AUSTRAC CEO Neil Jensen retires
The Australian Transaction Reports and Analysis Centre (AUSTRAC) protects the integrity and security of Australia's financial system by countering money laundering and terrorism financing. Recently retired Chief Executive Officer, Neil Jensen, talks about how AUSTRAC is targeting tax crime.
How does AUSTRAC help to identify and combat tax crime?
Our role is a dual one - a combination of regulator and financial intelligence unit. We have a wide range of organisations reporting to us on certain financial transactions, mainly across the financial services and gambling sectors. Then we apply our tools and expertise to analyse the collected data to identify suspicious transactions and share that intelligence with agencies like the ATO.
Who does AUSTRAC work with to achieve its objectives?
AUSTRAC relies on a partnership between reporting entities (such as financial institutions), revenue partners (like the ATO), and law enforcement agencies (such as the Australian Federal Police).
We also work with peer organisations in 53 countries through bilateral agreements.
And we're members of the Egmont Group, which brings 107 countries together to share information and undertake programs to counter money laundering and terrorism financing.
For the ATO, we track items such as fund flows in and out of Australia, including identifying whether funds are being transmitted between Australia and a tax haven.
How does AUSTRAC identify and investigate suspect transactions?
Before 2006, we had working relationships with just under 4,000 reporting entities, which probably sounds like a lot. However, with the introduction of the Anti-Money Laundering and Counter Terrorism Financing Act 2006 (the Act), we've increased the number of these relationships to more than 15,000.
Each of these entities has to report certain transactions, and when we combine those reports with data that's sourced from overseas jurisdictions, and apply our analytical tools, we can identify patterns and suspicious transactions.
In 2007-08 the volume of suspect transactions increased by nearly 20 per cent. Why?
Once the Act was introduced, we were able to significantly expand our education program to encourage people to report transactions. That said, I don't think there has been a 20 percent increase in criminality - we've just enhanced awareness of the need to report criminal activity.
We hope the increased reporting rate deters would-be offenders, as it shows that we're monitoring data more closely than ever before and working with partners to deter criminal behaviour.
By way of example, our intelligence contributed to ATO assessments of more than $76.7 million during 2007-08. It also helped to identify $36 million in previously undisclosed income as part of the ATO's Offshore Voluntary Disclosure Initiative.
What has been the impact of the global financial crisis on AUSTRAC's operations?
Times of economic volatility tend to give rise to opportunistic scams and dodgy schemes, with unscrupulous individuals trying to make money out of other people's difficulties.
We've also witnessed the collapse of long-standing dubious schemes because the financial crisis means they can no longer continue to operate. The Ponzi Scheme of Bernard Maddoff in the United States - which was estimated to have lost investors more than $50 billion - is one example. In this case, the funds of new investors were paid to long-standing investors in order to induce even newer investors.
The scheme apparently generated minimal profits from business activities, with any new money invested going towards paying returns to other investors and therefore requiring a constant stream of new investments in order to survive.
So the global financial crisis has focused the operations of AUSTRAC to identify these sorts of schemes more readily and work with our partners to put a stop to them.
Which of AUSTRAC's achievements are you most proud of from your time as CEO?
I'm really proud of helping to put Australia on the map as a global leader in financial intelligence. The technology platforms developed by AUSTRAC to detect criminal activity in Australia's financial system are considered among the best in the world. It's really satisfying to know that Australia is considered by other developed and developing countries as a benchmark for quality and effectiveness.
We've also built successful partnerships with the private sector and government agencies worldwide to better identify criminal activity. And we've helped law enforcement agencies convict offenders who damage the security of Australia's financial system. I'm proud that AUSTRAC is a key player in protecting that system for the benefit of the Australian community as a whole.
We'd like to record our thanks to Neil Jensen for this interview, and acknowledge the major contribution he made during his time at AUSTRAC. We wish him well for his retirement.
For more information about AUSTRAC, visit www.austrac.gov.au