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Financial crime against Indigenous communities
During the inquiry the committee heard evidence from numerous submitters
and witnesses regarding the targeting of Indigenous communities by criminal
organisations. For instance the Northern Territory Police (NT Police)
submission highlighted these concerns:
The types of financial related crimes that affect the
Northern Territory (NT) are consistent with those which occur nationally. The
NTP [Northern Territory Police] have identified anecdotal increases in
financial crimes exploiting vulnerabilities associated with Indigenous
Supporting the submission from the NT Police was evidence from legal and
education service providers who argued that Indigenous communities were
particularly vulnerable to financial crime.
The Northern Australian Aboriginal Justice Agency (NAAJA) for instance
submitted that without assistance and education in financial literacy,
Indigenous communities were without the resources to fight against financial
crime such as phishing scams.
Officers of the former ACC National Indigenous Intelligence Task Force (NIITF)
told the committee that without adequate governance capabilities of Indigenous
organisations, including auditing and accounting practices, the government
funding provided to Indigenous communities was at risk.
This view was supported by evidence from Indigenous legal and education service
providers who highlighted the lack of investment in auditing, accounting and
financial management education in Indigenous organisations and communities.
This chapter discusses the evidence received in relation to financial
related crime targeting Indigenous communities and organisations, beginning
with a scam at Nhulunbuy as an example of the issues faced by many Indigenous
communities. The chapter then discusses the main concerns raised by submitters:
education, financial literacy and language barriers; and
regulatory environment and governance capabilities of Indigenous
organisations (auditing, accounting practices).
Nhulunbuy community scam
A scam targeting the Indigenous community in Nhulunbuy, in remote north‑east
Arnhem Land, provides a clear example of the types of scam perpetrated against
Indigenous communities, and the substantive regulatory and educational issues facing
Indigenous communities and law enforcement agencies.
The NT Police explained that international crime groups had specifically
targeted vulnerable groups in Indigenous communities. The scam was described by
the NT Police as a 'traditional advance fee inheritance scam'. In January 2014,
the NT Police received information that between 10 and 20 individuals in the
community had made payments to the scammers via the Western Union bank.
The NT Police estimated the total losses from the community at $70 000,
with the funds being paid to locations overseas. The NT Police described the scammers'
methodology as including:
...a combination of open source analysis, using internet search
engines as well as targeted calls to identify Indigenous groups in regional
Mr Mark Payne, Assistant Commissioner, Crime and Specialist Services,
NT Police, told the committee that the Nhulunbuy case had an added layer
of complexity because a 'money mule' had been used in the transfers of money
through the Western Union bank.
Commander Richard Bryson, Crime and Specialist Support Command,
NT Police, told the committee that the trend towards sophisticated,
targeted financial crime against Indigenous communities was very concerning,
particularly the speed with which such crimes could be perpetrated:
...around that Nhulunbuy incident, we see that the method of
operation was one where it was a very sophisticated scam to the extent that it
involved a lot of subjectivity on behalf of the targets and knowledge around
the sorts of conversations and approaches that could be made in order to
facilitate that scam. You can see how quickly that that was able to be
Commander Bryson noted that the level of sophistication in the Nhulunbuy
scam showed an evolution in criminal methodology:
...the most concerning thing is that traditionally a lot of
those types of fraudulent scams are done with no subjective understanding, or a
very poor subjective understanding, of the victim. As some of those crime types
evolve—as we all know, criminals evolve in their method of operation—what is
concerning is that they have had that subjective understanding of the target
group and have been able to exploit it.
Although the NT Police submission states that international crime
organisations were responsible for the scams in Nhulunbuy, Assistant
Commissioner Payne told the committee that financial crime threats to
Indigenous communities could also originate within Australia.
The Nhulunbuy scam is but one example of the threats faced by Indigenous
communities from financial crime organisations. Assistant Commissioner Payne
advised that with the combination of funding, lack of governance, and poor
financial literacy, the threats to Indigenous communities from financial crime
Essentially, in the Northern Territory we find we are not
immune—and in fact we have certain entities within our community who are more
susceptible to financial crime. In many instances, these are people who form
part of the community who may be less likely to receive advice because of the
areas where they live and in some instances, a lower level of education but
higher access to moneys, either through royalties or other payments. We also
see some targets in the Northern Territory today and ongoing into the future
related to large amounts of government funding and grants that sit in accounts
that, with some of the governance arrangements that stand around these entities
and these associations, make them very vulnerable to financial fraud.
