Australia: an increasingly global approach
Traditionally, investigations by Australian government agencies were limited to individuals and corporations operating within Australia’s geographical borders. The advent of globalisation, however, has necessitated a change to the nation state based approach. Today, Australian government agencies are increasingly required to be involved in cross-border investigations, often working collaboratively with their international counterparts in parallel investigations. One of the main drivers behind this change has been the internationalisation of commerce and the subsequent increase in ‘borderless crimes’ such as money laundering, tax evasion, e-commerce fraud, corruption, bribery, cybercrime and terrorism financing.
This article surveys the major Australian government agencies involved in such investigations, with a particular focus on their increasing need to adopt a global approach to fulfil their ultimate mandate: to protect Australians from criminal threats including international ones.
The Australian Federal Police
The Australian Federal Police (AFP) is Australia’s national law enforcement policing body, tasked with enforcing the Commonwealth criminal law, which includes the offences foreign bribery, cybercrime, tax evasion, terrorism financing and money laundering.
In 2017, the AFP published its International Engagement 2020 and Beyond report. International engagement means activity that is undertaken with foreign governments and foreign law enforcement partners to protect a country’s national interests.
The AFP state that the purpose of its international engagement is ‘to take the fight against crime offshore, and to protect Australians and Australia’s national interests by working in partnership with state, territory and foreign law enforcement agencies to detect, deter, prevent and disrupt crime at its point of origin or transit.’ This represents a significant shift in the AFP’s approach.
According to the report, the following statistics reflect the need for the AFP to engage with international law enforcement agencies:
- Around 70% of Australia’s serious criminal targets live or have links to overseas.
- Fraud is said to cost Australia more than A$6 billion each year.
- Cybercrime costs more than A$2 billion annually, and with changing technologies and automation this will only increase.
- The global cost of crime is about A$3 trillion and this will continue to grow.
- There has been a 120% increase in terrorism incidents globally since 2010.
In accordance with this new approach, the AFP work with global law enforcement and intelligence partners such as INTERPOL and Five Eyes, as well as global non-law enforcement such as the UN and foreign governments, to further their investigations where Australian interests are affected.
Task Force Eligo: an example of the future of government investigations in Australia
A recent operational example of an AFP task force that demonstrates the way in which this is occurring is Task Force Eligo.
The Eligo National Task Force commenced in December 2012 as a special investigation led by the Australian Crime Intelligence Commission (ACIC) into the use of alternative remittance and informal value transfer systems by serious and organised crime.
As at January 2014, it had resulted in the seizure of more than A$580 million worth of drugs and assets, including A$26 million in cash.
The Task Force was made up of the ACIC, AUSTRAC (Australia’s financial intelligence unit) and the AFP.
It was supported by state and territory law enforcement, key Commonwealth agencies and major international law enforcement bodies, including from the United States, the United Kingdom, Canada and New Zealand.
The AFP: its global investigative footprint and internationalist policy
Additionally, the AFP have strategically placed liaison officers, police advisers and missions in five regions across the globe, each with a regional manager. The regional managers are responsible for overseeing and providing strategic leadership and guidance for senior liaison officers and advisers and implementing region-wide law enforcement areas of emphasis and responsibilities. The posts within each region have responsibility for a number of countries within that region.
According to the AFP, the International Operations (IO) portfolio assists the AFP in the disruption of crime offshore through:
- disruption of transnational serious and organised crime (including terrorism);
- security and stabilisation missions to achieve regional stability and contribute to global order;
- international engagement and liaison; and
- capability development missions and activities.
The AFP now has more than 300 personnel located in more than 52 locations through the regional areas of Asia, South East Asia, Americas, Europe, the Middle East and Africa, and the Pacific catchment.
The AFP describe their increasing internationalist approach to investigations by referencing the following three principles:
- collaboration – brokering collaboration with international law enforcement agencies to drive investigations and support bilateral or multi-lateral cooperation;
- intelligence gathering – collecting and exchanging criminal intelligence in support of international law enforcement efforts; and
- capacity building – enhancing the capacity and the capability of international law enforcement agencies to combat transnational crime.
