Source: 2003
Released by the Bureau for International Narcotics and Law Enforcement Affairs
Australia is a committed partner in international efforts to combat illicit drugs. Australia accords high priority to drug-related issues, both internationally and domestically. Australia manages the diverse legal, health, social and economic consequences of drug use through comprehensive and consistent policies of demand reduction, supply reduction, and harm reduction in certain Australian states. Australia is party to all three UN drug conventions, including the 1988 UN Drug Convention.
Australia is a consumer country for illicit drugs. There is no evidence of narcotics destined for the U.S. transiting Australia. U.S. and Australian law enforcement agencies have excellent cooperation on narcotics matters. Cannabis (marijuana) and ecstasy (MDMA) continue to be the most abused drugs in Australia. The use of methamphetamine, crystal methamphetamine, and other amphetamine type substances has risen dramatically in the past few years. Heroin, however, remains at the forefront of concern for the law enforcement, social services, and healthcare communities in Australia.
Policy Initiatives. The Federal Government continues to vigorously pursue polices that attempt to both prevent and treat illegal drug use. Launched in 1997, Prime Minister Howard's National Illicit Drug Strategy "Tough on Drugs" outlines a program to address drug issues. Australia has committed more than $740 million to the Strategy. (NOTE: Throughout this report, figures are in U.S. dollars, calculated at an exchange rate of U.S. $1 = $1.27 Australian). The Federal Government has recently committed an additional $187.4 million to the "Tough on Drugs" Strategy to reduce the supply of, and demand for, illicit drugs. In 2001, the Prime Minister committed an additional U.S. $76.25 million over four years to fund comprehensive national law enforcement initiatives. In 2002, the Federal Government brought together state and federal officials at a Leaders' Summit on Transnational Crime and Terrorism. The Summit resulted in the creation of the Australian Crime Commission and increased the cooperation between state and federal investigators in responding to serious crimes such as drug trafficking and ensuring prosecution at the appropriate state or federal level.
Accomplishments. The Australian Government continues to implement extensive programs to combat drug trafficking and use, as well as target the drug trade at all levels of production, distribution and consumption. In late 2002 and throughout 2003, Australian law enforcement officials seized record amounts of ecstasy (MDMA) originating in Western Europe and crystal methamphetamine from Southeast Asia. These seizures were consistent with the reported increase in use of these drugs throughout the country. In April and May 2003, Australian law enforcement officials seized 125 kilograms of heroin from the MV Pong Su, a North Korean cargo vessel. State police agencies have reported an increase in the number of clandestine methamphetamine laboratories seized throughout the country and the seizure of several large-scale MDMA production labs. These laboratory seizures, coupled with the seizures of 750 kilograms of the precursor pseudoephedrine indicate that criminal organizations are attempting to move their production facilities into Australia.
Law Enforcement Efforts. Law enforcement agencies continued their aggressive counternarcotics law enforcement activities in 2003. Responsibility for these efforts is divided among the federal government--primarily the Australian Federal Police (AFP), the Australian Customs Service (ACS), and the Australian Crime Commission (ACC)--and the respective state police services. The AFP maintains overseas liaison posts to assist in narcotics-related investigations. Liaison officers, particularly those in the Pacific Island nations, also assist local law enforcement agencies in training and institution-building. The AFP, both in Australia and overseas, has a close working relationship with U.S. agencies, including the DEA and the FBI. Recently, the AFP doubled its overseas presence to 58 agents in 30 locations, which has allowed it to focus more on transnational drug trafficking as well as counterterrorism investigations. Australia has also budgeted $11 million to develop a South Pacific Regional Police Initiative in Fiji. This center aims to enhance the level of law enforcement in the Pacific Region.
Corruption. The Australian Government is vigilant in its efforts to prevent narcotics-related corruption. There is no indication of any senior official of the government facilitating the production or distribution of illicit drugs or aiding in the laundering of proceeds from such activities. Although some individual police officers have been investigated for drug-related corruption, corruption is not common or widespread.