NT Police representatives explained that they had put a lot of faith
into the Australian Cybercrime Online Reporting Network (ACORN), arguing that
it would result in higher detection and awareness of scams earlier, and
facilitate a speedier response to financial related crime.
Further, NT Police detailed their expectation that ACORN would provide a
much better picture of criminality for law enforcement agencies, as well as provide
information to victims of crime due to its business rules. This would encourage
more accurate capture and retention of information, without giving unrealistic
hopes or expectations to victims of fraud:
The ACORN initiative will automate a large body of that work
and be much better for the wider community and the victims of this type of
NT Police also raised the role of the NIITF in detecting not only child
related sex offences, but also the existence of a substantial connection to
financial related crime, in that facilitators of either crime were often interchangeable:
...for the facilitators of some crimes against children or,
vice versa, the facilitators of some financial fraud, there is a relationship
between the two, that is, compromising people, or having people compromised
over offences that they may have committed and then making them the subject of
fraud activity in terms of duress, basically.
National Indigenous Intelligence Task Force
The committee received evidence relating to the establishment (and
eventual completion) of the NIITF. Established as part of the Commonwealth
Government's Building Stronger Communities in the Northern Territory
initiative, 'the NIITF was announced in July 2006 as part of a whole‑of‑government response to violence
and child abuse in remote, rural and urban Indigenous communities.'
The committee understands that the NIITF ceased operation on 30 June 2014.
Former officers of the NIITF told the committee:
The NIITF's aim was to build a national understanding of the
nature and extent of violence and child abuse in Australia's remote, regional
and urban Indigenous communities. The ACC was well placed to run the NIITF as
it is the only criminal intelligence agency with a national footprint and
access to a range of capabilities required to collect, analyse and provide
information regarding the extent of child abuse and violence in Indigenous
The NIITF representatives also noted the significant threats to
Commonwealth funding of Indigenous programs, largely due to the sophistication
of schemes targeting Indigenous Australians:
In terms of the drivers of financial crime and exploitation
within Indigenous communities, there are a number of factors at play, including
socioeconomic disadvantage, problem gambling, poor governance and
accountability, and the absence of probity check of staff and board members
within some Indigenous communities.
The NIITF representatives explained that while financial related crime
and exploitation within Indigenous organisations is difficult to detect,
investigate and prosecute, its prevalence is largely due to a number of
...the significant under-reporting due to fear of retribution,
the fear of self‑incrimination, shame, unawareness that it has actually
taken place, and, where government funding is concerned, a concern that making
a complaint might risk future funding into those organisations.
The committee received a confidential copy of the NIITF report to assist
with its analysis of the work of the NIITF. The committee has decided not to
release this information publicly. The committee notes that aspects of that
report were released under FOI by the ACC on 13 March 2015.
While the report focusses mainly on issues associated with violence and
child abuse in Indigenous communities, the NIITF developed numerous intelligence
products relating to illicit substances and financial crimes.
The report notes that, in relation to financial crime, exploitation of
Indigenous organisations occurs in every jurisdiction and is likely to
increase, with remote communities assessed as being particularly vulnerable.
The NIITF report notes:
Indigenous program funding is significant and is vulnerable
to financial crime and exploitation. When funding is diverted by criminal acts,
there can be significant reductions in program delivery, loss of community
trust and confidence, normalisation of criminal activity, and community
These issues are examined in greater detail below in the context of financial
services awareness (education), financial literacy and governance.
