The Australian Serious Financial Crime Taskforce (SFCT) has aimed its sights on the burgeoning market in cryptocurrency transactions. Using the well-known maxim of “follow the money”, the SFCT has openly disclosed it would be using data matching to track various forms of cybercrime, including the use of cryptocurrency to avoid taxation or launder the proceeds of crime.
The task force combines nine government bodies, including teams from the Australian Federal Police (AFP) and the Australian Tax Office (ATO). Additionally, the SFCT works with several international bodies, including the Joint Chiefs of Global Tax Enforcement, known as the J5, comprised of Canada, the USA, the UK, Netherlands and Australia.
Within the J5, there is an acknowledgment that offshore structures and financial instruments, where used to commit tax crime and money laundering, need special attention. As part of the effort to tackle cross-border financial crime, the member nations collaborate internationally to reduce the growing threat to tax administrations posed by cryptocurrencies and cybercrime and to make the most of data and technology.
Data is the Key to Recovering the Proceeds of Crime
In its simplest form, the SFCT matches the data from various transactions within the economy to highlight abnormal spending patterns. This may include sudden changes in consumption by businesses or individuals — notably via the acquisition of large ticket items, property acquisition, or luxury vehicle purchases. These patterns can involve cryptocurrencies aimed to mask the identities of the parties involved.
Approximately 14 cryptocurrency exchanges share data with the SFCT. The Taskforce has not disclosed what form this data sharing takes.
Drugs and cybercrime have been a significant focus for the J5. During the pandemic, criminals have evolved to meet funds transfer and product supply challenges during lockdowns. The lack of physical contact during the pandemic has meant dealers have had to eschew cash as their preferred currency and instead switch to other forms of exchange, namely cryptocurrency.
Last week the Chinese arrested some 1100 people in connection with money laundering via cryptocurrencies. The J5 has not made use of mass arrests, though penalties obtained through tax and criminal prosecutions have been growing. The SFCT collected some $182m in the period between 2015–2018, and that was enough to see the Australian Government agree to extend the life of the Taskforce by a further four years.
The message to cybercriminals is clear: don’t think you can hide your anonymity forever. Eventually, the data will unmask the perpetrators. As for small-time tax evasion, the Taskforce is not aimed at low-level crime, but the ATO members of the Taskforce are acquiring skills that can be put to use when they eventually return from secondment.