Chapter 4Supply reduction and challenges
4.1As one of the three pillars of the National Drug Strategy 2017–2026 (the Strategy), supply reduction focuses on the availability of, and access to, illicit drugs. Mechanisms for achieving supply reduction identified within the Strategy (noting that the Strategy applies to tobacco and alcohol in addition to illicit drugs) include:
regulating retail and wholesale sale;
age restrictions;
border control;
regulating or disrupting production and distribution; and
implementation of real-time monitoring of prescription medications so that prescribers can prevent patients inappropriately accessing harmful and substantial quantities of medications.
4.2As highlighted in chapter 3, Commonwealth departments and federal law enforcement and border protection agencies have key responsibilities in disrupting the supply of illicit drugs, including with respect to supply, production and distribution. This chapter outlines the scale of organised crime operations to supply illicit drugs to the domestic market; identifies key strategies employed by law enforcement and its partners to disrupt supply; and considers key challenges for law enforcement in undertaking these responsibilities.
Profitability driving criminality
4.3Inquiry participants told the committee that the high prices paid for drugs in Australia make it an attractive market and target for drug cartels. Two factors were identified as driving this interest, namely the size of the illicit drug consumer population in Australia, and the willingness of Australians to pay high prices for illicit drugs. The Australian Federal Police (AFP) explained that the majority of transnational, serious and organised crime (TSOC) syndicates in Australia are involved in the drug trade and crime related to it, such as money laundering, weapons smuggling and violence.
4.4To illustrate profitability, the NSW Crime Commission shared observations from the NSW Police Force on the price of drugs during 2022. During this period, the price of a kilogram of cocaine varied between $130,000 to $280,000 and spiked mid-year to $390,000. Similarly, crystal methylamphetamine (ice) varied from $50 per point to as much as $250per point.
4.5The Australian Criminal Intelligence Commission (ACIC) also drew attention to the scale of profitability available to TSOC syndicates in the Australian market:
There is a significant mark-up in the price of the 4 major illicit drugs once they reach the Australian border. For example, Mexican cartels currently pay Colombian farmers US$1,000 per kilogram for dried coca leaf. This price almost doubles once processed into cocaine and by the time it reaches Australia, cocaine can be sold for more than A$300,000 per kilogram.
4.6Noting that organised crime groups could make ‘tens of millions of dollars of profit from one successful shipment’, the ACIC said that:
…the most sophisticated serious and organised crime syndicates will factor in losses of entire shipments as part of their business model, knowing they have more ventures on the water on the way to Australia.
Law enforcement approaches to transnational serious and organised crime
4.7The AFP’s law enforcement efforts with respect to illicit drugs centre on ‘supply reduction measures through disruption of TSOC syndicates and targeting large-scale illicit drug importations’.
4.8The AFP told the committee that its focus is not on drug users, but rather on drug-related activities of TSOC syndicates. Ms Kristy Schofield, Assistant Commissioner, Crime Command stated that since 2018 the AFP has charged 12offenders with 14 counts of low level possession. She stated that those charges have often arisen during law enforcement activities in relation to other crimes.
4.9The AFP told the committee that it is uniquely placed to take action across the spectrum of the criminal drug business model with the ability to attack drug traffickers’ operations, logistics, finances and communications, onshore and offshore. It stressed that in all the elements of its work, its priority is ‘to prevent harm to the Australian community’. It stated:
By disrupting drug importations offshore, the AFP prevents their harmful effects from reaching Australian communities. As part of a range of strategies, for example focusing on the leaders of TSOC groups who target Australia from overseas, the AFP can maximise impact on the criminal environment.
Transnational law enforcement operations
4.10Consistent with the international nature of the business model of illicit drug supply, the AFP told the committee that TSOC organisations ‘intentionally position themselves offshore to expand their operations and strategically position elements of their criminal enterprises overseas to increase their control, influence and share of illicit markets’. The AFP added that these syndicates ‘seek to operate from permissive offshore environments’.The ACIC estimated that the percentage of Australia’s TSOC syndicates either being based offshore, or having strong offshore links is, around 70 per cent.
