Bank staff ‘overlook criminal activity to keep clients’ business’
The Australian 12:00am July 13, 2017
Sam Buckingham-Jones
Traders and advisers from Australian banks and other financial institutions are willing to overlook suspected cases of money-laundering and terror financing to keep a client’s business, the financial intelligence agency says.
In an assessment of why Australia’s financial system has a high-medium risk of facilitating criminal activities, a new report by the Australian Transaction Reports and Analysis Centre — AUSTRAC — found financial institutions must improve their reporting systems and work on the “vulnerability” posed by front-office staff.
“There is considerable scope for entities operating in these markets to improve their anti-money-laundering/counter-terrorism financing systems and controls to be able to identify and submit suspicious matter reports,” the AUSTRAC Money Laundering and Terrorism Financing Risk Assessment report found.
“Front office staff, such as traders and advisers, can represent a vulnerability. Some reporting entities observed that client-facing front office staff can sometimes be complacent about (anti-money-laundering/counter-terror financing reporting) due to their greater focus on retaining client business.”
High turnover in staff was one factor that “exacerbated” the situation, AUSTRAC found, but institutions the intelligence service surveyed said front office staff were “crucial” in identifying and reporting criminal threats.
The report, which investigated more than 660 instances of suspicious activity, found fraud to be the biggest challenge for the sector, while money-laundering, insider trading and market manipulation were second with 21 per cent.
AUSTRAC expressed concern that more than half — 60 per cent — of Australia’s trading and settling organisations did not report a single instance of suspicious activity between April 2014 to the end of March 2016.
“The level of suspicious matter reporting in the sector suggests that anti-money-laundering/counter-terror finance reporting mechanisms need to be strengthened to better detect financial crime and increase reporting to AUSTRAC,” the report found.
There are an estimated 929,000 trades worth $4.7 billion a day on the Australian Securities Exchange, and 6.7 million Australians own shares.
“It’s very important people understand their obligations to report suspicious matters,” Minister for Justice Michael Keenan said yesterday.
“We want people to understand their risks, but also to understand their obligations to report transactions that they believe might be worthy of us taking a closer look at.”