AUSTRAC has published an assessment of the money laundering/terrorism financing (ML/TF) risks associated with traveller’s cheques.

AUSTRAC has assessed the overall ML/TF risk for traveller’s cheques as low. This is largely due to the very low value of traveller’s cheque transactions in Australia, combined with the measures service providers have implemented to mitigate the risk of exploitation.

Measures implemented include: only selling to known customers; limiting the total value of traveller’s cheques a person can buy in a single day; and adding physical features to traveller’s cheques to reduce the risk of counterfeiting.

Traveller’s cheques can only be issued or sold to individual customers—they cannot be made out to agents of customers, or non-individuals such as companies and trusts.

Only 27 suspicious matter reports (SMRs) were submitted to AUSTRAC in relation to traveller’s cheques over a two-year period. These SMRs all related to the process of cashing traveller’s cheques. The reasons for suspicion in this small SMR dataset were suspected low-level money laundering and traveller’s cheque fraud.

AUSTRAC says that the purchase of traveller’s cheques is likely to be vulnerable to ML ‘placement’ risk, as customers can buy traveller’s cheques using cash. But the very significant reduction in recent years in the number of outlets in Australia where traveller’s cheques can be purchased has limited this risk. There are now only two financial institutions that sell traveller’s cheques in Australia.

AUSTRAC expects the value of traveller’s cheque transactions to continue to decrease, which will continue to put downward pressure on the market’s vulnerability to crime.

The decline in demand for traveller’s cheques is likely to be a result of the increased uptake of travel money cards, or stored value cards (SVCs). SVCs have many features that make them a more attractive way of funding travel activity than traveller’s cheques. However, they are also highly vulnerable to criminal misuse.