Risk factors and prevention
The factors which place Indigenous communities and organisations at risk
should be, in the opinion of witnesses and submitters, the key targets for
preventative action. This section examines each risk factor in turn, noting the
current and suggested actions for prevention and safeguarding of Indigenous communities
education (organisations and individuals);
financial literacy and language barriers; and
governance capabilities of indigenous organisations (auditing, accounting
Education – organisations and individuals
Many witnesses, like the NT Police
agreed that education, and particularly financial literacy, was the best means
of protecting individuals and organisations in Indigenous communities from
financial crime. Commander Bryson told the committee that while there were good
mechanisms in place to deal with crime once reported, education was essential:
...from a law enforcement perspective there are already some
fairly robust mechanisms in place so that once there is any vision over that
type of scam or offending then the appropriate things take place in relation to
the money transfers and in relation to the accounts the moneys are being
transferred to in order to basically put a stop to that crime series. But I
think the better way to approach things is in relation to the education space I
spoke about before, for the target group here in the Northern Territory that
does not have access to the normal types of communication strategies that the
government would engage in.
Assistant Commissioner Payne agreed that educated and aware individuals
were those best protected against financial crime. He noted the role of the
ACCC in educating the public regarding financial crime and scams:
I would also like to raise just briefly some of the
advancements, particularly we think the role of the Australian Competition and
Consumer Commission in terms of getting information out to the public and the
strategies that are enforced through the Australasian Consumer Fraud Taskforce,
which detect, disrupt and disable, are very sound strategies. We tend to feel,
as law enforcement agencies, that our best attack is the defence that we gain
by advising victims and trying to make them more savvy and aware.
Commander Bryson argued that the best way to educate those who needed it
most was to have 'boots on the ground':
From the educational perspective, the large Indigenous
population that we have here in the Northern Territory are extremely disparate
in some of the remote communities where they live, and, notwithstanding some of
our efforts where we have worked with the other stakeholders in that education
space, it is problematic to actually reach that target audience and have them
be aware. The traditional way that you might go about that in other parts of
Australia will not get the traction that you would expect or hope to get in
those circumstances. Unfortunately it involves a lot of face-to-face contact
and a lot of actually having relationships with relevant people on the ground.
For lack of a better expression, it involves 'boots on the ground' in these
remote communities to make sure that people are aware of these things.
Commander Bryson also emphasised the need for education and proper
management, particularly in an environment such as the Northern Territory,
which has a large investment of Commonwealth grant funding going to
Certainly from the Northern Territory Police perspective, we
really feel that a greater investment from some of the Commonwealth bodies in
that education space before it gets to the stage of offending and some more
robust accounting and auditing processes going forward would be of assistance.
Also, we are a small jurisdiction but have a disproportionate amount of
Commonwealth grants and Commonwealth funding coming into the jurisdiction. We
have done some work in the last 18 to 24 months where, going forward, we would
like to think that in the medium term we may be able to move ourselves into a
position where we have our own joint task force here in the Territory and we
can get some of the Commonwealth bodies to come on board and cohabitate with us
here in the Territory so that we can case manage some of these matters in a
much better fashion.
The committee heard from Mr Richard Trudgen, an advocate on Indigenous
matters who appeared in a private capacity, of his experiences providing
education to those in communities who had been the victims of scams. Mr Trudgen
is a community educator and author, and has worked with the Yolngu people in
north-east Arnhem Land for about 40 years.
Mr Trudgen told the committee that 'knowledge gap' research has revealed
the true extent of the lack of education and awareness about financial
management and financial crime in Indigenous communities.
Mr Trudgen had the opposite view to the NT Police of the utility of the ACCC's
scam awareness work:
It is no good if the [ACCC] or any of those other
organisations come along and say, 'We'll put some posters out.' Well,
wonderful! They will sit in a corner somewhere. They are all in English and
they will just become fire fodder. They do not deal with the real needs that
Financial literacy and language barriers
Mr Trudgen highlighted two key problems with the financial literacy
levels in Indigenous communities, and the consequent vulnerability to financial
crime: lack of financial understanding and language barriers.
Understanding the financial system, including modern innovations of
electronic banking, is vital for individuals to identify ways to protect
themselves from financial crime. Mr Trudgen explained that this basic understanding,
and financial literacy was lacking from the communities with which he engaged:
We introduce all these technologies to Indigenous people and
we do nothing about preparing them. We have opened up now to electronic banking
et cetera. People are basically economically illiterate, which they were
not years ago when they were trading with Makassar [a major Indonesian port].
