Money laundering, a strange term indeed, but one that has the potential to have an impact on the country as a whole, if we regard reputation as a paramount risk.  Money laundering is essentially taking unclean money or money derived from criminal activities and putting it through a process that mean the title to the money at the end of the process is legal or clean.  Australia is not a soft target in this area and has sent very clear signals internationally and domestically of its overt hosility to these activities.

 

Australia is well served in its risk management of this issue by the Australian Transaction Reports and Analysis Centre, (AUSTRAC).  Its role is to monitor and report on suspected money laundering transactions and police the effects of various government legislation that ensures Australia sends a clear message to lawbreakers of its monitoring of any form of evasion of existing leglislation.

 

Objectives of AUSTRAC are:

 

1. To have processes in place within the leglislation which have an effect on the market place by making it difficult for tax evaders and money launderers to operate.

2. To require financial institutions to educate their clients in international best practice and to deter their participation in illegal activities.

3. To provide law enforcement agencies with information.

4. To act as a focus for law enforcement agencies in relation to the financial aspects ofcrime.

5. To behave as a good world citizen by assisting elswhere if possible.

 

The management of risk requires identification of risks as a starting point for the process of mitigation to commence.  What risks then flow on to the community in general when instances of money laundering pass the majority of us by without us even knowing it is occuring:

a. Commercial and market riski. Competitive pressuresii. Purchase agreementsb. Contractual riski. Legal regimesii. Changes to general conditionsiii. Delays and international contractsc. Economic and financiali. Cash and foreign exchangeii. Derivatives and applicationiii. Equity and ownershipiv. Fraud and funding sourcesv. Tax regimesd. Legal and regulatoryi. Local biasii. Conflict of interestiii. Corporate regulationse. Political and sociali. Government actionii. Government interventioniii. Probityiv. Pressure groupsf. Sovreigni. Taxation and monetary regimeii. Expropration and contractual issuesiii. Government contraints or ecnouragement of activitiesiv. Withdrawl of approvals

 

At the beginning of this article AUSTRAC was mentioned as having in place in Australia strict guidelines aimed at the protection of the community of Australia as a whole. However in the business world we must ensure our offshore operations are as protected as our onshore activities, the moral stance of a country is as important as it is to an individual.

 

When looking at the above consideration points it becomes apparent that we are well served in this community by having ASNZS4360:1999.  A quick look at the process will demonstrate the validity of the methodology used and how management of the above risks can be mitigated in line with company and community desires. 

 

The risk management process overview:

 

1. Establish the context

2. Identify risks

3. Analyse risks

4. Evaluate risks

5. Treat risks

 

When the monitoring and review, and communication and consultation components are overlaid an umbrella of protection is cast across the firm and community.  The management of risk when utilised in this context has many positive outcomes.