The Expanding Crypto Nexus in National Security and Financial Crime

Thank you, and good morning from Tokyo. I appreciate the chance to join you, even if I can’t be in the room.

I want to start not with a number but with a person. Right now, somewhere in Southeast Asia, a young man or woman who answered a job advertisement for call centre work has had their passport confiscated and been put to work in a compound in Cambodia or Myanmar. They are forced to build a fake romantic relationship with a victim — someone in Melbourne, or Perth, or Townsville. Over weeks, they convince that victim to invest their savings on a fraudulent crypto platform. The money — which was never invested — flows through underground settlement networks that processed over 103 billion US dollars last year. That is the machine. INTERPOL reports that 74% of known trafficking victims were brought to Southeast Asia from outside the region. This is modern slavery at industrial scale, and cryptocurrency is the financial architecture that makes it work.

When I was Commissioner of the Australian Border Force, we were already seeing the intersection of crypto with drug and illicit tobacco importation, trade-based money laundering, and sanctions evasion. In the two years since I left that role, the scale has exploded.

TRM Labs’ 2026 Crypto Crime Report identifies a record 158 billion US dollars in illicit crypto flows globally in 2025, up nearly 145% from the previous year. Approximately 35 billion dollars flowed to fraud schemes, with AI-enabled scam activity rising roughly 500% year-on-year.

But here is the number that matters most for this room. Australian crypto entities processed 71 billion Australian dollars in the year to February 2026. Monthly volumes grew from around 1.1 billion to 6.5 billion dollars in that period alone. Less than 1% of that activity has been linked to illicit counterparties — but 1% of 71 billion is still a significant number, and that figure only captures what has already been attributed. The real number is almost certainly higher.

Now, I want to make an important point about context. The vast majority of crypto activity in Australia is legitimate. Stablecoins are being used for remittances, trade settlement, and everyday transactions across Asia-Pacific. Nine of the top twenty countries in global crypto adoption are Asian. The enforcement challenge is precision, not prohibition. We need to find ways to detect and disrupt illicit use without undermining the legitimate financial infrastructure that is now part of the fabric of our region.

The first wave of crypto adoption has already happened. Criminals, state actors, and transnational networks are using it at scale. The question is whether we — collectively — are developing the tools and the capability to see what they’re doing with it.

The Pipeline to Australia

The criminal infrastructure I’m describing is not abstract. It terminates in Australian jurisdictions, and it connects directly to the kind of cases many of you are already working.

UNODC estimates annual profits from scam centres in Southeast Asia now approach 40 billion dollars. The settlement infrastructure behind those centres — Telegram-based guarantee marketplaces, underground escrow services — processed nearly 90 billion dollars in settlement activity across Asia-Pacific in 2025. That infrastructure does not sit neatly in one country. It reaches into ours. Many of the fraud victims are Australian. The proceeds flow through crypto channels that intersect with Australian exchanges and off-ramps.

The historic money laundering channels between Australia and Southeast Asia are well documented. Underground banking, alternative remittance, trade-based laundering — these have been features of transnational organised crime targeting Australia for decades. What has changed is the settlement layer. Crypto is not replacing those channels. It is layering on top of them. It is faster, cheaper, and — without the right tools — invisible to the investigators working the downstream drug, fraud, and proceeds of crime cases.

North Korea stole 1.92 billion US dollars in cryptocurrency in 2025 — 67% of all crypto theft globally. But the reason I raise that here is not the headline. It is the laundering method. Stolen crypto is converted through industrial-scale underground networks across this region — the same region, the same networks, and in some cases the same infrastructure that processes proceeds from Australian drug importation and fraud.

And there is a dimension I want to flag specifically for this audience. AUSTRAC published its Money Laundering Update this week. It explicitly identifies crypto and AI as new laundering layers, and warns that DeFi and offshore VASPs are creating blind spots for detection and supervision. AUSTRAC can see the on-ramp. It can flag suspicious activity. But the investigative response — the ability to follow those funds on-chain, to trace them to their destination, to identify the counterparties — that requires capability that sits with you. And if that capability isn’t there, the intelligence AUSTRAC generates goes nowhere.

Why It’s Hard to See

Now, I’m aware that a common response in state policing to the crypto threat is: “but we’re not seeing it.” I want to address that directly, and I want to do it respectfully, because it is an entirely reasonable observation from where most investigators sit today.

The reason you’re not seeing it is not because it isn’t there. It is because crypto-enabled crime presents as traditional crime unless you have the tools to see the financial layer underneath. The drug importation looks like a drug importation. The fraud looks like a fraud. The proceeds of crime case looks like unexplained wealth with no visible banking trail. The crypto dimension sits in the settlement layer — and without blockchain analytics, it is invisible.

Let me give you a worked example. Operation Taipan — Victoria Police, late 2024. AUSTRAC flagged an anomaly: one individual was the single largest recipient of ATM cash deposits nationally. That led to an investigation that uncovered a syndicate laundering over 30 million dollars through USDC and Tether on the Ethereum blockchain. One crypto account transacted 39 million dollars in five months. TRM Labs provided the forensic blockchain analysis and expert testimony that secured the conviction — Australia’s first major crypto money laundering prosecution. The crime was there. It took the right tools and the right partnerships to see it.

