organised crime in australia report 2013
TRANSCRIPT
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ORGANISED CRIMEIN AUSTRALIA 2013
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Correspondence should be addressed to:
Chief Execuve Ocer
Australian Crime Commission
PO Box 1936 Canberra City
ACT 2601
Telephone:
02 6243 6666 (from within Australia)
61 2 6243 6666 (internaonal)
Facsimile:
02 6243 6687 (from within Australia)
61 2 6243 6687 (internaonal)
Published July 2013
© Commonwealth of Australia 2013.
This work is copyright. Apart from any use as permied under the Copyright Act 1968, no part
may be reproduced by any process without wrien permission from the Chief Execuve Ocer,
Australian Crime Commission.
ISSN 2202-3925
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CONTENTSINTRODUCTION 4
The contemporary face of organised crime 4
The impact of organised crime in Australia 6
The neus etween organised crime, naona securit and the econom 8
How the goa nancia crisis impacted on organised crime in Austraia 9
UNDERSTANDING ORGANISED CRIME THROUGH RISK AND THREAT ASSESSMENTS 11
Market-based risk assessment 11
Threat and harm assessment 12
ENABLER ACTIVITIES 13
Money laundering 14
Introducon 14
The current situaon 14
Key current and emerging issues 16
Cyber and technology-enabled crime 17
Introducon 17
The current situaon 17
Key current and emerging issues 19
Ident crime 21
Introducon 21
The current situaon 21
Key current and emerging issues 24
Epoitaon of usiness structures 24
Introducon 24
The current situaon 24
Key current and emerging issues 25
Puic sector corrupon 25Introducon 25
The current situaon 26
Key current and emerging issues 27
Violence 27
Introducon 27
The current situaon 28
Key current and emerging issues 28
ILLICIT COMMODITIES 29
Illicit drug market overview 29
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Methylamphetamine 30
Precursor chemicals 32
Cocaine 33
Heroin 34
Drug analogues and other novel substances 35
MDMA 36
Cannabis 37
Iicit pharmaceucas 37
Opioid analgesics 38
Benzodiazepines 39
Performance and image enhancing drugs 39
Anaesthecs 41
Ketamine 41
GHB 42
Tryptamines 42
Intellectual property crime 43
Counterfeit goods 43
Piracy 44
Trade secrets 44
Firearm tracking 45
Environmental crime 48
CRIMES IN THE MAINSTREAM ECONOMY 49
Card fraud 49
Mass marketed fraud 52
Investment fraud 52
Advance fee fraud 53
Revenue and tax fraud 54
Illegal tobacco 55
Superannuaon fraud 55
Financial market fraud 59
Securies and share market fraud 59Mortgage and loan fraud 60
CRIMES AGAINST THE PERSON 61
Human tracking 61
Marime peope smugging 62
Chid se oences 65
THE OUTLOOK 66
Comang serious and organised crime in Austraia 66Serious and organised crime: a threat to naona securit 66
Hardening Australia against organised crime threats 70
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INTRODUCTION
THE CONTEMPORARY FACE OF ORGANISED CRIME
In the two ears since the puicaon of the ast Organised Crime in Austraia assessment,
organised crime has become more pervasive, more powerful and more complex. Such is the
risk posed by organised crime that governments around the world, including the Australian
Government, have recognised for some me that organised crime has impicaons for naona
securit. Austraia’s Naona Securit Strateg, reeased in Januar 2013, ists serious and
organised crime as one of the seven ke naona securit risks.
Goaisaon has een emraced and epoited organised crime, which capitaises on the
wa in which goaisaon has great faciitated internaona communicaon, cross-order
links, commerce and trade. Although organised crime now seems to have no borders or
geographica constraints, comang organised crime and iicit trade has remained in man
was constrained jurisdicona, egisave and state orders – a fact that is not ost on
sophiscated criminas.
The rapid development of technology, and the increasing availability of that technology to
users throughout the word, have signicant increased the dnamics, proe and reach of
organised crime. The Internet enaes goa virtua networking and socia interacon etween
criminals, and has enabled the establishment of ‘virtual marketplaces’ for illegal and illicit
goods such as drugs, rearms, idencaon documents and chid epoitaon materia.
Athough tradiona purchases through face-to-face contact wi connue to e a ke form
of iicit transacons for the foreseeae future, these virtua marketpaces have created
aternave sources of supp, ringing access to iicit goods to the keoard of Internet
suscriers a over the word, and have meant that those deaing or tracking in iicit goods
can e ased in an geographica ocaon and s connect direct with customers in an
numer of internaona jurisdicons. In this wa, the Internet has cut out the tradiona
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phsica ‘midde man’ or intermediar in these transacons, who has een repaced a
‘virtual intermediary’. For example, users of illicit drugs no longer necessarily have to seek out
deaers in person; instead, the can order the drugs of their choice on the Internet, epecng
to have their purchase delivered to their door.
This new avenue of drug supp has the potena to grow eponena, and rings with it new
chaenges for aw enforcement in disrupng the supp of iicit goods.
The cominaon of goaisaon and rapid technoogica deveopment has had a profound
eect on the new and emerging drug markets (the drug anaogues and other nove sustances
markets) and on sophiscated organised fraud. The Internet is the ke driver of the new and
emerging drug markets, enaing entrepreneuria individuas, rather than tradiona organised
crime groups, to ecome signicant paers within these markets. Organised fraud can now
target vicms around the word from an ocaon, with the deiver of scams via the Internet
or via voice-over-Internet protocols, meaning that those behind these schemes can easily andcheap reach increasing arge poos of possie vicms.
The emergence of entrepreneurial individuals in some key illicit markets is challenging the
tradiona paradigms of organised crime dominance or contro. With serious harms now eing
wrought actors outside the tradiona organised crime structures, these individuas can, in
some instances, e as worth targets for aw enforcement aenon as organised crime groups.
Important, whie the Internet has rought uers and seers of iicit commodies together,
it has also made it possible for organised crime to introduce itself into the homes or lives of
all Australian Internet users. Organised criminals increasingly exploit the online environment
to perpetrate crimes such as steaing sensive persona idencaon informaon echanged
over the Internet to commit frauds or ident crime, or deivering mass marketed frauduent
schemes such as advance fee fraud and fake investments to unsuspecng vicms.
Organised crime is ig usiness, with prots from transnaona organised crime for 2009
esmated in a 2011 report to have een around US$870 iion – an amount equa to 1.5 per
cent of goa GDP at that me.1 This gure has amost certain grown since then. Those
engaged in organised crime energeca, aggressive and innovave compete for their
share of iicit markets, are prot driven, and empo increasing compe network structures
and was of conceaing their acvies and their idenes – increasing with the hep of
professional advisers and facilitators.
Organised crime as it aects Austraia is inetrica inked to internaona organised crime.
Serious and organised criminas operang in Austraia necessari have internaona inks
to faciitate their acvies – parcuar the movement of iicit goods into Austraia – and
overseas-ased organised criminas acve target Austraia. This means that strong and
trusted partnerships with overseas law enforcement agencies are now more fundamental to
comang organised crime than the have ever een.
1 United Naons Oce on Drugs and Crime 2011, Esmang illicit nancial ows resulng from drug tracking and othertransnaonal organized crimes, UNODC, Vienna.
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THE IMPACT OF ORGANISED CRIME IN AUSTRALIA
Organised crime is now a part of the everyday lives of Australians in ways that are
unprecedented. The Austraian Crime Commission (ACC) conservave esmates organised
crime to current cost Austraia A$15 iion annua.
Once, encounters with organised crime were largely restricted to those who sought out illicit
commodies or iega acvies. Toda, an Austraian on an da can e aected organised
crime. Some of the more obvious examples of this are:
the increasing incidence of Austraian investors eing defrauded in investment scams –
somemes referred compicit or compromised ‘egimate’ rokers – and eing targeted
for sophiscated ‘oier-room’ frauds run oshore organised crime groups
the of credit card and ank account data through onine aacks, or means of skimming
machines installed on ATMs or point-of-sale devices
the discover of dangerous and voae candesne aoratories used to produce drugs in
suuran areas, requiring the temporar evacuaon of residents in surrounding houses or
streets
violence between organised crime groups that takes place in public.
There are also less obvious impacts of organised crime on Australians. ACC research and
invesgaons have idened the foowing as eampes of some of the more sute was in
which organised crime can have an impact on Australia:
increased public expenditure to support health services to treat illness related to illicit drugs – incuding the increasing numer of users who need ong-term medica support
sma usinesses strugging to remain compeve with usinesses used as vehices to
aunder mone for organised crime, for whom ‘protaiit’ is not an issue
a distorted share market, in which organised crime has manipulated share prices and asset
values for criminal gain.
