Transnational, serious and organised crime

Cat Barker, Foreign Affairs, Defence and Security

Key issue
Transnational, serious and organised crime represent significant and persistent risks to Australian governments, communities, businesses and individuals. The need for coordinated and sustained counter-efforts was recognised in 2018 with the appointment of a Commonwealth Transnational Serious and Organised Crime Coordinator and the release of a national strategy. However, agencies face significant ongoing challenges in dealing with sophisticated, resilient and adaptable criminal groups.

The Australian Criminal Intelligence Commission (ACIC) has assessed organised crime in Australia as ‘proficient and enduring’: ‘Serious and organised crime touches the lives of Australians in unprecedented ways. It is destructive, pervasive and complex’. Successive Australian governments have characterised transnational, serious and organised crime (TSOC) as a threat to national security. This is because it ‘undermines our economy, infringes border integrity and sovereignty, damages prosperity and regional stability, and erodes political and social institutions’. The harms associated with TSOC span from those affecting individuals (such as the health and other impacts of illicit drugs, or financial loss from fraud) and communities (such as public violence) through to those affecting the private sector (for example, through market distortion) and the government (including loss of revenue and higher law enforcement costs).

The Australian Institute of Criminology estimated the costs of serious and organised crime in Australia in 2016–17 to be between $23.8 billion and $47.4 billion. The costs are spread across direct serious and organised crimes (up to $25.0 billion—including up to $9.6 billion attributable to illicit drugs and $8.6 billion to organised financial crime), conventional crimes committed as a consequence of serious and organised crimes (up to $6.5 billion) and prevention and response costs (up to $15.9 billion).

The ACIC has identified the use of technology and digital infrastructure by serious and organised crime as a ‘key determinant of significant changes in the criminal landscape into the future’. There are two aspects to this—the increasing use of technology to commit crimes, and the use of technologies that reduce law enforcement visibility of criminal activities (such as encrypted communications). According to the ACIC, factors shaping the current and anticipated threat environment include the increasing use of professional facilitators (who can, amongst other things, help criminal groups to exploit complex business structures), the continuing role of money laundering and identity crime as key enablers of criminal activity, and Australia’s continuing attraction as a lucrative illicit drug market. The ACIC estimates that up to 70 per cent of Australia’s serious and organised crime threats originate offshore or have strong offshore links.

Recent policy and legislative responses

The Australian Government appointed Australian Federal Police (AFP) Deputy Commissioner Karl Kent as the first Commonwealth Transnational Serious and Organised Crime Coordinator in May 2018. The Coordinator led the development, with Commonwealth, state and territory representatives and other stakeholders, of the National Strategy to Fight Transnational, Serious and Organised Crime, agreed by the Council of Australian Governments in December 2018 and released the same month. The Strategy is a high-level framework intended as a guide to ‘governments, the private sector, civil society organisations and the community’ for developing responses to TSOC, and it is expected to ‘inform the development of more detailed plans and actions at the national level, and within each state and territory’. This appears to foreshadow a more detailed Commonwealth plan.

Tackling transnational organised crime was also identified as a priority in the 2017 Foreign Policy White Paper.

During the 45th Parliament, legislative amendments were passed to:

respond to challenges posed by the use of encryption by facilitating law enforcement access to communications and data for the purpose of investigating criminal activity, including by requiring industry to assist law enforcement to decrypt certain communications and by introducing computer access warrants for law enforcement agencies
update anti-money laundering and counter-terrorist financing (AML/CTF) laws, including by bringing digital currency exchange providers under the AML/CTF regulatory regime and by expanding the powers available for investigations and enforcement related to the regulatory regime
establish a national cooperative scheme to target ‘unexplained wealth’ (the difference between a person’s total wealth and that shown to be derived lawfully)
give the Australian Signals Directorate the function of preventing and disrupting cybercrime undertaken by people or organisations outside Australia and
introduce additional offences and enforcement powers relating to illicit tobacco and change the point of taxation for imported tobacco to combat illicit tobacco entering the black market through leakage from customs warehouses.

Specific non-legislative responses to TSOC initiated during the 45th Parliament included:

establishment of the Fintel Alliance in March 2017. The Fintel Alliance is a public-private partnership to combat money laundering, terrorism financing and other serious crime. It is led by the Australian Transaction Reports and Analysis Centre and comprises 22 members from across Australian and overseas governments and organisations (including the major banks, PayPal and Western Union)
establishment of the Australian Centre to Counter Child Exploitation, announced in March 2018 and funded in the 2018–19 Budget. The Centre is led by the Australian Federal Police (AFP) and brings together several agencies in the Home Affairs portfolio and links to other Commonwealth, state and territory agencies, overseas agencies, non-government agencies and the private sector to foster a collective effort to counter child exploitation
the Indo-Pacific Justice and Security Program, announced in October 2017, under which Australia works with partners in the region (with an initial focus on South and Southeast Asia) to provide assistance and advice on laws to combat transnational crime and violent extremism and
establishment of the Illicit Tobacco Taskforce in July 2018 (following a May 2018 announcement). The Taskforce, which builds on the Illicit Tobacco Strike Force set up in 2015, is led by the Australian Border Force and comprises other Home Affairs portfolio agencies, the Australian Taxation Office and the Commonwealth Director of Public Prosecutions.

