Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2017 [CTH] Aims to Expand Powers of AUSTRAC

Tuesday 22 August 2017 @ 10.32 a.m. | Legal Research

The Commonwealth government has introduced the Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2017 [CTH] (‘the Bill’) earlier this month (17 August 2017), and the Bill has been referred to the Legal and Constitutional Affairs Legislation Committee.

Important Amendments

The Bill proposes to amend the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 [CTH] and the Financial Transaction Reports Act 1988 [CTH], and is based on the recommendations of the Report on the Statutory Review of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 and Associated Rules and Regulations (‘the Report’). The key aims of the Bill are:

  • The closing of the regulatory gap relating to digital currencies such as bitcoin;
  • Providing regulatory relief to industry by simplifying and streamlining requirements;
  • Deregulation of two sectors: cash in transit operators and some insurance intermediaries and general insurance providers; and
  • Enhancement of cross-border reporting obligations and enforcement.

The Bill also seeks to improve the function of the Australian Transactions Reports and Analysis Centre (AUSTRAC) as a regulator by:

  • Expanding its powers and functions;
  • Allowing retrospective remedial directions;
  • Allowing the registration of remitters; and
  • Expanding powers to issue infringement notices and expanding the provisions relating to such notices.

The Attorney-General’s office released a media release on 17 August 2017. In the media release, the Hon Michael Keenan MP, Minister for Justice stated:

“Stopping the movement of money to criminals and terrorists is a vital part of our national security defences and we expect regulated businesses in Australia to comply with our comprehensive regime. AUSTRAC has a strong track record in ensuring our financial institutions comply with the law.”

The new Bill will be addressing issues of the sort currently being faced by AUSTRAC in relation to the Commonwealth Bank of Australia’s (‘CBA’) recent money laundering scandal.  An AUSTRAC investigation into CBA’S intelligent deposit machines (IDMs) between November 2012 and September 2015 revealed that CBA failed to comply with the law relating to disclosure of deposits over a certain amount. AUSTRAC has begun civil proceedings against CBA, alleging that money laundering occurred through using IDMs, followed immediately by domestic and international transfers. They also further allege that CBA did not take any steps to assess the risks of money laundering or terrorism financing via the IDMs, and almost 8.9 billion was deposited before a risk assessment took place.  AUSTRAC’s acting chief executive Peter Clark pointed to the terror financing allegations against certain CBA customers, noting:

“Of the late threshold transaction reports we've claimed that six of those relate to cash transactions by five customers whom the bank has accessed as [having] a potential link to terrorism or terrorism financing.”

Opposition and Concerns about Expansion of Laws

The Law Council of Australia opposes the extension of anti-money laundering laws, and executive board member Konrad de Kerloy said that lawyers were already heavily regulated and new anti-money laundering laws would fall on professionals in rural and regional Australia. The Real Estate Institute of Australia supported the laws but highlighted the need for extra training for real estate agents regarding the new laws.

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Sources:

Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2017 [CTH] and other associated materials, as published on TimeBase LawOne.

Minister for Justice, ‘Crackdown on money laundering and terrorism financing,’ (media release), 17 August 2017.

Sue Lannin, ‘Australia a 'place of choice' for money laundering due to lack of regulation: ANZ,’ (ABC News), 13 July 2017.

Report on the Statutory Review of the Anti-Money Laundering and Counter Terrorism Financing Act 2006 and Associated Rules and Regulations, tabled in Parliament on 29 April 2016

Peter Ryan, ‘CBA risks massive fines over anti-money laundering, terrorism financing law breaches,’ (ABC News), 3 August 2017.

Peter Ryan, 'CBA the only bank on the AUSTRAC radar in money-laundering and terror financing allegations,' (ABC News) 18 August 2017.

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