Organised crime not on has a direct impact on individuas, ut aso aects our communies,
our econom, our government and our wa of ife. As stated in Austraia’s Naona Securit
Strategy:
Serious and organised crime can undermine our border integrity and
security. It can erode condence in instuons and law enforcement
agencies, and damage our economic prosperity and regional
stability.
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Organised criminas who ma once have een invoved in tradiona iicit markets, such as
drugs, are now epanding their interests – oen across a range of iicit acvies or sectors
– in order to maimise their prots. Athough most organised crime acvies in Austraia are
focused on iicit drug markets, organised crime is increasing diversifing its acvies, with
convergences eing oserved etween egimate or icit markets and iicit markets.
Of concern is the diversicaon of organised crime into egimate usiness to concea its iicit
acvies. In Austraia, crimina enes u egimate usinesses (cash usinesses in parcuar)
to launder money, and use complex business structures to conceal the real ownership or
contro of diverse usiness interests. Internaona, powerfu organised crime groups have
strategica purchased usinesses in parcuar sectors in order to achieve a market share
large enough for them to be able to manipulate the prices of certain goods or services.
Organised crime has targeted ig usiness that is centra to economies in order to intrate
these businesses with the aim of using their economic power as leverage against governments.
Corrupon and coercion can then foow. Though this eve of organised crimina intraon of
usiness is not apparent in Austraia, these internaona eampes serve to highight the risk
posed organised crimina invovement in egimate usiness sectors.
The intraon of egimate usiness organised crime can e parcuar insidious when
that intraon is used to pursue an-compeve pracces. Internaona, perhaps the
most publicised example of this is the involvement of Russian organised crime in big business
in crica sectors within Russia and the other countries of the former Soviet Union. This
invovement aows crimina monopoies to deveop, squeezes egimate usiness out of ke
sectors, and gives signicant poica inuence to organised crime gures as a resut of their
control of businesses that are fundamental to the economy.
New types of crimes are also having an impact on Australia, such as the phenomenon of
‘hackvism’ – compromising computer sstems or networks to make a mora or poica point.
Onine poica movated or issue-movated groups such as ‘Anonmous’ have demonstrated
oth intent and capaiit to successfu aack the onine services of governments, private
industr and persona users around the word. These aacks cause nancia and reputaona
damage to their targets, maximise inconvenience and damage, and expose individuals to the
risk of fraud.
The anonmit oered cer-ased crimina methodoogies can aso mask the underingmovaons for aacks on individuas, organisaons and governments. In this respect, it is
oen dicut to disnguish cercriminas from ‘State-ased’ actors. Aeged State-ased cer
acvit around the word etween 2008 and 2011 reported targeted everthing from nucear
reactors and Internaona Monetar Fund (IMF) data hodings to defence contractors and the
Google and Hotmail email accounts of individuals.2
2 Oensive cer acvit conducted as part of state-on-state conict or compeon represents a crimina oence, potena
resung in signicant damage to the econom and crica naona infrastructure. However, state-on-state cer conict is not
considered to be part of the organised crime environment and is covered in assessments promulgated by the Commonwealth’sCer Securit Operaons Centre (CSOC).
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The diversity and complexity of the organised criminal environment necessitate agile and
adaptae approaches to comang threats and risks, with aw enforcement required to
deveop new skis and capaiies to e eecve. The scope and nature of contemporar
organised crime mean that, domesca, the reaonships etween aw enforcement, naona
security, government, regulatory and compliance agencies, private industry and community
groups wi e more important than the have ever een in idenfing and deaing with
threats. Internaona, Austraia’s dipomac and aw enforcement partnerships wi e
fundamental to containing organised crime.
THE NExUS bETWEEN ORGANISED CRIME, NATIONAl SECURITy AND THE ECONOMy
In the same way that organised crime is now recognised as a global threat, there is a general
acceptance of the threat that organised crime poses to naona securit. Naona securit
incorporates, ut is not imited to, concepts of sovereignt, order integrit, poica and
economic strength, strong instuons of State, the safet and weeing of cizens, and thestrength and depth of reaonships and aiances with other naons.
Economic strength and staiit are fundamenta contriutors to naona securit. In Ju 2011,
United States President barack Oama signed an Eecuve Order and reeased a strateg to
comat transnaona organised crime, in recognion of the threat that transnaona organised
crime now poses to the securit of the United States and the internaona communit. The
strategy noted that organised crime threatens United States economic interests and can
damage the word nancia sstem through the suversion of egimate markets. This foows
the United Naons Securit Counci, in 2010, nong concerns aout the serious threat posed
drug tracking and transnaona organised crime to internaona securit.3
In Austraia, the Naona Securit Strateg, reeased in Januar 2013,4 listed serious and
organised crime as one of the seven ke naona securit risks, and noted that contemporar
crimina sndicates ‘have the capacit to inict serious harm on our econom, usinesses and
instuons’. The sndicates impacng on Austraia are not just those ased in Austraia, ut
aso those ocated oshore who are targeng Austraia for crimina gain.
There is evidence that organised crime groups, incuding high professiona internaona
organised fraud networks, are targeng the Austraian securies and investment sector.
The Trio Capita superannuaon and investment fraud case5 in 2011 is an example of the
sophiscated methodoogies that these organised fraud networks empo.Fraud or other crimina ehaviour that aects the securies and share market in Austraia, or
in an other countr, can have ver signicant consequences. behaviour within the market,
or having an eect on the market, that undermines investor condence in its integrit can
resut in investors – overseas investors in parcuar – ceasing to invest in Austraian shares and
securies, with ovious impicaons for the econom.
3 United Naons Securit Counci Presidena Statement S/PRST/2010/4, United Naons, Geneva.
4 Department of the Prime Minister and Cabinet 2013, Strong and secure: a strategy for Australia’s naonal security , public
aunch, Canerra, 23 Januar 2013.
5 A fu account of the case can e found in the report of the Pariamentar Joint Commiee on Corporaons and Financia
Services Inquir into the coapse of Trio Capita, Ma 2012, .
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HOW THE GlObAl FINANCIAl CRISIS IMPACTED ON ORGANISED CRIME IN AUSTRAlIA
The goa nancia crisis had a parcuar impact on organised crime overseas, which was quick
to idenf and capitaise on the usiness opportunies that the crisis aorded. Internaona,
organised crime is reputed to have various provided sucient iquid investment capita derived
from drug prots to save some anks from coapse, to have stepped in to provide nancing
(aeit at etoronate rates) to new and strugging usinesses across a range of sectors when
anks ghtened their ending criteria, to have ought or taken over faiing companies for we
eow market vaue – gaining interests in sectors crucia to economies – and to have amassed
sustana rea estate at argain prices. In Ita, it has een caimed that the Maa is now ‘Ita’s
numer one ank’, with €65 iion in iquidit and with an esmated 200,000 usinesses ed to
etoronate enders, giving the Maa a ‘strangehod’ on the econom.6
The nancia crisis, dang from 2008, has given transnaona organised crime groups the
opportunit to use their eisng iicit funds to u power and inuence – economic inuence,
in parcuar – and to transfer signicant sums of mone into the egimate econom, there
eecve aundering it. In an arce puished in 2012, Moisés Naím7 outlined some other
was in which organised crime has eneted from the goa economic crisis:
Fiscal austerity is forcing governments everywhere to cut the budget
of law enforcement agencies ... Large numbers of unemployed
experts in nance, accounng, informaon technology, law and
logiscs have boosted the supply of world-class talent available
to criminal cartels. Meanwhile, philanthropists all over the world
have curtailed their giving, creang funding shoralls in the arts,
educaon, health care and other areas, which criminals are too
happy to ll in exchange for polical access, social legimacy and
popular support. Internaonal criminals could hardly ask for a more
favourable business environment.*
* Naím, M 2012, ‘Maa states’, accessed 18 March 2012, avaiae at .
In reaon to the impact of the goa nancia crisis on organised crime in Austraia, the
reave strength of the Austraian econom is ike to e aracve to organised criminas
seeking to place their assets in an environment that is perceived as stable and safe. This may
mean that organised crime will be seeking to deposit laundered funds into Australian banks,
to invest in Australian business or the Australian stock market, or to put money into tangible
assets such as real estate.