These initiatives build on established measures and capabilities—including the National Criminal Intelligence Fusion Capability, the Criminal Assets Confiscation Taskforce, and the Serious Financial Crime Taskforce—and Australia’s international engagement, including through the Conference of the Parties to the United Nations Convention against Transnational Organized Crime and the United Nations Office on Drugs and Crime’s Global Programme on Cybercrime.

Some issues for the new Parliament

Addressing the challenges posed by new technologies

The Parliamentary Joint Committee on Law Enforcement reported on its inquiry into the impact of new and emerging information and communication technology in April 2019. The committee noted evidence of increasing cybercrime—both crimes where the use of technology is integral to the commission of an existing offence (such as online fraud) and crimes directed at computers or other technologies (such as hacking)—and of technology as an enabler of crime (with its use no longer limited to ‘high tech crime types’). It also identified some of the new and emerging technologies with which law enforcement is having to contend.

The committee examined the operational challenges and vulnerabilities for law enforcement (including geographical and jurisdictional constraints, workforce skills and capabilities, and keeping up with rapidly changing technologies), as well as strategic challenges and opportunities. It made 15 recommendations aimed at better positioning Australian authorities to meet the challenges identified and capitalise on opportunities offered by technology. Some of the measures proposed for consideration would require legislation to be brought before Parliament, including a national framework for delayed notification search warrants for serious offences (at the federal level, these warrants are currently only available for terrorism offences), and amendments to the Telecommunications (Interception and Access) Act 1979 and the Surveillance Devices Act 2004 to ensure they are technology neutral. Parliament may also have a role, through the budget process, if the Government takes up the suggestion of providing dedicated agency funding to help agencies respond to the escalating challenges of cybercrime.

Commonwealth and state and territory governments adopted the first National Plan to Combat Cybercrime in 2013. In May 2017 relevant federal, state and territory ministers agreed to develop an updated national plan, but it is yet to be released.

There are two relevant statutory reviews that will be completed during the 46th Parliament. The Parliamentary Joint Committee on Intelligence is currently conducting reviews of laws passed in 2015 that established a mandatory telecommunications data retention scheme and those passed in 2018 to respond to challenges posed by the use of encryption. The latter inquiry will also be informed by a review by the Independent National Security Legislation Monitor. Reports on both inquiries are due in 2020.

Combating money laundering

The Attorney-General’s Department completed a statutory review of Commonwealth AML/CTF laws in April 2016. The review examined the operation of the AML/CTF regime, the extent to which the policy objectives of the regime remain appropriate, and whether it remained appropriate for achieving those objectives. The review also took account of the findings and recommendations of the Financial Action Task Force’s 2015 evaluation of Australia’s compliance with the international AML/CTF standards, which was completed while the review was underway. The review produced a long list of recommendations (84 in total).

The first amendments flowing from the 2016 review, including bringing digital currency exchange providers under the AML/CTF regulatory regime, were made by the Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2017. However, implementation of the many remaining recommendations stalled, with several consultation papers released in late 2016, but no further reforms introduced in the 45th Parliament.

A key gap in Australia’s AML/CTF regime is that the ‘designated non-financial businesses and professions’, such as accountants, lawyers and real estate agents are not covered by the regulatory regime. This means they do not have certain obligations—such as conducting customer due diligence and reporting suspicious transactions—recommended in the international standards. These businesses and professions are being exploited in Australia to launder criminal proceeds. Draft legislation to bring them within the AML/CTF regime was released for public consultation in 2007. However, the process was put on hold to allow time for recovery from the Global Financial Crisis. Following the statutory review, consultation papers released in 2016 sought feedback on options for regulating accountants, high-value dealers, legal practitioners and conveyancers, real estate professionals and trust and company service providers.

Unexplained wealth

Unexplained wealth laws can be a powerful tool against organised crime. They allow authorities to restrain assets that appear to exceed a person’s legitimate wealth, and if that person cannot demonstrate the assets were in fact acquired legitimately, to confiscate them. This enables targeting of those who profit from crime but who are not directly involved in the commission of an offence. Commonwealth unexplained wealth laws have been in place since 2010. However, due to the need for a connection with a constitutional head of power, their application was limited to instances where a connection could be established to a Commonwealth or foreign offence, or a state offence with a Commonwealth aspect. A parliamentary committee recommended in 2012 that the Commonwealth lead the development of a nationally consistent unexplained wealth scheme and seek a referral of powers from the states and territories so as to legislate for a broader based national scheme. Following several years of negotiations, the Unexplained Wealth Legislation Amendment Act 2018 established a framework for a national scheme. The NT and the ACT are included in the scheme without the need for separate legislation. NSW is the only state to have introduced legislation to refer its powers at the time of writing. The utility of the scheme will depend on how many other states choose to do so.