Michael Keenan (Stirling, Liberal Party, Shadow Minister for Justice, Customs and Border Protection) Share this | Hansard source

I rise to talk on the Combating the Financing of People Smuggling and Other Measures Bill 2011. The coalition supports the bill in principle. The purpose of the bill is to reduce the risk of money transfers by remittance dealers being used to fund organised crime, including counterterrorism, people-smuggling and other serious crimes, by introducing a more comprehensive regulatory regime for the remittance sector.

I would like to point out at the outset that the title of this bill was of some contention within the Senate Legal and Constitutional Affairs Legislation Committee, which reported on the bill yesterday. The committee listed the title of the bill as one of the key concerns with this piece of legislation. In submissions to the inquiry, both the Australian Privacy Foundation and Liberty Victoria made the point that, by highlighting only one offence which may utilise the remittance sector—that is, the financing of people-smuggling—the title of this bill is uninformative and misleading and should be amended to more properly reflect the bill’s intent and content. I will explain some of these comments a little later on, but they are of course part of the government’s unrelenting spin campaign to do very little to stop the people-smuggling trade by constantly pretending to take action.

It is no secret that organised crime is about generating profit. It has been estimated that organised crime costs the Australian community approximately $10 billion to $15 billion a year. This money has to be laundered and has to resurface somewhere in the legitimate economy somehow. As confirmed by Mr David Ross, from the Australian Crime Commission, one of the primary methods that organised crime uses to get that money offshore is by using alternative remittance dealers. They present a lot of advantages over the regulated financial system—for example, banks. There is less visibility, it is easier to collude with remittance dealers and it is easier to infiltrate that particular sector than, say, the traditional banking sector. It comes as no surprise that it is particularly attractive for organised criminal syndicates to use the remittance sector to launder money. There is less risk of getting caught in doing it this way. With around 6½ thousand providers of remittance services in Australia, in terms of legislation it is essential and integral to ensure that it will be useful and effective in combating the challenges presented by organised crime.

Whilst the title of this bill is misleading, I believe it is important for us to discuss the issue of people-smuggling. Anybody who is familiar with the record of this Labor government would know full well that this is a government that is the best friend that people smugglers have ever had. When it came to office it inherited a system where we had on average three boat arrivals per year. That is one every four months. That record continued for the first year it was in office. Then in August of 2008 it made the very fateful and foolhardy decision to alter the robust system of border protection that it had inherited from the previous Howard government, a system of border protection that had largely driven people smugglers from business.

When those decisions were made that gave a green light for people-smuggling syndicates which had been very active in the past to go back into that evil and insidious trade. As a result, once that green light went up, the people-smuggling syndicates, which are very sophisticated organised crime syndicates operating out of South-East Asia, smuggled down to Australia 215 boats illegally, containing over 10,500 people. This has led to the sorts of incidents we have seen over the past week in our detention network but particularly on Christmas Island where we had the extraordinary sight of Australian Federal Police officers being forced to retake a Commonwealth facility by force because the immigration department had lost control over that immigration detention centre.

The title of this bill, although it refers specifically to people-smuggling, is really part of the government spinning the idea that they are somehow doing something about people-smuggling when this bill relates more broadly to organised crime. I will just turn to people smugglers quickly because they are people who obviously use these money-laundering techniques to generate profits by putting more and more people on each vessel. As we have seen lately, some of these vessels have been getting larger, containing more people. By putting more and more people on each vessel, they increase their profits but they also run a greater risk of a disaster occurring as we saw on Christmas Island in December last year.

The trend towards more people being put on boats has been occurring for some time. Yet, regardless of what the people smugglers do and regardless of how successful they are, the Labor government remain wedded to their policy failures. Labor’s rolling detention crisis puts at risk the lives of not just detainees but Commonwealth officers who are policing these detention centres. The incentive provided by the current immigration regime in Australia for people to come here illegally puts children at risk. The denial of humanitarian visas to thousands waiting offshore is also a moral burden that Labor must now carry for their weak decisions and failed policy.

Last week I had a meeting in my office—and I have often had meetings of this nature—with people who have immigrated to Australia under our generous humanitarian program. Many of them settle in Stirling. They now seek to have a family member who is waiting in a refugee camp, particularly in Africa—in fact, almost exclusively in Africa—brought to Australia to get the protection of the Australian government. Not always but usually the people they come to see me about are women. Very often they are women with children who are trapped in these refugee camps. They lead very difficult lives. They are in grave danger as refugees who are essentially stateless in these enormous refugee camps. There are grave dangers to their health. There are grave dangers to their physical safety. Often they come with terrible stories about their mistreatment at the hands of people in these enormous refugee camps. Quite rightly, their relatives who are in Australia are deeply worried about their welfare. When they apply to Australia for our protection, they apply for a limited number of places. They apply for one of the 13,750 places that we have in our humanitarian program. Sadly, for every person who comes here illegally, the chances of one of those people who are trapped within these terrible refugee camps in Africa of getting one of those humanitarian visas decreases markedly. That is the moral burden that the Labor Party must bear because, when people have the wherewithal to pay US$15,000 to a people smuggler and come down to Australia illegally and are granted protection by the Australian government, they take the place of somebody else who might be sitting in one of those refugee camps in Africa—often a vulnerable woman with children. They take a place from someone who could have legitimately applied for protection from the Australian government.