6 From a report Itaian an-crime group SOS Impresa, ted ‘Maa Spa is the rst ank in Ita’ (not avaiae in fu Engish
transaon), quoted Mackenzie, J 2012, ‘Maa now “Ita’s No.1 ank” as crisis ites: report’, Reuters, 10 Januar.7 Moisés Naím is an academic, journaist, author and commentator on internaona poics and economics.
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The high prices paid for iicit drugs Austraian drug users wi connue to make Austraia
an aracve target for organised crime groups invoved in internaona drug tracking. Not
only will their product be sold at higher wholesale prices than almost anywhere else in the
word, ut the prots from the sae of the drugs, earned in Austraian doars (which remain
strong in internaona nancia markets), wi have a high vaue when moved oshore. The
potena for signicant prots is ike to movate internaona organised crime groups to
pursue aggressive taccs in order to capture a part of the ucrave Austraian market, incuding
riing, corrupng or coercing puic ocers hoding posions that enae them to faciitate
crimina acvies.
As discussed ater in this report, the reave strength of the Austraian econom, and
the comparave auent popuaon, have aso made Austraia an aracve target for
organised crime groups invoved in fraud. With a compusor superannuaon regime, and
superannuaon assets in Austraia current esmated at A$1.3 triion, high sophiscated
oshore organised fraud networks have estaished, and wi connue to estaish, compe
frauduent schemes to stea superannuaon savings. Individua Austraians are eing targeted
for mass marketed fraud, including ‘boiler-room’ or cold-call investment fraud, and Ponzi
schemes, with organised crime aso seeking to epoit and manipuate the egimate securies
and share market for crimina gain. These nancia crimes are emerging as an important threat,
and have the potena to do signicant harm to the Austraian econom and the Austraian
community.
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UNDERSTANDINGORGANISED CRIMETHROUGH RISK ANDTHREAT ASSESSMENTS
Marketbased risk assessMent
Iicit markets operate in the same wa as markets for egimate commodies – the primar
movator is nancia gain or prot, with the markets governed demand, supp, price and
the perceived quait of the goods or services.
Consequent, the ACC uses a market-ased risk assessment approach to evauang iicit
markets that conforms to internaona risk assessment standards.8 This approach informs
a comprehensive picture of serious and organised crime, the unique acvies that enae
organised crimina acvit, and the impact of each of the iicit markets on Austraia. The ACC’srisk assessment methodology derives a level of risk by combining an assessment of the threat
posed each specic iicit market with an assessment of the ‘harms’ wrought that market
on the Austraian communit. Epressed as an equaon, the risk methodoog is:
Threat (assessment of market dynamics) x Harm = Risk
8 Internaona Standard AS/NZS/ISO 31000:2009.
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THREAT AND HARM ASSESSMENT
The harm – the negave consequences arising from an iicit market – is assessed from a
poica and socia perspecve. The threat – the ikeihood of those consequences – is assessed
considering market dnamics and the acvies of market parcipants, taking into account
the nature and eecveness of eisng contros (such as egisaon or reguaon) that impact
on the market.
This market-based risk assessment underpins the ACC’s Organised Crime Threat Assessment
(OCTA). The assessment provides contetuaised informaon aout the impact of serious and
organised crime on the Austraian communit, market dnamics, vuneraiies, and areas that
woud enet from further inteigence or risk anasis.
This report is an uncassied version of the Organised Crime Threat Assessment that was
deivered in June 2012 to the ACC’s board and the ACC’s partner aw enforcement agencies.
The report outines trends in the internaona environment, serious and organised crime9
acvies in Austraia, and the resung harms to the Austraian communit. It eamines factors
that aect supp and demand, the risks posed a range of crime markets, and the wa in
which enaer acvies faciitate organised crime.
The overall risk to Australia from organised crime is assessed as high.10 Relevant factors are:
demand for and supply of the illicit commodity
the nature and extent of the market
arriers to entr and the eve of compeon in the market
genera characteriscs of signicant individuas or groups in the market
the raonae for and contet of the market in reaon to other iicit markets and the
egimate econom
the impact of the eisng reguator framework and contros on the market, and
the impact of the market on the community generally.
As an uncassied document, this report cannot provide the same eve of detai as the
cassied version. It can, however, give a cear picture of the scope and nature of the acvies
that make up the organised crime environment in Australia. The report is not intended to cause
undue concern about organised crime, but rather to inform Australians about organised crime
so that a eements of the Austraian communit – government, aw enforcement, puic and
private sector agencies, academic instuons, usiness sectors and the puic – can increase
their awareness of the problems and risks, and work together to combat the threat.
9 The Australian Crime Commission Act 2002 (Cwth) denes ‘serious and organised crime’ as an oence that invoves two
or more oenders, sustana panning and organisaon and the use of sophiscated methods and techniques, which is
commied in conjuncon with other serious oences punishae imprisonment for a period of three ears or more. A
road range of serious oences are isted in the egisaon, incuding the, fraud, ta evasion, mone aundering, iega drug
deaing, etoron, rier or corrupon of an ocer of the Commonweath, an ocer of a state or an ocer of a territor,
perverng the course of jusce, ankruptc and compan vioaons, and cercrime.
10 This assessment is ased on the coecve risk posed the iicit markets that aect Austraia. The eve of risk has not een
assessed reave to other naona securit risks. Risk is assessed on a si-point scae, with the risk eves eing ver ow, ow,medium, high, ver high and crica.
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ENABLER ACTIVITIES
The ACC’s Organised Crime Threat Assessment 2012 idened si disnct i icit acvies as
eing ‘ke enaers’. Those acvies are:
money laundering
cyber and technology-enabled crime
ident crime
epoitaon of usiness structures
corrupon
violence.
These acvies are cassied as ‘enaers’ as the each have unique roes in enaing or
faciitang organised crime, ut are not an end in themseves – that is, mone aundering
woud not e necessar if the crime from which iicit prot had een made had not een
commied, necessitang conceament of the proceeds of that crime. Simiar, the the of
ident documents woud pose ie threat if those documents were not intended to e used
to commit oences.
Acvies such as mone aundering, ident crime, corrupon and vioence contriute to the
eecveness of other tpes of organised crime. Athough not a of the enaers are present
in ever iicit market, enaers can work in unison, with an one organised crime group (OCG)
using severa enaers at once. Corrupon can e used to faciitate, or to hide, the use of other
enablers.
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Important, enaers are aso unique in that an impacts of aw enforcement, reguator,
egisave or poic acvit that are fet within the enaing acvies – such as the cosing of
oophoes in nancia reporng sstems to prevent mone aundering, or reguator changes
in reaon to the requirements for registering usinesses – have the potena to resonate
through a of the iicit markets in which those enaing acvies are present. For eampe,
shoud aw enforcement capaiit to idenf, trace and prosecute cer and technoog-
enabled crime be enhanced, all of those markets that rely on technology to perpetrate crime
woud e aected.
MONEY LAUNDERING
INTRODUCTION
Organised crime groups re on mone aundering as a wa of egimising or hiding proceeds
or instruments of crime. Mone aundering is a pervasive, corrupng process that can endcrimina and egimate acvies. It stretches across areas as diverse as mainstream anking,
internaona funds transfers and foreign echange services, gaming, shares and stocks,
artwork, jewellery and real estate.
THE CURRENT SITUATION
Financia prot is a main driver for organised crime groups. legimising the proceeds of crime
and the instruments of crime (the means which crime is commied) is crucia for organised
crime groups and this acvit poses an ongoing risk to the Austraian communit. Mone
aundering invoves criminas aempng to hide or disguise the true origin and ownership
of the instruments of crime and the proceeds of crime so that the can avoid prosecuon,
convicon and conscaon of crimina funds. Mone aundering oences are dened in Part
10.2 of the Crimina Code Act 1995 (Cwth). The oences encompass a ver wide range of
crimina acvit.
