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CHAPTER 2

Australian Crime Commission Annual Report 2011–12

Background

2.1        The ACC is established under the Australian Crime Commission Act 2002 (the ACC Act) as a statutory authority to combat serious and organised crime.[1] It has 'primary responsibility' for combating nationally significant organised crime in Australia.[2] The ACC works with partners across law enforcement, national security, government and industry and provides a 'unique and valuable understanding of serious and organised crime, necessary to identify, disrupt and prevent the threats of most harm to the community'.[3]

Annual report compliance

2.2         The ACC annual report must comply with requirements specified in section 61 of the ACC Act. Subsection 61(2) requires that the report must include the following:

• a description of any investigation into matters relating to federally relevant criminal activity that the ACC conducted during the year and that the Board determined to be a special investigation;
• a description, which may include statistics, of any patterns or trends, and the nature and scope, of any criminal activity that have come to the attention of the ACC during that year in the performance of its functions;
• any recommendations for changes in the laws of the Commonwealth, of a participating State or of a Territory, or for administrative action, that, as a result of the performance of the ACC’s functions, the Board considers should be made;
• the general nature and the extent of any information furnished by the CEO during that year to a law enforcement agency;
• the general nature and the extent of any information disclosed by the CEO during that year to a body corporate under section 59AB;
• the extent to which investigations by the ACC have resulted in the prosecution in that year of persons for offences;
• the extent to which investigations by the ACC have resulted in confiscation proceedings;
• particulars of the number and results of:
• applications made to the Federal Court or the Federal Magistrates Court under the Administrative Decisions (Judicial Review) Act 1977 for orders of review in respect of matters arising under the ACC Act; and
• other court proceedings involving the ACC;

being applications and proceedings that were determined, or otherwise disposed of, during that year.[4]

2.3        The ACC is a prescribed agency for the purposes of the Financial Management and Accountability Act 1997 (FMA Act). As an FMA Act agency, the ACC must comply with the Requirements for Annual Reports for Departments, Executive Agencies and FMA Act Bodies, prepared by the Department of the Prime Minister and Cabinet and approved by the Joint Committee of Public Accounts and Audit.

2.4        Based on the committee's assessment, the report meets the above requirements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

Emerging serious and organised crime threats and the ACC's response

2.5        In the review by the ACC Chief Executive Officer (CEO), Mr John Lawler acknowledged new threats in 'cybercrime, offshore investment frauds, virtual illicit marketplaces, and harvesting of online personal and financial information'.[5] When questioned by the committee about these four emerging threats, Mr Lawler identified cyber environment as the key threat for law enforcement. He noted that:

It has enabled organised crime like never before, in a whole range of different ways, and it has put the question of jurisdiction in question. Because these crimes are happening in cyberspace with anonymity it is often very difficult to understand where the crime is being perpetrated from. There need to be sophisticated capacities to deal with that. These people are very nimble and they are globally connected so that they can respond very flexibly and very quickly to crime opportunities.

I have used the example of the stimulus payment. Fraudsters in West Africa, within 24 hours, were sending unsolicited emails looking to get bank account details from people so the stimulus payment could be made to them. These are often people who have never come to Australia, never will come to Australia, do not have any assets in Australia and are often outside the reach of judicial processes from Australia. So there is a significant challenge, and in some ways there needs to be a rethink about what sort of treatments and tools might be used to disrupt, deter or dismantle these criminal networks.[6]

2.6        Mr Lawler explained that tackling the cyber environment required the application of non-traditional law enforcement methods while new skills were needed to deal with some of its challenges. He noted that the cyber environment was 'profoundly' changing traditional community policing and organised crime responses as a judicial context in which a person is arrested, charged and put before the courts is 'impotent' in the context of some offences carried out in cyberspace.[7]

2.7        At the same time, 'traditional' illegal activities remain serious threats with the illicit drug market continuing to serve as a key source of profit for serious and organised crime. Mr Lawler noted the serious impact of illicit drug abuse on the country's health infrastructure and its social cost which is estimated at $8 billion a year.[8]  The illicit drug market, which accounts for a significant proportion of the profits generated by organised crime, and high risk transnational crime groups continue to view Australia as an attractive market. This is because of:

...new and emerging distribution networks, high discretionary income, high consumer demand and therefore the high return on investment and relative safety of remotely coordinating trafficking of illicit drugs to Australia. These groups partner with domestic groups who provide specialist facilitators capable of smuggling illicit drugs through border controls, and access to money launderers who repatriate the transnational groups' profit share.[9]

2.8        ACC intelligence confirms that the highest serious and organised crime entities 'continue to significantly influence Australia's illicit commodity markets, and are present in all Australian states and territories'. Most of the groups operate in two or more jurisdictions and transnationally while many have also established a presence within legitimate sectors to facilitate their criminal activity.[10]

2.9        The ACC reduces serious and organised crime threats 'by working in partnership to protect the community through knowledge'.[11] The ACC's single intended outcome is to achieve a:

Reduction in the threat and impact of serious and organised crime, through analysis of and operations against national criminal activity, for governments, law enforcement agencies and private sector organisations.[12] 

2.10      In order to achieve this outcome, the ACC 'enhances' national collaboration against organised crime through six mechanisms:

• national criminal intelligence data holdings;
• coercive powers;
• strategic products;
• legislative framework providing for data sharing;
• specialist skills; and
• the Fusion capability.

ACC priorities in 2011–12

2.11      There were nine priorities for the ACC over the review period. These included:

• highest risk criminal targets;
• targeting criminal wealth;
• high risk and emerging drugs;
• national security impacts from serious and organised crime;
• making Australian hostile to serious and organised crime;
• establishing Criminal Networks–Victoria;
• high risk crime groups–South Australia;
• the National Indigenous Intelligence Taskforce (National Indigenous Violence or Child Abuse No. 2); and
• child sex offences.[13]

2.12      However, the annual report also noted that:

In light of several changes occurring in the criminal intelligence priority setting environment, such as the Commonwealth Organised Crime Strategic Framework and associated Commonwealth and National Organised Crime Response Plans, the purpose and the function of the National Criminal Intelligence Priorities are currently under review.[14]

2.13      As part of this review, the role, function and framework of the National Criminal Intelligence Priorities (NCIPs) are under discussion with a revised NCIP framework expected to include an updated set of NCIPs that will reflect the framework's objectives.[15] The ACC noted that it was pre-emptive to indicate which of the nine priority areas (which are currently approved ACC Special Investigations and Special Operations) are likely to be reprioritised in light of changes to the NCIPs.[16]

Developments and key achievements over the year in review

2.14      One of the major developments for the ACC during the review period which will impact its reach and ability to share information and intelligence was legislative reform. The Crimes Legislation Amendment (Powers and Offences) Act 2012 came into effect in late June 2012 providing the ACC with the capacity to share its information with partner agencies, government and foreign bodies, and the private sector. Of the legislation, the ACC noted:

This significant change recognises the importance of being able to use criminal intelligence outside law enforcement, to enhance private sector capacity to protect against exploitation by serious and organised crime groups. For example, this can lead to more preventative partnerships with industry, improved policies and programs, informed decisions or triggers for further investigations that help reduce the cost of fraud in the private sector through early detection.[17]

Task forces

2.15      During the committee's examination of the annual report, Mr Lawler highlighted the important work that task forces have undertaken over the review period. The ACC-led Task Force Galilee was established in response to growing concern about serious and organised investment fraud which cost 2600 Australians more than $113 million in the last five years.[18] The ACC engaged in identifying and disrupting these fraudulent activities with over 40 partner agencies and industry organisations on superannuation fraud. Mr Lawler explained that cyber-enabled individuals were targeting the life savings of Australians without even entering the country. He noted that cybercrimes of this nature was a focus area for the ACC. As part of the preventative measures taken by the ACC to deal with these threats, the ACC conducted a mail-out to every household in Australia which provided information about how to 'deal with unsolicited requests from these cyber-enabled criminals'.[19]