4.11The AFP added that Operation IRONSIDE exposed cooperation between different TSOC groups, including both Australian-based and international groups. It stated:
Cartels, triads and mafia groups willingly work with each other, or work with Australian-based criminal syndicates, such as [outlaw motorcycle gangs] - who also have a significant overseas presence.
4.12The AFP told the committee that under Operation GAIN, it leads a taskforce targeting Australia’s most entrenched and complex offshore TSOC threats:
These are the most serious criminals impacting Australia, who conduct their organised crime businesses (including narcotics trafficking and money laundering) in perceived safe and permissive locations around the world. These individuals and groups are globally networked, sophisticated and highly resilient to law enforcement.
4.13The Commonwealth Director of Public Prosecutions (CDPP) described the complexities of transnational investigations, and the related complexities that arise in these contexts. It stated that these cases:
…often involve proceedings in multiple jurisdictions, investigated by different police forces or joint taskforces…one branch of a group may be prosecuted in one jurisdiction in conjunction with state police, while a related matter is prosecuted in another jurisdiction in conjunction with federal police. Such prosecutions may also involve related criminality, such as money laundering, and may have links to state prosecutions for the distribution and use of the drugs.
Border operations
4.14The Australian Border Force (ABF) also performs critical functions in intercepting illicit drugs and precursors before they enter the Australian community. The Department of Home Affairs explained:
…the Department and ABF work closely with internal stakeholders and external entities nationally and internationally to share knowledge, information, and expertise, in order to protect the Australian community by detecting, deterring, and disrupting the trade of illicit drugs, drug precursors, and associated manufacturing equipment through coordinated intelligence and law enforcement action.
4.15The department told the committee that it uses an ‘intelligence-informed and risk-based approach’ to disrupt illicit supply chains, particularly where TSOC syndicates seek to exploit border controls and frameworks.
The importance of partnerships
4.16The committee was told that partnerships, both international and domestic, are vital to law enforcements’ efforts to disrupt supply of illicit drugs.
International partnerships
4.17Given the offshore origins of most of Australia’s drugs and the overseas locations of many TSOC leaders, international partnerships are critical to stop the illicit drug trade ‘at the source of origin’ or ‘transit point before it can cause harm to the Australian community’. The AFP reported that it:
…works collaboratively with international jurisdictions to take the fight against drugs offshore, targeting high profile TSOC figures offshore and ensuring that illicit drugs are seized at the earliest opportunity, reducing the supply to Australia.
4.18The committee received a wide range of evidence about the importance of law enforcement developing and enhancing international partnerships to enable intervention in the supply chain prior to drugs arriving on Australia's shores. For instance, the ACIC told the committee that engagement with partners also allows it to identify significant overseas drug threats to prevent them from being replicated in Australia.
4.19The AFP engages with international law enforcement agencies to disrupt supply operations before they reach Australian shores. As noted in chapter 2, this engagement resulted in the seizure of 66tonnes of illegal drugs by overseas police with AFP assistance during financial year 2022-23. The AFP explained that the motivation behind this strategy is to ‘stop it at the source, to take the fight offshore’. Ms Kristy Schofield, Assistant Commissioner, Crime Command provided an example of this strategy in practice:
There was 7,000 litres of meth in tequila bottles heading to Australia out of Mexico. Through our partnerships with authorities in Mexico, that was able to be stopped before it even landed on our shores.
4.20The AFP pointed to Taskforce BASILIK as another example of successful collaboration with international partners, this time with the Office of the Colombian Attorney General. With the intention of stopping the illicit drug trade at the source, the Taskforce was responsible for the seizure of six barrels of approximately 1,300 litres of precursor chemicals. The intervention in the market of these precursors was significant, with the AFP noting:
Removal of these precursors from the supply chain prevented the potential production of approximately 3 tonnes of cocaine. Had it reached Australia's shores, this volume of illicit drugs had the potential to generate societal harm amounting between $750 million to $1.2 billion.