Mone aundering is an etreme diverse acvit. It is carried out in Austraia at a eves
of sophiscaon most, if not a, organised crime groups, increasing with the assistance
of professiona advisers, and using a constant evoving variet of techniques. Athough the
anking sstem and mone transfer and aternave remiance services are major channes
for money laundering, organised crime groups consistently seek out new channels for money
laundering.11
There is no single method of laundering money. Money launderers have shown themselves to
e imaginave, creang new schemes to get around the counter-measures designed to idenf
and stop them. Some examples of strategies that criminals might use to launder money are:
reaking up arge amounts of cash and deposing the smaer sums in dierent ank
accounts, or uing mone orders or cheques and deposing them in other accounts, in an
eort to pace mone in the nancia sstem without arousing suspicion
11 Austraian Transacon Reports and Anasis Centre (AUSTRAC) 2011, Money laundering in Australia, AUSTRAC, Sydney.
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moving mone around to create compe mone trais, making it dicut to idenf its
origina source – usua through a series of quick transacons, or through usinesses in
other countries
using funds ‘egimised’ through introducon into the forma nancia sstem to faciitatecrimina acvit or egimate usiness, or to purchase high-vaue goods or rea estate
using a numer of peope to carr out sma transacons or cash smugging
using onine gaming paorms, pacing iega proceeds of crime into gaming machines or
purchasing casino chips and cashing them out short aerwards
trade-ased mone aundering – conceaing the movement of funds within arge voumes of
egimate nancia transfers associated with internaona trade.12
The asence of an agreed methodoog for esmang the vaue of mone aundering, and
gaps in informaon on the nancia dimension of organised crimina acvit, hamper eorts tocacuate an accurate gure for mone aundering in Austraia.
Money laundering can harm the Australian community in many ways, including:
‘crowding out’ egimate usinesses in the marketpace when usinesses that are fronts for
money laundering subsidise products and services so that they can sell them at levels well
below market rates
aecng the reputaon and integrit of nancia instuons when, usua without
knowing, the ecome invoved with the proceeds of iega acvit
distorng investment paerns
assisng in the nancing of internaona and domesc terrorism
nancing and providing movaon for further crimina acvies.13
Three ke factors inuence the seecon of parcuar mone aundering methodoogies:
ecienc, capacit and cost. On the asis of these criteria, organised crime groups connue
to wide use aternave remiance deaers. Internaona funds transfers some deaers
can concea their cients’ iicit mone ows among the high voumes of aggregated (main
egimate) dai transacons.
Some organised crime idenes are suspected of eing invoved in the nancing andconstrucon of internaona ased casinos and of using this opportunit to aunder funds,
as we as connuing to aunder iicit funds on compeon of the project. Man casinos and
gaming faciies oer services simiar to those of nancia instuons, incuding accounts,
foreign echange, eectronic funds transfers, cheque issuing and safet deposit oes. These
anciar services, in addion to the variet of gaming services oered and the high cash
turnover, make the gaming sector high aracve and eecve for mone aundering.
12 ibid.13 ibid.
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In June 2011, the Comang the Financing of Peope Smugging and Other Measures bi was
passed, amending the An-Money Laundering and Counter-Terrorism Financing Act 2006,
the Financial Transacons Reports Act 1998 and the Privacy Act 1988. The amendments
were made to reduce the risk of mone transfers remiance deaers eing used to nance
peope smugging and other organised crime ventures through the introducon of a more
comprehensive an-mone aundering and counter-terrorism nancing reguator regime for
the remiance sector.14
However, new mone echange paorms – in parcuar, virtua currencies – remain a
chaenge for aw enforcement as the oen fa outside the an-mone aundering and
counter-terrorism nancing reguator framework. bitcoin is an eampe of a digita currenc
that can be bought and sold anonymously online and does not rely on a central bank or
nancia instuon to faciitate transacons. The unreguated environment and the anonmit
of transacons make currencies such as bitcoin aracve to organised crime for mone
laundering.
The aiit of aw enforcement to take igoen gains from criminas is considered to e a
powerfu too in prevenng serious and organised crimina acvit. Amendments to the
Commonwealth Proceeds of Crime Act 2002 came into force in February 2010. These provisions
provide for the making of an unepained weath order if the court is sased that there is a
reasonable suspicion that a person’s total wealth exceeds the value of the wealth that they
have awfu acquired, and the person has either commied, or has weath which was derived
from, a reevant oence.
KEy CURRENT AND EMERGING ISSUES
Athough reguated sectors (such as anking, gaming and the aternave remiance sector)
connue to e major avenues for mone aundering acvit, organised crime groups are
also using less traceable methods, with new methodologies being constantly employed. This
incudes internaona trade, cash smugging and virtua currencies, such as bitcoin, which
can be bought and sold anonymously.
Organised crime groups are increasing using professionas to idenf and estaish mone
aundering structures and methods, man of which capitaise on estaished goa nancia
networks to move money rapidly around the world.
licit and iicit nancia acvit is ecoming increasing interminged and dicut to
dierenate.
14 Pariament of the Commonweath of Austraia 2011, Comang the Financing of Peope Smugging and Other Measures
bi – epanator memorandum, accessed 31 Januar 2013, .
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I S E D C R I ME I N A U S T R A L I A 2 0 1 3
Cyber and teChnologyenabled CriMe
INTRODUCTION
The threat to Austraia of cer and major technoog-enaed crime from internaona and
domesc organised crime groups is signicant. The use of computers and the Internet has
become an integral part of daily life for most Australians, from online banking, shopping
and socia networking, to using emai and rowsing the we. Organised crime has idened
and seized on the opportunity to exploit for criminal gain the growing use of the Internet by
Australians.
Cyber and major technology-enabled crime has a major impact on the world economy, with a
2012 stud esmang the goa cost of cercrime at US$110 iion annua.15 The overall
cost of cer and major technoog-enaed crime to the Austraian econom is esmated to
be US$1.7 iion16 per ear, with major cer intrusions cosng organisaons an average of
US$2 miion per incident.17
THE CURRENT SITUATION
Cercrime takes two forms: crimes where computers or other informaon communicaons
technoogies (ICTs) are an integra part of an oence (such as onine fraud, ident the and
the distriuon of chid epoitaon materia), and crimes directed at computers or other ICTs
(such as hacking or unauthorised access to data).
In reaon to the use of the Internet and technoog to faciitate tradiona crimina acvies
and oences, Tae 1 shows the migraon of tradiona crime to the onine environment.
Important, compung and informaon technoog enaes the commission of crime remote
and reave anonmous – two characteriscs that are parcuar aracve to organised
crime, as the make the idencaon and prosecuon of the oenders more dicut. The
goa reach of technoog aso signicant increases the potena vicm ase. The principa
idened threats to Austraia emanate from oshore networks speciaising in technoog-
faciitated tradiona oences.
15 Norton 2012, Norton Cercrime Report 2012, , viewed 30 Ma 2013.
16 ibid.
17 Pomenon Instute 2012, 2011 Cost of data reach stud: Austraia, , viewed 30 Ma 2013.
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TABLE 1: TRADITIONAL CRIME TYPES AND THEIR CYBERCRIME EQUIVALENTS
t cm Ccm quv
Fraud Online fraud, mass marketed fraud
Chid se oences Onine chid grooming, chid epoitaon materia wesites, storage andechange of epoitaon materia on technica devices
Money laundering Online money laundering via payment systems, e-cash
Ident crime Onine ident crime, ‘phishing’
Etoron Onine etoron through ransomware, distriuted denia of service
aacks, hacking
Intellectual property crime Onine unauthorised access (hacking) and the of informaon for
nancia advantage
Australia has a large and increasing number of Internet users, any of whom may become
the vicm of cercrime. According to the Austraian bureau of Stascs (AbS), at the end
of June 2012 there were over 12 miion Internet suscriers in Austraia (ecuding Internet
connecons through moie handsets)18 – an increase of 4 per cent since the end of Decemer
2011. In addion, the AbS reports that there were 16.2 miion moie handset Internet
subscribers, an increase of 7 per cent from December 2011, and an increase of 22 per cent
since June 2011. Athough these moie devices are just as vunerae to aack as tradiona
compung devices such as aptop computers, users oen do not give the securit of these
devices the same consideraon, which ma increase their vuneraiit.
Aacks on Internet users aside, organised crime groups are aso making use of ‘darknets’. These
are protected hidden networks of wepages, forums and aucon sites, which oen harour
trading in iicit commodies, incuding chid epoitaon materia, iicit drugs and rearms,
stoen credit card and ident data, and hacking techniques.
Aacks against computer services are ecoming more sophiscated and common. Organised
crime groups without strong technological skills are able to obtain ready-made malicious
soware packages (‘maware’) onine, to hep them commit a range of oences, or there are
those who will provide packages to organised crime for a fee.
The maware avaiae is aso increasing dicut to detect – oen containing ‘rootkit’features. A rootkit (aso caed ‘steathware’) is computer code designed to hide from the
operang sstem and securit soware of the target computer. Maware incorporang rootkits
is more eecve in avoiding detecon an-virus soware, aowing cercriminas to gain
unauthorised access to sstems for onger periods of me. This can, among other things,
provide unauthorised backdoor access to a computer to steal or falsify documents, steal credit
card details or passwords, such as online banking passwords, install viruses, or direct the
computer to send spam email.