Agreements and Treaties. The U.S. and Australia cooperate extensively in law enforcement matters, including drug prevention and prosecution, under a bilateral mutual legal assistance treaty and an extradition treaty. Australia is a party to all three UN drug conventions. The USG has a Customs Mutual Assistance Agreement (CMAA) with Australia. Australia signed the UN Convention Against Transnational Organized Crime in December 2000.
Cultivation/Production. Cannabis is the only significant illicit drug cultivated in Australia. There is no evidence that illicit Australian marijuana reaches the U.S. in quantities sufficient to have a significant effect. Australia has a significant licit opium crop (12,853 hectares) on the island of Tasmania. Controls against diversion of that crop are excellent. The majority of amphetamines and methamphetamines consumed in Australia are produced domestically in small, often mobile, laboratories.
Drug Flow/Transit. Australia has been and continues to be a target for Southeast Asian heroin trafficking organizations and South American cocaine traffickers. Laos, Burma, and Thailand continued to be the principal sources of heroin trafficked into Australia. Law enforcement authorities estimate that eighty percent of imported heroin comes from Burma. Improved travel links between Australia and South America have facilitated a record number of border cocaine seizures of one kilogram or more. South Africa is increasingly being used as a transit point for drugs (mostly cocaine) transported from South America to Australia. There has been an increase in detected amounts of amphetamine-type substances (ATS, a category which includes ecstasy and methamphetamines) imported from Asia. Ecstasy is mainly imported from Europe. To date there has been no evidence suggesting that drugs are transiting Australia to the United States.
Domestic Programs. The Federal Government has continued to pursue an aggressive policy to prevent and treat drug use. The Prime Minister's National Illicit Drug Campaign committed the equivalent of $3.9 million to drug prevention programs in schools and $40.1 million for compulsory education and treatment system of drug offenders. Under Australian law, the Federal Government has responsibility for national health and crime issues, while the States and Territories have responsibility for the delivery of health and welfare services. The Ministerial Council on Drug Strategy brings together Federal, State and Territory Ministers responsible for health and law enforcement to determine national policies and programs to reduce the impact of drugs in Australia.
Although the Federal Government opposes supervised injecting rooms, the legal authority to provide injecting rooms rests with the health and law enforcement agencies in the States and Territories. In May 2001, the State of New South Wales passed legislation to permit the licensing and operation of an injecting center for a trial period of 18 months. This trial period has been since extended to October 2007. The center, which is now in operation, provides for medically supervised heroin injections. The Australian Capital Territory has passed similar legislation, but has not opened an injection center.
Policy Initiatives. U.S. counternarcotics activities in Australia feature strong ongoing US-Australian collaboration in investigating, disrupting, and dismantling international illicit drug trafficking organizations. In mid-2002, the U.S. and Australia signed a Memorandum of Understanding to codify these objectives.
The Road Ahead. Australia shows no sign of lessening its commitment to the international fight against drug trafficking, particularly in Southeast Asia. The U.S. can expect excellent ongoing bilateral relations with Australia on the counternarcotics front, and the two countries should continue to work well together in the UN Drugs and Crime Program and other multilateral forums.
Australia is one of the key centers for capital markets activity in the Asia-Pacific region, with liquid markets in equities, debt, foreign exchange, and derivatives. Estimated activity across Australian exchange and over-the-counter financial markets amounted to over $40 trillion in 2003. The market capitalization of domestic equities listed on the Australian Stock Exchange as of September 2003 was $389 billion. The Government of Australia (GOA) has maintained a comprehensive system to detect, prevent, and prosecute money laundering. The major sources of illegal proceeds are fraud and drug trafficking. The last two years have seen a noticeable increase in activities investigated by Australian law enforcement agencies that relate directly to offenses committed overseas. The majority of these matters are connected to frauds committed in an overseas jurisdiction where money has either been laundered into Australia for the purpose of acquiring assets or has been laundered through Australia to overseas countries.
The Australian Federal Police (AFP) has previously estimated that crime in Australia is worth between $3.5 and $4.2 billion, annually, based on intelligence assessments of major fraud and narcotics crimes. A report commissioned by the Australian Transaction Reports and Analysis Centre or AUSTRAC, Australias financial intelligence unit (FIU), has previously estimated that money laundering in and through Australia is estimated at around $3.5 billion per annum.
