AUSTRAC mutual banking sector money laundering and terrorism financing risk assessment

AUSTRAC has released its mutual banking sector money laundering and terrorism financing risk assessment report which shows the main threat to the sector is money laundering. Mutual banks are also a target for fraudulent activity such as identity theft and scams, tax evasion, and welfare fraud, particularly through their elderly customers.

AUSTRAC assesses the overall money laundering and terrorism financing (ML/TF) risk associated with the mutual banking sector to be medium.

This rating is based on assessments of the criminal threat environment, the vulnerabilities in the sector, and the consequences associated with the criminal threat.

Suspicious matter reports (SMRs) indicate the key threat faced by mutuals is money laundering, with substantial reporting activity detailing large and frequent cash transactions, transactions involving unknown third parties, and the rapid and complex movement of funds between financial products and institutions. However, AUSTRAC considers many of these reports describe legitimate, if unusual, transactional activity. Due to the limited indication of actual criminality in many of the money laundering SMRs, AUSTRAC assesses the money laundering threat faced by the mutual banking sector is medium, despite the high number of SMRs.

AUSTRAC assesses the overall ML/TF risk associated with vulnerabilities in the mutual banking sector to be high. Many of the factors leading to this assessment relate to the nature of banking products in general, and are not attributes specific to mutual banks.

AUSTRAC assesses the consequences of ML/TF activity in the mutual banking sector to be moderate.

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