18 Austraian bureau of Stascs 2012, Internet acvity Australia, June 2012, cat. no. 8153.0, ABS, Canberra.
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I S E D C R I ME I N A U S T R A L I A 2 0 1 3
Organised crime ma aso use distriuted denia of service (DDoS) aacks to aack usiness or
government wesites. DDoS aacks aempt to make the wesite unavaiae to its intended
users ooding it with trac. This causes the server to ecome overoaded with connecons,
so that new connecons cannot e accepted.The Defence Signas Directorate (DSD) pas a vita
roe in Austraia’s cer and informaon securit. The DSD provides advice and assistance to
federa and state authories on maers reang to the securit and integrit of informaon,
on greater understanding of sophiscated cer threats, and on coordinaon of and assistance
with operaona responses to cer incidents of naona importance across government and
sstems of naona importance. As with home Internet users, adequate securit pracces are
paramount to prevenng cer intrusions. At east 85 per cent of the intrusions that the DSD
responded to in 2011 invoved adversaries using unsophiscated techniques that woud have
een migated impemenng the top four strategies isted in their Strategies to migate
targeted cyber intrusions.19
In ate 2012, there was an increase in reports of aacks in which users’ computers were
‘ocked’ un a fee was paid to have them ‘unocked’. This tpe of aack – named ‘ransomware’
or ‘scareware’ (see case stud on page 20).
Recognising that cyberspace is a strategic asset for Australia, the Australian Government
is establishing the Australian Cyber Security Centre to improve partnerships between
governments and with industry. The Centre will bring together Defence’s Cyber Security
Operaons Centre, the Aorne-Genera’s Computer Emergenc Response Team Austraia, the
Austraian Securit Inteigence Organisaon (ASIO)’s Cer Espionage branch, eements of the
Austraian Federa Poice’s High Tech Crime Operaons capaiit and a-source-assessment
analysts from the ACC.20
KEy CURRENT AND EMERGING ISSUES
The threat posed organised crime groups is high and the connued rapid uptake of
technoog in Austraia is increasing the opportunies for cer and major technoog-
enabled crime.
The principa threats to Austraia come from crimina networks ased oshore that
speciaise in technoog-faciitated crimes, such as onine fraud and aacks on computer
systems.
Organised crime groups are making use of Internet ‘darknets’ – protected hidden networks
for trading in iicit products and informaon.
19 Defence Signals Directorate 2012, Strategies to migate targeted cyber intrusions, 10 October 2012, accessed 20 May 2013,
.
20 Department of the Prime Minister and Cabinet 2013, Strong and secure: a strategy for Australia’s naonal security , viewed 31Januar 2013, .
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RANSOMWARE
ATTACKSi 2012, w c m p f vcm f ‘mw’ au
u w. tw m p f c w p: m u
pcu, c u m m cmpu u.1
t p f c c cmpu, cp m
cc wu pm f ‘m’. bu w p f f
uc.2 i m c, f c c m up.3
t c p f c p pp-up m pup fm w fcm
c vm pm (cmp w ), w m cm
cmpu vv cv c u ‘’ w p.4 i
m c, w cp, u c mp c.5 i m
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a v f c w p gm 2013, w pp-up m
c m pup c xp m, w m, f
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1 Tung, l 2012, ‘2013: a ook at four maware predicons’, CSO Magazine (onine), 18 Decemer 2012, viewed 19 Decemer
2012, .
2 Department of broadand, Communicaons and the Digita Econom 2012, ‘Ransomware aacks wi increase in 2013’, accessed
18 Apri 2013, .
3 O’Nei M 2012, ‘Ransomware targeng usinesses, home PCs’, ABC News Online, 25 October 2012, accessed 18 April 2013,
.
4 Austraian Compeon and Consumer Commission 2013, ‘Poice scareware scam connues to target Austraians’, accessed 18
Apri 2013, .
5 Tung, l 2012, ‘2013: a ook at four maware predicons’, CSO Magazine (onine), 18 Decemer 2012, viewed 19 Decemer
2012, .
6 O’Nei M 2012, ‘Ransomware targeng usinesses, home PCs’, ABC News Online, 25 October 2012, accessed 18 April 2013,
.
7 Cue, G 2013, ‘Ransomware scares vicms with chid se ause images’, accessed 18 Apri 2013, .
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I S E D C R I ME I N A U S T R A L I A 2 0 1 3
IDENTITY CRIME
INTRODUCTION
Ident crime road encompasses:
the the of persona ident informaon (PII) and reated nancia informaon
the assumpon of another ident for frauduent purposes
the producon of fase idenes and nancia documents to enae other crimes.
The Austraian Government’s Organised Crime Response Pan recognises that comang
ident crime is a ke priorit at the naona eve, ecause of the possie impact on naona
securit, aw enforcement and the communit. The Naona Organised Crime Response Pan
2010–13 isted one of ve core strategies as eing a naona response to ke eements of the
organised crime environment, incuding measures to target ident crime. As an enaer for
other crime tpes, ident crime undermines the integrit of the econom, of nancia and
anking instuons, and of icensing, immigraon and wefare sstems.
THE CURRENT SITUATION
The rapid growth of ident crime and the misuse of PII aects man areas of societ, and has
aso raised serious concerns internaona from a persona securit and safet perspecve.
Ident crime has considerae socia and nancia impicaons for the Austraian communit.
Individuas whose idenes are stoen and used to faciitate crimina oences epend
considerae me and eort restoring persona proes, incuding re-estaishing nancia
arrangements and amending credit proes.
There are a range of reasons for crimina enes to engage in ident crime. In some instances,
PII is stoen in order to create a fase or frauduent ident to use in the commission of an
oence. With prosecuons for crimina oences eing reiant on estaishing the ident of the
oender, criminas have historica tried to ensure that their ident has een either oscured
or fasied. Fase idenes, oen ased on persona detais stoen from others, have various
been used by criminals to, for example, perpetrate frauds, establish business structures and
companies through which to faciitate crimes such as mone aundering or the importaon
of iicit commodies, or undertake naona or internaona trave without those trave
movements eing ae to e idened or traced aw enforcement agencies. Stoen idenes
have aso een used in the commission of terrorism oences.
The size of the ident crime market in Austraia is dicut to assess. For eampe, in some
cases the vicm of ident crime might, in the rst instance, nof their nancia instuon
of the the of their credit card and other persona detais, rather than nofing poice. If the
instuon cances the card, reimurses the vicm and provides them with a new card, the
ident crime is unknown to aw enforcement agencies and is not recorded.
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The manufacture and use of fase or counterfeit and frauduent ident documentaon main
targets anks, ending agencies, nancia instuons and arge retaiers, aowing groups
invoved in ident crime to otain frauduent oans and withdraw funds iega, or to faciitate
organised shopping groups using false credit cards and skimmed card data. Government
agencies, however, are aso increasing eing targeted, parcuar those that provide some
form of enet or refund, such as Centreink and the Austraian Taaon Oce (ATO). For
eampe, etween 1 Ju and 30 Novemer 2011, the ATO idened over 7,300 income ta
returns, with caimed refunds of around $36 miion, as eing suspected cases of ident crime.
Ident and ident-reated crime is increasing faciitated technoog, with a growing
requirement for individuas to divuge PII onine in order to access goods and services, and
with a greater wiingness, parcuar among ounger peope, to share PII and data with other
pares onine. In parcuar, socia networking sites, on which individuas oen post detais such
as dates of irth, addresses and paces of work, can provide organised crime with sucient
detaied persona informaon to aow them to commit ident crime. These detais can e
easi harvested and can e ‘warehoused’ for ears efore eing used. This makes it dicut to
idenf where and when the informaon has een compromised.
An emerging technology-related problem is the growing availability of portable devices capable
of reading ank card detais from a distance – for eampe, ‘tap and go’ cards. This technoog
is ike to e adapted tradiona ‘card skimming’ groups.
Notwithstanding the increasing threat of ident crime that Internet users face, there are
indicaons that users have a reave ow awareness of the risks associated with using
informaon and communicaon technoogies from an ident crime perspecve. Userawareness of ident crime is parcuar important in the contemporar environment, in
which onine ‘phishing’ aempts are increasing targeng specic groups such as professionas
(for eampe, in the medica, accounng and ega professions), organisaons or empoment
sites, with the aim of eicing PII or other vauae data (see case stud on page 23).
