relation to periodically reviewing access to, and dissemination of, AUSTRAC financial intelligence; improving management of the assessment of financial intelligence; and providing greater assurance and transparency to AUSTRAC’s public reporting of performance against program deliverables and key performance indicators.

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