Australia criminalized money laundering related to serious crimes with the enactment of the Proceeds of Crime Act 1987. This legislation also contains provisions to assist investigations and prosecution in the form of production orders, search warrants, and monitoring orders. The Proceeds of Crime Act 2002 came into force on January 1, 2003. This Act provides for civil forfeiture of proceeds of crime as well as for continuing and strengthening the existing conviction-based forfeiture scheme that was in the Proceeds of Crime Act 1987. The Proceeds of Crime Act 2002 also enables freezing and confiscation of property used in, intended to be used in, or derived from, terrorism offenses. It implements obligations under the UN International Convention for the Suppression of the Financing of Terrorism and resolutions of the UN Security Council relevant to the seizure of terrorism-related property. The Act also provides for forfeiture of literary proceeds where these have been derived by a person from commercial exploitation by the person of notoriety gained from committing a criminal offense. The Proceeds of Crime Act 1987 will continue in force until all court proceedings which had been commenced under it prior to January 1, 2003, are completed.
The Proceeds of Crime (Consequential Amendments and Transitional Provisions) Act 2002, which also came into force on January 1, 2003, repealed the money laundering offenses which had previously been in the Proceeds of Crime Act 1987 and replaced them with updated offenses which have been inserted into the Criminal Code. The new offenses are graded according both to the level of knowledge required of the offender and the value of the property involved in the dealing constituting the laundering. As a matter of policy all very serious offenses are now being progressively placed in the Criminal Code. The Criminal Code contains the general principles by which offenses are interpreted as well as other serious offenses, which in many cases will be relevant to the money laundering offenses.
The Financial Transaction Reports Act (FTR Act) of 1988 was enacted to combat tax evasion, money laundering, and serious crimes. The FTR Act requires banks and nonbanking financial entities (collectively referred to as cash dealers) to verify the identities of all account holders and signatories to accounts, and to retain the identification record, or a copy of it, for seven years after the day on which the relevant account is closed. A cash dealer, or an officer, employee, or agent of a cash dealer, is protected against any action, suit, or proceeding in relation to the reporting process. The FTR also establishes reporting requirements for Australias financial services sector. Required to be reported are: suspicious transactions, cash transactions in excess of Australian $10,000 (approximately $7,500 as of December 2003) and international funds transfers equivalent to or exceeding Australian $10,000. FTR reporting also applies to nonbank financial institutions such as money exchangers, money remitters, stockbrokers, casinos and other gambling institutions, bookmakers, insurance companies, insurance intermediaries, finance companies, finance intermediaries, trustees or managers of unit trusts, issuers, sellers and redeemers of travelers checks, bullion sellers, and other financial services licensees. Lawyers also are required to report significant cash transactions. Accountants do not have any FTR obligations. However, they do have an obligation under a self-regulatory industry standard not to be involved in money laundering transactions. The Act also provides the GOA broad powers to seize, declare forfeit, or otherwise deny to persons the benefit of unlawful activity. The Act also creates a national Confiscated Assets Account from which the GOA may transfer assets to other governments.
AUSTRAC, Australias FIU, was established under the FTR Act to collect, retain, compile, analyze and disseminate FTR information and to monitor compliance with reporting requirements. AUSTRAC also provides advice and assistance to revenue collection and law enforcement agencies and issues guidelines to cash dealers in terms of their obligations under the FTR Act and regulations. The Australian Taxation Office reported that more than $99 million in assessments and penalties were directly attributed to the use of AUSTRAC intelligence and that there were more than 1,500 investigations collectively reported by law enforcement agencies that involved the use of AUSTRACs intelligence. For the year ending June 30, 2003, AUSTRAC received 8054 suspicious transaction reports, an increase of three percent over the previous year.