Capitaising on the current need for individuas to have mupe forms of eectronic PII,
such as persona idencaon numers and computer sstem passwords, some organised
crime groups speciaise in the the of ident data, and in parcuar nancia data, for the
purpose of on-seing it to other crimina groups. In this wa, ident data has ecome another
commodity that organised crime can trade in.
As securit features on ident documents connue to improve, and more eectronic PII is
held in centralised repositories, organised crime is increasingly likely to target ‘trusted insiders’
who can faciitate the the or compromising of sensive data. This might invove aempts
to intrate agencies responsie for the producon of persona idencaon documents,
or to corrupt empoees within those agencies who have access to ident informaon and
documents.
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I S E D C R I ME I N A U S T R A L I A 2 0 1 3
CHILDS PLAYAN UNSOPHISTICATED ATTEMPT TO GETPERSONAL INFORMATION
i ap 2013, m p cm mp c p fm
fm au gvm mp w v . t cm vv
m v cc c w p wu ccp
c w p w ru cmpx C. ru w
dfc s dc, asio, dfc ic o dfc Fc
dpm f dfc c.
a p f v pp f cc pc, w cu
ppc fm f fm m qu. t cu mp
um, x um c u c.
au mp c p fm fm um f pp wupc, f uccfu cu v u fm mup
. t cu v u c cum
cmm c uc fu.
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KEy CURRENT AND EMERGING ISSUES
The threat from ident crime is ike to increase over the net two ears.
Warehousing of data organised crime groups for ater use, making it dicut to detect
when and how data breaches have occurred, has increased.
In the future, organised crime groups are more likely to target trusted insiders or to
aempt to corrupt ocias to access informaon and documents. As securit features on
ident documents connue to improve, there ma e a move to oenders apping for
fraudulently obtained genuine documents.
EXPLOITATION OF BUSINESS STRUCTURES
INTRODUCTION
The crimina epoitaon of usiness structures invoves the use of unawfu usiness pracces,
and oth simpe and compe usiness structures, to concea the crimina intraon of an
industr, to enae usinesses to maintain or epand market share, and to generate and/or
concea prots. This form of epoitaon, in which professiona faciitators connue to have a
signicant roe, is ecoming increasing common in Austraia.
THE CURRENT SITUATION
smp u ucu – Simpe usiness structures such as restaurants, hotes, pus
and clubs, entertainment venues and other cash-intensive businesses are typically used by
organised crime in support of mone aundering. This is primari ecause cash prots from
crimina acvit can e mied with cash owing egimate into these usinesses, making it
dicut for aw enforcement to e ae to idenf which funds are ‘cean’ and which funds
are ‘dirt’. Transfers of cash can aso e made eaving no audit trai – unike, for eampe, the
electronic transfer of funds, or the formal transfer of assets.
Iicit funds can aso e invested in a usiness in an eort to maintain or epand market share,
creang an unfair advantage for organised crime compeng with egimate usiness owners.
In some instances, organised crime groups ma aso use vioence (threatened or actua) to
inmidate usiness competors.
Cmpx u ucu – Compe usiness structures (for eampe, those composed ofmupe aers, with mupe controers and internaona connecons) are current used
organised crime in reaon to arge-scae revenue and taaon fraud and mone aundering.
These structures ma e used to hide enecia ownership ehind aers of companies and
trusts in mupe oshore jurisdicons, to move and oscure the umate desnaon of
funds, and to hinder reguator and aw enforcement eorts to idenf assets and iicit mone
ows.21
21 Austraian Transacon Reports and Anasis Centre 2011, Money laundering in Australia 2011, AUSTRAC, Canberra.
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I S E D C R I ME I N A U S T R A L I A 2 0 1 3
The epoitaon of trust structures organised crime is an ongoing proem that impairs
the aiit of aw enforcement to idenf and successfu disrupt mone aundering, and
the aiit to idenf assets otained through crimina acvit. Athough trusts pa an
important and egimate roe in protecng assets and providing for eneciaries, organised
crime connues to use trust structures for the purpose of mone aundering. Trust structures
oen form part of a arger, sophiscated network of usiness structures and proprietar
companies. Unraveing compe usiness structures can e resource intensive, oen requiring
speciaist skis and knowedge, protracted invesgaons and strong cooperaon etween aw
enforcement and regulatory agencies.
Pf fc – The use of professiona faciitators (those with the specic skis,
knowedge, eperse and resources sought organised crime to aow them to operate
seamess across oth egimate and iicit markets) remains a ke eement in the epoitaon
of usiness structures. Some faciitators – aso referred to as ‘promoters’ – hep organised
crime to evade ta registering companies (oen in ta havens with strict secrec provisions),
establishing bank accounts, and providing asset management and trust services that are
designed to circumvent taaon aws and oscure the owner of the funds.
Sophiscated organised criminas tpica seek the services of severa professiona faciitators
at once, enisng each one to assist with dierent eements of their ‘usiness’ arrangements.
This compartmentaisaon of their usiness aows the architect of a frauduent arrangement
to create separate parts of the scheme, with each part able to be viewed in its own right
as having a pausie raonae, and with each part constructed in such a wa that each
professiona faciitator is unae to view or have knowedge of the true purpose of the enre
arrangement. Tpica it is on when such schemes are viewed in their enret that their
fraudulent nature is apparent.
KEy CURRENT AND EMERGING ISSUES
Organised crime groups operang in Austraia are current using sophiscated networks of
businesses, proprietary companies and trusts to enable a range of organised criminal and
reguator oences.
Professiona faciitators and ‘promoters’ have a signicant roe in heping organised
criminals to exploit business structures, drawing on their specialist skills, knowledge,
eperse and resources.
PUBLIC SECTOR CORRUPTION
INTRODUCTION
Puic sector corrupon refers to the misuse of puic power or posion with an epectaon
of undue private gain or advantage (for sef or others). It ma incude instances of rier,
emezzement, fraud, etoron, trading in inuence, or perverng the course of jusce.
Corrupt conduct can occur direct through the improper or unawfu acons of puic sector
ocias, or through the acons of individuas operang in the private sector who aempt toinappropriate inuence the funcons of government.
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Transparenc Internaona’s 2011 Corrupon Percepons Inde ranked Austraia the eighth
‘ceanest’ countr in puic percepons of corrupon.22 Athough this is a posive nding, it
does not mean that corrupon is asent in Austraia (given, for eampe, the recent arrests of
order agenc ocers), and organised crime connua proes for weaknesses in sstems and
wi take advantage of an opportunies to corrupt puic ocias. Corrupon can undermine
the est reguator sstems and requires constant monitoring an-corrupon and other
agencies to migate the risk that it poses.
THE CURRENT SITUATION
Organised crime seeks to corrupt public sector personnel to gain access to public funds,
informaon, protecon and other services that hep faciitate crimina acvies. This can
incude targeng puic ocias who work in areas where the have access to informaon on
the acvies of other organised crime groups and aw enforcement agencies, or where sta are
ae to provide idencaon documents such as drivers icences. Ocias with the capaiit
to faciitate organised crimina acvies through ‘turning a ind ee’ to acvies, or those who
can direct targeng of goods at paces such as importaon points, are aso ike targets.
Corrupon of puic sector ocias has sustana mupier eects and enets for organised
crime. There ma e signicant inks etween corrupon in the puic sector and organised
crime groups that, their ver nature, remain hidden. The ke chaenge in idenfing and
invesgang corrupon is that corrupt conduct occurs in secret, etween consenng pares
who, frequent, are skied at decepon.
An-corrupon agencies in Austraia have highighted that the reave strength of the
Austraian econom signicant increases the potena protaiit of imporng iicit
commodies, such as iicit drugs, into Austraia, with the prots from the sae in Austraian
doars then eing repatriated overseas. This ma provide incenves for organised crime to pa
arge ries to faciitate their acvies and access Austraian markets.
It is not just domesca ased puic sector ocias who ma e targeted organised crime
groups. Austraia is represented overseas a arge numer of Austraian ocias working in a
dipomac capacit, incuding aw enforcement, consuar, dipomac and other ocias. Man
of them work in countries where there is a higher eve of corrupon in the puic sector than
is the case in Austraia. Transnaona organised crime groups ased in those countries are
ike to aempt to seek opportunies to corrupt Austraian government representaves. This
risk has een recognised the Pariamentar Joint Commiee on the Austraian Commission
for Law Enforcement Integrity, which, in December 2011, announced that it would conduct
an inquir to consider the corrupon risks facing internaona operaons of aw enforcement
agencies. The inquir is ongoing.
