Insurance, Fraud and Organised Crime at the Border

Just two days ago, my term as Australian Border Force Commissioner (ABF) and my 44-year career in law enforcement came to an end. It is an honor to stand here at the start of this new chapter, addressing such a prestigious gathering.

I’m naturally feeling reflective, recalling my own transition into policing as a teenager. Back then, I was spinning waltzer cars at a seaside fairground in the UK, working for a family of Irish travellers. It was a chaotic setting and little did I know this early experience, in keeping things on track and spinning rapidly at the same time, would serve me well in my future roles, from police cadet in London to the ABF Commissioner in Australia.

I want to thank Dennis for his gracious invitation to speak on today’s topic, which examines the intersection of the insurance industry and fraud, international border management, and serious organized crime. My goal is to outline the opportunities to make this intersection more hostile to criminals, or “crooks” as we call them down-under, and a better place to do business.

Introduction

The global landscape is increasingly less predictable for business and for governments. This effects supply chains and borders, where predictability, resilience and security all dovetail in terms of contextualising risk.

The cost of living crisis in many countries illustrates how disruptions in supply chains can have cascading effects across a hyper-connected world. Working in silos—whether within organizations or across industries—is no longer sustainable. Industry and governments must collaborate more closely, shifting the paradigm of trust.

Technology is pivotal in addressing this. Like many of you, I am tracking the rapid evolution of Artificial Intelligence (AI). Developments like Generalized AI and Explainable AI will unlock new opportunities, allowing us to tap into vast reservoirs of real-time data, augment our intelligence, and improve decision-making across complex systems. International borders, in particular, are vast and complex systems of immense strategic value to governments and industries alike.

Against this backdrop, transnational organized crime operates across both physical and virtual borders, often with increasing impunity. Layers of criminal networks infiltrate global supply chains, and state-based actors are sometimes complicit—shielding, obfuscating, or even driving criminal activities such as fraud and money laundering.

Ironically, some of the very laws designed to protect our sovereignty have become vectors for criminality, whether through people smuggling, fraud, or trade-based money laundering.

The Global Landscape of Insurance Fraud and Organized Crime

At Australia’s borders, the importation of illegal drugs, firearms, tobacco, and people smuggling, to are persistent threats. On a good day, the ABF intercepts only about 25% of the illegal drugs entering the country. That’s despite a significant increase in our strike rate, through advances in our ability to “target’ high risk consignments.

At the same time, several Australian states have either decriminalized drug use or are entertaining the idea of doing so. However, there has been little in terms of additional investment in the health, education, or border security systems, which are needed to counter the social impact of these policies. The potential economic and social costs are staggering:

• Family and domestic violence: The Australian government has declared this a national emergency, committing billions of dollars to counter it.

• Road trauma and death: Last year, Australia experienced record levels of road fatalities.

• Youth crime: In many Australian towns and cities, youth crime is rising sharply.

There is extensive research showing direct and indirect links between illicit drug use and these social issues. Given the pressures on household budgets, I also wonder about the impact on the insurance industry. Will people choose to go uninsured or under-insured? Will we see a rise in fraudulent claims? It seems organized crime has changed our way of life without us fully realising it—perhaps more so than terrorism, but far less obviously.

Criminal Networks and Crossroads

Traditionally, the ABF has been focused on inbound goods and people, as Australia is often the final destination in global supply chains and traveller journeys. Our intelligence collection, data analysis, and targeting have been geared toward this end. However, the landscape has become increasingly complex.

The Fraud Carousels: Spirits In, Beer Out—Gaming the System

One example of large-scale revenue fraud involved alcohol. Spirits were imported into Australia with duties paid, then reported as being re-exported, allowing the claim of duty refunds.

When our General Manager for customs noticed that the annual value of duty refunds had tripled in just three years—from under $100 million to over $300 million, and that only a few companies were responsible—I initiated an investigation.

What we uncovered was that the sea containers supposedly carrying re-exported spirits were actually filled with cheap beer. The spirits were being diverted, duty-free, into the domestic market, using legitimate supply chains like road haulage, warehousing, and retail outlets. This highly orchestrated global scheme exploited weaknesses across multiple sectors. These kinds of fraud are often associated with Goods and Services Taxes, so this was variation on a global theme.

Stolen Wheels: Trafficking Through a Fast Lane

Organized vehicle theft and export in Canada have become so pervasive that the Canada Border Services Agency (CBSA) had to step up its controls on outbound containers. In 2023 alone, CBSA seized 1,800 stolen cars, and the Canadian government invested an additional $28 million to boost its efforts. The Middle East and Africa remain the primary destinations for these stolen vehicles.

Despite these efforts, organized crime syndicates continue to exploit vulnerabilities in global supply chains. Meanwhile, in Australia, fraudulent insurance claims are being lodged on high-value vehicles, with insider knowledge facilitating these scams.