4.21Taskforce BLAZE is another example of the AFP’s international partnerships resulting in the disruption of illicit drug supply to Australia. Taskforce BLAZE is a standing partnership between the AFP and Office of China National Narcotics Control Commission which has operated since 2015. The AFP described Taskforce BLAZE as ‘one of the most successful joint efforts in stopping illicit drugs impacting Australia and Pacific Island countries’.This partnership has resulted in the seizure of 28 tonnes of illicit drugs and precursors, including methylamphetamine, cocaine, ketamine, MDMA and fentanyl, and safrole oil. More than 11 tonnes of these substances were seized in China, while the remainder were seized by Australian authorities following information sharing between the agencies.
4.22The submission from the Department of Home Affairs and the ABF described these agencies’ own partnerships and collaboration with international bodies. It stated that ‘deepening international collaboration, information sharing and joint operational efforts with law enforcement and industry partners is effective in addressing and disrupting the illicit drug trade’. The ABF told the committee that collaboration with international agencies such as the World Customs Organization, and United Nations treaty bodies such as the International Narcotics Control Board, allows greater access to systems, tools and data to improve its operations.
4.23The ABF provided a range of examples where international partnerships resulted in successful interventions in the drug market. One such successful mission was Operation TIN CAN, which involved coordination of over 60customs administrations with members of private industry around the world and the seizure of 100 tonnes of cocaine. The ABF advised that a significant part of this operation involved focusing on ports and vessels in South America and disrupting the supply before it could arrive in Australia. It advised:
We've made significant efforts in deploying a number of officers offshore to try and address the seizure of these narcotics offshore. In the last 12 months, 1.9 tonnes of narcotics has been seized offshore close to the source.
4.24The ABF also outlined successes in Panama, where it worked closely with colleagues in US Customs and Border Protection and Panama Customs to address rip-on/rip-offs of sea containers (discussed further below). The ABF told the committee that in the four months to September 2023, this work had identified over 30 containers that were subject to a rip-on, with removal of 1.14tonnes of narcotics destined for Australia.
Domestic partnerships
4.25The AFP recognised the importance of engagement with domestic partners, stating that given the complexity of illicit drugs, a multifaceted approach in partnership with other agencies is needed. The AFP advised that it works closely with domestic partners to ‘maximise intelligence insights and capabilities, leveraging our unique offshore reach and international relationships’.
4.26The AFP identified two taskforces that exist to bring together members from a number of agencies to address drug or drug-related crime. The first example, the Joint Organised Crime Taskforces (JOCTFs), consist of members of the AFP, ABF, ACIC, Department of Home Affairs and state and territory police. The AFP described the purpose and operation of JOCTFs as follows:
JOCTFs are established in Queensland, Northern Territory and Victoria to investigate, prosecute, deter and disrupt serious and organised crime, including illicit drugs. JOCTFs allow for cross-jurisdictional investigations of serious organised crime, and the coordination of resources, legislative powers and experience across agencies.
4.27The second, the Criminal Assets Confiscation Taskforce, brings together the AFP, ABF, the Australian Transaction Reports and Analysis Centre (AUSTRAC), the Australian Taxation Office and the ACIC. This taskforce and its purpose are discussed further in the following section.
Financial benefits flowing to offenders from the illicit drug trade
4.28The financial benefits associated with the illicit drug trade are significant. As mentioned in chapter 2, the Australian Institute of Criminology estimates that serious and organised crime cost Australia up to $60.1 billion in 2020-21. Further, in relation to the flow on effects of the illicit drug trade in Australia specifically, the ACIC highlighted:
Due to the significant profits available through illicit drug trafficking, laundering criminal proceeds is a key enabler of illicit drug markets. Money laundering can take a variety of forms, often the profits are transferred offshore, or concealed through company structures, comingled with legitimate funds, used for the purchase of high value assets, often with assistance from professional facilitators. The concealment of the profits also means that [serious organised crime] groups do not pay tax on proceeds of criminality.