Conforming with this approach, in 2015 the AFP and the FBI signed a memorandum of understanding that focuses on the collaboration between the AFP and FBI in terrorism, illicit drugs, money laundering, illegal firearms trafficking, identity crime, cybercrime and transnational economic crime.
The memorandum of understanding – called ‘Combating Transnational Crime, Combating Terrorism and Developing Law Enforcement Cooperation’ – consolidates the AFP and FBI cooperation in the exchange of information, resources, technical and forensic capabilities.
The AFP has signed similar memorandums with many other countries, and additionally relies on Europol and Interpol for assistance with its investigations.
The Australian Transactions Reports and Analysis Centre
The Australian Transactions Reports and Analysis Centre (AUSTRAC) is Australia’s anti-money laundering and counter-terrorism financing regulator, and Australia’s specialist financial intelligence unit (FIU) responsible for identifying threats and criminal abuses in the financial system. AUSTRAC’s powers are set out in the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) and the Financial Transactions Reports Act 1988 (Cth).
As AUSTRAC primarily receives and analyses financial information, the resulting financial intelligence is disseminated to revenue, law enforcement, national security, human services, regulatory and other partner agencies in Australia and overseas.
By identifying potential money laundering and terrorism financing money laundering and terrorism financing cases and providing financial intelligence, AUSTRAC plays a vital role in assisting partner agencies to detect money laundering and terrorism financing activity, investigate financial crimes (including tax evasion) and secure prosecutions. This supports national priorities to protect Australia’s security, apprehend criminals, protect the integrity of Australia’s financial markets and maximise revenue collection.
AUSTRAC recognises that the transnational nature of money laundering and terrorism financing requires a coordinated global response and therefore engages in a two-way exchange of information and intelligence with other FIUs all over the world.
The information shared relates to financial transactions, financial intelligence, anti-money laundering and counter-terrorism financing, and general anti-money laundering and counter-terrorism financing issues and statistics.
The benefits of exchanging this information is that it assists international counterparts with their anti-money laundering and counterterrorism financing regulation while also assisting law enforcement agencies track the international movements of proceeds of crime.
AUSTRAC also works in conjunction with: the Financial Action Task Force (FATF), which is an intergovernmental body focused on fighting money laundering, terrorism financing and other related threats to the integrity of the international financial system; the Egmont Group of Financial Intelligence Units, which is made up of international FIUs and provides a global network for enhancing cooperation among FIUs, especially in the areas of information exchange, training and sharing of knowledge and expertise; and the Asia Pacific Group which is a FATF-style regional body for the Asia-Pacific region.
The most basic requirement for the dissemination of information to international partners is for the CEO of AUSTRAC to be satisfied, in accordance with section 132 of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth), that:
- the foreign government requesting the information has provided requisite undertakings as set out in section 132(1)(a) of the Act; and
- it is appropriate to release the information in all the circumstances.
AUSTRAC also requests the provision of information that it requires from foreign governments.
When considering the appropriateness of information release, the CEO is required to take into account such factors as Australia’s domestic and international obligations to combat money laundering, maintaining international relation and reducing crime nationally and internationally.
Generally, information is only passed on to members of the Egmont Group of Financial Intelligence Units, the international organisation aimed at facilitating cooperation between relevant agencies to combat terrorism financing and money-laundering internationally. If a foreign state is not a member of the Egmont Group, satisfactory circumstances for the exchange of information must exist.
Commonly, AUSTRAC will liaise with international law enforcement bodies and agencies regarding the traceability of proceeds of crime. Of particular concern to international law enforcement is the proliferation of Bitcoin and other cryptocurrency transactions, which are widely considered to be used for illegal purposes. The anonymity that exists in the cryptocurrency realm is what makes it difficult for law enforcement agencies to identify and track users.
