The Bergin report: the convergence of crime, AML and national security risk
In July 2019, Crown Resorts’ Directors put their names to a full page newspaper ad “setting the record straight in the face of a deceitful campaign against Crown”. This referred to media reports suggesting Crown’s high roller rooms were enabling money laundering, drug trafficking and foreign interference.
Crown’s subsequent unravelling at the Bergin Inquiry plays out at several levels. At its heart is Crown’s refusal to establish effective counterparty due diligence systems. At another level, the board failed to appreciate the growing concerns of Federal Government security agencies that the challenges of organised crime, money laundering and national security had converged.
What does this mean for businesses? It means due diligence systems and AML protocols that were acceptable in 2019 may not meet the 2021 benchmark.
Today’s risk management practices are adapting to the rapidly changing realities of Great Power competition, amplified by COVID-19. Australian businesses need to proactively manage risks in new focus areas that range from coercive trade sanctions and supply chain diversification to organised crime, foreign interference, insolvency, cybersecurity and the cash economy. Increasingly, siloed risk-management responsibilities will converge.
We expect to see more evidence of foreign interference links to cyber breaches, fraud and money laundering across other sectors. Managing the legislative, reputational and commercial risks associated with foreign interference requires specialist knowledge and experience. This year’s likely enactment of the Security Legislation Amendment (Critical Infrastructure) Bill 2020 will push cyber, foreign interference and other emerging security obligations directly onto boards.
At the same time, as stimulus recedes and insolvencies rise, we anticipate ‘Phoenixing’ activities where assets are stripped and entities are put into liquidation. Cyber and fraud matters will continue, along with associated demand for asset and funds tracing expertise.