And just weeks ago — 52 Bitcoin, 5.7 million dollars, seized from a house in Sydney. Darknet market. Drugs and weapons. Two men charged. This is not a theoretical risk. Crypto-enabled crime is being prosecuted in Australian jurisdictions right now.

There is a telling finding in TRM’s analysis of Australian crypto crime court records. The majority of offenders in Australian courts were caught using traditional policing methods — intercepted packages, phone taps, physical surveillance, search warrants. Not blockchain analytics. That is not a criticism. It tells us something important: you are catching criminals who happen to use crypto. You are not yet using crypto as the investigative lead. The cases are there. The crypto dimension is there. The detection method hasn’t caught up.

And the window for straightforward enforcement is narrowing. Criminals are migrating from centralised platforms — where enforcement is most effective — to decentralised finance protocols, cross-chain bridges, and peer-to-peer settlement. Bridge-related activity grew 66% in 2025, while mixer use declined 37%. They are trading privacy for speed, and moving to infrastructure that requires more sophisticated capability to follow. The low-hanging fruit that early-mover agencies harvested by targeting centralised exchanges is drying up. The longer any agency waits, the harder the ground becomes.

As a former police officer, customs officer and border commissioner, I am particularly concerned about crypto-enabled trade-based money laundering. Funds from scams, ransomware, or theft can be converted to stablecoins, used to settle import and export trades through apparently legitimate invoices, and cycled back through the formal financial system. Standard targeting and compliance systems do not see this. It sits in the blind spot between what blockchain analytics can see on-chain and what police and customs agencies can see off-chain — and that intersection is exactly where the next generation of enforcement capability needs to be built.

The Opportunity

Here is the good news in this story. Every transaction on a blockchain is recorded permanently. Unlike cash, unlike hawala, unlike trade-based laundering through conventional banking — there is a trail. The challenge is having the tools and the capability to follow it.

And new enforcement mechanisms are emerging that did not exist in traditional financial crime. When Tether blocklists a wallet, those funds are frozen regardless of which blockchain they sit on, regardless of jurisdiction, and it happens in hours, not months. That is faster and more global than any mutual legal assistance treaty. Blocklisted activity grew 32% in 2025, driven by expanded stablecoin issuer enforcement targeting wallets linked to sanctions evasion, terrorism financing, fraud, and hacking. Private companies are now functioning as a compliance enforcement layer.

And here is the counterintuitive point. The very infrastructure that makes criminal settlement resilient — the concentration at escrow platforms, the reliance on a finite number of OTC broker networks, the repeated off-ramp patterns — also creates monitorable chokepoints. The enforcement opportunity is real. But it is only available to agencies with the capability to see it.

There is also a timing dimension that is directly relevant to this room. AUSTRAC’s Travel Rule takes effect on 1 July — six weeks from today. Every VASP operating in Australia will be required to transmit originator and beneficiary data with every transfer. That will generate a new stream of financial intelligence. State police financial investigators will start seeing crypto-related intelligence packages. The question is whether your officers will know what to do with them — and whether your agencies have the analytical tools to follow the trail.

Your cybercrime units already have specialist crypto capability — some of it very strong. The NSW capability, for instance, is significant. The AFP has built a dedicated team at the federal level. But the opportunity for discovery doesn’t sit only with specialist units. It happens when you push the knowledge and the tooling to the edge — to the sergeant running a drug operation, the detective working a proceeds of crime file, the officer executing a search warrant who doesn’t know to look for a hardware wallet or a seed phrase on a piece of paper. On-chain investigation capability for non-specialist officers. Real-time intelligence sharing, so that when an investigator in one jurisdiction identifies a criminal wallet, every exchange and platform knows about it immediately. Training for frontline officers who encounter crypto evidence — so they know what to seize and how to preserve it.

The longer you wait, the more archaeological digs you’ll do, instead of disruption. The blockchain does not forget. An agency that builds capability next year can still trace activity from last year. The evidence does not decay. But the operational window to freeze, seize, and prosecute — that does. The ability to act closes even when the evidence remains.

Close

I want to leave you with one thought.

The AI capability that is scaling scam operations today, through social engineering, could tomorrow be turned on smart contract code — discovering and exploiting vulnerabilities at a speed and scale that human auditors simply cannot match. We cannot respond to AI-speed crime with human-speed prevention, disruption and investigation. We need AI-assisted tools in our investigative toolkit, and we need them before the adversary’s capability advantage becomes insurmountable.

The criminals are innovating fast. But the investigative side is innovating too. The balance could tip either way. What determines the outcome is whether agencies across Australia — not just at the federal level, but at the state and territory level where the cases land — invest in the capability, the training, and the partnerships needed to stay ahead.

My closing thought is this. The seam between what we can see on-chain and what police, customs and border agencies see off-chain is where the next breakthrough — or the next failure — will come. Closing that gap is the most important challenge in this space. But with the right tools, the right partnerships, and the willingness to build the capability, we have a genuine opportunity to turn the transparency of blockchain from something criminals exploit into our greatest investigative advantage.

I said at the start that the reason you may not be seeing crypto-enabled crime is not because it isn’t there. It is because the tools to see it are new, and the capability to use them hasn’t reached every jurisdiction yet. That is not a criticism. It is an opportunity. And the evidence will still be there when you’re ready to look for it.

Thank you.