Australian Banks Report Hundreds of Suspicious Tobacco Deals After Crackdown Call

Australia's major banks are actively collaborating with the nation's anti-money laundering regulator, AUSTRAC, to combat the burgeoning illicit tobacco trade. Following a call for a crackdown late last year, these financial institutions have submitted hundreds of suspicious activity reports, leading to dozens of "active leads" being passed to law enforcement. This concerted effort highlights the significant financial threat posed by the illegal tobacco market, which AUSTRAC CEO Brendan Thomas describes as "so profitable" and a "significant target for organised criminals."

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It's so profitable

AUSTRAC's initiative, which involved writing to major banks in November to request increased oversight of tobacco and convenience stores, particularly those with private ATMs and EFTPOS facilities, has already yielded substantial results. Since then, over 1,000 bank customers have been either exited or recommended for exit following reviews. The regulator's focus on this sector is driven by the sheer scale of the illicit trade, estimated by the Illicit Tobacco and E-cigarette Commissioner (ITEC) to account for 50 to 60 percent of the overall market, potentially worth as much as $6.9 billion in 2024-25.

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There is so much money flowing through the Australian economy as a result of the sale of illicit tobacco that it's become a significant target for organised criminals

Brendan Thomas emphasized the strategy: "We're trying to make it hard for the crooks to do business... Make it difficult for money to flow from their sales, make it more obvious when they are trading in illicit tobacco." By providing banks with a unique reference code for suspicious matter reports, AUSTRAC has facilitated the tracking of illicit tobacco activity, receiving 337 such reports and making 76 referrals to partner agencies. This collaborative approach, where banks play a critical role in protecting Australia's financial system, is seen as a key to disrupting organized crime.

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We're trying to make it hard for the crooks to do business, there's no question about that

Executives from major banks have presented a united front, acknowledging significant progress in the crackdown. They note that legitimate and illicit sales often co-mingle at retail points, making transaction data analysis crucial. While acknowledging that organized crime may shift to other sectors once illicit tobacco becomes unviable, the current focus is on making the trade as difficult as possible, demonstrating a strong commitment from both the financial sector and regulatory bodies to dismantle these illegal operations.

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Make it difficult for money to flow from their sales, make it more obvious when they are trading in illicit tobacco