Representatives from the Australian Transaction Reports and Analysis Centre (Austrac) on Monday said far-right extremists were increasingly using online platforms, such as Telegram and cryptocurrency exchange platforms, to fund their operations.
But due to Austrac's remit only being financing activity within Australia's banking system, the agency's CEO said its scope for catching financing of terrorism activities could often be limited.
"That's why we rely so heavily on the banks if it's going to the banking system, but of course, much of this doesn't go through the banking system so that's why we're [trying to] enhance our capability," Austrac CEO Nicole Rose said at Senate Estimates.
In terms of what Austrac can do when it comes to restricting prominent far-right extremists from fundraising through those digital channels, Rose said the agency can work with partner agencies to help identify these payments.
"We provide intelligence on targets that we may create ourselves or the police may actually ask us national security agencies asked us to provide intelligence," Rose said.
Austrac deputy CEO John Moss added the agency was working with digital currency exchange providers to build indicators and financial crime guides that can be used to detect suspicious matter reports and send those to government, which can then be shared with governments outside of Australia.
Identifying these payments is difficult though, with Moss explaining at Senate Estimates that terrorism financing through these digital channels are often in the form of small payments, which are hard to detect.
Last month, one of the country's largest fintech industry bodies Fintech Australia said Austrac had too heavy of a burden in its fight against money laundering and counter terrorism.
The fintech industry body said Austrac has struggled to respond to and rely upon various regulatory reports it receives to deal with money laundering and terrorism financing due to resourcing and technology budgeting reasons.
Meanwhile, Australian Security Intelligence Organisation director-general Mike Burgess said current trends indicate that espionage and foreign interference would supplant terrorism as Australia's principal security concern, despite terrorism continuing to remain as a key threat.
"On a daily basis, multiple countries are making multiple attempts to conduct espionage and foreign interference against Australia," Burgess said in his opening statement at Senate Estimates.
"These attempts are sophisticated and wide-ranging. They are enabled and accelerated by technology.
"Such cyber-enabled activities could be used to damage critical networks and infrastructure in the future, especially in times of increased tensions."
Concurring with the findings made by Austrac that online platforms have helped spur the rise of far-right extremism, Burgess said almost half of the agency's domestic onshore counter-terrorism caseload was focused on far-right extremism.
"People being online have potentially been subject to information that has helped put them up a path of radicalisation," he said.
"Obviously with lockdowns, they don't benefit from the social interactions that tend to normalise what people get through their online interactions."