©2018-2019 by The GRC Institute - Governance, Risk & Compliance.  ABN: 42862119377

Traveller's Cheques not a Major Threat

July 17, 2018

 

 

 

Traveller’s Cheques are not a major threat to Australia and have been given a low-risk rating when it comes to money laundering and terrorist financing.

 

This is the findings in the recently released Traveller’s Cheques risk assessment by the Australian Transaction Reports and Analysis Centre (AUSTRAC).

 

The report said only 27 suspicious matter reports (SMRs) were submitted between 2015 and 2017.

20 of which were suspected cases of money laundering and the seven other cases of fraud.

 

The total value of SMRs almost $700, 000 and the report indicated that the average value of the SMRs is $27,401.

 

The decline is connected to their being fewer suppliers left in Australia.

 

The decline of risk in Australia has fallen by 90 per cent between 2012 and 2016, and this decline is also due to the uptake of stored value cards (SVCs) and travel money cards.  During this period the number of SMRs fell from 61 to 13 and the Threshold Transaction Reports (TTRs) from 1, 213 to 177.

 

One of the 26 factors that were considered in the risk assessment which vulnerabilities found that there has been a challenge for business to certain about the source of funds of the individuals who purchase traveller's cheques from them.  16 of the 27 SMRs were reported because of the spending habits that were inconsistent with the profile of the customer.

 

However, many providers that participated in the AUSTRAC’s report have satisfied the regulation demonstrating their knowledge of the risks and potential risk exposures:

 

  • only selling traveller’s cheques to customers who already have an account

 

  • ensuring robust customer identification and verification processes are followed when selling and cashing traveller’s cheques

 

  • restricting the cashing of traveller’s cheques from certain high-risk jurisdictions

 

  • requiring additional due diligence be undertaken in relation to transactions above a certain value

 

  • limiting the cumulative value of traveller’s cheques that can be sold to an individual in one day

 

  • limiting the cumulative value of sequentially numbered traveller’s cheques that can be cashed providing authorisation mechanisms to protect against fraud


 

Another risk that was identified is that traveller’s cheques can be obtained in larger denominations than cash, which makes the transport of them a lot easier.

 

 

Stored Value Cards

While there has been a decline in traveller’s cheques the report noted that there has been an uptake in stored value cards. In 2016, AUSTRAC did a risks assessment which agave SVCs a medium risk rating.

 

The report continued that they support a wide array of criminal activities. The vulnerabilities include:

  • reloadability

 

  • ability to use cash to load/reload the SVC

 

  • ability to redeem SVC value in cash

 

  • ability to redeem at a wide range of merchants (‘acceptability’)

 

 

  • ability to redeem internationally

 

 

  • high storage limits.

 

At the time when this report was published, there were 916 SMRs submitted for SVCs that that totalled to 72.3 million.

 

Julian Hunn, from financial crime compliance officer at Flight Centre Travel Group, told attendees earlier this year at the GRCI AML & Financial Crimes summit that while AUSTRAC regards SVCs or cash cards as the medium-to-high-risk, he regards them as a very high risk.

 

Hunn said that you can load $100 000 on a cash card and then use those funds overseas and this makes is a potential tool for terrorist financing, and this risk faced by all businesses that have cash card products.

 

In the report, AUSTRAC said that $170,000 of the overall $72 Million are likely to be related to terrorist financing.

Please reload

Suggested Posts
Please reload

Tags
Please reload