Money laundering is big business — especially for banks

Money laundering is big business, but only because banks are partners in laundering it.

1988 UN Vienna Convention It defined money laundering as the transfer of stolen funds for the purpose of concealing the illicit source of the funds and helping those involved evade legal consequences. Money laundering consists of three stages; Diverting funds away from crime, creating a concealment trail, and integrating the money in a way that appears legitimate.

Money laundering represents an economy in itself. with predictions as high as 5 percent of global GDP. This figure is almost certainly much higher, as 90% of laundering goes undetected and only 0.1 goes undetected. Percentage of illicit funds recovered. Money laundering is a crime of the digital age, a crime that relies on the anonymity of transactions and loopholes in banking systems.

One of the problems with money laundering is that it is a crime that knows no borders. An estimated 70 percent of laundering crosses at least one border, making it difficult for sovereign nations to take action. Australia is on the edge of a global hotspot. Asia–The Pacific accounts for 40% of the world’s money laundering and due to regulatory flaws we are a prime target.

The global response has been to fine banks that facilitate money laundering and to demand that banks be more compliant with national anti-money laundering (AML) laws. There was $4.6 in 2024 Billions of fines have been levied worldwide across 52 enforcement actions, with AML compliance costing banks just over $60 billion. However, fines and compliance costs represent less than 0.01% of the money laundered. The most damning statistic is that only 0.1% of suspicious activity is investigated. We are in a dark age when it comes to money laundering.

The fight against money laundering began a long time ago, coming to the fore during the prohibition era and expanding in the digital age with the Group of Seven (G7). Financial Action Task ForceSuccessive UN conventions and AML laws designed to improve the monitoring of transactions. There is no universal standard for anti-money laundering (AML) laws. Australia’s 2006 Anti-Money Laundering and Counterterrorism Financing Act India is different from 2002 Prevention of Money Laundering Act and from the US Corporate Transparency Act. Money laundering requires global standards, but there is no global standard.

Despite the limited response, there have been some notable investigations and prosecutions into laundering. In December 2012, HSCBC paid a $1.9 billion fine for laundering; In July 2014, BNP Paribas fined $8.9 billion; In September 2020, the International Consortium of Investigative Journalists revealed that US$2 trillion in transactions had been laundered by some of the world’s largest banks. Chinese organized crime groups have been identified as major money launderers of drug cartels in Mexico, Italy and elsewhere. In the US, Chinese networks raised over US$312 billion in illicit funds from 2021 to 2024. Money laundering is a crime that no one sees until it is too late.

AUSTRIA (Australian Transaction Reports and Analysis Centre) is the body responsible for the following transactions: ensuring banks comply with the AML Act 2006. AUSTRAC is very selective. In 2018 they fined the Commonwealth Bank of Australia (CBA) $700 million for breaches of the AML Act, and in 2020 they fined Westpac $1.3 billion for breaches of the AML Act. However, in 2022, following a five-year investigation into breaches of the AML Act, the National Australia Bank NAB not fined. Instead, he signed an enforceable agreement promising the regulator to do better. Why selectivity?

There has been an explosion in scams since 2020, with Australians losing $7 billion. Most of the black money was laundered; There was an explosion of money laundering without prosecution. In the fraud we were exposed to, hundreds of thousands of dollars were withdrawn within 24 hours, but the banks’ banking algorithms could not detect any abnormalities. Why aren’t the banks sued when there is real evidence of money laundering? This is a question all scam victims ask.

The government and regulators appear to be lenient on money laundering. There appears to be a systematic strategy to prevent money laundering.

Fraud Prevention Framework The (SPF) Act passed in 2025 does not mention money laundering, and the Treasury position paper on frauds dated November 2025 appears to distinguish between fraud and money laundering:

‘Rules can be used to exclude the following activities; isolation does not meet the definition of fraud: certain criminal conduct regulated under anti-money laundering and counter-terrorism financing (AML/CTF) legislation.’

Fraud is the first stage of money laundering. If the money is not laundered, the victim will be able to get the money back. Fraud and money laundering are inextricably linked. These are inseparable, but the Government clearly thinks so.

AUSTRAC, which polices money laundering, is housed in the Home Office, whose Minister is Tony Burke. The anti-fraud response is coordinated by the Treasury, whose Minister is Daniel Mulino. Of course, the fraud victims were not able to meet with either Minister.

The separation of regulatory powers demonstrates the fragmentation of Australian regulations, which allows scams to proliferate without accountability from banks. The UK is years ahead of Australia with mandatory bank reimbursement for authorized instant payment fraud, shared liability between sending and receiving banks, and liability for failure to detect money laundering. While the UK reimburses fraud victims for 88% of losses within five days, many Australian fraud victims are fighting for compensation after more than two years. Last year the UK appointed its first Fraud Minister to coordinate the fight against fraud, particularly cybercrime and money laundering. They created an integrated framework.

in 2020–23, global crypto–related money laundering increased by more than 80% and There was a 230% increase in depth in the first quarter of 2025–fake identity attacks. But what plagues Australia the most is the possibility of mortgage fraud. A quarter of global money laundering is now real estate related. A recent commissioned by the Commonwealth Bank the report emerged The number of loans based on doctored documents may exceed $1 billion, and questionable loans from other banks amount to at least $1 billion. Mortgage fraud is the new frontier of fraud.

Australia has been very lenient on white-collar crime. The regulation is fragmented and non-preemptive, and we suffer from the audience problem that he will be right… until he isn’t. Financial crime has no boundaries; We cannot afford to be spectators as we always have been. We need a regulatory reboot. Does any party have the commitment to do this?

Dr Kim Sawyer is a senior researcher. School of Historical and Philosophical Studies at the University of Melbourne.

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