The older people I knew 40 years ago had very good economic literacy and
understanding of those things. But today there is little economic literacy,
especially since the Northern Territory intervention, with the mystification
about government having all this money and government printing all this money.
Mr Trudgen used the example of the concept of banking passwords to
explain the point further:
Plus, we introduce all these technologies to people, like
bank cards and SIM cards and the things we develop programs around, like
passwords and security codes... When we did the work around passwords, people had
no understanding of what that word meant, as you would not if English was your
second language, as it was for these people—or fifth or sixth language. When
you asked them, 'What does that word mean,' they said, 'That's the word you
pass on to people,' because they had no history of Europe and where that word
came from... So we told that story, and even the Yolngu lady who was helping me
said, 'I've been doing credit union training forever, for the last 10, 20
years, and this is the first time I've actually heard the background meaning to
the word "password".' I see people give out their security codes like
they are nothing. They will give a card to a kid and give them the security
code, and off they go to get money out.
Language barriers are also considerable obstacles in people's financial
understanding, and in the communication of awareness of financial crimes.
Mr Trudgen argued passionately for the need for communication materials
designed for Indigenous communities to be in the language of those communities:
...we need the Australian government to roll out something, for
Aboriginal people right across the country, even where Aboriginal people are
speaking Aboriginal English, not through culturally incompetent mainstream
services, but through organisations like ours and so on, who have the language
skills, who know their people and who know what the gaps are... We could turn
this stuff around if we just spent a fraction of the dollars that have been
wasted in the Aboriginal industry at the moment.
Ms Pip Martin, a managing solicitor of NAAJA, supported Mr Trudgen's
evidence, noting that 'at the same time as we have this increase in technology,
there is a lack of education and basic knowledge to be able to deal with those
Both Mr Trudgen and Ms Martin insisted on the need for any education or
awareness raising to be done in an individual's first language. Mr Trudgen
reported the benefits from the use of radio as opposed to written
Ms Martin made the point that whenever the community legal education team
visits communities they always use interpreters. Ms Martin believed that very
few, if any, national campaigns on financial literacy were available in
translated form. Further, Ms Martin noted that written information is not as
suitable for communication in Indigenous communities. She described the
approach taken by the community legal education team as 'not PowerPoint
presentations; it is sitting down discussing and role playing – using
interactive adult education techniques – to overcome those literacy and language
In contrast to the work being done by Australian Government agencies to
raise awareness of financial crimes, Mr Trudgen observed that sadly it was the
criminals themselves who, by working patiently with individuals, were providing
These crooks are providing better education than what the
mainstream system is doing. They actually educate them on how to fill out the
forms, to go to the post office. They take them through it step by step. The
impact is significant. It is still out there and I think it is right across.
The methods and practices are, basically, the same at the moment of mining
information as fast as possible.
Mr Trudgen warned that the need for appropriate language services in
awareness raising was not just an issue in north-east Arnhem Land but was
likely to be a problem across Australia:
I am convinced that it is not just East Arnhem Land. Because
of my language ability and from being here for a long time, people talk to me
and open up to me. I reckon it will be right across North Australia and Central
Australia. It is in what we call the 'silent culture zone', which just does not
get out into mainstream. It is not heard on the media. It is not there because
people are operating in that other language.
Mr Trudgen's final comments to the committee noted that through
empowering Indigenous Australians to have control in safeguarding their own
financial assets, many problems may be solved, including the mental health
issues related to lack of confidence and falling victim to financial crime.
Education as a means of preventing crime was also supported by Ms Judy Lind,
Executive Director, Strategy and Specialist Capability at the ACC, who stated:
It is our belief that any further strategy should be focused
on prevention and not just focused on the investigation of referrals alone,
including raising awareness of the nature of the threats, educating communities
and strengthening the environment for which financial crime and exploitation
Ms Lind proposed that in addition to education, more could be done with
structural mechanisms for increasing accountability and transparency in
There are measures in place under the [Public Governance,
Performance and Accountability Act 2013]. There are measures in terms of
independence and requirements for auditing of agencies. We know that some of
the funding agreements being entered into in Indigenous communities require
quite high levels of checks and balances in relation to those funding agreements.
