Payment Providers have a key role to play in keeping an eye
out for crime and are demanded by law to do so.
Cash is getting squeezed out of the system to choke crime. If criminals can easily use the digital payment network its rather like squeezing a balloon – it just pops up somewhere else.
A post by Brad Kelly highlights how illegal tobacco purchases being processed
openly through mainstream payment systems, including terminals from major banks
and PoS providers, raising serious questions about merchant onboarding,
transaction monitoring, and compliance obligations under Australian law.
In Australia, payment service providers can be held responsible under several laws and regulatory regimes when they facilitate illegal transactions, including those involving illicit tobacco:
Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act) Requires reporting entities (including banks and payment processors) to identify and mitigate risks of money laundering and terrorism financing. Facilitating payments for illegal tobacco or any other crime may constitute a breach if due diligence and transaction monitoring fail to detect suspicious activity.
Criminal Code Act 1995. Under sections related to aiding and abetting, knowingly facilitating the sale of illegal goods (like contraband tobacco) could expose payment providers to criminal liability.
Competition and Consumer Act 2010 (Australian Consumer Law) If surcharges are applied and not disclosed, this may breach consumer protection provisions around transparency and unfair practices.
Taxation Laws (e.g., GST Act). Collecting GST on illegal products, could trigger investigations by the ATO. It implies a failure in merchant classification and tax compliance.
Customs Act 1901 Tobacco importation and sale are tightly regulated. Payment services facilitating transactions for non-duty-paid tobacco may be complicit in customs violations.
Poor merchant onboarding, transaction monitoring failure, undisclosed surcharges, and routing manipulation (LCR) open to door to queries around aiding and abetting crime such as illegal alcohol, baccy, counterfeit goods, unregulated pharmaceuticals or supplements, unlicensed gambling and dark web transactions that are righty frowned upon.
With all the AI available, little of this is acceptable
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