Andrew Murray (WA, Australian Democrats) Share this | Hansard source

According to the explanatory memorandum, the purpose of the Financial Transaction Reports Amendment Bill 2006 is to ‘vary the amendments to the Financial Transaction Reports Act 1988 made by schedule 9 of the Anti-Terrorism Act (No. 2) 2005’. The amendments are to the new division 3A, which was inserted by schedule 9 of the ATA at part II of the FTRA. So the shadow minister is quite accurate that this is a bill designed to correct drafting errors and perhaps unintended consequences.

The proposed amendments include: an amendment to the definition of ‘account’ for the purposes of division 3A, clarification of the definition of the term ‘customer information’ in section 17FA of the FTRA, an amendment to the definition of ‘customer information’ for incoming international funds transfer instructions under section 17FB of the FTRA and an amendment to restrict the application of division 3A to authorised deposit-taking institutions only and not all cash dealers.

Australia’s anti-money-laundering program is encapsulated in the Financial Transaction Reports Act and places obligations on financial institutions and other financial intermediaries. Enacted in 1988, it is Australia’s primary anti-money-laundering legislation and was initially aimed at the financial, gambling and criminal sectors. It imposes obligations to report significant and suspicious transactions and international fund transfers, makes it an offence to open a bank account in a false name, and requires cash dealers to verify identities of cash holders or signatories.

It also requires reporting of certain transactions and transfers and creates record-keeping obligations. When division 3A comes into force in December this year it will require cash dealers in Australia to include required information about the ordering customer with an international funds transfer instruction when transmitting international funds transfer instructions out of Australia. It will be an offence not to include this information, which is reported to AUSTRAC, the Australian Transaction Reports and Analysis Centre, Australia’s anti-money-laundering regulator and specialist financial intelligence unit.

When the Financial Action Task Force, an intergovernmental body designed to establish international standards and develop and promote policies to combat money laundering and terrorist financing, conducted an evaluation of Australia’s anti-money-laundering and counterterrorism financing legislation, they noted that the estimated value of money-laundering offences in Australia amounts to between $2 billion and $3 billion per year—and I suspect that may be a conservative estimate. Although Australia has in place anti-money-laundering legislation, it does still continue to represent a major challenge and problem for law enforcement agencies.

Because the hard yards in this particular area of law had been done in the time of a Labor government, money laundering some years ago was considered a fringe issue by this coalition government. But in the wake of the September 11 events in the United States and, over the subsequent years, major terrorist attacks in other countries around the world including Spain and the United Kingdom, anti-money-laundering has moved very quickly up the ladder of geopolitical concern. That is because terrorism cannot operate at this high level of activity without very significant funds. Of course this new interest in anti-money-laundering will have useful effects on criminal and drug activity and the way in which the people involved in those activities move moneys around the world, and on tax evasion.

In recognition of all this, very soon after the United States September 11 events, the Financial Action Task Force expanded its mandate in October 2001 and issued eight special recommendations dealing with specific issues relating to terrorist financing. In October 2004 they published a ninth special recommendation. In conjunction with the nine special recommendations, the 40 recommendations have also been modified and there have been reviews over the years, the most recent being in 2003. According to their 2005-06 annual report, the Financial Action Task Force consider that the so-called 40 plus nine recommendations:

... form a comprehensive framework for governments to develop their domestic efforts against money laundering and terrorist financing.

I note with some approval the scathing comment by Senator Ludwig in his additional comments to the Senate report on this bill. He said at 1.4:

These measures themselves were brought forward from the Government’s long delay in bringing forward the anti-money laundering regime due to botched consultation with affected industries, and were themselves perhaps prompted by the Howard government’s failure to meet the international Financial Action Task Force mutual evaluation on anti-money laundering and counter-terrorism financing, in which the Government scored just 9 out of 40 on anti-money laundering, and 0 out of 9 on counter-terrorism financing.

That sort of criticism really does need to be noted and I, amongst others, have chivvied the government about their delays in getting on with these vital tasks. It is pointless sending our troops and making all the efforts we do around the world to assist in counterterrorism activity when we do not back that up with as much domestic law change as we can in this field concerning the financing or the potential financing of crime and of terrorism.

As a member nation of the Financial Action Task Force, Australia has worked towards maintaining the Financial Action Task Force standards, and has made some changes in response to the changing world in which we live including the introduction of the Suppression of the Financing of Terrorism Act in 2002. The Suppression of the Financing of Terrorism Act is aimed at restricting financial resources available to terrorist organisations and making the financing of terrorists a criminal offence as well as requiring cash dealers to report terrorist financing transactions—a very good intention that lies behind that act.

However, in an evaluation of Australia’s anti-money-laundering and counterterrorism financing laws by the Financial Action Task Force in 2005, it was reported that our system was falling behind the task force standards. The Financial Transaction Reports Amendment Bill 2006 is therefore part of the government’s long-coming response to international pressure to crack down on the potential for money laundering, particularly with respect to the financing of terrorism. I cannot see it simply as a bill designed to correct a drafting mistake; it is part of a continuing response.

According to the Parliamentary Library’s Bills Digest No. 64 on the Anti-Terrorism Bill (No. 2) 2005, the government is particularly concerned with rectifying the non-compliant status that the Financial Action Task Force deemed Australia to have in relation to special recommendation VII, which relates to wire transfer of funds. Whilst such legislation is of critical importance in an age where information exchange is taking place at increasingly rapid rates and through a plethora of national and international channels, such legislation also needs to be approached with care and concern for those ordinary, law-abiding citizens which it captures in its operation.

Although one may suggest that the bill currently under consideration is of a dry and somewhat technical nature, it still does impact upon an issue which is of central and increasing concern in the society in which we live: that of privacy. Privacy is a matter which has concerned this government in its 10 years of office and it is a matter which concerns our society. Privacy concerns were issues strongly highlighted by the Senate Legal and Constitutional Committee in their report on the exposure daft of the Anti-Money Laundering and Counter-Terrorism Financing Bill 2005. The anti-money-laundering and counterterrorism financing laws, of which the Financial Transaction Reports Act is a part, legislates mandatory reporting requirements in relation to people’s personal financial information.

Debate interrupted.