Purpose
AUSTRAC has prepared this Terrorism financing in Australia 2014 report to raise awareness and strengthen the national response to the serious threat of terrorism financing. The report is based on a classified national risk assessment of the Australian terrorism financing environment completed by AUSTRAC in 2014 in collaboration with a number of key partner agencies, particularly the Australian Federal Police (AFP).
This public report presents a consolidated picture of the Australian terrorism financing environment - current and emerging risks and threats, the channels used to raise and transfer funds, indicators to help identify suspicious activity, and the legal and regulatory framework in place to help deter and detect terrorism financing. While classified and sensitive information has been excluded from this public report, its key findings and terrorism financing methodologies, trends and observations are consistent with the classified national risk assessment.
This information will assist government, industry and the Australian community to better understand terrorism financing risks and vulnerabilities and implement appropriate prevention measures. The report will also educate key community groups on the risks associated with sending funds to high-risk overseas destinations and recipients and promote understanding of AUSTRAC's role and contribution to combating terrorism financing.
Terrorism financing in Australia 2014 complements AUSTRAC's Money laundering in Australia 2011 report to provide an overall picture of the Australian money laundering and terrorism financing environment. Combined with AUSTRAC's annual typologies and case studies reports, these reports provide AUSTRAC's reporting entities with valuable background information to assess the specific risks affecting their business.
As the global terrorism financing environment is dynamic and rapidly changing, this report should be considered alongside any recent developments that may affect Australia's terrorism financing risk.
How does AUSTRAC combat terrorism financing?
AUSTRAC's purpose is to protect the integrity of Australia's financial system and contribute to the administration of justice through its expertise in countering money laundering and terrorism financing. It does this in two ways: as the national anti-money laundering and counter-terrorism financing (AML/CTF) regulator and as Australia's financial intelligence unit (FIU).
As the regulator, AUSTRAC monitors compliance with the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act) and takes enforcement action where necessary against breaches of the Act.
In its capacity as Australia's FIU, AUSTRAC analyses financial transaction information and works with partner agencies, industry and international counterparts to identify patterns of suspicious activity and contribute to law enforcement operations.
Key features of the Australian terrorism financing environment
A risk to Australia's national security
Terrorism financing is a risk to Australia's national security, financial system, commercial organisations and not-for-profit organisations (NPOs). Primarily, terrorism financing is a national security risk as it can directly enable terrorist acts both in Australia and overseas. In Australia, individuals have been convicted of terrorism offences and funds have been raised to support domestic activity and overseas terrorist groups.
In addition to funding individual terrorist attacks and operations, terrorism financing helps establish and maintain terrorist groups in Australia and foreign countries and sustains the networks that connect them. Terrorism financing supports the less violent or obvious aspects of a group's operations by paying for daily living expenses, travel, training, propaganda activities, organisational costs, and compensation for wounded fighters or the families and dependants of terrorists who have died.
Terrorism financing also poses significant risks to any organisation involved in the activity, even if their involvement is unwitting. It can severely damage the reputation of financial institutions misused as part of the process. The integrity and work of non-government organisations such as charities and humanitarian groups can be seriously undermined if they are misused as a cover for terrorism financing activity.
AUSTRAC has identified three key features of the Australian terrorism financing environment:
- Terrorism financing is largely motivated by international tensions and conflicts. Communal and sectarian links between groups overseas and individuals in Australia drives Australian involvement in terrorism financing.
- Use of conduit countries. In recent cases, those sending funds out of Australia for terrorism financing tend to use conduit countries rather than send the funds directly to high-risk jurisdictions. This makes it more difficult for financial institutions to link the international funds transfers directly to terrorism financing. Conduit countries may also be used in an attempt to evade United Nations Security Council sanctions and Australian autonomous sanctions.
- Commingling legitimate funds with funds collected for terrorist groups. This is especially the case for donations collected through charities and NPOs. Commingling can disguise funds raised for terrorism financing among legitimate donations. It can also add to the total pool of funds directed towards a terrorist group.