In June 2002, Australia passed the Suppression of the Financing of Terrorism Act 2002 (SFT Act). The aim of the SFT Act is to restrict the financial resources available to support the activities of terrorist organizations. This legislation criminalizes terrorist financing and substantially increases the penalties that apply when a person uses or deals with suspected terrorist assets that are subject to freezing. The SFT Act enhances the collection and use of financial intelligence by requiring cash dealers to report suspected terrorist financing transactions to AUSTRAC, and relaxes restrictions on information sharing with relevant authorities regarding the aforementioned transactions. The SFT Act also addresses commitments Australia has made with regard to the UNSCR 1373 and the UN International Convention for the Suppression of the Financing of Terrorism. The GOA froze three accounts in the name of a United Nations listed terrorist entity, the International Sikh Youth Federation in September 2002. There have been no prosecutions or arrests under this legislation to date. The Security Legislation Amendment (Terrorism) Act 2002 was inserted into the Criminal Code offenses of receiving funds from, or making funds available to, a terrorist organization.
A significant milestone in the enhancement of AUSTRACs international efforts came with the SFTA amendments to the FTR Act. These amendments provided the Director of AUSTRAC the ability to establish agreements with international counterparts to directly exchange intelligence, spontaneously and upon request. A review of the FTR Act is currently being undertaken with regard to improving procedures, implementing international best practices, and addressing further aspects of terrorist financing to include alternative remittance systems.
In 2003, AUSTRAC has seen an increase in cash dealers reporting electronically, using the EDDSWeb system (electronic data delivery system), by 356 percent, from 42 users to 160. By encouraging cash dealers to fulfill their reporting requirements through electronic means, AUSTRAC is able to provide high quality data to its partner agencies in a timely manner. The increasing volume of reports submitted to AUSTRAC and the number of cash dealers using the EDDSWeb system significantly increases both the volume of FTR intelligence available to partner agencies and the speed with which those agencies can access that intelligence.
Australia is a member of the Financial Action Task Force (FATF), co-chairs the Asia/Pacific Group on Money Laundering (APG), and is also a member of the Pacific Island Forum and the Commonwealth Secretariat. Through its funding and hosting of the Secretariat of the APG, Australia has elevated money laundering issues to a priority concern among countries in the Asia/Pacific region. AUSTRAC is a member of the Egmont Group, and has bilateral agreements allowing the exchange of financial intelligence with 24 countries, with approximately 30 additional memoranda of understanding (MOUs) in various stages of negotiation. MOUs have recently been signed with Croatia, Mauritius, and Slovenia. Other MOUs are with Belgium, Canada, Denmark, France, Guernsey, Isle of Man, Israel, Italy, Korea, Lebanon, Malaysia, New Zealand, Poland, Portugal, Singapore, South Africa, The Netherlands, United Kingdom, United States, Vanuatu and Venezuela. In September 1999, a Mutual Legal Assistance Treaty between Australia and the United States entered into force.
Following the bombings in Bali in October 2002, the Australian Government announced an Australian $10 million initiative managed by AusAID, to assist in the development of counterterrorism capabilities in Indonesia. As part of this initiative, AUSTRAC has embarked upon a long-term technical assistance program to assist Indonesia in developing an effective financial intelligence unit (FIU). AUSTRAC conducted a project with the Government of Vanuatu to identify current issues facing the Vanuatu FIU and the potential strategies to meet these issues and enhance its operations.
Australia has signed and ratified the Council of Europe Convention on Laundering, Search, Seizure, and Confiscation of the Proceeds from Crime, and the 1988 UN Drug Convention. Australia is a party to the UN International Convention for the Suppression of the Financing of Terrorism on September 26, 2002.
Australia continues to pursue a well-balanced, comprehensive, and effective anti-money laundering regime that meets the objectives of the revised FATF Forty Recommendations and the Special Recommendations on Terrorist Financing. In December 2003, the Australias Minister of Justice announced that the government will proceed with a fundamental legislative overhaul to implement fully the FATFs revised Forty Recommendations. The new standards will oblige Australia to expand customer due diligence to requirements for financial institutions and extend anti-money laundering obligations to nonfinancial businesses and professions such as real estate agents, dealers in precious metals and stones, accountants, trust and company service providers, legal professionals and notaries. It gives high priority to dealing with money laundering and to international cooperation.
AUSTRAC serves as a model for FIUs worldwide, because of its demonstrated commitment and competence in using financial reports and related information to identify money trails. The GOA should continue its efforts to emphasize money laundering issues and trends within the APG, and its commitment to providing training and technical assistance to the Asia/Pacific region. Australia should become a party to the UN Convention against Transnational Organized Crime.