<http://australianit.news.com.au/common/print/0,7208,7134699%5E15319%5E%5Enbv%5E15306,00.html> Australian IT Money launderers go online Simon Hayes SEPTEMBER 02, 2003 LEGISLATION may be needed to help police and the Tax Office keep track of transactions made using internet-based payment services, a government watchdog has warned. Officials from Austrac, which monitors the financial system and identifies suspicious transactions, said there were many legitimate uses for internet-based payments systems, but they could be misused to provide an outlet for money laundering or tax evasion. It was not a concern with alternative payment systems "but with the potential to ensure that our law enforcement, revenue and national security programs don't suffer", Austrac director Neil Jensen said. "In the current system there's a chance it's not caught by the legislation." Alternative online payments systems are growing in popularity, particularly as a means of paying for internet auctions. "All of these things developing now need to be looked at, and looked at carefully," Mr Jensen said. Austrac officials told a recent hearing of the joint parliamentary committee on the Australian Crime Commission that the growing "array of alternative payment systems", such as the popular e-gold, escaped reporting requirements that caught bank-based transactions. Deputy director Liz Atkins told the committee that systems such as e-gold, which allows users to secure a cash deposit against gold held in a US vault and then use it to make online purchases, were being used to evade Austrac's network. "E-gold and other, similar types of mechanisms have been of great interest, particularly to the Australian Taxation Office," she said. "People use them to avoid our reporting mechanisms on international funds transactions. "It is quite easy to use these mechanisms by buying e-gold and then having credit cards or debit cards on international accounts so that our reporting systems are completely avoided. "There is quite a lot of concern within the broader law-enforcement agencies, including revenue and regulatory agencies, about these sorts of mechanisms." Ms Atkins said web payment systems, in conjunction with foreign credit cards, could help Australians avoid reporting transactions. Mr Jensen said Austrac could track part of the transaction, since funds had to pass through the banking system to be deposited in the account, but it was limited in what it could do after the deposit was made. New laws might be needed to bring non-bank payment systems under control, he said. Australian Institute of Criminology research deputy director Russell Smith said the internet had made it far easier for people to avoid the traditional banking system. Although most alternative payments systems were US-based and subject to strict regulation, much offshore banking took place in less regulated countries. "Part of the problem is harmonising regulations so different countries have similar controls," he said. "Some rogue states don't become involved, and thus can be used for criminal purposes." This report appears on australianIT.com.au. -- ----------------- R. A. Hettinga <mailto: rah@ibuc.com> The Internet Bearer Underwriting Corporation <http://www.ibuc.com/> 44 Farquhar Street, Boston, MA 02131 USA "... however it may deserve respect for its usefulness and antiquity, [predicting the end of the world] has not been found agreeable to experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'