Banks have taken decisive action to disrupt the financial flows underpinning Australia’s illicit tobacco trade, strengthening oversight to more effectively cut off criminal cash flows.

In late 2025, AUSTRAC and the Illicit Tobacco and E-Cigarette (ITEC) Commissioner wrote to the banking sector, warning of the growing risks linked to tobacco retailers and convenience stores using cash, private ATMs and EFTPOS terminals to move and disguise illicit tobacco proceeds.

Banks were asked to strengthen monitoring and reporting under their existing AML/CTF obligations.

AUSTRAC Chief Executive Officer Brendan Thomas said the response from the banking sector had been strong and constructive.

“We asked banks to refocus their attention on high-risk transactions linked to tobacco retailers, including cash deposits and EFTPOS activity, because these channels can be used to pay for illicit tobacco and to launder criminal profits,” Mr Thomas said.

“The response from the banking sector has been strong. Many institutions have implemented tighter controls, increased reporting to AUSTRAC and, where risks couldn’t be managed, exited high risk customers. 

Cutting off the financial lifeblood of organised crime

In November, alongside the letter, AUSTRAC provided banks with a unique reference code to use in suspicious matter reports, enabling illicit tobacco activity to be more easily identified, tracked and disrupted.

Since then, AUSTRAC has received 337 suspicious matter reports using that code, and made 76 referrals to its partner agencies where the primary and secondary threat types were illicit tobacco, combined with money laundering.

Around 20 per cent of reporting entities exited high risk customers with exposure to illicit tobacco, while others imposed enhanced controls and monitoring arrangements to manage identified risks. More than 1,000 customers have been exited or recommended for exit, driven by reviews undertaken following the November correspondence.

Enhanced information sharing

AUSTRAC continues to work closely with banks, the ITEC Commissioner, customs and law enforcement partners to ensure illicit tobacco linked financial activity is identified, reported and acted on, while avoiding unnecessary disruption to legitimate businesses and communities.

Proposed reforms to enhance information sharing across the financial system could further strengthen banks’ ability to identify and avoid high risk customers, making it harder for criminal networks to move undetected between institutions.

Assistant Minister for Customs Julian Hill said Australian banks are critical to fight these criminal syndicates because cutting off the money flow and cutting off the profits is key to stopping this illegal trade. 

“Australians are rightly sick to death of criminals running sleazy illegal tobacco shops in broad daylight – in shopping strips and malls, in suburbs and towns right across the country,” he said.

“Australia’s strong anti-money laundering laws are being used to disrupt this trade and change the ‘risk vs reward’ calculation for serious and organised criminals.

“If you are funnelling illegal funds through the legitimate banking systems, you will be caught, and you will be penalised.”