In responding to this problem, the Australian government recently passed the Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2017. The amendments are expected to take effect in April 2018. Under the new legislation, AUSTRAC will have the power to monitor all digital currency exchanges within Australia’s borders with the aim of ensuring that the transactions are not being used for money laundering or terrorism-related activities. Further, digital currencies will be treated the same way as physical cash in a bank with regard to money laundering and activities suspected to be linked to terrorism financing. The new legislation requires any business that offers digital currency exchange services to register with AUSTRAC.
Any company caught operating an unregistered digital exchange will be held criminally liable. The penalties start at a two-year jail term or a fine of A$105,000 for failure to register but range up to seven years in jail and a A$2.1 million fine for corporations (A$420,000 for individuals) for more serious offences.
The introduction of these new regulations will enhance the abilities of the Australian government to more comprehensively investigate emerging crimes such as money laundering through the use of cryptocurrency as well as cybercrime on an international scale.
The Australian Criminal Intelligence Commission
The ACIC is Australia’s national criminal intelligence agency with ‘specialist investigative capabilities’. The ACIC is the only agency in Australia that is exclusively focused on combating serious and organised crime.
The ACIC has a remit for ‘specialist investigative capabilities’ that involves:
- collecting criminal intelligence from partner agencies and combining it to create a comprehensive national database;
- utilising coercive powers (similar to a Royal Commission) to obtain information where traditional law enforcement methods have not been effective;
- acquiring strategic intelligence products to support in decision-making, strategic targeting and policy development; and
- implementing a national target management framework to guide law enforcement in establishing and sharing organised crime priorities and targets. This is particularly useful for dealing with multi-jurisdictional serious and organised crime investigations.
In 2017, the ACIC released its Organised Crime in Australia 2017 Report. The report consistently reiterates that organised crime in Australia is ‘transnational in nature, technology enabled and increasingly functions as a business: employing professionals and outsourcing key activities such as money laundering’.
Indeed, the National Organised Crime Response Plan 2015–2018 recognises that the threat of serious and organised crime is becoming increasingly transnational in nature.
Accordingly, the ACIC frequently collaborates with international governments and law enforcement agencies in order to provide a coordinated response to the threat of transnational crime.
A recent example was the Vestigo Task Force (Vestigo), which was authorised in November 2016 to address transnational serious organise crime activities impacting adversely on the national interests of Australia and the countries of overseas partners. The task force was supported by commonwealth, state and territory partners, along with a number of international partners including the Five Eyes Law Enforcement Group (FELEG). Vestigo provided a framework for the ACIC to enhance its international engagement and collaboration in response to the threat posed by high-risk serious and organised crime entities based overseas.
In the area of financial crime, the serious financial crime taskforce (SFCT) was created as a multi-agency taskforce that forms part of the AFP-led Fraud and Anti-Corruption Centre and relies on the ACIC’s unique investigative capabilities. The SFCT was established to bring together the knowledge, resources and experiences of federal law enforcement and regulatory agencies to identify and address serious and complex financial crimes. The SFCT targets activities that occur both within Australia and in foreign jurisdictions. It works closely with international partner agencies, both law enforcement and regulators, governments and organisations across the globe including those countries that are subject to Australia’s bilateral tax treaties and tax exchange agreements. The main operational focus of the task force is abusive use of secrecy jurisdictions trust fraud and international tax evasion fraud.
The Australian Security and Investments Commission
The Australian Security and Investments Commission (ASIC) exercises its powers under the ASIC Act to regulate many aspects of Australia’s corporate, market and financial sectors. ASIC possesses the discretion to investigate potential breaches of law committed by the financial entities within its oversight. However, before initiating a formal investigation, ASIC must first undertake a consideration of multiple factors. If a matter falls within their regulatory responsibility, it will be assessed to determine whether a formal investigation should be held. This includes consideration of the harm suffered by consumers, potential benefits of pursuing the misconduct in contrast with the expense, level of misconduct available on the evidence and any alternative courses of action such as surveillance.
While primarily responsible for regulating Australia’s corporate, market and financial sectors, the nature of the modern global economy requires ASIC to work internationally with foreign agencies, as many Australian financial market participants undertake cross-border transactions.
