Money laundering and terrorism financing risk mitigation strategies in the bullion dealing sector are not up to scratch, AUSTRAC said in a review of the sector.

“The sophistication and implementation of risk mitigation strategies varies significantly between bullion dealers, presenting ongoing and potentially significant risks to the sector,” AUSTRAC said in its report, Bullion Dealers in Australia.

“A number of bullion dealers consulted for this report outlined less sophisticated approaches to AML/CTF with scope for improvements.”

It said dealers need to review their programs, train staff properly, have better systems in place to detect and report suspicious matters and consistently apply “exposed person” screening.

AUSTRAC rated the overall criminal threat environment facing the Australian bullion sector as low but said it faces threats of tax evasion, money laundering, fraud and scams.

“There is a low to moderate volume of suspected criminal activity, most of which is unsophisticated.

“Data matching with criminal lists suggests that sector is not significantly exposed to national or transnational, serious and organised criminal entities or entities linked to terrorism or terrorism financing activities.”

AUSTRAC said one reason risks are low is that bullion dealing has a relatively small customer base. But on the risky side, many bullion dealers operate “cash-intensive” business models.

AUSTRAC said personal income tax evasion is the most common suspected offence, linked to 52 per cent of the suspicious matter reports it reviewed. Values were low – generally below the A$10,000 reporting threshold.

Corporate tax evasion involving bullion transactions is much less common. Most of the corporate tax evasion involved the bullion dealers themselves, using cash to pay for business invoices and expenses.

The most common types of fraud involved the use of fake or stolen identification documents and credit card fraud. The most common type of scam identified in the review was business email compromise.

Theft is also an issue for bullion dealers, with suspicious matter reports reflecting concerns that bullion and jewellery sold to bullion dealers may have been stolen.