Some additional preventative measures that could be
considered in this environment could include the need for probity checking of
directors, secretaries and employees of Indigenous organisations, as well as
appointing independent board members to Indigenous organisations; the continued
provisioning of targeted governance training to Indigenous organisations, and
support to those organisations to try to build governance capabilities and
financial literacy; the potential to increase the transparency of royalty
payments and land-use agreements so that law enforcement and other regulators
can assist communities to attempt to detect and avoid potential areas of
exploitation of the huge amounts of money that is flowing into Indigenous
communities under those agreements; and the potential need to more
systematically identify problem gamblers within those organisations that hold
or attempt to hold office, and some mitigating strategies wrapped around those
The evidence received by the committee indicates that Indigenous
communities would benefit from culturally appropriate and targeted financial
literacy programs. As witnesses with significant first-hand experience in
Indigenous communities explained, there are two major issues regarding the
provision of culturally appropriate financial literacy material. The first is
that many Indigenous communities access information verbally as opposed to via written
form. Secondly, because English is not the primary language in many remote Indigenous
communities, mainstream financial literacy materials are likely to be ineffective.
To reduce the risk of these communities being targeted by organised criminal
groups and fraudsters, financial literacy materials need to be provided in
local Indigenous languages, and targeted in an appropriate medium and format.
Without appropriately translated materials that are delivered in a
culturally accessible manner, Indigenous communities across Australia are
likely to remain particularly vulnerable to financial related crimes. This in
turn puts at risk the wellbeing of Indigenous Australians, and also the government
funding across a range of portfolios which is provided to support these
communities and organisations.
The committee agrees with the evidence presented that Indigenous
communities require support to develop financial literacy and education, including
in local Indigenous languages. These actions would do much to build financial
management skills and confidence, as well as assisting Indigenous communities
build resilience against the perpetrators of financial related crime.
The committee recommends the government fund targeted financial literacy
education programs for Indigenous communities. These programs must be translated
into local Indigenous languages, be specific to the local community circumstances
and be delivered in a culturally appropriate manner.
Governance capabilities of Indigenous organisations
The lack of financial understanding in individuals becomes a larger
problem when financial crimes are transferred to a community controlled organisation.
Without basic organisational proficiencies, it is difficult to account for
funds and maintain accurate records. Without good governance systems in place,
an organisation is susceptible to be the target of organised financial crime
from external groups as well as being vulnerable to fraud and other financial
crimes from within the organisation itself.
The committee heard that there is a lack of education and awareness in
community-based organisations in Indigenous communities. Ms Martin told the
We have been approached by individual directors from
Indigenous corporations for advice. From their perspective when they approach
us—and it is only a few people—they are not aware of their responsibilities as
a director. They are aware of power plays going on but they are not aware of
the fact that they can stand up to it in terms of voting and being involved in
the decision making of an organisation. So governance is a very important
Regarding the effect of financial crime on Indigenous organisations,
Ms Lind echoed the sentiments expressed by Mr Trudgen
about the effect of financial crime on individuals:
Our broad conclusion is that the impact of financial crime in
Indigenous communities cannot be understated, and in some cases can be linked
to a decline in living conditions where those frauds have resulted in the
removal of funding destined for particular programs that try to address
Indigenous disadvantage. Funding by government to Indigenous organisations is
often for programs aimed at tackling child abuse, neglect, violence, substance
abuse and improving overall Indigenous health and wellbeing. Misappropriations
within those organisations can result in failure to deliver these services and
a consequent failure to deal with these problems.
Lack of governance creates opportunities for fraud, but can also impede
a police investigation which may prevent further losses. Commander Bryson told
the committee of the difficulties faced by police in making an investigation
into fraud in an organisation with poor governance practices:
When we have a report of a financial related crime here in
the Territory, time and time again we find that a lot of the entities, whether
they be incorporated bodies or associations, have extremely poor governance and
poor records. That makes it very problematic to conduct a successful
investigation and move the matter into the prosecution phase.
Assistant Commissioner Payne told the committee that oversight of
organisations is made by the Department of Business, Northern Territory, which:
...oversees the [Associations Act] of the Northern Territory.
