Australian Transaction Reports and Analysis Centre

Australian Transaction Reports and Analysis Centre

Australian Transaction Reports and Analysis Centre

Section 1: Agency overview and resources

1.1Strategic direction statement

The Australian Transaction Reports and Analysis Centre (AUSTRAC) is Australia’s anti-money laundering and counter-terrorism financing (AML/CTF) regulator and specialist financial intelligence unit.

AUSTRAC’s vision is for an Australian community that is hostile to money laundering, financing of terrorism, serious and organised crime, including people smuggling, and tax evasion.

As a regulator, AUSTRAC oversees compliance with obligations under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act) and the Financial Transaction Reports Act 1988(FTR Act) for approximately 16,000 businesses across diverse industry sectors, including financial services providers, the gambling industry, bullion dealers, and remittance service providers.

As Australia’s financial intelligence unit, AUSTRAC collects and analyses financial information provided by regulated entities to assist Australian law enforcement, national security, social justice and revenue agencies, and certain international counterparts, in the investigation and prosecution of serious criminal activity, including money laundering, terrorism financing, organised crime and tax evasion.

In 2014–15, AUSTRAC will continue to improve and enhance all aspects of its dealings with its diverse regulated population. AUSTRAC will also continue to consult with its stakeholders to minimise compliance costs and the impact of regulatory changes. AUSTRAC will actively engage with the government’s objective of reducing the regulatory burden and identify opportunities to cut red tape and limit the flow of new regulation, particularly through its involvement in the statutory review of the operation of Australia’s AML/CTF regime.

AUSTRAC takes a risk-based approach to the supervision of its regulated entities and will undertake appropriate, measured enforcement action supported by the powers available to it under the AML/CTF Act. AUSTRAC will continue to leverage the opportunities that arise from incorporating intelligence and investigative priorities with its supervisory functions. This enables resources to be focused on areas where they will have the greatest impact—in industry sectors most vulnerable to the risk of money laundering and terrorism financing.

AUSTRAC will also continue to work closely with the Attorney-General’s Department to facilitate the Financial Action Task Force’s mutual evaluation of Australia’s AML/CTF regime. The Financial Action Task Force sets the global standards for AML/CTF measures and its review of Australia’s regime will provide invaluable guidance and feedback on Australia’s continuing efforts to combat money laundering and terrorism financing.

AUSTRAC will continue to strengthen its support to whole-of-government initiatives and priorities focused on combating organised crime, tax evasion and threats to Australia’s security. As part of this commitment, AUSTRAC will also continue to provide critical financial intelligence to Commonwealth, state and territory partner agencies and international counterparts, and support national investigations and taskforces.

Implementation of AUSTRAC’s intelligence system, the combating organised crime—enhanced analytical capability programme, will continue in 2014–15. The system will give AUSTRAC the ability to follow the money trail in a timely way, which is critical to detection, investigation and disruption of planned criminal and terrorist activity.

AUSTRAC will maintain its commitment to international capacity-building by providing technical assistance and training to a range of overseas financial intelligence units and other agencies. AUSTRAC will also continue to contribute to global efforts to combat money laundering, terrorism financing and major crime through:

•information exchange with counterpart financial intelligence units

•active involvement in international bodies

•continuing development of Australia’s AML/CTF framework to meet international standards.

In summary, in 2014–15 AUSTRAC will further strengthen partnerships with industry, its partner agencies and international counterparts. It will contribute to protecting the integrity and global reputation of the Australian financial environment and economy by supporting the Australian Government’s ongoing commitment to combating serious and organised crime, tax evasion, people smuggling and terrorism.

1.2Agency resource statement

Table 1.1 shows the total resources from all sources.

Table 1.1: Agency resource statement—Budget estimates for 2014–15 as at Budget May 2014

Estimate of
prior year / Actual
amounts / + / Proposed / = / Total / available
available in / at Budget / estimate / appropriation
2014–15 / 2014–15 / 2014–15 / 2013–14
$’000 / $’000 / $’000 / $’000
ORDINARY ANNUAL SERVICES1
Departmental appropriation
Prior year departmental
appropriation2 / 11,079 / – / 11,079 / 11,079
Departmental appropriation3 / – / 56,855 / 56,855 / 56,023
s 31 relevant agency receipts4 / – / 1,557 / 1,557 / 7,846
Total ordinary annual services / 11,079 / 58,412 / 69,491 / 74,948
OTHER SERVICES5
Departmental non-operating
Equity injections / – / – / – / 8,565
Total other services / – / – / – / 8,565
Total available annual
appropriations / 11,079 / 58,412 / 69,491 / 83,513
Total net resourcing for agency / 11,079 / 58,412 / 69,491 / 83,513

All figures are GST exclusive.

