Sydney broker suspected of terror finance

A Sydney-based money transfer business has been suspended from trading over possible links to terrorism.

Federal agency Austrac says the registration of Bisotel Rieh Pty Ltd, an independent remittance provider, has been suspended as action is taken to cancel its registration.

The suspension came after Austrac discovered a $9 million discrepancy between what the business reported had been sent overseas over the past nine months and what the agency understood from its own checks had actually been sent.

"We are satisfied that the continued registration ... may involve a significant financing-of-terrorism risk," acting Austrac chief John Schmidt said.

In the space of nine months the business is believed to have moved between $12 million and $21 million overseas.

According to the official notice of action, Bisotel Rieh admitted to Austrac that it "actively smuggled" money into Lebanon from Turkey.

Lebanon is the subject of Australian sanctions.

Austrac also identified a $38,000 suspect payment made to an individual in Malaysia.

Bisotel Rieh has until Friday to comment on why it should remain registered, after which time Austrac can extend the suspension for another 40 days pending a decision to cancel the registration.

Mr Schmidt told AAP the agency took very seriously the risk to Australia of terrorism and the financing of it.

"The bulk of the financial sector take it extremely seriously," he said.

"This makes it very challenging and worrying when you have an entity dealing with high-risk countries and their reporting makes it difficult to determine what is happening with money leaving the country."

Bisotel Rieh's website describes it as an "exceptionally unique financial service".

It is headquartered at Lakemba in Sydney's southwest and has a branch in Tripoli, Lebanon.

A recent Austrac report found the remittance sector was vulnerable to being misused for terrorism financing.

During the past three years, Austrac has refused the registration of six entities, cancelled the registration of two others and put conditions on another 15.

Foreign Minister Julie Bishop said the government was seeking to starve Islamic State of funds.

"This is a multi-pronged approach to combat ISIL (Islamic State of Iraq and the Levant) and its ilk and it will involve starving ISIL of funds so it can't fund its terrorist activities," she told reporters on Wednesday night.

"This will be an international effort and the government has supported more funding to Austrac to carry out their interception activities."

Asked whether Bisotel Rieh was linked to the Islamic State, Ms Bishop said she wouldn't go into details because it was an intelligence matter.