Source:2005
Released by the Bureau for International Narcotics and Law Enforcement Affairs
I. Summary
Australia is a committed partner in international efforts to combat illicit drugs, according 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 and supply reduction, and circumscribed harm reduction initiatives. Australia is party to the 1988 UN Drug Convention.
II. Status of Country
Australia is a consumer nation for illicit drugs. There is no evidence indicating that narcotics destined for the U.S. are transiting Australia. U.S. and Australian law enforcement agencies have excellent cooperation on narcotics matters. While domestically produced marijuana is the most abused drug in Australia, the use of MDMA (Ecstasy) and methamphetamine has risen drastically in the past few years. The UN 2004 World Drugs Report indicated that Australia has one of the highest rates of MDMA and methamphetamine abuse in the world. There are also indications that the use of cocaine has increased throughout Australia in recent years. Although the use of heroin has declined since 2000, law enforcement and health officials continue to aggressively target heroin trafficking and abuse.
III. Country Actions Against Drugs in 2004
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, called "Tough on Drugs," outlines a program to address drug issues. Australia has committed more than US$750 million (AU$1 billion) to the Strategy. (NOTE: Throughout this report, figures are in U.S. dollars, calculated at an exchange rate of A$1 equals U.S. $0.75) Since 2002, following the Federal Government's creation of the Australian Crime Commission, state and federal investigators have increased their cooperation, bolstered their enforcement responses to serious crimes such as drug trafficking, and improved prosecution at the appropriate state or federal level. The Federal government committed an additional $187.4 million in 2003 to the "Tough on Drugs" program to reduce the supply of, and demand for, illicit drugs.
In 2004, the Australian government instituted a national program to educate customs officers, container examiners and other law-enforcement personnel on the precursor chemicals used in the creation of synthetic narcotics. It also increased the budget for drug research by $3 million. This additional $3 million is being used to research pseudoephedrine, a common ingredient in cold and cough medicine, which is also a precursor to methamphetamine. The government hopes to develop a pseudoephedrine product that cannot be used as a precursor chemical for methamphetamine. There is an ongoing campaign to prevent illegal sales of pseudoephedrine in Australia. The government also introduced technology in 2004 to help combat narcotics trafficking, most notably a neutron scanner to screen air cargo and an advanced ion scanner that enables customs officials to determine drug type quickly.
Accomplishments. The Australian government continues to implement extensive multi-faceted programs to combat drug trafficking and use in Australia. Throughout 2004, Australian law enforcement officials seized record amounts of Ecstasy and crystal methamphetamine. These seizures were consistent with the reported increased use of these drugs throughout Australia. In addition to these seizures, Australian law enforcement officials worked closely with law enforcement agencies from Fiji, Vanuatu, the U.S., New Zealand and throughout Asia to dismantle an Asian organized crime group that was establishing large-scale crystal methamphetamine production labs in Fiji and in several Asian countries. It is believed that much of the methamphetamine produced at these labs was destined for Australia. State Police agencies continue to report increases in the number of clandestine methamphetamine labs seized throughout the country. The agencies believe that the level of sophistication in many of these labs has advanced. Australian efforts to control the availability of the precursor chemical pseudoephedrine have led to the increase in illegal bulk pseudoephedrine import attempts into Australia. In May 2004, an Australian multi-agency law enforcement effort resulted in the seizure of approximately 1.5 tons of pseudoephedrine in the Philippines destined for Australian methamphetamine production groups. The trial for defendants arrested as a result of the April/May 2003 seizure of 125 kilograms of heroin from the North Korean cargo vessel MV Pong Su is scheduled to begin in January 2005.
Law Enforcement Efforts. Australian law enforcement agencies continued their aggressive counternarcotics efforts in 2004. Responsibility for these activities is divided among the Federal government --- primarily the Australian Federal Police (AFP), the Australian Customs Service (ACS), the Australian Crime Commission (ACC) and the Therapeutic Goods Administration (TGA) --- and state/territorial police services throughout the country. The AFP maintains 68 officers in 32 overseas liaison posts in 26 countries to assist in narcotics investigation. Liaison Officers, particularly those in the Pacific Islands and throughout Asia, also assist local law enforcement agencies in training and institution building. The AFP and other Australian law enforcement agencies continue to have close working relationships with U.S. agencies including the DEA and FBI. In recent years, the AFP has increased its liaison network in order to focus on transnational crime, including drug trafficking, terrorist activities and people smuggling. Recently, there has been an increase in cocaine couriers using South Africa to transport cocaine into Australia.