1. Appropriation Bill (No. 1) 2014–15.

2. Estimated adjusted balance carried forward from previous year.

3. Includes an amount of $3.137m in 2014–15 for the departmental capital budget (see Table3.2.5 for further details). For accounting purposes this amount has been designated as ‘contributions by owners’.

4. Section 31 relevant agency receipts—estimate.

5. Appropriation Bill (No. 2) 2014–15.

1.3Budget measures

Budget measures announced since the 2013–14 Mid-Year Economic and Fiscal Outlook(MYEFO) relating to AUSTRAC are detailed in Budget Paper No.2 and are summarised in Part1 of Table1.2. MYEFO measures not previously reported in a portfolio statement are summarised in Part2.

Table 1.2: Agency 2014–15 Budget measures

Part 1: Measures announced since the 2013–14 MYEFO

2013–14 / 2014–15 / 2015–16 / 2016–17 / 2017–18
Programme / $’000 / $’000 / $’000 / $’000 / $’000
Revenue measures
Australian Transaction Reports and Analysis Centre—industry contribution / 1.1
Administered revenues / – / 10,137 / 22,726 / 21,266 / 24,960
Total revenue measures / – / 10,137 / 22,726 / 21,266 / 24,960
Expense measures
Australian Transaction Reports and Analysis Centre—industry contribution / 1.1
Departmental expenses / – / 156 / – / – / –
Total expense measures / – / 156 / – / – / –

Prepared on a Government Finance Statistics (fiscal) basis.

Part 2: MYEFO and other measures not previously reported in a portfolio statement

2013–14 / 2014–15 / 2015–16 / 2016–17 / 2017–18
Programme / $’000 / $’000 / $’000 / $’000 / $’000
Measures
Public service efficiencies / 1.1
Departmental expenses / (7) / (38) / (77) / (104) / (7)
Reforms to APS management and efficient procurement of agency software / 1.1
Departmental expenses / (84) / (109) / (147) / (96) / –
Temporary increase in the efficiency dividend / 1.1
Departmental expenses / – / (580) / (1,289) / (2,016) / (2,016)
Efficiency Dividend—
a further temporary increase
of 0.25 per cent / 1.1
Departmental expenses / – / (145) / (285) / (426) / –
Total measures / (91) / (872) / (1,798) / (2,642) / (2,023)

Prepared on a Government Finance Statistics (fiscal) basis.

Section 2: Outcomes and planned performance

2.1Outcomes and performance information

Government outcomes are the intended results, impacts or consequences of actions by the government on the Australian community. Commonwealth programmes are the primary vehicle by which government agencies achieve the intended results of their outcome statements. Agencies are required to identify the programmes that contribute to government outcomes over the budget and forward years.

AUSTRAC’s outcome is described below together with its related programme, specifying the performance indicators and targets used to assess and monitor the performance of AUSTRAC in achieving government outcomes.

Outcome 1: A financial environment hostile to money laundering, financing of terrorism, major crime and tax evasion through industry regulation and the collection, analysis and dissemination of financial intelligence

Outcome 1 strategy

AUSTRAC achieves its outcome by operating as Australia’s AML/CTF regulator and financial intelligence unit. AUSTRAC’s strategy involves:

•ongoing implementation of Australia’s AML/CTF regime in partnership with industry, government and partner agencies

•maintaining the trust of the community, industry and government in AUSTRAC as Australia’s AML/CTF regulator

•adopting a risk-based approach to improving industry compliance with their obligations, including through pursuing a strategic enforcement policy

•maintaining AUSTRAC’s reputation as a global leader in collecting, analysing and disseminating financial intelligence.

Outcome 1 expense statement

Table 2.1 provides an overview of the total expenses for Outcome 1, by programme.

Table 2.1: Budgeted expenses for Outcome 1

Outcome 1: A financial environment hostile to money laundering, financing of terrorism, major crime and tax evasion through industry regulation and the collection, analysis and dissemination of financial intelligence / 2013–14
Estimated / 2014–15
actual / Estimated
expenses / expenses
$’000 / $’000
Programme 1.1: AUSTRAC
Departmental expenses
Departmental appropriation1 / 60,988 / 55,275
Expenses not requiring appropriation in the budget year2 / 6,599 / 7,710
Total expenses for Outcome 1 / 67,587 / 62,985
2013–14 / 2014–15
Average staffing level (number) / 268 / 259

Note: Departmental appropriation splits and totals are indicative estimates and may change in the course of the budget year as government priorities change.