22 Transparenc Internaona’s Corrupon Percepons Inde measures the perceived eve of puic sector corrupon in near200 countries. It has been published since 1995.
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An-corrupon and aw enforcement agencies connue to highight puic sector ocias’
inappropriate reaonships with informants and crimina enes as a threat that can ead
to corrupt acvies, parcuar for aw enforcement agenc memers. Faciitang these
reaonships is the increasing use of socia media sites organised crime to iniate contact
with puic sector ocias. This has een through sites ased on simiar interests – parcuar
reang to oduiding and kickoing – or professiona sites such as linkedIn or Faceook,
where puic ocias have incuded arge amounts of persona detais. Organised crime
groups have used these detais to iniate contact, which at rst ma appear to e within the
contet for interacon within these forums, ut can e uit upon to judge the potena for
compromising the person being targeted.
The Austraian Government is current deveoping a Naona An-Corrupon pan, which
wi posion Austraia to deiver a coordinated approach to ghng corrupon. The pan wi
incude specic measures to idenf and manage corrupon risks, incuding those reated to
organised crime. The pan wi aso incude measures to improve the reporng and anasis of
Commonweath data on corrupon.
KEy CURRENT AND EMERGING ISSUES
The reave strength of the Austraian econom signicant increases the potena
protaiit of imporng iicit commodies, such as iicit drugs, into Austraia. This ma
provide incenves for organised crime to pa arge ries to faciitate their acvies and
access Australian markets.
Faciitang corrupt reaonships is the increasing use of socia media sites organised
crime to iniate contact with puic sector ocias. This has een through sites ased on
simiar interests – parcuar reang to oduiding and kickoing – or professiona
sites such as linkedIn or Faceook, where puic ocias have incuded arge amounts of
personal details.
VIOLENCE
INTRODUCTION
In Austraia, ke reasons for the use of vioence organised crime incude ‘warning o’
competors in crimina markets, retaiaon for previous vioent acts, retaiaon for faiure tosupp goods, empoment of stand-over taccs on ehaf of other crimina groups, interna
group discipine, maintenance of ‘honour’ or status, and etoron to gain mone or access
to other usiness acvies. Some inter- and intra-group vioence is not awas reated to
enaing organised crime acvit. It has een oserved that some vioence etween and within
organised crime groups has een to see fami and other disputes. This parcuar reates to
maers of honour and status as menoned aove. Eampes incude vioence in response to a
perceived sight on an individua’s reave.
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THE CURRENT SITUATION
The use, or threat, of vioence remains an integra part of organised crimina acvit in
Austraia. The frequenc of use, and the tpe of vioence used, depends on ethos, the crime
market involved and the type of organised crime group.
Organised crime operang in Austraia is aso ike to use etoron, through threats of
vioence, as oth a primar prot-generang acvit – for eampe, in conjuncon with the
tracking of high protae iicit commodies such as amphetamine-tpe smuants (ATS) or
cocaine – and an enaing acvit that can assist in the epansion of market contro. This can
incude the intraon of egimate usiness structures for crimina gain.
Vioence is a ke aritrator in the compeon etween those operang in the same crimina
markets. This means that it is likely that the levels of violence occurring among organised crime
groups wi e and ow depending on the numer, size and ‘strength’ of the groups in an
parcuar crime market, as we as the size and protaiit of an given crime market.
Oservaons from Canada are that ‘more sophiscated groups at mes hire suordinate
criminal groups or individuals to undertake violent acts on their behalf ’.23 Although the extent
to which this might be occurring in Australia is not clear, there is a risk that, should more
organised crime groups ‘contract out’ det coecon and threat funcons, there coud e an
increase in actua vioence as ess sophiscated, ess discipined ower-eve crimina groups
accept sub-contracts for these roles. Groups willing to engage in ‘stand-over’ threats and debt
coecon are ike to have a propensit towards vioence, and to consider it a egimate tacc.
Some organised crime groups in Austraia, such as outaw motorcce gangs (OMCGs), have
a ong-standing associaon with a cuture of vioence. In the past this vioence has tpica
een conducted out of the puic view. There are, however, some indicaons that this ma e
changing. The bludgeoning and stabbing death of an OMCG member at Sydney Airport in 2009
and the shoong death of Giovanni Focarei in South Austraia in Januar 2012 are eampes of
cases in which OMCG-reated vioence is eing paed out in puic. The drive- shoongs that
have occurred in a number of Australian states are other examples. If violence between crime
groups is increasingly played out in the public space, the risk increases that members of the
puic wi ecome unintended ‘coatera’ vicms of this vioence.
KEy CURRENT AND EMERGING ISSUES
The use of vioence remains an integra part of organised crimina acvit in Austraia.
The apparent wiingness of organised crime, and OMCGs in parcuar, to ring their vioent
disputes into public spaces increases the risk that members of the public will become
unintended vicms.
23 Criminal Intelligence Service Canada 2010, Annual report 2010, CISC, Oawa, accessed 10 Januar 2012, .
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ILLICIT COMMODITIES
IllICIT DRUG MARKET OVERVIEW
The use of iicit drugs, and the consistent epoitaon of demand for iicit drugs organised
criminal individuals and groups, remain enduring problems for the Australian Government,
state and territory governments, law enforcement and health agencies, and the broader
community.
Athough the tradiona iicit drugs such as methamphetamine, cannais, cocaine and heroin
remain entrenched markets, the broader illicit drug market is becoming increasingly complex,
with a vast arra of sustances now avaiae to movated users.
In recent ears, aw enforcement and heath agencies in Austraia, Western Europe and North
America have encountered an increasingly complex environment, with the emergence of
drug analogues and other novel substances. According to analysis of the current European
Union (EU) drugs markets the European Monitoring Centre for Drugs and Drug Addicon
(EMCDDA) and Europo, there has een a dramac increase in the numer, tpe and avaiaiit
of new sustances in Europe, with a record 73 new sustances detected there for the rst mein 2012. Overall, the EU early warning system currently monitors more than 250 substances.24
The drug anaogue and other nove sustances market is unique, and is chaenging eisng
regulatory approaches. This is compounded by the existence of a marketplace within a
‘virtua environment’ – where interacon etween manufacturers, suppiers and users, and
the exchange of drugs, product and use knowledge, and payment for product, occurs on the
Internet.
24 European Monitoring Centre for Drugs and Drug Addicon & Europo 2013, EU drug markets report: a strategic analysis,EMCDDA, lison & Europo, The Hague.
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The Internet has aso acceerated the evouon of some drug markets and created a rapid
changing market dnamic. Informaon on new drugs, doses, routes of administraon, eects and
drug cominaons – which was previous communicated through word of mouth – now spreads
rapid through socia networking sites and uen oards devoted to iicit drug use. Vendors are
aso epoing the Internet open adversing the deveopment and reease of new product
ines and oering product reviews and free drug sampes to promote their atest products.
Athough estaished drug monitoring sstems connue to provide a good insight into the
dnamics of estaished and tradiona drug markets, the growing speed with which new
markets are deveoping has made the monitoring of drug markets from a hoisc perspecve
increasing dicut, and has decreased the eecveness of estaished drug monitoring
sstems. This situaon has e oth heath providers and aw enforcement agencies strugging
to maintain a contemporary understanding of these markets.
Further, visibility of the drug analogue and novel substance market remains limited, as these drugsemerge so quick that quesons pertaining to their use are tpica not incuded in estaished
drug use monitoring quesonnaires, such as the Austraian Naona Househod Surve.
To overcome this problem, agencies in the European Union and the United Kingdom have
deveoped innovave data coecon strategies25 designed to provide reevant authories and
decision-makers with ongoing me insights into these markets. In Austraia, the Austraian
component of the Goa Drug Surve and the Naona Drug and Acoho Research Centre’s
Naona Iicit Drug Indicators project are current ooking at the Austraian nove sustances
market and the use of the Internet.
METHYLAMPHETAMINE
In the past, law enforcement has assessed the market for methylamphetamine under the
heading of amphetamine-tpe smuants (ATS) – a heading that aso covered MDMA or
‘ecstas’. Now, the markets for methamphetamine and MDMA have evoved so dierent
that it is no longer useful or appropriate to group them together in undertaking an assessment
of the risk that they pose.
