AUSTRAC has issued a letter to the online payment platforms sector, warning businesses to tighten their controls to prevent payments for child sexual exploitation.
The warning comes after a supervisory campaign easily identified a number of customers suspected to be making payments for child sexual exploitation.
AUSTRAC's regulatory operations team found issues across the sector, with low suspicious matter reporting, poor transaction monitoring and clear failures to identify and manage high-risk customers.
AUSTRAC has directed WorldRemit to appoint an external auditor, sent letters of concern to five businesses, and is currently investigating several others.
AUSTRAC CEO Brendan Thomas said the campaign focussed on detecting child sexual exploitation activities within the customer base of several online payment platform businesses.
"The team conducted their own transaction monitoring simulation, identifying suspicious customer behaviour and transfers that were very likely payments for child sexual exploitation," Mr Thomas said.
"They applied the same typologies that AUSTRAC expects the businesses to be applying themselves, exposing a number of customers who should have been flagged for investigation and subject to suspicious matter reports.
"In fact, some of these customers should have had their accounts closed immediately given the severity of the risks they posed. These customers were referred to the Australian Border Force and law enforcement.
"The indicators we applied are readily available on the AUSTRAC website in our financial crime guide, and there is no excuse for payment platforms not to know them.
"Failure to effectively monitor for suspicious transactions and to submit timely reports means we miss out on critical intelligence our customs and border, and law enforcement agencies can use to catch the offenders and other criminals."
Payment platforms provide services for customers to transfer funds to overseas recipients.
Many of these businesses are registered with AUSTRAC as remitters. They generally have sophisticated technology platforms and operate entirely online.
Around 90 payment platforms operate in Australia with around 50 also registered with AUSTRAC as remitters. All are regulated by AUSTRAC under the AML/CTF laws.
The largest payment platforms report more international funds transfers than the big banks - including to high-risk jurisdictions for child sexual exploitation.
Offenders usually make frequent low value transfers between $10 and $500, applying benign labels such as 'school uniform' or 'medical costs'. Often offenders have a history of travel to high-risk jurisdictions.
AUSTRAC uses a range of financial intelligence to create a picture of offending, which can then be referred to our customs and border, and law enforcement partners.
"It is an abhorrent trade, and we need businesses that transfer funds and make payments internationally to step up to help us prevent offending."
"Businesses offering international funds transfers must monitor for child sexual exploitation indicators and get suspicious matter reports in quickly so AUSTRAC can analyse and act.
"This includes being vigilant about high-risk customers who may need to be exited. It also means being alert to new customers who have been off-boarded from another platform.
"Timely reporting can be the link that enables law enforcement to make an arrest of a child sexual offender."
Read AUSTRAC's financial crime guide, Combatting the Sexual Exploitation of Children for Financial Gain.
AUSTRAC is a member of the AFP-led Australian Centre to Counter Child Exploitation (ACCCE). Through close collaboration with law enforcement and partner agencies like the ACCCE, and the private sector via Fintel Alliance, AUSTRAC identifies perpetrators and makes it more difficult to profit from child sexual exploitation.