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 state police officers have been investigated and tried 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. The USG has a Customs Mutual Assistance Agreement (CMAA) with Australia. Australia is a party to the 1988 UN Drug Convention, the 1971 UN Convention on Psychotropic Substances, and the 1961 UN Single Convention as amended by its 1972 Protocol. Australia is a party to the UN Convention against Transnational Organized Crime and its protocol against migrant smuggling.
Cultivation/Production. Cannabis is the only significant illicit drug cultivated in Australia. The use of hydroponic growth sites has been increasing throughout the country in recent years. The cannabis grown in Australia is primarily destined for the domestic market and there is no evidence that Australian marijuana reaches the U.S. in any significant quantity. Australia has a well-established and controlled licit opium crop (12,000 hectares) on the island of Tasmania. Although recent significant seizures of foreign produced methamphetamine may be signaling a change in trafficking patterns, a majority of amphetamine and methamphetamine consumed in Australia is produced in small, often mobile, domestic clandestine laboratories.
Drug Flow/Transit. Historically, Australia has been the target for Asian-based criminal groups trafficking in heroin. This trend is continuing and many of these organizations are also involved in the trafficking of methamphetamines into Australia. The primary source for heroin in Australia continues to be the Golden Triangle area of Laos, Burma and Thailand. Ecstasy consumed in Australia is primarily imported from Europe with some shipments transiting Asia prior to arrival in Australia. South American cocaine trafficking organizations are utilizing the improved transportation/commercial links between Australia and South America to facilitate the smuggling of cocaine. Couriers from South America are intercepted at international airports on a regular basis.
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 $4 million to drug prevention programs in schools and $40 million for compulsory education and a treatment system for 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 harm caused by 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.
IV. U.S. Policy Initiatives and Programs
U.S. Policy Initiatives. U.S. counternarcotics activities in Australia feature strong ongoing U.S.-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 outline these objectives.
Bilateral Cooperation. Cooperation between U.S. and Australian authorities is excellent.
The Road Ahead. Australia shows no sign of lessening its commitment to the international fight against drug trafficking. Australian counternarcotics efforts throughout Asia and the Pacific Islands continue to be extremely robust. The U.S. can expect strong bilateral relations with Australia on counternarcotics issues. The two countries will continue to work closely in support of the UN Drug and Crime Program and other multi-lateral fora.
Australia is one of the key centers for capital markets 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 2004. The market capitalization of domestic equities listed on the Australian Stock Exchange as of October 2004 was $700 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 three years have seen a noticeable increase in activities investigated by Australian law enforcement agencies that relate directly to offenses committed overseas.
Australia criminalized money laundering related to serious crimes with the enactment of the Proceeds of Crime Act 1987. This legislation also contained provisions to assist investigations and prosecution in the form of production orders, search warrants, and monitoring orders. It has now been replaced by two acts that came into force on January 1, 2003 (although proceedings that began prior to that date under the 1987 law will continue under that law). The Proceeds of Crime Act 2002 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 is intended to implement 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 second law, the Proceeds of Crime (Consequential Amendments and Transitional Provisions) Act 2002, 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 activity 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 that 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 non-banking 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 Act also establishes reporting requirements for Australia,s financial services sector. Required to be reported are: suspicious transactions, cash transactions in excess of Australian $10,000 (approximately $7,500), and international funds transfers equivalent to or exceeding Australian $10,000. The FTR Act also obliges any person causing an international movement of currency of Australian $10,000 (or a foreign currency equivalent) or more, into or out of Australia, either in person, as a passenger, by post or courier to make a report of that transfer.
FTR Act reporting also applies to non-bank 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. Solicitors (lawyers) also are required to report significant cash transactions. Accountants do not have any FTR Act obligations. However, they do have an obligation under a self-regulatory industry standard not to be involved in money laundering transactions. The FTR Act also provides the GOA broad powers to seize, declare forfeit, or otherwise deny to persons the benefit of unlawful activity. It further creates a national Confiscated Assets Account from which the GOA may transfer assets to other governments.
The Australian Transaction and Reports Analysis Centre (AUSTRAC), Australia,s Financial Intelligence Unit (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. In June 2004, the Australian Taxation Office reported that more than AU $75 million in assessments and penalties were directly attributed to the use of AUSTRAC intelligence, and that there were more than 1,700 investigations collectively reported by law enforcement agencies that involved the use of AUSTRAC,s intelligence. For the year ending June 2004, AUSTRAC received 11,484 suspicious transaction reports, an increase of 42.5 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 is intended to implement the UN International Convention for the Suppression of the Financing of Terrorism. The GOA froze three accounts related to an entity listed on the UNSCR 1267 Sanction Committee,s consolidated list, the International Sikh Youth Federation, in September 2002. There have been no prosecutions or arrests under this legislation. The Security Legislation Amendment (Terrorism) Act 2002 created new criminal offenses for receiving funds from, or making funds available to, a terrorist organization. There are several investigations currently under way and the GOA is pursuing one prosecution related to the receipt of funds from a terrorist organization.