Naona drug use monitoring surves have idened increasing use and avaiaiit of
methamphetamine, and increases in users’ percepons of the purit of the drug, over the
past ve ears.26
Both anecdotal reports and drug user monitoring surveys suggest increasinguse and avaiaiit of crstaine methamphetamine in parcuar.27
The Austraian methamphetamine market connues to comine domesc producon with
iicit importaons. Athough organised crime groups maintain a strong presence in the market,
market parcipants are diverse, and incude individuas and groups operang at various eves of
sophiscaon and capaiit. The foowing case stud demonstrates the sophiscaon of some
organised crime groups invoved in the methamphetamine market (see case stud on page 31).
25 This incudes the coecon of sampes from urinas at major music fesvas and the anasis of waste water.
26 Naona Drug and Acoho Research Centre 2012, ‘Ke ndings from the 2012 IDRS’, NDARC conference, Sdne; Macgregor, S
& Pane, J 2011, Increase in use of methamphetamine, Austraian Instute of Criminoog, Canerra.27 Naona Drug and Acoho Research Centre 2012, ‘Ke ndings from the 2012 IDRS’, NDARC conference, Sdne.
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SEIZURE OF 365 LITRESOF LIQUID CONTAININGMETHYLAMPHETAMINEa j v au F Pc, au Cm Cmm,
au Cum b Pc svc Vc Pc pp
c w v c mmpm mp au.
t c, 46 p f qu cp c, v Mu fm
h k ap 2013. exm f c v 96 f 3,332
f qu c c mmpm. i m 365 f qu
mmpm wu qu 280 m f pu mmpm, w
vu f up $205 m.
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Crimina enes invoved in methamphetamine producon have a great degree of eiiit
because of the numerous methods by which methylamphetamine can be synthesised, and
the variet of precursor chemicas that can e used in methamphetamine producon. This
enaes those invoved in the producon of methamphetamine to quick adapt to an
changes in the availability of precursors, or in regulatory controls.
A recent ACC assessment of precursor chemica contros found that, since the incepon of
the vountar Code of Pracce for Supp Diversion into Iicit Drug Manufacture in 1994, iicit
drug manufacturing methodologies have changed. A trend back towards the classic routes of
synthesis for methylamphetamine has been observed. Many of the key chemicals used in these
methods are isted in Categor II of the Code, which does not require that the e recorded or
reported to authories.
In reaon to distriuon, the market is aso diverse. Distriuon occurs through a compe
web of networks, ranging from social groups through to organised criminal groups engaged inthe arge-scae importaon and distriuon of precursor chemicas and methamphetamine.
PRECURSOR CHEMICALS
Precursor chemicas are an essena part of the producon process for iicit drugs. The
chemicas required dier according to the drug eing produced and the producon process
used. Methamphetamine is the main iicit drug manufactured in Austraia requiring precursor
chemicals.
large amounts of precursor chemicas connue to e detected at the order, and to e
diverted domesca from a range of sources. The Peope’s Repuic of China, Thaiand,Cambodia and India are primary source countries for the Australian illicit precursor chemical
market.
In 2011–12, the Austraian Customs and border Protecon Service (ACbPS) made 1,026
precursor detecons, weighing a tota of 2,079.22 kiograms.28 This represented an increase
in the numer of detecons (up from 785), ut a decrease in the weight of detecons
(down from 3,470.47 kiograms) from the previous ear.29 The majorit of these detecons
(in oth weight and numer) were of precursors used in the producon of amphetamine-
tpe smuants (incorporang precursors to methamphetamine) such as ContacNT,30 but
precursors for lSD (sergic acid diethamide), GHb (gamma-hdroutrate) and MDMA(3,4-methenediomethamphetamine or ‘ecstas’) were aso detected.31 In addion to
precursor order detecons, there were a numer of signicant naona precursor seizures
in 2011–12. This incuded an 11 tonne seizure of hpophosphorous acid, which is used in the
manufacture of methylamphetamine.32
28 Austraian Customs and border Protecon Service 2012, Annual report, 2011–12, ACBPS, Canberra.
29 ibid.
30 ContacNT is a cod and u medicaon manufactured egimate in China for use in the domesc market. It contains a high
proporon of pseudoephedrine and is a favoured precursor used in the manufacture of methamphetamine.
31 Austraian Customs and border Protecon Service 2012, Annual report, 2011–12, ACBPS, Canberra.32 Australian Crime Commission 2013, Illicit Drug Data Report 2011–12, ACC, Canberra.
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COCAINE
The main countries invoved in cocaine producon are Coomia, Peru and boivia. Goa coca
producon has connued to decine ecause of signicant decreases in the cuvaon of coca
in Coomia. Athough coca producon increased in 2010 in Peru and boivia, these increases
were not sucient to oset decreased Coomian coca producon33 – a decrease arge
rought aout enforcement eorts in Coomia.
According to the UNODC’s Word Drug Report, North America and Western and Centra Europe
remain the argest cocaine markets. Though reduced Coomian cocaine producon has ed to
a decrease in supply of cocaine to the United States, there has not been a decline in supply of
the same magnitude in the European market.34
There are mied indicaons of the avaiaiit and use of cocaine in Austraia. On the one hand,
the 2010 Naona Househod Surve reported the highest eve ( numer of users) of recent
cocaine use since the survey began in 1993.35 It also reported that the number of individuals
who had een oered, or had the opportunit to use, cocaine increased consistent etween
1998 and 2010.36
However, whie reported cocaine use in Austraia is at historica high eves, an eaminaon
of paerns of use shows that 60.8 per cent of peope who had used cocaine within the ast
year had used cocaine only once or twice.37 The proporon of peope reporng recent use of
cocaine through injecon has aso een decining.38 Drug user surveys indicate that cocaine use
is reave stae among injecng drug users and decreased signicant etween 2011 and
2012 among regular ecstasy-and-related-drug users.39
The internaona cocaine market connues to e dominated entrenched crimina groups
such as Colombian and Mexican groups, who have consistently demonstrated the capacity to
innovate in response to aw enforcement acons. In recent ears, however, an increasing range
of crimina groups have ecome invoved in cocaine tracking as a resut of new tracking
routes and the goa footprint of cocaine in terms of user market ocaons.
Given the increasing dnamic internaona cocaine market and the increasing invovement of
crimina groups who have not tradiona een invoved in cocaine tracking, Austraia is ike
to see groups who have not tradiona een invoved in cocaine tracking and distriuon
develop a presence in the Australian cocaine market. The high price that cocaine commands in
Austraia makes this countr an aracve and ucrave market for crimina groups.
33 United Naons Oce on Drugs and Crime 2012, World drug report 2012, United Naons, Vienna.
34 ibid.
35 Austraian Instute of Heath and Wefare 2011, 2010 Naonal Drug Strategy Household Survey , Drug Stascs Series no. 25,
cat. no. PHE 145, AIHW, Canerra.
36 ibid.
37 ibid.
38 Phiips, b & burns, l 2011, Eleven years of cocaine trends among people who inject drugs in Sydney: price, purity and
availability 2000–2010, Drug Trends buen, NDARC, Sdne.39 Naona Drug and Acoho Research Centre 2012, ‘Ke ndings from the 2012 IDRS and EDRS’, NDARC conference, Sdne.
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These high prices, however, may also act as an inhibitor to the large-scale expansion of
the cocaine user market in Australia. The price of cocaine in Australia has been stable to
increasing over the past two ears, and some users are reporng inconsistent purit as a factor
discouraging their use.
HEROIN
Goa producon of opium increased sustana in 2011. In South West Asia, opium
producon was esmated at 5,800 tonnes – a 61 per cent increase compared with 2010, when
opium ieds were signicant ower ecause of a pant disease.40 This was despite a 65 per
cent increase in popp eradicaon in 2011.
Opium producon in South East Asia has aso connued to increase, parcuar in Manmar,
which remains the main producer of opium in the region. based on UNODC crop esmates,
opium producon in South East Asia has doued etween 2006 and 2011. Sources in
Manmar suggest that opium producon is more widespread and sustana higher than
ocia UNODC esmates.41
The numer and weight of naona heroin seizures, which incudes oth order and domesc
seizures, connued to increase in 2011–12. The numer of heroin seizures in 2011–12 is
the highest reported in the ast decade, whie the weight of naona seizures is the second
highest weight reported in the decade. 42 Despite uctuaons in naona heroin seizures over
the ast decade, reported recent heroin use in the genera popuaon has remained unchanged
since 2001. 43
Rates of heroin use in Austraia are reave ow in comparison with the rates for other iicitdrugs. The 2010 Naona Househod Surve idened that 1.4 per cent of Austraians aged 14
ears or o