International dimensions
Australia's terrorism financing environment is largely influenced by international factors, particularly sectarian and other conflict in foreign countries beyond Australia's immediate region. Recent turmoil in parts of the Middle East and Africa raises significant terrorism financing risks for Australia. Links exist between terrorist groups in these regions and radicalised individuals or members of communities in Australia. Overseas conflicts have prompted some Australians to travel abroad to take part in combat and terrorist or paramilitary training or to financially support armed political or terrorist groups.
Currently, the conflicts in Syria and Iraq pose the most significant terrorism financing risks to Australia. Australian terrorism financing risks relating to the Syrian conflict are discussed in more detail below. Yemen and Somalia also pose ongoing terrorism financing risks and Australians have provided financial support to, and travelled to train or fight with, terrorist groups in these countries.
Global terrorism financing risks may change quickly and unexpectedly where extremist groups become involved in regional conflicts. Such scenarios can have a significant impact on the Australian terrorism financing risk environment. The rapidly changing security situation in Iraq is a case in point. At the time of publication, the Islamic State (Formerly known as Islamic State of Iraq and the Levant (ISIL)) occupied large parts of Iraq and presented a significant threat to the Government of Iraq. With the involvement of some Australians in the conflict in Iraq, the risk of terrorism financing involving Australia in relation to Iraq is likely to have increased.
Syria
Australians have travelled to Syria to illegally engage in the conflict, raising a concern that they will join terrorist groups engaged in fighting. This raises a significant risk that either they or their supporters will raise funds for terrorism-related purposes in Syria. At least two groups listed as terrorist organisations by the Commonwealth Government, Jabhat al-Nusra (al-Nusra) and the Islamic State, are engaged in conflict against the Syrian regime. Hizballah has aligned itself with the Syrian regime, and Hizballah's External Security Organisation is listed as a terrorist organisation in Australia.
Terrorist groups active in Syria have links with radicalised individuals in Australia. The large volume of humanitarian aid and financial assistance sent from Australia to family and community members in Syria provides opportunities for commingling or disguising funds for terrorism financing among the legitimate transactions. Conflict in Syria creates a dynamic environment for terrorism financing, which may lead to the use of new methods of fundraising and transferring funds.
Neighbouring countries including Lebanon, Turkey, the United Arab Emirates and Jordan have been used as conduits to route money destined for terrorist groups in Syria. These jurisdictions are targeted due to the comparative stability of their financial sectors and because funds sent to these countries are less likely to attract attention than those sent directly to Syria. Cash may also be physically couriered into these conduit countries from Australia and carried overland across the border into Syria.
Current and emerging terrorism financing channels
In the short-to-medium term a number of channels are likely to pose an increased risk of being misused for terrorism financing:
- Self-funding from legitimate sources being used to pay travel and living expenses for Australians to fight alongside terrorist groups overseas. Family and associates in Australia have also knowingly or unwittingly transferred their own legitimately obtained funds to persons engaged in conflict. There is also a significant risk that self-funding may be used to fund the activities of any 'lone wolf' extremists within Australia. Lone wolf extremists act alone to plan or carry out violent acts in support of a group or ideology, without support or assistance from any group.
- There is a significant risk that the cross-border movement of cash may be used as a channel by Australians travelling overseas to fund terrorist groups and activity. The risk is heightened when Australians travel to Syria and neighbouring countries.
- In Australia, the banking and remittance sectors are used more frequently than other channels to send funds to individuals engaged in foreign insurgencies and conflicts, some of whom are also suspected of engaging with terrorist groups. This largely reflects the central role of the banking sector in Australia and the utility of the remittance sector to move smaller amounts of money to jurisdictions where formal financial channels are less accessible.
- Online payment systems may be used to collect donations and transfer funds to extremists in Australia and overseas. The use of online payment systems may correspond with the use of social media by terrorist groups and extremists to radicalise, recruit and communicate with sympathisers.
- Stored value cards and credit/debit cards may be used by Australians linked to foreign terrorist groups to access funds overseas.
- Charities and NPOs may be used to raise funds for groups engaged in foreign conflict and as a cover to transfer funds offshore. Funds for legitimate humanitarian aid may also be diverted in Australia, or at their destination, and used to support terrorist groups.
Source: http://www.austrac.gov.au/
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