Thursday, 10 December 2020
Crimes Legislation Amendment (Economic Disruption) Bill 2020; Second Reading
I am pleased to have the opportunity to rise to speak and make a contribution to debate on this very significant piece of legislation, the Crimes Legislation Amendment (Economic Disruption) Bill 2020. I flag that I will be putting before the House a second reading amendment. I want to acknowledge that this is obviously a bill that exists in a much wider context. Indeed, legislation covering similar ground came before the House recently as part of a package of reforms which go back quite some time. These reforms are a part of Australia's engagement with very significant international efforts to combat money laundering, recognising its awful consequences domestically, in terms of criminal activity and terrorism financing.
The amendments in this bill adapt and update money-laundering offences to combat the modern networks, the evolving networks. I guess this is one of those areas where governments here and governments internationally have to be extremely agile in responding to a constantly evolving series of threats and challenges. Those modern money-laundering networks need to have a modern and robust legislative response if we are to engage with the great ill that they do to our society. The changes also go to asset confiscation laws and would enable us to strengthen those undercover operations which are so necessary. I will go through some of these reforms in more detailed remarks, but I just wanted to acknowledge a couple of things first, if I may.
Firstly, the nature of legislation such as this is that it often involves some quite technical provisions and it shows the importance of due consideration to reforms—agreed reforms, bipartisan reforms—ensuring that they are entirely fit for purpose, particularly when there are some additional powers being conferred, as is the case here. I am grateful for the work of all members of the Senate's Legal and Constitutional Affairs Legislation Committee for applying their scrutiny to these provisions, as they have done to similar provisions of related legislation. I found two submissions of particular interest, and I want to raise them in my contributions before the House.
I want to acknowledge the longstanding work of the Synod of Victoria and Tasmania of the Uniting Church in Australia, who have had a deep interest in this matter and many other issues of social and economic justice in Australia. The submission notes the longstanding interest they have had in the need to reduce money laundering in Australia and, of course, globally. They have obviously made a substantial contribution to advancing that debate here. They note:
Corruption and money laundering do real harm to people, holds back development and undermines confidence in government and public institutions.
The synod resolved to prosecute the case in that context. That's a call that I am keen to respond to in this place. The submission also notes:
Successive Australian Governments—
I know that this is a deeply bipartisan concern—
have signed up to international standards committing to assist with global efforts to recover stolen assets shifted across borders.
The commitments that we have made in these forums mean that this parliament needs to put in place laws that are fit for purpose to give effect to those commitments and give effect to international arrangements, such as the UN Convention against Corruption, to which Australia is a party, and the 2015 Addis Ababa Action Agenda on Financing for Development.
These are matters which are also traversed in the Sustainable Development Goals and the work that has been done by the High-Level Panel on International Financial Accountability, Transparency and Integrity for Achieving the 2030 Agenda, which has been looking at these issues. They have noted in an interim report that was released only this year:
Cooperation on confiscating and returning the proceeds of corruption is far from effective. The process remains extremely burdensome and lengthy for countries that saw their resources drained—especially those that are seeking to recover assets stolen by formerly entrenched kleptocratic rulers.
This is part of the challenge we are responding to. We have to acknowledge that Australia is home to stolen assets that have been shifted across borders. The Australian Federal Police reported they have restrained more than $250 million in criminal assets in courts across Australia and overseas in the last financial year—assets that make many forms, which again goes to the complexity of the challenge. I put these matters before the House before turning to detail because I think it's very easy to look at the technical provisions of this bill without having regard to the context.
The other submission that I want to refer members to is that of the Law Council of Australia. Their contribution is a very helpful one going to the details of the bill before the House. I think it is significant to look at the broad position that they have taken. They first recognised the nature of the problem in quite similar terms to the Senate but went on to acknowledge:
… the significant difficulties identified in the Explanatory Memorandum to the Bill in relation to the investigation and enforcement of money laundering offences in contemporary circumstances.
What I was talking about earlier is the constantly evolving and complex environment. The submission goes on to say:
These difficulties are said to have arisen from the diffuse, opaque and dynamic nature of the legal, financial and administrative arrangements that organised crime syndicates have adopted to conceal the criminal origins of the funds and evade tracing, particularly by establishing complex distribution chains, and tightly limiting the information that is known to each person in a chain about the origins and ultimate destinations of funds. It has also been observed that serious and organised crime groups have significantly diversified their criminal activities.
This highlights again the importance of vigilance in our legislative initiatives as well as in our enforcement activities.
I'll turn now to the provisions of the bill, and I should be clear and say this is legislation which Labor supports as Labor supports the government's efforts to deal with the objectives underpinning this legislation. The explanatory memorandum to the bill notes that the proposed amendments, which I'll turn to in a moment, would increase the pressure on the growing strength of transnational, serious and organised crime groups by targeting the financial benefits they seek to gain by reason of their illicit activities. This is of course a goal that we share with members opposite and indeed which is shared across the entirety of the Australian community. Our challenge is to make sure that this goal is advanced through this legislation and, more broadly, by closer attention on the part of the government to our international efforts to deal with these issues—and I will be touching on these matters in the course of my contribution.