4.29Targeting unexplained wealth is a tactic utilised by law enforcement to intervene in actions taken by mid to high level management of TSOC syndicates. Unexplained wealth regimes enable law enforcement to target the individuals who are benefiting from the proceeds of crime, not just those who are perpetrating individual crimes at a lower level in the TSOC hierarchy.
4.30The current national unexplained wealth regime is legislated in the Proceeds of Crime Act 2002 (the Proceeds of Crime Act). This legislation gives law enforcement powers to gather information and intervene in occurrences of unexplained wealth across Australia. Where individuals are identified as having significantly more assets than their legally declared income, officers are empowered to investigate the source of these assets. Where there are reasonable grounds to suspect an individual has committed an offence against the Commonwealth or their wealth in part or whole was accumulated as a result of an offence, the information gathering powers can be applied to investigate and intervene.
Criminal Assets Confiscation Taskforce
4.31As stated above, the Criminal Assets Confiscation Taskforce (CACT) is a national multi-agency taskforce that seeks to trace, restrain and ultimately confiscate criminal assets. The AFP described the objectives of the CACT as follows:
The CACT seeks to deprive persons and criminal groups of the proceeds, instruments and benefits of their offending, to punish and deter persons from breaching laws, and to undermine the profitability of criminal enterprises. The CACT disincentivises criminality, such as illicit drug trafficking activities, by depriving organised crime syndicates of profits, whilst also preventing reinvestment in further criminal activities.
4.32To date, the CACT has had significant success in the confiscation of criminal assets. In 2019, the AFP Commissioner set a five year target to restrain $600million of assets by 2024. In August 2022, the CACT surpassed this target two years ahead of schedule. In the decade since its commencement, the CACT has restrained over $1.2 billion in criminal assets, and more than $500 million has been forfeited to the Commonwealth.
4.33The proceeds of confiscated assets are placed into the Commonwealth's Confiscated Assets Account (CAA). Funds in the CAA are then redistributed by the Attorney-General to fund programs for crime prevention, law enforcement, treatment and diversionary measures related to illicit drugs, and other community-related safety initiatives.
Challenges
4.34This section identifies some of the key challenges for law enforcement in disrupting the illicit drug supply chain that were raised in evidence to this inquiry. These include:
perceptions of the effectiveness of supply reduction activities undertaken by law enforcement and border protection agencies;
the constantly evolving methods and capabilities of TSOC syndicates;
difficulties regulating the importation of precursor chemicals;
trusted insiders; and
the National Cooperative Scheme on Unexplained Wealth.
Effectiveness
4.35Some evidence questioned the effectiveness of law enforcement, pointing out the levels of illicit drug consumption continuing at high rates despite record seizures. The ABF estimated that it is able to disrupt 20 to 25 per cent of illicit drug imports on a daily basis. MrRobert Taylor, Knowledge Manager, Policy and Advocacy, Alcohol and Drug Foundation pointed out:
Despite ongoing investment in law enforcement, the use of illicit substances in Australia continues to increase, and the harms of criminalisation continue to outweigh the risks of drug use itself. The number of Australians who have used an illicit drug in their lifetime increased from 38 per cent in 2007 to 43per cent in 2019. Evidence shows drug markets continuing to expand, despite the interruptions of the pandemic and record seizures by law enforcement.
4.36Furthermore, in relation to supply reduction measures and illicit drug seizures by law enforcement, Harm Reduction Australia underlined the limited ongoing impact these actions had on the market overall:
Even in the area of occasional (always highly publicised) so-called ‘large-scale seizures’ of drugs including heroin and amphetamine-type substances (ATS), there is now routine acknowledgement (including by past and serving law enforcement officials) that despite frequent public claims to the contrary, such seizures do not have any lasting suppression effect on the potential harms associated with, the demand for or supply of illicit substances. Indeed, it has been acknowledged that these large-scale law enforcement efforts are typically “a signal of increased rather than reduced supply” and invariably come at a significant cost to the public purse.
