Andrew Giles (Scullin, Australian Labor Party, Shadow Minister for Cities and Urban Infrastructure) Share this | Hansard source

I rise in continuation of my remarks on the Anti-Money Laundering and Counter-Terrorism Financing and Other Legislation Amendment Bill 2019. Just before the debate was interrupted earlier today, I was in the process of introducing a second reading amendment. I move:

That all words after "That" be omitted with a view to substituting the following words:

"whilst not declining to give the bill a second reading, the House:

(1) notes that Australia has still not implemented all of the recommendations from the 2016 report on the statutory review of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 and associated rules and regulations;

(2) further notes that other international jurisdictions are already moving ahead of Australia with stronger anti-money laundering and counter-terrorism financing protections; and

(3) calls on the Government to ensure Australia is not regarded a soft-touch for money launderers or terrorism financiers".

I now want to talk about the consideration of the Senate Legal and Constitutional Affairs Legislation Committee in respect of this bill. Labor was successful in referring the bill to that committee on 14 November 2019—again showing the lack of haste the government has shown in dealing with the important measures that are the subject of this bill. Labor senators, in their consideration, demonstrated a concern that much of the important detail appears to remain in the explanatory memorandum to the bill and is not reflected in the terms of the legislation itself. I share these concerns. Of course these are not concerns that are confined to this piece of legislation; this government has a habit of leaving important terms in subordinate legislation or not sufficiently prescribing terms that should be in substantive legislation.

With regard to some of the most significant details referred to in the explanatory memorandum, Labor senators noted:

Proposed Section 37A allows for a reporting entity to enter into a written agreement with 'another person' but does not appear to stipulate that this person is either a reporting entity or otherwise subject to appropriate AML/CTF regulation and supervision. This stipulation exists only in the Explanatory Memorandum and we submit should ideally be reflected in the legislation—

The substantive legislation, that is. They go on:

Proposed Section 37A allows for two entities to enter into a CDD Arrangement that allows for a second entity to rely on the customer identification procedure undertaken by the first entity. Proposed Subsection 37A(2)(d) requires that the second entity obtain information from the first entity regarding the identity of the customer but does not impose any requirements or restrictions as to the currency of that information. If the intention is to impose such a restriction, such as a timeframe for how old that information can be, we submit that this should be reflected in the legislation.

That is a very reasonable request, given the subject matter of this legislation.

As for concerns raised by industry, both the Australian Financial Markets Association and the Financial Services Council have raised concerns that there are some definitional deficiencies in the current bill which need to be addressed. The Financial Markets Association said:

Firstly, given that the proposed Rule will relate to opening an account, we request that the term "opening an account" be specifically defined in the AML/CTF Act to ensure consistency of approach across reporting entities. There is some ambiguity as to when an account is actually opened, such that a designated service is provided.

The Financial Services Council stated in their submission:

We note that the amended section 32 under the Bill does not materially change the current obligations to carry out an Applicable Customer Identification Procedure (ACIP) prior to the provision of a designated service. However, it is suggested that the term "opening an account" needs to be specifically defined in the AML/CTF Act to ensure consistency of approach by all reporting entities. Also, in this regard, the FSC notes that AUSTRAC intends to issue Rules under section 33 to stipulate special circumstances where a designated service can be provided prior to ACIP being completed. Similarly, it is suggested that such Rule changes need to be made carefully to ensure consistency of approach overall, including with Section 32.

Labor senators noted these outstanding definitional deficiencies 'could undermine Australia's anti-money laundering and counter terrorism financing laws in the future'. Labor senators also noted that the Senate Standing Committee for the Scrutiny of Bills had reviewed the legislation and requested the minister's advice as to why it is proposed to use offence-specific defences which reverse the evidential burden of proof in this instance. While the scrutiny committee accepted the minister's explanation, the minister also undertook to table an addendum to the bill's explanatory memorandum to include further information about the use of offence-specific defences in response to these comments. As I understand it now—exactly a year after that time—the Minister for Home Affairs is yet to table this addendum, again demonstrating a lack of attention to detail and to the seriousness of the matters this bill, which has bipartisan support, is intended to address.

In concluding my remarks, I want to touch on recent money-laundering scandals involving Crown and Westpac. In November last year, AUSTRAC launched Federal Court action accusing Westpac of breaching AML-CTF laws more than 23 million times, including by allowing a dozen customers to transfer money to the Philippines in a way that is consistent with child exploitation. The current system meant that there was no action taken against Westpac until it had breached the anti-money-laundering and counterterrorism financing laws 23 million times. I repeat: 23 million times. How can that be adequate? How can it be adequate that we have taken so long to substantively respond to this? Westpac later admitted that it took the bank six years to identify as a risk the client known as 'customer 1', who made 625 transactions worth $136,000 in a manner consistent with guidance on transactions that could indicate child exploitation. It's disgusting and unacceptable. I'm sure all members and senators would agree.

With respect to Crown casino, the chairperson, Helen Coonan, submitted that the casino had facilitated laundering. The ongoing NSW Independent Liquor and Gaming Authority inquiry into Crown casino has revealed shocking noncompliance with money-laundering laws by Australian casinos and junket operators. Yet AUSTRAC, the regulator, gave these casino and junket operations its tick of approval only three years ago. Since then tens of billions of dollars have poured into Australia through such channels.

It is deeply worrying that we have needed a New South Wales government licencing authority to bring systemic breaches of money-laundering laws to light, given the profound responsibility of the Morrison government to protect all Australians from money launderers and the funders of terrorism. It demonstrates that the protections and oversight in this area need to be beefed up and enhanced, and this needs to be done expeditiously with due attention to detail—things that have not been in evidence.

Labor is supporting the passage of this bill through the House of Representatives. I proposed, on behalf of the opposition, in the second reading amendment, some suggestions to improve the bill because Labor understands the importance of strong, robust, anti-money-laundering and counterterrorism laws. We are concerned that the Morrison government has been too slow to act in this area—and too slow to act on the advice of the intergovernmental body which has done such important work—and that this could have contributed to some of the shocking and unacceptable revelations of money laundering, including at Westpac and Crown. Above all, we do not want Australia to become a soft touch for money launderers and those involved in terrorism financing.

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