AUSTRAC warns of financial crime vulnerabilities at foreign-owned banks

The regulator warned that low suspicious reporting and money mule exposure could enable payments to fraudulent online gambling platforms.

Australia.- The Australian Transaction Reports and Analysis Centre (AUSTRAC) has identified anti-money laundering (AML) weaknesses across foreign-owned banks operating in the country. It warned that gaps may be exploited by criminal networks, including those linked to fraudulent online gambling platforms.

The findings stem from two separate supervisory campaigns targeting foreign bank branches and subsidiaries. These revealed low suspicious matter reporting (SMR) levels and elevated exposure to money mule activity.

Brendan Thomas, AUSTRAC CEO, said the regulator found an entrenched perception among some foreign bank branches that their businesses were inherently low risk for money laundering, despite handling substantial cross-border transactions and high-risk client profiles.

“Low reporting doesn’t mean low risk – it means blind spots criminals can exploit,” Thomas said, noting that 50 foreign bank branches operating in Australia moved approximately AUD 2.5trn in and out of the country last year while reporting relatively few suspicious transactions.

According to AUSTRAC, weaknesses in AML systems and customer monitoring processes could allow illicit funds, including proceeds from illegal online gambling operations, to move across borders undetected.

The second campaign, focused on six foreign bank subsidiaries providing retail banking services in Australia, highlighted a particularly high exposure to money mule activity.

“We’re also seeing risks associated with cross-border transactions through money mule accounts,” Thomas said. “This includes the risks of undetected scambling accounts, where people are tricked into depositing money for fake online gambling sites.”

The regulator also noted vulnerabilities at both the customer onboarding stage and post-onboarding transactional monitoring. The findings come as Australia continues to tighten AML requirements across financial institutions, with new compliance obligations introduced on March 31. AUSTRAC has urged foreign-owned banks to strengthen controls, increase suspicious activity reporting and implement enhanced monitoring of cross-border payments.

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The regulator warned that low suspicious reporting and money mule exposure could enable payments to fraudulent online gambling platforms. Australia.- The Australian Transaction Reports and Analysis Centre (AUSTRAC) has identified anti-money laundering (AML) weaknesses across foreign-owned banks operating in the country. It warned that gaps may be exploited by criminal networks, including those linked to…