1. Departmental appropriation combines ‘Ordinary annual services (Appropriation Bill No. 1)’ and ‘Revenue from independent sources (s31)’.

2. Expenses not requiring appropriation in the budget year are made up of depreciation and amortisation expenses, audit fees and provisions expensed in prior periods.

Contributions to Outcome 1

Programme 1.1: AUSTRAC
Programme 1.1 objective
AUSTRAC’s regulatory objective is to deter and detect money laundering and terrorism financing occurring through its regulated population. This is achieved through promoting increased compliance by the financial, remittance service and gambling sectors with their obligations under the FTR Act and the AML/CTF Act.
AUSTRAC works to achieve this objective through supervision of regulated entities and regulatory policy development and implementation. Consultation with industry and government stakeholders helps to identify areas where AML/CTF regulation can be strengthened or improved and where there are opportunities to reduce the regulatory burden.
AUSTRAC addresses the risk of non-compliance through industry outreach, assessment and supervision of regulated entities and sectors, and, where required, remedial and escalated enforcement action.
AUSTRAC’s financial intelligence objective is to counter money laundering and the financing of terrorism and other forms of serious and organised crime through:
•identifying, monitoring and assessing financial transaction reporting to support partner agency and AUSTRAC regulatory priorities and interests
•identifying emerging money laundering and terrorism financing trends and educating industry and government stakeholders accordingly
•providing partner agencies with access to, and support in the use of, AUSTRAC databases
•contributing to international efforts directed at AML/CTF, including the international exchange of information with counterpart financial intelligence units and capacity-building assistance for a range of overseas financial intelligence units.
Programme 1.1 expenses
2013–14 / 2015–16 / 2016–17 / 2017–18
Estimated / 2014–15 / Forward / Forward / Forward
actual / Budget / estimate / estimate / estimate
$’000 / $’000 / $’000 / $’000 / $’000
Annual departmental expenses
Provision of Australia’s anti-money laundering and counter-terrorism financing regulator and financial intelligence unit / 60,988 / 55,275 / 52,823 / 52,364 / 52,795
Expenses not requiring appropriation in
the budget year1 / 6,599 / 7,710 / 8,740 / 7,236 / 6,363
Total programme expenses / 67,587 / 62,985 / 61,563 / 59,600 / 59,158

1. Expenses not requiring appropriation in the budget year are made up of depreciation and amortisation expenses, audit fees and provisions expensed in prior periods.

Programme 1.1 deliverables
In the budget and forward years, AUSTRAC will:
Supervision measures
•improve the quantity and quality of transaction reports received by AUSTRAC to assist the financial intelligence unit and through it, AUSTRAC’s partner agencies
•assist reporting entities to strengthen their AML/CTF programmes so their services are not used by criminals for money laundering or terrorism financing purposes
•provide guidance or other assistance tailored to the needs of reporting entities and industry sectors
•risk rate industry sectors and provide targeted industry supervision
•manage a selection of entities to achieve compliance through persuasive means and the use of AUSTRAC’s formal enforcement powers
•provide information to the financial intelligence unit on the activities of AUSTRAC’s regulated population that are relevant to an understanding of money laundering and terrorism financing risks.
Regulatory measures
•make AML/CTF rules and issue exemptions and modifications in a way that takes account of money laundering and terrorism financing risks
•continue to identify opportunities for reducing the regulatory burden
•publish guidance material to assist reporting entities to comply with the FTR and AML/CTF Acts
•provide advice to government and international bodies that is aimed at strengthening AML/CTF regulation.
Intelligence measures
•maintain high levels of database availability for AUSTRAC and for use of partner agencies
•provide training and onsite assistance to users of AUSTRAC databases within partner agencies
•produce financial intelligence to support partner agency and major taskforce operations, including strategic intelligence on AML/CTF risks, typologies and emerging threats
•establish and manage mechanisms for exchange of financial intelligence with counterpart financial intelligence units
•provide technical assistance and training to a range of overseas financial intelligence units.