Meanwhile, high value cars are the device through which simultaneous fraudulent damage claims are being lodged and paid out in Australia; requiring inside knowledge of the industry and the use of complicit industry participants.

There is still much we don’t know about how vehicles are moved across borders. I see significant opportunities here for collaboration between border agencies and the insurance industry to better understand and combat this global trafficking.

Rip On: What a Rip Off

Illicit narcotics are smuggled into Australia by sea, air, and land, often concealed within the structure of a container or its refrigeration unit, or within goods being shipped — for example machine parts, artwork, or electronics.

In some cases, criminals perform “rip-on/rip-off” operations, placing illegal goods in containers at origin or transhipment ports and removing them in the destination country before the goods reach their final destination. Complicit aviation ground and air crew also engage in similar activities, using aircraft as opposed to sea containers but for the same purposes, around the globe.

In Australia, we see criminals interfering containers after they leave the wharf—sometimes at gunpoint. Customs officers in Belgium and the Netherlands face similar challenges, with break-ins at secure container yards. Belgian Customs officers are now arming themselves due to the risks posed by organised crime.

These concealments not only result in drug trafficking but can also damage or contaminate insured goods. When a refrigeration unit fails, for example, an entire shipment of perishable goods can be lost. In such cases, the insurer may be left covering the cost, unaware of the criminal activity that caused the damage.

Below the Surface: Criminal Frogmen

In 2023, a Brazilian scuba diver was found dead in the Port of Newcastle, wearing specialist closed circuit breathing equipment surrounded by bricks of cocaine weighing over 50kg’s. He had been hired to retrieve the drugs which were concealed beneath the waterline of the bulk carrier ‘Areti GR’.

We are seeing more instances of drugs being concealed within the structure of commercial ships—sea chests, ballast tanks, and rudder housings. These concealments require specialized knowledge. Retrieving the drugs often leads to significant delays for shipping companies and losses for those awaiting the delivery of their goods.

Criminal networks are also employing “drops at sea,” where complicit crew members throw drugs overboard attached to buoyancy and GPS devices for retrieval by small boats. On occasion this has led to large quantities of narcotics washing up on Australian beaches. We’ve also seen aircrew and baggage handlers arrested and convicted for using commercial aircraft to import narcotics and other illicit goods. These tactics pose significant risks to shipping, aviation and insurance companies alike.

Smoke and Mirrors: The Tobacco Trafficking Trade

The prohibition on vaping products and heavy taxes on tobacco in Australia have created a thriving black market. E-cigarettes, nicotine products, and traditional tobacco are smuggled into Australia by the same criminal groups trafficking narcotics.

In the past year, we’ve seen arson attacks on retail outlets, especially in Melbourne, as organized crime groups battle for market dominance and seek to coerce retailers. These incidents have serious implications for the insurance industry, with rising property damage claims resulting from these turf wars.

Insiders at the Gates: Breaching the Portcullis

Trusted insiders are employees, contractors and third party service providers who have access to sensitive systems, infrastructure or information. They are a significant threat, both at the border and within the insurance industry. These individuals, whether intentionally or unintentionally, enable crime, disrupt operations and compromise security.

In 2021, law enforcement agencies from several countries executed a sequence of raids around the globe, following a 3 year covert sting operation by the FBI and Australian Federal Police, known as Operation “Trojan Shield” or “Ironside”. Millions of messages were intercepted through a smart-phone based communications platform, which the criminals wrongly believed to be secure. The operation also confirmed what we’d long suspected; that the Australian border was seriously infiltrated by criminals.

Operation Jardena – Unmasking the infiltrators

In August 2021, my then boss the Minister for Home Affairs announced the establishment of ABF Operation Jardena. I re-deployed 100 officers who undertook targeted enforcement operations for over 2 years. Their work provided clarity and understanding of those involved and their role, the vulnerabilities being exploited and it laid the groundwork for us to generate legislative, regulatory, policy and future operational responses.

Over 100 companies and 1000 individuals who operate at the Australia Border in our air and sea port and supply chains, were identified as being directly involved with or closely connected to transnational serious and organised crime groups, including insidious outlaw motor cycle gangs. Many with security pass access at ports and airports. We also became concerned about dozens of overseas ports the international supply chain, because of similar issues. These trusted insiders exploited vulnerabilities within the border, a concern that equally applies to your industry

WCO Operation Tin Can: Global Data, Local Impact

Jardena gave me the evidence base with which to I press the World Customs Organisation (WCO) to prioritise this issue. I then deployed ABF officers to Europe, to engage with the World Shipping Council as well as the WCO. WCO Operation Tin Can was established, involving 43 countries and 4 members of the world shipping council, who provided real time data from their supply chains, which we’d never seen before. They helped us shine a light on nefarious activity at ports and on the rip methodology. 100 Tonnes of cocaine was seized in 6 weeks.

