Organised Crime in Australia Report 2013

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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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A U S T R A L I A N C R I ME C O M M I S S I O N O R G A N

I S E D C R I ME I N A U S T R A L I A 2 0 1 3


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AUSTRALIANCRIMECOMMISSI

ONORGANISEDCRIMEINAUSTRALIA2013

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



Ident crime 21

Introducon 21



Epoitaon of usiness structures 24

Introducon 24



Puic sector corrupon 25Introducon 25



Violence 27

Introducon 27



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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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


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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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


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

c, wcm w m cv m u w u -m

uvc.6

a v f c w p gm 2013, w pp-up m

c m pup c xp m, w m, f

c f c pc p.7

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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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 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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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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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.


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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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.


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.


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.


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 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.


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

Organised Crime in Australia Report 2013

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