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How much money is laundered in and through Australia?

Media Release

13 September 2007

'By its nature, money laundering is unlikely ever to be measured accurately, but estimates of its cost to the economy can be made using a range of data sources', Dr Toni Makkai, Director of the Australian Institute of Criminology, said on releasing 'Money laundering in and through Australia, 2004', number 342 in the AIC's Trends and issues in crime and criminal justice series.

New research confirms that fraud constitutes the greatest source of laundered funds, followed by the illegal drug trade. The research suggests that crime in Australia in 2004 generated between $2.8b and $6.3b, with a likely figure of $4.5b. These estimates are based on the analysis of survey results, costs of crime, and estimates of the profitability of crime.

This research updates estimates of the cost of money laundering undertaken in 1995. Funded by the Criminology Research Council, the update and analysis of money laundering was extended to include the Asia Pacific region and terrorism in the region.

The study utilised a survey of expert groups: law enforcement agencies; researchers and criminologists; and financial intelligence units. In total there were 39 responses - 24 from overseas and 15 from Australian stakeholders. It also involved a review of relevant annual reports and examination of AUSTRAC's database.

A key finding was that the extent of money laundering is not significantly different from that in 1995. However, law enforcement agencies are now more successful in seizing large quantities of drugs and identifying corrupt business practices, partly as a result of access to AUSTRAC's financial intelligence.

The banking sector, casinos, the real estate market and the accountancy profession were most commonly believed by survey respondents to be utilised for money laundering in Australia, sending money overseas or receiving it from overseas.

Money laundering to, from or within Australia was frequently through structuring transactions to avoid reporting requirements, using accounts in false names and cash smuggling.

The money laundered in Australia was believed to be invested in real estate and further criminal activities, and to a lesser extent, gambling, luxury goods, and legitimate business.

Overseas respondents also mentioned fraud and drug crime most frequently as generators of criminal proceeds. However, motor vehicle theft and prostitution were ranked higher in overseas countries than in Australia where computer crime was of more concern.

None of the overseas respondents regarded Australia as significant in any area of their own money laundering environment. No terrorist financing links were identified between Australia and other countries.

The paper outlines other estimates for money laundering derived from costs of crime, suspicious transactions, analysis of international funds transfers, estimates of the shadow economy and of trade pricing anomalies, and proceeds of crime recoveries. As these can only act as a guide to the actual extent of money laundering, the paper argues for internationally comparable data on the proceeds of crime and money laundering.

This paper is taken from a larger report funded by a grant from the Criminology Research Council.