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AUSTRAC and ACNC Risk Assessment shows criminals are targeting charities and non-profit sector

Australia’s first risk assessment of charities and non-profit organisations has revealed that the sector that is built around helping the most vulnerable is being targeted by shameless criminals.

Minister for Justice Michael Keenan and Assistant Minister to the Treasurer Michael Sukkar today released AUSTRAC’s Australia’s non-profit organisation sector: money laundering and terrorism financing risk assessment in Melbourne.

This is the fifth risk assessment of financial and other sectors conducted by AUSTRAC, the Government’s financial intelligence and regulatory agency, and was done in partnership with the Australian Charities and Not-for-profits Commission (ACNC).

The report identified a ‘medium’ risk level with regards to money laundering and terrorism financing within the sector, after evaluating approximately 257,000 registered non-profit organisations in Australia.

Minister Keenan said the report highlighted the extreme lengths organised criminals and terrorists and their associates are prepared to go.

“The report found significant links between registered Not-for-Profit Organisations (NPOs) and members of Australia’s most serious and organised crime groups,” Mr Keenan said.

“The fact that criminals are seeking to target a sector founded on helping our most vulnerable just shows that they are the lowest of the low.

“The greatest criminal threats facing the NPO sector are fraud and theft of resources, with a low level of money laundering and tax evasion also detected.

“Between 2012 and 2016, 735 investigations were conducted into suspicious criminal misuse –nearly all of these investigations related to fraud or theft of resources.

“In that same time 249 Suspicious Matter Reports (SMRs) were submitted for suspected money laundering or criminal misuse with a total value of $57.8 million.

“There were also 28 SMRs related to terrorism financing involving NPOs, with a total value of $5.6 million.

“While this is a relatively small figure compared to the overall income of the sector, it represents a significant figure in the current terrorism financing environment.

“What this shows is that NPOs have the capacity to quickly raise and camouflage the movement of large amounts of funds offshore to support individuals or groups engaged in foreign conflict.”

Assistant Minister Sukkar said that the risk assessment would allow NPOs to assess their level of vulnerability, strengthen their controls, and report suspicious and criminal activity to relevant NPO regulators or law enforcement agencies.

“The NPO sector is large and diverse,” Mr Sukkar said. “Registered charities with ACNC, which account for 54,000 of our NPOs, have combined revenue equivalent to 8.3 per cent of Australia’s GDP.

“While the vast majority of NPOs are run by honest, well-intentioned individuals, some NPOs have been exploited for criminal activity, particularly if the charity does not have strong financial and governance controls.

“This report not only presents opportunities for the NPO sector to better protect themselves, but also for government agencies to improve their engagement and mitigate risks.

“The government will continue to engage with state and territory regulators to ensure we are working together as effectively and efficiently as possible to combat this activity.

“The review of the ACNC Act, which will commence later this year, provides further opportunity to examine the regulatory framework for the charity sector.”

Australians are encouraged to take basic steps, such as verifying whether the organisation they want to donate to is registered with the ACNC and to be wary of fake ‘pop-up’ fundraising appeals which are often conducted under the guise of charitable giving.

As part of the government’s continued action to strengthen AUSTRAC’s financial intelligence capability, the Minister for Justice also announced a powerful new technological upgrade.

The Palantir Technologies analytical software will be installed at every AUSTRAC intelligence hub around Australia, enabling dramatically faster and more detailed financial intelligence reports.

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