In fact, it has regulatory powers, but, in a general sense, as I understand it,
it is a case of ensuring that, on a yearly basis, it provides its end-of-year
financials, it is solvent and it is operating as a business.
Assistant Commissioner Payne went on to explain that it is up to each
organisation or association itself to have in place appropriate processes:
The [Associations Act] requires each association to have a
constitution, and the constitution has, essentially, the business rules of the
organisation. This is one of our problems. Sorry, generally speaking, when we
become involved we have discovered that the organisation was incompetent and
made very bad decisions, or there has been criminal activity that has caused
the organisation to fail financially.
Although witnesses differed in their perspectives, all agreed that good
governance practices are central to efforts to mitigate the threat faced by
organisations from financial crime. From a policing perspective, Commander
Bryson told the committee that:
...there needs to be early intervention and regular auditing
and inquisition. The record keeping is extremely poor. Quite often when we go
behind and start to look at large sums of money and how they have been
acquitted, it is clear that there has been a lack of governance for an extended
period of time and that nobody has been in that space for an extended period of
time to see exactly how the funds are being dispersed versus what they were
granted for and the objective that is sought to be achieved.
From a policing perspective, as I said, normally there is an
extended time line between when the conduct was engaged in and when we actually
get the report, which is unhelpful. We really need to be in a space, from a
community perspective, where we are looking at these things much more regularly
and much earlier...
Ms Martin stressed the importance of governance, education, and
mentoring being provided to Indigenous communities to help people build
capacity to support themselves:
NAAJA is one of the organisations involved in a peak
organisation called Aboriginal Peak Organisations of the Northern
Territory—that is the medical services, the legal services and the land
councils. They were given significant funding to set up a governance program to
support Aboriginal organisations and train up the directors and provide
mentoring. That is a great approach in terms of building up the capacity of
Aboriginal corporations so that they can manage the funds to support their
people in the range of services that are required.
However, Ms Martin expressed concern over the fact that once the current
funding concludes, NAAJA would have to reapply:
That funding is finishing, if not in June 2015, in June 2016,
and we are, at the moment, having to apply for more funding under the Indigenous
Mr Trudgen too argued for the need for education, and particularly
education in the appropriate language, to help individuals and organisations
manage better. But Mr Trudgen, like Ms Martin, observed that without funding,
there was no way to deliver education in a meaningful way:
Unfortunately nobody does this training for Indigenous
people, especially remote Indigenous people, except organisations like us that
take it on. We have organisations that apparently should be doing it, but they
are all English first language and therefore they cannot do it and they do not
do it. Our company struggles to survive because we do not get income and we do
all these things for nothing. We have to decide what we are going to do, for
the sake of closing it down.
The NIITF report released under FOI notes that Indigenous corporations
would likely continue to be exploited by individuals, including board members,
who wish to advance personal, family or group interests at the expense of the
community. The report suggests that members would pressure office holders to
approve programs or policies that are not in the best interests of the
The committee is greatly concerned by the evidence that Indigenous
communities are likely to continue to be victims of financial related crime.
This is due to a combination of factors, including the lack of support for, and
oversight of, adequate governance arrangements for Indigenous corporations and
The committee agrees that it is problematic that Indigenous communities
do not feel empowered, have the requisite skills, or have adequate resources to
comply with financial accounting requirements.
The committee commends the NIITF for its detailed work regarding
financial related crimes in Indigenous communities. The committee supports the
NIITF's recommended remedial actions regarding financial crime in Indigenous
communities including recommendations: for ongoing funding for law enforcement
agencies to prevent, detect and investigate suspected financial crimes in
Indigenous organisations; and to provide targeted governance training to
The committee believes that the implementation of the NIITF's
recommendations regarding financial related crime would require the ongoing
involvement of the ACC in collaboration with state and territory law
The recently announced Serious Financial Crime Taskforce could have an
alternative role in continuing the financial crime aspects of the NIITF's work,
should it be impractical for the ACC to have an ongoing role in this space.
The committee recommends the government implement the recommendations
from the National Indigenous Intelligence Task Force report relating to the
prevention of financial crime and improved governance in Indigenous
Mr Craig Kelly MP
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