Is Australia’s methamphetamine problem falling down the cracks (slight pun intended!)?

July 11, 2019

If you thought it was just Antarctica that has a major ice problem you’d be wrong, Australia is facing an ice problem of epidemic proportions.

After reading recent articles over the last two months on a couple of substantial drug busts thwarted by the Australian Federal Police, it got me thinking about the sheer volume of drugs being imported into Australia.

The table below summarises just ten of these drug busts, where the street value of seized methamphetamine, coke and marijuana taken off the streets of Australia is well in excess of AUD$5 billion dollars.

July ’19 – AUD$400 million – Read me
June ’19 – AUD $1.2 billion – Read me
May ’19 – AUD $60 million – Read me
April ’19 – AUD $500 million – Read me
March ’19 – AUD $135 million – Read me
February ’19 – AUD $1.3 billion – Read me
January ’19 – AUD $107 million – Read me
April ’17 – AUD $898 million – Read me
March ’17 – AUD $1.5 billion – Read me
February ’17 – AUD $180 million – Read me

For every 1 shipment that is busted, it is probable that another 8 or 9 are getting through so the real-street value of illicit drugs could easily be AUD$45 billion.

With the confiscation rates of criminal proceeds being estimated at an incredibly low 1%, 99% of these proceeds would equate to around AUD$44.5 billion, which could be sitting in the hands of organised criminal networks (and this is from drugs being imported only into Australia).

So where is all this money going and what harm is being done as a result?

Well for a start, a proportion of the AUD$45 billion in funds is no doubt reinvested in funding future drug harvesting, manufacture, importation and distribution so that it’s not really a big deal for the syndicates if they have a couple of billion dollars of drugs confiscated – cost of doing business.

Much of the proceeds of crime is funnelled through Australian businesses, including banks, credit unions, casinos, stockbrokers, online gaming platforms, high value dealers (cars, boats, jewellery, high end fashion stores) and the hotel, pubs and clubs sector.

In Australia, there are over 1,650 clubs and 3,000 pubs with thousands of gaming machines that collectively have billions of dollars in cash going through them each year and are rife for exploitation by organised criminal networks operating throughout Australia.

So if you are a regulated business the chances are pretty high that your organisation could be used to launder drug money.

What is the true cost of the ice problem in Australia?

Whilst the amount of cash generated from drugs is high in Australia, particularly as the price of a gram of cocaine in Australia at AUD$300 is one of the highest in the world according to Havocscope, the true cost is not to the size of the resulting ill-gotten gains but the devastating social cost that comes with epidemic drug use.

According, to the organisation Cracks in the Ice, 1.3 million Australians have used ice in the last 12 months, which is a pretty scary number considering this represents more than 20% of the adult population of this country.

Of the 1.3 million users of ice in the last year, how many of these are on the path to drug addiction? Even if the addiction rates were as low as 25%, that’s over 300,000 meth addicts roaming our cities and towns.

Let’s face it, ice is not for the feint-hearted, so the proportion or recreational drug users snorting coke or smoking weed on the weekends would be a lot higher than 1.3 million – so the percentage of drug users in Australia is likely to be far higher than 20%.

The social impact of drug addiction

We are seeing a number of related problems including; drug addiction1; increase in drug overdoses2 and drug-related suicides3; breakdown of families4; increase in meth addicted babies5; increased gang and domestic violence6; increased crime rates7 and increased costs for health care, policing, rehab centres and jails8.

Why should I care if I am on a Board of a regulated business?

If you are a Board Director and your company offers ‘designated services’ under the AML/CTF Act in Australia, you are considered to be a reporting entity and have a responsibility to understand the potential risk exposure to your business being exploited for money laundering and terrorism financing purposes and are personally accountable for ensuring that your organisation has appropriate and proportionate procedures to mitigate and manage these risks.

Understanding money laundering and terrorism financing risks is not that straight-forward and should not be treated as a once-off ‘tick the box’ exercise – the stakes for getting this right have never been higher – we all have a role to play in protecting the country we love from the social problems caused through drugs and the money launderers who use reputable businesses as vehicles to launder the proceeds of their crimes.

If you would like to find out more about how Arctic Intelligence is helping regulated businesses across different industry sectors and countries to manage their financial crime risk and compliance exposures please contact [email protected]

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