The SFTA amendments to the FTR Act were a significant milestone in the enhancement of AUSTRAC,s international efforts. These amendments gave the Director of AUSTRAC the right to establish agreements with international counterparts to directly exchange intelligence, spontaneously and upon request. A review of the FTR Act is currently being undertaken to improve procedures, implement international best practices, and address further aspects of terrorist financing, including alternative remittance systems.
AUSTRAC has expanded its involvement in the fight against financial crimes by signing agreements for using AUSTRAC,s financial transaction data with Centrelink (an Australian public assistance agency) and the Child Support Agency. The GOA believes that the welfare policies will greatly benefit from the availability of AUSTRAC data, and it is anticipated that early results will help reduce welfare fraud and related criminal conduct. The information available to Centrelink officers will relate specifically to significant cash transaction reports, international currency transfer reports, suspect transaction reports, and international funds transfer instructions.
The Internet-based Anti-Money Laundering Electronic Learning Application (AML E-Learning), launched in 2004, has assisted AUSTRAC,s ongoing industry education program. The goal of this program is to assist those in the private sector, government agencies, and the public, domestically and internationally, to understand the broader issues within Australia,s anti-money laundering environment. The AML E-learning application provides education on a variety of issues including the process of money laundering, terrorist financing, and the role of AUSTRAC. This comprehensive application is currently being market-tested with industry and the formal launch of the application will occur early in the new financial year.
AUSTRAC,s work in a range of committees and working groups in the international Egmont Group of financial intelligence units and with the Asia/Pacific Group on Money Laundering has become a larger part of its international activities this year. 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 on a long-term technical assistance program to help 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. AUSTRAC is exploring similar assistance to other regional FIUs, with $7.8 million in funding over the next four years under the Southeast Asia Counter-Terrorism Technical Assistance and Training Package AUSTRAC has provided training and other technical assistance to developing FIUs in its region..
In 2004, AUSTRAC received more than 10.7 million reports from cash dealers, solicitors, and members of the general public through its electronic data delivery system (EDDSWeb system). 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 increase both the volume of FTR intelligence available to partner agencies and the speed with which those agencies can access that intelligence. AUSTRAC believes the increase reflects its ongoing public awareness of suspicious transaction reporting requirements and procedures.
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 and terrorist financing 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 35 countries. Memoranda of understanding (MOUs) have been signed with Argentina, the Bahamas, Belgium, Canada, Colombia, Cook Islands, Croatia, Cyprus, Denmark, France, Estonia, Guernsey, Indonesia, Ireland, Isle of Man, Israel, Italy, Korea, Lebanon, Malaysia, Mauritius, the Netherlands, New Zealand, Poland, Portugal, Singapore, Slovakia, Slovenia, Spain, South Africa, Thailand, the United Kingdom, the United States, Vanuatu, and Venezuela. In September 1999, a Mutual Legal Assistance Treaty between Australia and the United States entered into force.
AUSTRAC,s director is a Co-Vice Chair of the Egmont Committee, a sub-group of the heads of FIUs, and was re-elected this year to that role and to the role as head of the Oceania regional group, which currently comprises the five Oceania region members of the Egmont Group-Australia, Cook Islands, Marshall Islands, New Zealand, and Vanuatu.
Australia is a party to the Council of Europe Convention on Laundering, Search, Seizure, and Confiscation of the Proceeds from Crime, the 1988 UN Drug Convention, the UN Convention for the Suppression of the Financing of Terrorism, and the UN Convention against Transnational Organized Crime and its protocol on migrant smuggling.
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, Australia,s Minister of Justice announced that the government would proceed with a fundamental legislative overhaul to implement fully the FATF,s revised Forty Recommendations and address further aspects of terrorist financing, including alternative remittance systems. The new standards will oblige Australia to expand customer due diligence to requirements for financial institutions and will extend anti-money laundering obligations to non-financial 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 officials expect the government to propose legislative revisions to implement the FATF Forty Recommendations in 2005.
The Government of Australia should implement financial transaction reporting by accountants and reporting of suspect transaction reports by solicitors. Australia should also implement a registration or licensing system for alternative remittance agents or non-profit organizations. Australia should also continue its leadership role in emphasizing money laundering/terrorist finance issues and trends within the Asia Pacific region and its commitment to providing training and technical assistance to the Asia/Pacific region.