Programme 1.1 deliverables (continued)

Deliverables / 2013–14
Estimated
actual / 2014–15 Budget / 2015–16 Forward
estimate / 2016–17 Forward
estimate / 2017–18 Forward
estimate
Transaction reporting among regulated population / Take action against non-compliance by regulated entities according to compliance and risk profile / Take action against non-compliance by regulated entities according to compliance and risk profile / Take action against non-compliance by regulated entities according to compliance and risk profile / Take action against non-compliance by regulated entities according to compliance and risk profile / Take action against non-compliance by regulated entities according to compliance and risk profile
Education and awareness programmes delivered to industry / Assistance delivered to industry sectors according to compliance and risk profile / Assistance delivered to industry sectors according to compliance and risk profile / Assistance delivered to industry sectors according to compliance and risk profile / Assistance delivered to industry sectors according to compliance and risk profile / Assistance delivered to industry sectors according to compliance and risk profile
Industry sectors risk rated / Ongoing risk rating of all regulated sectors / Ongoing risk rating of all regulated sectors / Ongoing risk rating of all regulated sectors / Ongoing risk rating of all regulated sectors / Ongoing risk rating of all regulated sectors
Annual supervisory programme / 95% of assessments in supervisory programme completed / 95% of assessments in supervisory programme completed / 95% of assessments in supervisory programme completed / 95% of assessments in supervisory programme completed / 95% of assessments in supervisory programme completed
Effective use of remedial powers to promote compliance / Identify and take action on appropriate cases / Identify and take action on appropriate cases / Identify and take action on appropriate cases / Identify and take action on appropriate cases / Identify and take action on appropriate cases
Development of rules and guidance to meet industry and government needs / AML/CTF rules registered and guidance published addressing issues raised by government and industry / AML/CTF rules registered and guidance published addressing issues raised by government and industry / AML/CTF rules registered and guidance published addressing issues raised by government and industry / AML/CTF rules registered and guidance published addressing issues raised by government and industry / AML/CTF rules registered and guidance published addressing issues raised by government and industry
Advice on identified law improvements provided to government / Timely and quality advice on proposed law improvements / Timely and quality advice on proposed law improvements / Timely and quality advice on proposed law improvements / Timely and quality advice on proposed law improvements / Timely and quality advice on proposed law improvements
High level of database availability / 97% availability / 97% availability / 97% availability / 97% availability / 97% availability

Programme 1.1 deliverables (continued)

Key performance indicators / 2013–14
Estimated
actual / 2014–15 Budget / 2015–16 Forward
estimate / 2016–17 Forward
estimate / 2017–18 Forward
estimate
Analysis and dissemination of matters of intelligence interest / 95% of planned intelligence products disseminated / 95% of planned intelligence products disseminated / 95% of planned intelligence products disseminated / 95% of planned intelligence products disseminated / 95% of planned intelligence products disseminated
Feedback on money laundering and terrorism financing methods and risk to reporting entities / Typologies and Case Studies Reports published / Typologies and Case Studies Reports published / Typologies and Case Studies Reports published / Typologies and Case Studies Reports published / Typologies and Case Studies Reports published
International relationships established and strengthened / New international exchange instruments signed and relationships strengthened / New international exchange instruments signed and relationships strengthened / New international exchange instruments signed and relationships strengthened / New international exchange instruments signed and relationships strengthened / New international exchange instruments signed and relationships strengthened
Promote and support partner agency use of AUSTRAC databases and information / High levels of use of AUSTRAC’s Transaction Reports and Analysis Query System by partner agencies / High levels of use of AUSTRAC’s Transaction Reports and Analysis Query System by partner agencies / High levels of use of AUSTRAC’s Transaction Reports and Analysis Query System by partner agencies / High levels of use of AUSTRAC’s Transaction Reports and Analysis Query System by partner agencies / High levels of use of AUSTRAC’s Transaction Reports and Analysis Query System by partner agencies
Programme 1.1 key performance indicators
In the budget and forward years, AUSTRAC’s performance is measured across a number of indicators.
Supervision indicators
Increased industry compliance with AML/CTF Act obligations demonstrates the effectiveness of supervision deliverables and is measured across a number of indicators through:
•increased participation by reporting entities in the submission of transaction reporting to AUSTRAC
•increased volumes and quality of transaction reports submitted by regulated entities
•increased number of regulated entities with compliance programmes in place as identified in the compliance report
•rectification of identified non-compliance by reporting entities to address potential vulnerabilities in Australia’s AML/CTF regime
•increased effectiveness of regulated entities’ compliance programmes.
Intelligence indicators
The provision of financial intelligence to AUSTRAC’s partner agencies and counterpart financial intelligence units, coupled with technical assistance and training, leads to success in countering money laundering and terrorism financing as demonstrated through:
•ongoing value to partner agency and taskforce operations offinancial
intelligence products produced by AUSTRAC
•increased targeted financial intelligence exchange, which indicates the effectiveness of AUSTRAC’s international exchange instruments and the value of its financial intelligence
•the effectiveness of AUSTRAC’s international technical assistance and training, as measured by the internationally accepted indicator of delivered outcomes against agreed programme objectives and budget.

Programme 1.1 key performance indicators (continued)