4.37The AFP countered this view by posing the counterfactual:
I think the issue here is that one can only imagine what it would be like without the efforts of institutions like the AFP and other organisations who are tackling this problem at its root cause. We have a number of officers offshore who are doing absolutely tremendous work to stop the drugs coming in across the border and creating the harm and misery that has been perpetuated on Australia.
4.38The Tasmanian Department of Police, Fire and Emergency Management expressed a similar view, stating that ‘Tasmania Police views every thwarted attempt to traffic illicit substances in the State as a win’, describing the prevented harm to individuals and communities resulting from disruptions as ‘immeasurable’.
4.39Further, ACIC intelligence suggests that there is a measurable impact on the illicit drug market following seizures:
Our assessments indicate that where multihundred kilogram seizures of cocaine or methamphetamine have occurred the corresponding impact in supply is almost immediate, with a two- to six-month tail before the market responds.
Modes of supply constantly evolving
4.40The ability of TSOC syndicates to adapt their methods to evade law enforcement was identified as a significant challenge.
4.41In relation to importation, the committee was informed that TSOC syndicates employ a variety of methods to attempt to bring illicit drugs into Australia. The Department of Home Affairs said that some of these include:
mis-declaration – deliberately declaring a consignment as containing a different commodity.
‘piggybacking’ – using legitimate importers’ details with or without the importers knowledge.
‘rip on/rip off’ – whereby illicit goods are placed amongst legitimate cargo or baggage offshore (port of departure) and is retrieved near to, or at, the port of arrival.
‘scattergun’ – whereby multiple packages containing illicit goods are sent to different locations.
diversion of underbond goods, involving the diversion of goods during transportation between customs-controlled places.
mother-daughter transfers at sea, geo-tagged drops at sea, and underwater concealments.
walk-offs by corrupt industry insiders.
under water hull attachments – whereby illicit goods are strapped to the hulls of ships to evade detection.
4.42The Department of Home Affairs stated that the ‘tried and tested’ methods, such as concealing illicit drugs and precursors in dense materials or mixing with similar materials continue. However, the ABF has observed sophisticated TSOC groups experimenting with other methods, such as employing the use of 3D printing technologies.
4.43The NSW Crime Commission told the committee that TSOC syndicates employ ‘multipronged efforts’ in order to maximise chances of successful importation. It explained:
Multi-hundred-kilogram drug imports travel through sea routes on cargo vessels or through covert voyages on smaller vessels. They take longer to plan but when successful reap the largest rewards. Smaller 10-30kg imports come through air freight companies that arrive several times a week, often sent to residential addresses. There is evidence of particular syndicates diversifying their methodologies, using both methods concurrently and sending drugs from different ports of origin to avoid detection.
4.44The Department of Home Affairs emphasised the need for financial and non-financial investments in personnel, technology, domestic and international partnerships in order to improve the ability of Australian authorities to achieve a greater level of detection and disruption pre, at, and post border. It explained:
Investment in partnerships and technologies to modernise border systems with greater and improved security options and access controls will further harden Australia’s border from the importation of illicit drugs and chemicals.
4.45Mr Tim Fitzgerald, Acting Commissioner of the ABF, proposed legislative reform to provide the ABF with greater powers around surveillance and electronic surveillance. Mr Fitzgerald identified a recommendation of the Comprehensive Review of the Legal Framework of the National Intelligence Community that ‘the ABF should be granted the power to use tracking devices under warrant and authorisation for the purpose of serious and organised crime investigations’, as one such proposal.
4.46The National Centre for Education and Training on Addiction (NCETA) expressed a view that the decades of interaction between law enforcement and TSOC syndicates may have led to a ‘survival of the fittest’ dynamic evolving. It explained:
Resilient, adaptive and opportunistic organisations, networks and actors currently dominate illicit drug production and supply chains because only the most innovative and cunning organisations remain…Repeated escalations in law enforcement sophistication have been mirrored by escalations by organised criminal groups. There is no particular reason to believe that this will change in the future.
4.47NCETA surmised that these organisations will continue to seek to exploit technologies in order to maintain illicit drug supply. Such methods may include exploiting secure communication channels and adapting transportation models, trafficking routes and concealment methods.