Last year it was revealed that the Rudd-Gillard government were warned as early as 25 February 2008 that the decisions that I have referred to, which weaken the border and protection regime and immigration regime, carried enormous inherent risks. Advice from the Department of Immigration and Citizenship stated at the time that a range of risk management strategies had prevented significant boat arrivals in recent years. They were referring to the policies pursued by the Howard government, which did manage to successfully drive the people smugglers from business. Rather than strengthening our border protection regime in the face of these threats, the Labor government did exactly the opposite. They knowingly and wilfully dismantled a successful border protection system that had had this issue under control, and the strong working regime they inherited from the coalition has subsequently been completely destroyed. Of course the final nail has been driven into their coffin this week, when the Labor government decided that because they had lost control over the Christmas Island detention centre they could not take new arrivals to Christmas Island, as has been the custom for many years. They have now had to bring them directly to mainland Australia. Thus ends the idea of us having an immigration system with any sort of integrity.

Not only have the Labor Party invited this flood of boat arrivals to our shores; subsequently, the pressure on our detention centres both on Christmas Island and on the mainland led to what we witnessed last week. We witnessed extreme unrest at the Christmas Island detention centre in particular, with detainees lighting fires and creating a situation that forced security staff to barricade themselves into the gym for protection. The way the government reacted to this unrest I think sows the seeds for further unrest down the road, because they essentially caved in to the demands of those rioting asylum seekers. They granted them their wish and transferred many of them to the Australian mainland. They sent additional Australian Federal Police reinforcements and firefighters up to Christmas Island to back up the already substantial numbers of officers that were there. Christmas Island residents are now, rightly, fearful for their safety and they can only imagine what chaos might erupt on their island, which in the past has been quite idyllic.

Astonishingly, the immigration department and indeed the immigration minister were not able to say whether or not all the inmates have subsequently been returned to the detention centre—and in fact they wilfully misled about the fact that they have no idea. Different advice has been given by different people, but the latest advice we have, which contradicted what the immigration minister said just before question time, is that four people remain missing. So they cannot even tell the residents of Christmas Island how many people remain at large. Clearly, the residents of Christmas Island are right to be concerned about that and they are sick of their island being used and abused in this way.

On ABC radio last week a resident of Northam, which is due to host a very similar facility to Christmas Island, a facility that will hold 1,500 single men, spoke about the fears of his community in the wake of the riots on Christmas Island. Graeme said: ‘We are generally fearful for our safety. Like I said all along, I asked questions as to what procedures were in place if there was a break-out or something like that and was basically told that it wouldn’t happen, it would never happen, it can’t happen. But, as you see, it does happen.’ The fears expressed by Graeme on ABC radio are quite valid. Under Labor our immigration detention regime has descended into absolute chaos and anarchy and we are hearing daily reports of yet another break-out, riot or disconcerting event. Had the Rudd-Gillard governments not dismantled the coalition’s border protection regime, there would not have been the chaos that we have witnessed of late and the people smugglers would not have had a wonderful product to sell, which is permanent residence in Australia, as they do now. People smugglers are of course typically another money-making arm of larger organised crime syndicates.

The aim of this bill is to ensure that the people who pose an unacceptable risk by engaging in money laundering—that is, organised criminals, people smugglers or people who may finance terrorism—will not be allowed to provide remittance services in Australia. The bill seeks to reduce the risk of remittance dealers being involved in the financing of people-smuggling, money laundering or the financing of terrorism. The bill aims to improve intelligence sharing and aims to protect against criminal infiltration of this sector. It also aims to ensure that the Australian Transaction Reports and Analysis Centre, AUSTRAC, can crack down on remitters acting unlawfully.

It should also be noted that AUSTRAC is Australia’s anti-money-laundering and counter-terrorism-financing regulator and specialist financial intelligence unit. The agency works in conjunction with Australian industries and businesses in their compliance with anti-money-laundering and counter-terrorism-financing legislation.

As noted on the AUSTRAC website, money laundering can occur in various ways. One of the newer and more sophisticated methods is the laundering of money through bank accounts of unsuspecting third parties and this is known as ‘cuckoo smurfing’. That term was coined by international authorities after the nesting behaviour of the cuckoo bird and the tiny blue figures of a popular Belgian cartoon. Birdwatchers have long noted that bird’s practice of laying its eggs in the nests of other birds, which then hatch the chicks as their own. ‘Smurfing’ refers to a division of large sums of criminal money into smaller amounts. ‘Cuckoo smurfing’ is described in AUSTRAC’s money-laundering methodologies report as something that begins when a legitimate customer deposits funds with an alternative remitter in a foreign country for transfer into another Australian’s bank account.