ASIC therefore cooperate with other international regulators to share information in order to assist each other with the supervision of markets and enforcement of regulation. This is done in accordance with the memoranda of understanding ASIC has with other regulators, the International Organization of Securities Commission’s Multilateral Memorandum of Understanding, as well as staff secondments with fellow members of the International Organization of Securities Commission’s (IOSCO).
ASIC also works closely with a range of international organisations, foreign regulators and law enforcement agencies, and makes and receives international requests in relation to investigations, compliance and surveillance, policy research, delegations and licensing and due diligence, and general referrals.
Furthermore, ASIC participates in a number of important international regulatory forums including IOSCO and is a signatory to international cooperation agreements including the IOSCO Multilateral Memorandum of Understanding (MMoU) and numerous bilateral memoranda of understanding.
Many international organisations and foreign regulators make requests for assistance under international cooperation agreements including the IOSCO MMoU and other bilateral Memoranda of Understanding. Where authorised, ASIC uses the Mutual Assistance In Business Regulation Act 1992 to exercise compulsory powers to obtain documents, information or testimony on behalf of foreign regulators.
The MMoU sets an international benchmark for cross-border cooperation. Established in 2002, it has provided securities regulators with the tools for combating cross-border fraud and misconduct that can weaken global markets and undermine investor confidence. The MMoU represents a common understanding among its signatories of how they should consult, cooperate, and exchange information for the purpose of regulatory enforcement regarding securities markets. Information requests can be made when authorities are in the process of investigating offences relating to the following activities under the relevant laws and regulations of the jurisdictions in question: insider dealing and market manipulation; misrepresentation of material information and other fraudulent or manipulative practices relating to securities; derivatives the solicitation and handling of investor funds and customer orders; and the registration, issuance, offer, or sale of securities and derivatives.
The Australian Competition and Consumer Commission
The Australian Competition and Consumer Commission (ACCC) is an independent commonwealth statutory authority whose principal role is to enforce the Competition and Consumer Act 2010. Most of the ACCC’s enforcement work is conducted under the provisions of the Competition and Consumer Act 2010 (the Act).
Similar to many regulators, the ACCC uses a range of compliance tools to prevent breaches of the Act, including business and consumer education, and working closely with stakeholders and other agencies. However, the Act also provides the ACCC with a range of enforcement remedies, including court-based outcomes and court enforceable undertakings.
In addition to this, the ACCC has increasing international capabilities to assist it with its investigations, in particular with respect to cartel conduct and consumer scams and frauds.
The ACCC’s has stated its objectives for its international remit in the following terms:
- Assist with cross-border investigations and build the necessary international relationships and processes to promote this cooperation.
- Enhance the skill set of its staff by building partnerships with international counterpart agencies to share and develop knowledge.
- Assist other countries, particularly in the Asia-Pacific region, to build effective competition and consumer protection systems and appropriate frameworks for economic regulation.
The ACCC is therefore part of the International Competition Network, the Organisation for Economic Cooperation and Development, the Asia-Pacific Economic Cooperation, the Seoul Competition Forum and the International Consumer Protection and Enforcement Network (ICPEN), which is an informal network established to encourage international cooperation among agencies and the sharing of information about cross-border commercial activities that may affect consumer interests.
The ACCC is also part of a global effort of 34 nations to better combat e-commerce issues faced by consumers, including online scams. This is an initiative launched in the UK by ICPEN to help law enforcement authorities, including the ACCC, gather and share cross-border consumer complaints that can be used to investigate and take action against legitimate and illegitimate businesses engaged in e-commerce, and particularly online scammers.
The ACCC also has extensive powers to investigate international cartels and may:
- compel any person or company to provide information about a suspected breach of the law, including providing documents or giving verbal evidence;
- seek search warrants from a magistrate and execute these on company offices and the premises of company officers; or
- notify the AFP, who in certain circumstances collect evidence using phone taps and other surveillance devices.