This operation was a first step; a proof of concept targeting trial – it served as an example of what industry and law enforcement can achieve together, by combining data, intelligence and knowledge in near real time, to create an early warning system that reduces risk for both business and governments.

The Virtual Net: A 5 Eyes Targeting Network

Building on TinCan, the World Shipping Council members along with the B5 are partnering to create the Virtual Targeting Centre (VTC) under the Maritime Security and Trade Alliance (MSTA).

The European Ports Alliance has also emerged, doing similar work, and I believe these initiatives will connect and open up opportunities to expand the across into other sectors, whether insurance, trade finance or air cargo. What would we find if we compared data relating to the declared value and description of shipments to trade finance, insurance and customs organisations?

A I wrap up this section, it’s stating the obvious but I feel compelled to do so - in such vast, permissive and corrupted supply chains, shipping crime is more likely to occur, including insurance fraud.

Shadow Money: Following the Illicit Flows

ACIC Operation Hoffman was an investigation that targeted South East Asian criminal syndicates importing narcotics into Australia on an industrial scale. By following the money, we traced hundreds of millions in drug profits funnelled out of Australia through cash deposits with alternate remittance dealers.

The operation’s results were short-lived. Within six weeks, remittance levels returned to normal. This highlighted the agility of criminal organizations. They can regroup and pivot in response to enforcement actions, demonstrating their ability to adapt to changing circumstances with remarkable speed and flexibility.

The profits of organised crime are estimated by the UNODC and other credible sources as being equal to 1.5% of global GDP, which by the end of 2023 was around $105 Trillion. Australia’s financial intelligence unit AUSTRAC estimates that around half of this is laundered through the global financial system. So what happening to the remaining $52.5 Billion? Could this much possibly be moved through the trade systems of the world?

Possibly. Between 2008 – 17, value gaps in reported international trade for developing countries was estimated as $8.7 Trillion and $817.6 billion in 2017 alone.

Trade based Money Laundering (TBML) can be difficult to quantify with precision based on these numbers, and it can be hard to detect.

TBML: A Global Blind Spot

Driven by these questions and our work in the ABF, I took the fight to the World Customs Organization (WCO) this year. I presented a non-paper that proposed global action at a strategic and policy level, seeking to harness the collective knowledge, data and intelligence of the world’s customs administrations within whose arena international trade is regulated. Remarkably these is no agreed definition of what is, or is not TBML not any guide as to how Customs Administrations can detect its presence. This isn’t about doing the job of the Police, but about creating an global system of surveillance and detection, in order to help the police and financial enforcers to take action.

The response from 190 member countries was overwhelmingly supportive, and the WCO is now mobilizing to tackle this systemic abuse. Criminals exploit false trade documentation, manipulate invoices, and create phantom shipments. These methods enable customs fraud, tax evasion, and, as this audience will appreciate, insurance fraud.

The Real Test: Can We Keep Up?

Criminals with end-to-end control over their smuggling routes and financial networks are combining trade-based money laundering (TBML), customs fraud, and insurance fraud into coordinated operations. The real challenge lies in whether the insurance industry, supply chain operators, and customs agencies can work together as effectively to counter these threats.

The defining moments of my journey in law enforcement have shaped my understanding of these challenges and reinforced the importance of collaboration in tackling complex, global threats like these.

Defining Moments: A Career at the Frontlines

Over 44 years, I’ve stood at the intersection of crisis, crime, and complexity. From civil unrest to international operations, a few defining moments have shaped my understanding of the interconnected world we face today.

On the Line: Policing the Miners’ Strikes

As a young officer during the 1980s miners’ strikes in the UK, I was at the frontlines of riots caused by profound social and economic upheaval. These events left deep scars on communities, the effects of which are still felt today.

Minutes After: The Baltic Exchange Bombing

In 1992, as a detective at Scotland Yard’s Anti-Terrorist Branch, I arrived at the scene of the Baltic Exchange bombing just minutes after the explosion. This attack forever altered the City of London, underscoring how terrorism delivers an immediate shock to economic and social resilience. But, as we know, organized crime operates in a slower, more insidious way, often leaving lasting damage in its wake.

Cracking the Code: The Anti-Corruption Command

Evidence from the US, Canada and UK demonstrate how systemic police corruption creates an environment of impunity that fosters organised insurance fraud and diminishes law enforcements capacity to combat it.

As part of the inaugural Anti-Corruption Command at the Metropolitan Police, I confronted systemic corruption head-on in the late 1990s. This experience showed me that operational strikes alone don’t solve the problem and in isolation can leave an organisation more damaged than they find it; corruption doesn’t start overnight, and addressing it requires more than just arrests—it demands long-term institutional change.

