Corporate watchdog the Australian Securities and Investments Commission must respond to online financial crimes far more quickly, with questions raised about its ability to detect them, a parliamentary inquiry says.
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Australians – especially Indigenous communities – were increasingly at risk of financial crimes ranging from money laundering and identity fraud in the digital age, a joint parliamentary committee on law enforcement has said.
Corporate and financial regulators needed to improve their ability to target and combat such crimes as a result, their report, published on Tuesday, said.
The committee took a swipe at ASIC, saying it needed to deal more quickly with fast-moving internet financial scams in real time. It described ASIC's response to a scam against an unnamed credit provider, as "very tardy".
The National Financial Services Federation told the committee it took ASIC 223 days to issue a public warning in the form of a press release after it became aware of the scam, despite having evidence of the way a credit provider's licence details was being fraudulently used.
ASIC disputed this, saying it had taken only about 137 days, which was the "most appropriate regulatory response" to educate the public.
The report said internet scams were "incredibly rapid" and that the scam did not appear to be an isolated event: "If ASIC is to deal with internet-based financial-related crimes in an effective manner into the future, it must improve its response times to preventing and disrupting such criminal activities."
It recommended the government audit ASIC's "technological capabilities" to exercise its regulatory powers.
"We need to constantly ensure our regulation, law enforcement, and education methods are contemporary enough to help protect Australian consumers," deputy chairwoman of the committee Senator Lisa Singh said.
The report also recommended more federal funding for identity-fraud victims and for financial literacy education of Indigenous communities, who were particularly vulnerable to financial crimes targeted at them.
It said the ATO should be classified as a "criminal law enforcement agency" under metadata laws. This would be "for the purpose of protecting public finances from serious criminal activities such as major tax fraud" and should be limited by privacy and oversight safeguards, it said.
Law reforms, which include restricting public bodies' access to metadata to a list of agencies, are expected to come into effect later this year. This would mean the ATO retains rights to data including telephone companies' records about phone calls and some Australian internet service providers' information about emails.
Police found it hard to fight financial crime in part because it was difficult for them to access data in financial institutions, federal agencies and other jurisdictions, the report said. Financial crime was also becoming more sophisticated as more consumers used the internet and advancing technology to access financial services, according to the Australian Crime Commission.
Electronic Frontiers Australia's executive officer Jon Lawrence said it was expected that the ATO would be added to the list of agencies, and that he had "no issue" with this in the context of major crimes. But he said taxpayers would rely on the ATO's internal policies to ensure they did not use such data to target less serious crimes.
"There is nothing in the legislation that would prevent them from using this beyond [major tax fraud]. It's the nature of these sorts of schemes that they creep in scope and in use."
Spokesmen for the ATO and ASIC declined to comment on recommendations directed at their respective agencies.