2.16      Mr Lawler also drew attention to the ACC's work in the Attero National Task Force. Established in June 2012, this task force targets the Rebels outlaw motorcycle gang.[20]

2.17      Other key ACC achievements for 2011–12 include the:

• Fusion Capability—phase two of the Fusion program was completed during the year to enhance 'underlying technologies and analysis tools'.[21] Fusion was launched in July 2010 with $14.3 million allocated over four years. Fusion achievements include the identification of more than 70 high-threat criminal targets previously unknown to national law enforcement and 1200 intelligence products for 83 partners during the review period.[22]
• Production of 1884 analytical and tactical intelligence products provided to partners through 5629 disseminations resulting in 26 disruptions to criminal entities.[23] In addition, 35 topical strategic assessments were produced to inform future intelligence work and policy development in areas including assessment of the organised threat to the Australian carbon pricing mechanism, the cybercrime threat to Australia, and the national illicit firearms market.[24]

Financial management and resourcing

2.18      On 30 June 2012, the ACC comprised 598 staff in nine offices around the country.[25] By comparison, as at June 2011, ACC had a total of 628 staff.[26]

2.19      The ACC received an unqualified audit opinion from the ANAO.[27]

2.20      In terms of financial management, ACC's financial result for 2011-12 was a deficit of $4.143 million. The annual report notes that:

Due to accounting treatments and taking into account unfunded depreciation, the ACC reported result was a surplus of $1.921 million. Without accounting treatments, in real terms, the ACC had an operating expenditure deficit of $0.705 million.[28]

2.21      The deficit was a consequence of the bond rate changing on employee provisions of $0.507 million and superannuation contributions due to staff transfer of $0.196 million.[29]

2.22      The ACC's total appropriation for 2011–12 was $90.602 million which included tied funding of $9.860 million and base funding of $80.742.[30]

Security breaches

2.23      In 2011–12, there were 98 security incidents over the period 1 January to 31 December 2012 which included:

• ICT security breach: 15
• Physical security breach: 71
• Unauthorised disclosure: 4
• Maverick individuals (suspicious activity by an individual in or around the ACC premises): 7
• Contact (an ACC employee has come into contact with a representative of a foreign country or with criminal elements): 1

2.24      Physical security breaches made up over 72 per cent of all the breaches reported. Of the 71 physical security breaches, most amounted to a failure to adhere to the 'clear desk policy'. Examples include classified documents left on desks, secure containers left open, and lost ACC access passes. The ACC explained that these incidents were mostly internal and classified as minor in impact.[31]

2.25      The ACC noted that there was no security incident reported during the review period which resulted in Code of Conduct action. It was also emphasised that the increase in reported security incidents was expected following the introduction of an awareness raising program.

2.26      Since the last review period, the ACC took a series of steps to improve ACC staff security awareness and to report security incidents including:

• automated and simplified self-reporting of security incidents in July 2012;
• increasing the number of security audits across all ACC offices;
• rolling out a Protective security Awareness online package which is compulsory for all staff;
• production and dissemination of security awareness posters to all ACC offices; and
• review and dissemination of Protective Security policy.[32]

2.27      In comparison to the 98 breaches in 2011–12, the committee notes that from 2007 to 2011, there were a total of 62 breaches as follows:

• 2007: 2
• 2008: 8
• 2009: 13
• 2010: 21
• 2011: 18.[33]

2.28      In March 2012, the ACC acknowledged that the number of breaches was higher than it would have liked. It explained that it would 'continue to be vigilant about security and is continually improving risk assessment, monitoring, investigation and review and internal awareness raising'.[34]

2.29      The committee acknowledges that initiatives undertaken over the review period to develop a self-reporting culture and improve security awareness may have led to an increase in the number of security breaches that are reported. Notwithstanding unique circumstances, as a security-conscious culture within the ACC strengthens, however, the number of security breaches should start to decline. The committee will continue to monitor security breaches in the next reporting period and the effectiveness of the measures in place to raise security awareness.

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