Outsmarting criminals to overcome money laundering.

Financial services is an exciting, dynamic sector with significant opportunity for growth and innovation. But this very feature also makes it increasingly attractive to determined criminals who seek to take advantage of innovations such as digital banking and cryptocurrencies to launder dirty money and finance drugs, sex trafficking, terrorism and worse. Unfortunately, no bank or other institution operating in the financial or gaming sectors is immune. However, effective regulation is a powerful weapon which encourages sector participants to understand their vulnerabilities and to develop smart processes that actively monitor for and reduce the risks and impacts of financial crimes against banks, their customers and the wider Australian community. A key component of this involves monitoring customer and transactional activity and submitting a range of regulatory reporting.

The Australian Transaction Reports and Analysis Centre (AUSTRAC) is the Australian Government agency responsible for detecting, deterring and disrupting criminal abuse of the financial system to protect Australian communities from serious and organised crime. Its regulation touches over 15,000 individuals, businesses and organisations who need to provide financial reports and information which is thoroughly analysed to generate financial intelligence.

In 2021, we worked with the senior management and board of an Australian bank to conduct an end to end review of its transaction monitoring and regulatory reporting systems, which was being migrated to a new technology platform. In the midst of COVID-19, in the face of increased criminal activity during these uncertain times, and in response to changing regulatory obligations, the time was right to review and assess the bank’s operations to make sure it was appropriately identifying potential threats from criminal activity and playing its part in submitting regulatory reports to inform ongoing intelligence efforts.

Lisa Dobbin, Deloitte Australia’s Financial Crime Leader, says, “In 2021, AUSTRAC announced its intention to strengthen Australia’s anti-money laundering (AML) and counter terrorism financing (CTF) laws. The reforms, known as Phase 1.5, increase the resilience of our financial system against criminal threats, while making it easier for businesses to understand and comply with increased regulations. The regulator outlined its increased expectations of banks with a number of new obligations, making it more critical than ever for banks of all shapes and sizes to have a robust and risk-based AML/CTF program in place. Criminals may be smart, but with our contemporary industry experience we can help banks outsmart them and stay one step ahead.”

Ben Murphy, Lead Director on the six-month project, explains, “We were asked to make sure that the bank’s team had the right people in place, with the right capabilities and processes, so that when they transferred to the new systems they would be able to use it effectively and appropriately. The depth and extent of our review meant that we validated some anticipated issues, but also uncovered some surprises which allowed us to recommend enhanced processes to the client. It was really satisfying to play a key role in making this bank even more resilient to financial crime by placing an increased focus on the documentary infrastructure, operational processes and standards of the bank’s transaction monitoring system.”

By working closely together in partnership, regulators, banks and professional service providers can make it harder for financial criminals to succeed, keeping our communities safe and maintaining the integrity of Australia’s banking system.

*Source: Australian Taxation Office [https://www.ato.gov.au/General/The-fight-against-tax-crime/Our-focus/Financial-crime/]