House debates

Wednesday, 11 November 2020

Bills

Anti-Money Laundering and Counter-Terrorism Financing and Other Legislation Amendment Bill 2019; Second Reading

5:59 pm

Photo of Stephen JonesStephen Jones (Whitlam, Australian Labor Party, Shadow Assistant Treasurer) Share this | Hansard source

Money laundering is an area of regulation where the government has a very strong game when it comes to rhetoric, but the delivery is incredibly weak, and it begs the question why. The member for Fraser has gone through that in some detail, outlining delay after delay after delay with little explanation as to why.

This bill, the Anti-Money Laundering and Counter-Terrorism Financing and Other Legislation Amendment Bill 2019, takes us only a little further down the track. Money laundering is not a victimless crime. That's why we need to take it seriously. Money laundering is an enabler for global crime organisations and some of the most horrific crimes imaginable. It facilitates modern slavery, where young women are forced into prostitution and smuggled into illegal brothels around the world. It allows children to be sexually exploited for profit. It means that gun runners can fuel civil wars in failed states and drug barons can live in mansions built on the misery of addicts, including those here in Australia. Terrorists use it to fund secretly planned attacks.

We cannot allow our country to be used as an environment where these crimes flourish, and we cannot allow our financial institutions to provide safe harbour for international syndicates that perpetrate them. We owe that much, at least, to the victims of these crimes and of the potential crimes to come. Such is the sophistication and international reach of the perpetrators that denying them the profit they so ruthlessly pursue is our only real defence. Australians are not okay with these abhorrent crimes. So, we need money-laundering laws that tell the world we're doing our bit to stop them. That should be reason enough to strengthen these laws, but there are other reasons as well. We know from the experience of other countries that once serious organised crime gains a foothold in a jurisdiction it's extremely difficult to eradicate. Prevention is the best cure, and that starts with laws that are serious to the task.

Money laundering also has a corrosive effect on our financial system. More than ever, Australia is a services economy. Our thriving financial services industry in particular is a job creation powerhouse and a sector that has provided a secure future for workers across the income scale. That success has, yes, been built on the hard work of those who toil within it, but it has also been built on confidence and trust in our financial system that stems from the rule of law and strong regulators. That reputation has been hard won over many decades but can be lost in an instant. Make no mistake: organised criminals are targeting Australian financial institutions as a way to launder profits from their illegal activities. This is why the penalties should be strong.

Look no further than the record $1.3 billion fine handed out to Westpac earlier this year for failing no less than 23 million times to support suspicious financial transactions worth $11 billion. Most concerningly, around 3,000 of these transactions are highly likely to have involved payment from paedophiles to offshore criminals for horrific sexual crimes against children. In addition, Westpac failed to assess risks or keep proper records involving suspicious transactions with high-risk jurisdictions, such as the Democratic Republic of Congo, Iraq and Ukraine. Westpac's shareholders have a right to expect better standards of corporate governance than this. They, along with Westpac's customers and the public at large, deserve nothing but the highest level of vigilance when it comes to safeguarding the bank from involvement in serious criminal activity.

That's why Labor supports this bill but says it doesn't go nearly far enough. We welcome the expansion of reporting requirements, including the collection of customer identification and verification data. We welcome increasing the protections that will be placed on cross-border banking and the simplification of suspicious-matter reporting processes. And we support making it easier for law enforcement agencies to investigate and prosecute instances of money laundering. These changes will go some way to allowing Australia to show the world, and investors here at home, that we're determined to maintain a properly governed and properly regulated financial system. But we are still lagging far behind the rest of the world. There is more that can and should be done to enhance that message—that Australia is serious about cracking down on money laundering.

Take, for example, the New South Wales Crown casino inquiry. Here, too, we have seen shocking evidence of blatant money laundering from foreign organised-crime syndicates, much of it caught on video. It's clear that Crown casino has allowed itself to become a site for this sort of activity, as the company's chair, Helen Coonan, admitted to the New South Wales inquiry. She said:

It may have been ineptitude or a lack of attention, I don't think it was deliberately turning a blind eye …

That is still an open question. It's the kindest possible interpretation of what the inquiry has uncovered.

Let's remind ourselves of that infamous video of a blue cooler bag stuffed full of wads of cash—wads of cash being dumped on a cashier's table in exchange for chips. Let's remember that the gentleman in possession of the blue cooler bag was associated with the infamous Suncity junket operator, with known links to organised crime and with whom Crown was in a formal business arrangement. Let's not forget that Crown operated two bank accounts, Southbank Investments and Riverbank Investments, which appear to have facilitated suspicious transactions for some casino patrons. And what did Crown do about the numerous red flags raised by such activities? Nothing—absolutely nothing. No wonder that the counsel assisting the inquiry, Mr Adam Bell Senior Counsel, has already said that he thinks that Crown is not a fit person to hold a licence to operate Barangaroo casino.

Helen Coonan has been on the Crown board for nine years. Helen Coonan is also the chair of the Australian Financial Complaints Authority, where she serves at the pleasure of the government. Her position in that role is clearly untenable, and the government must act to remove her. The Crown casino abject failure of corporate governance in relation to money laundering demands no less.

One of the underpinnings of the strong regulatory environment which the bill before us seeks to strengthen is the concept of continuous reporting. In fact, it is a cornerstone of corporate regulation and financial systems regulation in this country. It lies at the core of our system to ensure that wrongdoing is detected and acted upon. It requires corporates to self-report suspicious activity. It requires that proper records be kept and that relevant regulators be informed when those records indicate that something could be going amiss. How, then, can the government allow Helen Coonan to hold the chair at one of those regulators? How can she credibly enforce regulations when, in her own words, she sat on the board, and, in fact, was the chair of the very board that failed to put in place the right governance arrangements and showed, at a very minimum, ineptitude and inattention in basic matters of corporate governance?

Westpac's shareholders paid a very high price—a record fine—for the bank's record-breaking transgressions of money-laundering laws. They rightly demanded, and got, the resignation of the CEO and then the early retirement of its chairman. Crown shareholders may end up making similar demands of Helen Coonan; that's a matter for them. But the board of the Australian Financial Complaints Authority is different. It is accountable to the Australian people through the Australian government, and, for that reason, the government cannot sit on its hands and allow her to remain as the chair of AFCA.

AFCA is the banking ombudsman. It is the financial advice ombudsman. It is the insurance industry ombudsman. That means it's the regulator of last resort for Australians who are in dispute with a financial services provider. It must maintain a spotless reputation for governance or risk losing the confidence of those it seeks to serve. Helen Coonan's reputation may already be tainted by the money-laundering issues at Crown. AUSTRAC, which successfully prosecuted Westpac, has now launched an investigation into Crown over money-laundering claims. The board, which she chairs, has demonstrably failed in its basic continuous disclosure obligations and other governance requirements. That the government seeks to crack down further on money laundering is welcome. That it simultaneously allows its Liberal mate to remain at the head of a major financial regulator despite Crown's unfortunate history with money laundering can only undermine public confidence.

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