4.48Government witnesses confirmed to the committee that improvements in technology, particularly communications technology, are a major factor challenging the ability of law enforcement to disrupt supply operations. The NSW Crime Commission stated that these capabilities ‘allow syndicates to operate globally with the principals able to direct operations well outside the reach of policing jurisdictions’. The Department of Home Affairs identified the ‘widespread’ use of anonymising technologies and the dark web by TSOC syndicates as a risk to community safety. It also advised that these technologies challenge the ability of law enforcement to detect, prevent and disrupt serious criminal activities under some existing powers.
Precursor chemicals
4.49Precursor chemicals are necessary for the production of synthetic drugs or may be utilised as substances on their own. The ACIC explained that ‘domestic manufacture of methylamphetamine and a number of other illicit drugs relies on the importation or diversion of precursor chemicals that originate offshore, primarily from China and India’. It stated:
Every gram of illicit drug manufactured or reconstituted in Australia relies either on the diversion of a precursor, pre-precursor, reagent or solvent from legitimate distribution channels in this country, or the illegal importation of these products.
4.50The committee was told that the importation of precursor chemicals poses several challenges. Some of these are outlined in the following paragraphs.
4.51First, many precursor chemicals also have legitimate industrial uses. Therefore, while some chemicals may be smuggled in, others may be imported through legitimate processes but then diverted towards illicit purposes. The Attorney‑General’s Department described this as ‘a difficult policy and legislative issue to get around’.
4.52The ACIC suggested that an opportunity to monitor for and prevent diversion of precursor chemicals away from legitimate uses may arise from the substantial quantities required to make drugs (e.g. production of one kilogram of methamphetamine requires 10 to 20kilograms of chemicals). Such an approach, the ACIC stated, could be achieved through the collaboration of law enforcement, regulators and industry. The Department of Home Affairs recommended the introduction of a legislative amendment to address possession of commercial quantities of precursors outside of this category. It noted that at present, while it is an offence to posses controlled precursors under the Criminal Code Act 1995, no such offence exists in relation to commercial quantities of precursors.
4.53Second, the detection of precursors at the border is a challenge for law enforcement authorities. The ACIC pointed to the scale of the precursor markets, the number and sophistication of the syndicates involved, as well as the length and nature of Australia’s border as creating particularly difficult conditions for authorities. The Department of Home Affairs and the ABF confirmed this view, advising the committee that the ABF’s ‘ability to detect and respond to the trafficking of precursor chemicals, illicit drugs, and trade based money laundering is stressed’.
4.54Third, while existing border controls regulate the importation of many precursor chemicals, AGD advised that new production methodologies are being developed by criminals using chemicals that are currently unregulated, and therefore avoiding regulatory controls. Despite these challenges, the AFP highlighted that regulation, within both Australia and exporting jurisdictions, does have a significant impact on the production capabilities of TSOC groups. It explained:
In May 2021, China scheduled [Gamma butyrolactone (GBL), a sedative that metabolises into Gamma-hydroxybutyrate (GHB)] as a precursor chemical to regulate its manufacture and distribution. This came into effect from September 2021. Consequently, Australian border seizures of GBL dropped significantly to 522 kilograms in the 2021-22 financial year, with no significant seizure from China since September 2021.
4.55Fourth, inconsistencies between Commonwealth and state and territory regulations can create risks of diversion and unnecessary costs for legitimate industry. AGD explained that state and territory laws regulate the possession of many precursor chemicals not captured by Commonwealth border controls. However, their uncontrolled importation creates a significant risk of diversion.The NSW Crime Commission provided an example of this occurring in relation to the chemical 1,4-butanediol (‘BD’):
BD is not a prohibited import however is categorised as a prohibited drug in accordance with the provisions of Schedule 1 of the Drug Misuse and Trafficking Act 1985 (NSW) (‘DMT Act’). BD is an industrial chemical and is illicitly used as a substitute to gammahydroxybutyric acid (‘GHB’). BD and gamma-butyrolactone (‘GBL’) are structurally similar to GHB and there is a large body of evidence to confirm that GBL and BD are converted to GHB after oral administration.