On 15 August 2014, the ACCC and the Commonwealth Director of Public Prosecutions (CDPP) signed a memorandum of understanding (MoU) regarding serious cartel conduct. The ACCC is responsible for investigating cartel conduct, managing the immunity process and referral of serious cartel conduct to the CDPP for consideration for prosecution. The CDPP is responsible for prosecuting offences against commonwealth law, including serious cartel offences, in accordance with the Prosecution Policy of the Commonwealth.
The Australian Tax Office
The Australian Tax Office (ATO) is an Australian government statutory agency and the principal revenue collection body for the Australian government.
The ATO is responsible for administering the Australian federal taxation system, superannuation legislation, and other associated matters. It conducts its own investigations and also works closely with partner agencies both domestically and abroad.
When it decides to bring a criminal prosecution it is generally the CDPP that conducts the proceedings.
According to the ATO, revenue collection agencies around the world are increasingly sharing intelligence and expertise in financial investigations to fight tax evasion and organised tax crime. Australia’s network of more than 100 information sharing agreements enabled the ATO to raise assessments totalling around A$255 million in the 2014–2015 financial year.
Income concealed offshore, poor transparency of offshore activities and practical difficulties associated with getting information about a taxpayer’s offshore activities all present risks for the international tax system.
To address these, the ATO states that it works with governments and organisations around the world to fight tax evasion and crime on a global scale through accessing information and resources from private and government sources, participating in information sharing, intelligence gathering, analytics, investigations and audits with international tax administrations, using Australia’s bilateral tax treaties and the multilateral convention on mutual administrative assistance in tax matters, working with domestic partner agencies through the Serious Financial Crime Taskforce, entering into information exchange agreements and obtaining information from countries previously regarded as secrecy jurisdictions, and working with AUSTRAC, with its enhanced capability to detect, monitor and report international transactions.
Additionally, the ATO collaborates with international revenue agencies bilaterally, and through groups and forums such as:
- The Organisation for Economic Co-operation and Development (OECD), which brings together more than 30 governments from across the globe and where the the ATO participates in the Taskforce on Tax Crimes and Other Crimes, including money laundering and bribery, by sharing experiences and examining specific tax and crime risks.
- The Global Forum was originally established in 2001 by OECD and non-OECD countries to tackle the use of secrecy jurisdictions. The forum’s primary focus is to exchange information and to develop the international standard of transparency. The forum now includes 122 members, making it the largest tax group in the world.
- The Joint International Taskforce on Shared Information & Collaboration (JITSIC) network brings together 30 of the world’s national tax administrations to find ways to more effectively deal with tax avoidance. The JITSIC network offers a platform that enables its members to actively collaborate within the legal framework of effective bilateral and multilateral conventions and tax information exchange agreements – sharing their experience, resources and expertise to tackle risks and issues which effect member nations.
The ATO also works with other government agencies, Australian law enforcement, industry and overseas counterparts to share data, intelligence and expertise in the fight against tax crime.
Some organisations (such as banks, employers, health insurers and other government agencies) have a legal obligation to report information to be used for taxation purposes. This is known as legislated tax collection.
The ATO exchanges information with its international treaty partners to ensure correct reporting of income earned overseas by Australian residents and income earned in Australia by foreign residents and also works with governments and organisations around the world to fight tax evasion on a global scale. Australia has a network of international treaties and information exchange agreements with over 100 jurisdictions.
Mutual Assistance in Criminal Matters: assisting and obtaining assistance from foreign law enforcement agencies
In addition to the informal agreements and MoUs between Australian government agencies and their international counterparts, the Australian government can also rely on the Mutual Assistance in Criminal Matters Act 1987 (Cth) (the Mutual Assistance Act), which provides formal mechanisms for the provision of and receiving of international assistance in criminal matters.
Government investigations in Australia are becoming more complex and international in response to increased globalisation. Australian government agencies and regulators have therefore sought to respond by forming formal and informal collaborations with their international counterparts to allow them to properly perform their investigations without being impeded by access to evidence and data held in foreign jurisdictions.