This is a legitimate activity and is often a cheaper and faster alternative than using a mainstream bank. Unbeknown to the customer, the alternative remitter is part of a wider criminal syndicate involved in the laundering of illicit funds. This criminal remitter, while remaining in a foreign country, provides details of the transfers, including the amount of funds, to a criminal based in Australia, including the account details of the intended recipient in Australia. The Australian criminal deposits illicit cash profits from Australian crime syndicates into the bank account of the customer awaiting the overseas transfer. The cash is usually deposited in small amounts to avoid detection, under transaction threshold reporting requirements. After an account balance check, the customer believes that the overseas transfer has been completed as legitimately arranged. The Australian criminal travels overseas and accesses the legitimate money that was initially deposited with the alternative remitter. Now that the illicit funds have been successfully laundered, the criminal owes nothing but a commission to the money-laundering syndicate for its work.

These are the sorts of things that this bill seeks to address. As mentioned earlier, the alternative remittance sector in Australia provides businesses and individuals with the ability to transfer funds overseas, often external to the formal banking sector. The system operates via agents who enter into agreements to receive money from businesses or individuals in one country and who pay funds to businesses or individuals overseas. The alternative remittance sector can transfer funds relatively quickly, securely and cost effectively and is especially important in countries where established banking networks are not common. In the alternative remittance sector, businesses vary in size and sophistication, ranging from community based independent remittance dealers, which are sole operator businesses, to large multinational entities that have extremely sophisticated operations. It is estimated by AUSTRAC that there are approximately 6,500 individual providers of remittance services in Australia, the majority of which form part of larger networks. Currently, under the Anti-Money Laundering Counter-Terrorism Financing Act, reporting entities are required to report international funds transfer instructions and threshold transactions over A$10,000 to AUSTRAC. In their submission to the Senate Legal and Constitutional Affairs Legislation Committee’s inquiry into the bill, the Australian Crime Commission said that the remittance:

… sector is an intersection point where many critical threats and vulnerabilities meet: specialist money-laundering syndicates operating as professional service providers—

weak or absent anti-money-laundering controls that enable ID crime—

poor quality reporting, including misreporting which distorts money trails; susceptibility of criminal manipulation or infiltration; and signs of trade based money laundering and close connections to higher risk countries or regions.

With this in mind I will now briefly turn to the amendments proposed within the bill. As noted in the bill’s explanatory memorandum, schedule 1 amends the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 to strengthen the Commonwealth legislative framework on the regulation of remittance dealers and the providers of remittance networks. Schedule 2 amends the same act to expand a list of agencies with which AUSTRAC can share intelligence. Schedule 3 amends the same provision in the Privacy Act to enable reporting entities to use credit reporting data to verify the identity of their customers. Schedule 4 amends the Financial Transaction Reports Act to enable the AUSTRAC CEO to exempt a person from one or more provisions of the act.

As I mentioned earlier in the speech, the Senate Legal and Constitutional Affairs Legislation Committee has had a detailed look into this bill. I want to touch on some of the comments that have been made in relation to that inquiry—particularly, as you might imagine, by the Liberal senators on that inquiry into the bill. Their report was tabled only yesterday, and they were of the view that the title of the bill does not relate to either its content or its intended purpose. While the key measure in the bill deals with enhanced regulation of the remittance sector, the title of the bill focuses only on one aspect of the possible misuse of the remittance sector—namely, the financing of people smuggling. The title of the bill is clearly uninformative and misleading and Liberal senators believe that it should be amended to reflect the bill’s actual content and intended purpose.

The Liberal senators also recommend that the following matters be addressed: the public release and consideration of the anti-money-laundering and counter-terrorism-financing rules, the establishment of appropriate memoranda of understanding for the sharing of intelligence between AUSTRAC and the new designated agencies, and a reassessment of the regulatory burden imposed by the bill on businesses in the remittance sector and a clarification as to whether the proposed changes create efficiencies or merely shift costs within the sector.

In conclusion there is one other issue that is worth noting. It was brought up by the ACC in their submission to the Senate inquiry. The registration of remitters should be a useful tool to increase the regulation of the remittance sector. However, a potential consequence of increased regulation may be that illegitimate remittance providers might be more covert and more into the unregulated and non-reporting environment than currently exists. This black market would need to be carefully monitored over an extended period of time to identify what, if any, emerging methodologies might be used to facilitate financial crimes, including money-laundering activities or the financing of people-smuggling and trafficking activities.

With organised criminal methodologies constantly evolving, it is imperative that our front-line agencies are adequately resourced to deal with the increased sophistication of these criminal networks. While the coalition supports this bill in principle we reserve the right to foreshadow potential amendments in the Senate. Clearly, those areas that have been highlighted by the Liberal senators on the Senate committee will be one area that we will be looking at. I condemn the government for naming this bill in such a way that it pretends to do something about the crime of people-smuggling when clearly this government has done so much to encourage the trade. We will certainly be looking at rectifying that and some of the other points that have been brought up by the Liberal senators once this bill reaches the other place.

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