4.56AGD informed the committee of current efforts underway to address these inconsistencies through the Precursor Working Group, which includes representatives from Commonwealth, state and territory governments. This working group is seeking to ensure national consistency of controls and exploring options to enhance controls on illicit drug precursors.
Trusted insiders
4.57Another threat identified as one of 'significant concern' to Australian law enforcement authorities is the use of trusted insiders within the illicit drug supply chain.
4.58A trusted insider is described as a person who holds a position of trust and has access to, and knowledge of, customs controlled information. Trusted insiders include maritime supply chain employees, shipping crew, dockworkers, employees at freight forwarding companies, noncompliant traders and customs brokers.
4.59Trusted insiders can be approached by members of TSOC organisations and offered financial incentives to facilitate importations of illicit drugs. The use of trusted insiders by TSOC groups was described by the AFP:
As part of their strategy to avoid detection, TSOC syndicates have been able to infiltrate and plant operators in key maritime and aviation facilities, which are used as gateways for the importation of illicit drugs into the country.
4.60Recent media has captured the significant importation power of trusted insiders. For example, in October 2023, two Qantas baggage handlers were part of a group of five men identified as responsible for attempted importation of approximately 100 kilograms of cocaine via Sydney Airport. Another example of attempted drug importation through a sea port included the attempted importation of 622 kilograms of methamphetamine hidden inside a shipment of toilet paper, which arrived in Melbourne via sea cargo from Malaysia on 4 October 2023.
4.61The Department of Home Affairs submitted that Operation IRONSIDE had ‘confirmed that criminal infiltration within supply chains had reached a scale of national concern’. The ABF stated that there are 'about a thousand individuals that we've identified and a hundred businesses across the supply chain that we're concerned are involved in illicit activities'.
4.62The committee was informed of operations being undertaken to address the threat of trusted insiders. For example, Operation JARDENA, was established by the ABF to target TSOC groups and other high threat entities seeking to exploit vulnerabilities in Australia’s borders. Officers with Operation JARDENA work with the AFP-led Taskforce CENTINEL. This taskforce was developed to ‘remove trusted insiders from all levels of the supply chain, ensuring that the criminal “back doors” are permanently closed’.
The National Cooperative Scheme on Unexplained Wealth
4.63Discussion earlier in this chapter outlined the powers available to law enforcement to combat the vast profits obtained by TSOC syndicates through the illicit drug trade. The committee was informed that attempts have been made to improve law enforcements’ capability to restrain assets using multi‑jurisdictional cooperation through the development of the National Cooperative Scheme on Unexplained Wealth (the Scheme). However, the committee heard that issues have arisen in the implementation of this scheme.
4.64The Scheme, which came into force on 10 December 2018, is a mechanism that 'enhances the ability of Commonwealth, State and Territory law enforcement agencies to trace, identify and seize assets that cannot be connected to a lawful source'. The Scheme provides participating jurisdictions access to additional information gathering powers, including production orders and notices to financial institutions.
4.65Jurisdictions that participate in the Scheme, and therefore gain access to the additional powers, must provide a report to be tabled in the Commonwealth Parliament on their use of the additional powers. However, few jurisdictions have provided reports on the use of these information gathering powers (only the Australian Capital Territory, New South Wales and Northern Territory for the 2022-23 period).
4.66The Police Federation of Australia supported harmonisation of unexplained wealth regimes around Australia to prevent criminals from being able to use inconsistencies across borders to their advantage. The Attorney‑General’s Department stated that at present, there is variation in how the proceeds of crime legislation works in different jurisdiction in Australia, with some jurisdictions being ‘more forward-leaning than others’. The department concluded that ‘national consistency would be helpful’.
4.67On 12 October 2023, the Attorney-General, theHonMark Dreyfus KC MP, announced an independent review into the National Cooperative Scheme on Unexplained Wealth.