Cross-Border Crime: Leading Task Forces at the ACC

At the Australian Crime Commission (ACC), I led multi-agency task forces to combat transnational organized crime. These efforts relied on the power of collaborative, multidisciplinary teams and close partnerships with industry—a hallmark of my leadership that I believe was crucial moving forward.

Global Response: The Aftermath of MH17

Coordinating Australia’s response to the downing of MH17 was a deeply sobering experience. Working alongside Dutch and Ukrainian authorities, I witnessed firsthand the importance of international cooperation in the face of a global crisis. I will never forget the solemn moment when the first repatriation of Australian victims occurred, their coffins draped in national flags, with a lone piper playing.

Closing and Opening the Gates: Border Leadership During the Pandemic

Steering Australia’s border through the COVID-19 pandemic was a constant balancing act—national security, public health, and political pressures all converged in a way we had never seen before. Managing these overlapping crises reinforced my belief in the importance of adaptable leadership and informed decision-making in times of global uncertainty.

Crises and organized crime ripple through not only law enforcement but government policy, international relations, and business operations. Whether combating civil unrest, countering terrorism, or managing global crises like MH17 and the pandemic, these events have had far-reaching impacts on industries, border management, and international cooperation.

Next Steps: Building a Smarter, More Resilient Future

At the ABF, we made significant strides in managing complexity, prioritizing risks, and improving decision-making. These gains were driven by:

• Strategic planning and preparedness

• Enhanced operational response

• Augmented decision-making

• Anticipating emerging threats

But this is just the beginning. The ABF is building a Targeting 2.0 capability, and I envision a future where Targeting 3.0 harnesses the full potential of AI, linking operational delivery with policy design and real-time monitoring. Emerging technologies, such as Digital Twins, will allow us to simulate the impact of crises across systems, making proactive decision-making possible before disaster strikes.

Targeting Today: Faster, Smarter, and Collaborative

Modern targeting is about identifying, selecting, and prioritizing the right people, activities, and domains. It requires a fusion of data, intelligence, and insights from industry and global law enforcement.

AI is revolutionizing our ability to detect new criminal patterns at speed and scale. But no technology can work in isolation—collaboration with industry is essential. Initiatives like the regulatory sandbox in the Australian Customs Act allow for innovative solutions, reduces regulatory delay and builds genuine partnerships through co-design.

Trust, once built and institutionalized, fosters genuine cooperation and shared innovation—enabling us to stay ahead of both criminal networks and government regulations. Importantly, it reduces the risk of poor policy leading to poor legislation.

Conclusion: A Call to Collaborative Action

In conclusion, I want to leave you with a few key points:

1. Convergence of Threats: There is an undeniable convergence between organized crime, the insurance industry, and border security.

2. Exploiting Vulnerabilities: Criminals exploit shared vulnerabilities, whether through vehicle theft rings, fraudulent claims, or compromised supply chains.

3. Trusted Insiders: These networks succeed because they have access to insiders—both at borders and within industries—who help them circumvent controls.

4. Global Supply Chain Integrity: The integrity of global supply chains has been compromised, making it harder for both insurers and border agencies to verify the legitimacy of goods and claims.

5. Coordination is Key: Criminals are highly coordinated across their operations. We must match that coordination with collaborative responses across sectors.

The economic and social harm caused by organized crime is staggering. The profits from fraud and money laundering are equally staggering. But this isn’t just about identifying threats—it’s about seizing opportunities to collaborate. We must take a united approach, driven by both economic and social logic.

I propose five key actions:

1. Map Knowledge and Data: Conduct a high-level mapping of our knowledge, information, and data so were ready to overlay with AI and quantum computing. This will help us develop automated threat detection and early warning systems.

2. Overcome Legislative Barriers: Address legislative and cultural barriers to information sharing, particularly around privacy and commercial sensitivity. Trusted compartments can help, within which information is shared securely.

3. Leverage Existing Mechanisms: Build on cross-sector coordination centres, like those established by the B5 and Global Shipping Alliance.

4. Create a Global Industry Centre: Establish a global or regional centre within the insurance industry, aligning with similar efforts by border agencies.

5. Address Trusted Insiders: Trusted insiders pose a significant threat. Mapping vulnerabilities, mitigating insider risks, and adopting best practices will help defend against these threats.

A Final Thought

As we face increasingly complex and interconnected threats, the future of border security and the insurance industry will depend on our ability to collaborate, innovate, and adapt. The solutions are within reach—if we work together. Together, we can outpace criminal networks and protect the global systems that connect us all.

Thank you.

This is the text as prepared for delivery. Views are Michael Outram's own. All figures are drawn from publicly available sources.