The bill has seven schedules and would propose to amend the Crimes Act 1914, the Criminal Code Act 1995, the COAG Reform Fund 2008 and the Proceeds of Crime Act 2002 to do the following: update Commonwealth money-laundering offences to address the behaviour of modern money-laundering networks; remove unnecessary obstacles to securing convictions and introduce new sentencing thresholds; clarify that the obligations imposed on investigating officials under part 1C of the Crimes Act do not apply to undercover operatives; ensure that buy-back orders under the Proceeds of Crime Act cannot be used by criminal suspects and their associates to buy back property forfeited to the Commonwealth or delay Proceeds of Crime Act proceedings; clarify that the Proceeds of Crime Act permits courts to make orders confiscating the value of a debt loss or liability that has been avoided, deferred or reduced through criminal offending; clarify the operation of the Proceeds of Crime Act in relation to the restraint and confiscation of property located overseas; strengthen information-gathering powers under the Proceeds of Crime Act by increasing penalties for noncompliance and clarifying the circumstances in which information gathered under these powers can be disclosed and used; and, lastly, expand the official trustee and bankruptcies powers to deal with property, gather information and recover costs under that act to allow the official trustee to discharge its functions in a more cost-effective manner.
While this bill has significant merits, we note that the Morrison government has been very slow to progress wider anti-money-laundering and counterterrorism financing reforms. Australia remains years behind comparable countries when it comes to implementing anti-money-laundering and counterterrorism financing reforms and will still not have responded to all the criticisms made by the Financial Action Task Force in its mutual evaluation report on our regime from 2015—five years ago. I touched on this in some detail in my contribution to related legislation in the parliament only a few days ago, but this criticism stands and it is very significant. While these objectives are shared, there is more to be done. Accordingly, 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:
(a)Australia has still not implemented all of the 2016 recommendations from the Report on the Statutory Review of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 and associated rules and regulations;
(b)other international jurisdictions are already moving ahead of Australia with stronger anti-money laundering and counter-terrorism financing protections;
(c)AUSTRAC warned the Government in 2017 of significant regulatory gaps that raised significant money-laundering and counter-terrorism financing risks for casino junket operations, and the Government did nothing; and
(2)calls on the Government to ensure Australia is not regarded as a soft-touch for money launderers or terrorism financiers".
This second reading amendment is important because it shows in this area, as in so many other areas, the gap between the rhetorical position of this government and the substantive action that underlines it. My friend the member for Fraser has done very significant work in this area. I look forward to hearing his contribution to this debate, because he has warned, in this place and outside, about these issues for some time, eloquently and effectively. It's time that his consideration was matched by urgency of action by this government.
We made commitments some years ago which are yet to be enacted. That's not good enough. That's not good enough in any respect but particularly so when we think about the risk of money laundering and terrorism financing. Criminals and terrorists both seek to stay one step in front of the law. If the law fails to evolve as we've agreed to, that is obviously much easier for them. As we fall out of step with comparative jurisdictions, it seems very obvious to me the incentive that that provides to undesirable elements to locate their activities here. That is something we have to respond to. We have, of course, heard some awful stories, highlighted by the member for Fraser and others, in junket casino operations, which require more urgent action. Again, these are not problems that exist in Australia alone. They are global problems. They threaten our national security and the integrity of Australia's financial system. I can't put it more clearly than that.
The last thing any country wants is to become a soft touch for money launderers or terrorism financers. I think I can speak for every member in this House in setting out that aspiration as a proud Australian. That's why our framework must continue to evolve. It must be fit for purpose, otherwise we will become a weak link in the global financial system and a soft touch for organised criminals seeking to launder the proceeds of their crimes.
The world's financial watchdog in this area, the Financial Action Task Force, has expressed serious concerns about our framework and this government's failure to implement reforms not just according to the Financial Action Task Force timetable but that were adopted by this government. The consequences are apparent and serious. AUSTRAC, this government's own regulator, gave these risky casino junket operations a tick of approval only three years ago. Since that time, tens of billions of dollars have poured into Australia through these channels, but there has been no proactive action on the part of this government to close these gaps, which were exposed in 2017.
Only because of the work of journalists such as Nick McKenzie, and later the New South Wales government's casino inquiry, has widespread money laundering and terrorism financing been exposed. Labor had to fight to get AUSTRAC to get to release, in full, its 2017 report into the casino junkets. Initially AUSTRAC would only release a heavily redacted report. Again, as with the delay, this is not good enough. It was only after Labor senators moved an order for the production of documents, which forced the government to release this document, that we found out AUSTRAC warned the government that there were major gaps. Having said that, Labor support the bill and of course welcome every effort on the part of this government to improve our anti-money-laundering and counterterrorism financing framework with this legislation or otherwise. But this legislation comes more than four years after the then Minister for Justice tabled the Report on the statutory review of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 and associated rules and regulations, which first called for these changes in March 2016. We do call on the Morrison government to take anti-money-laundering and counterterrorism financing laws seriously. Getting this framework right is too important to get wrong. I commend this bill to the House.
The original question was that this bill be now read a second time. To this the member for Scullin has moved as an amendment that all words after 'that' be omitted with a view to substituting other words. If it suits the House, I will state the question in the form that the words proposed to be omitted stand part of the question.
I rise to strongly support the arguments so clearly laid out by the member for Scullin. This is a bill that we support, but I will say at the same time that it is a bill that is so narrow in its scope, so limited in its ambition, that we need to use this time that we have to consider this bill to point out that this government should be doing much more. Indeed, as I will point out during my contribution, statements from those in this government years ago reinforce how tardy this government has been in undertaking reform in such an important area.
As the member for Scullin pointed out so clearly, this is a very technical area; it is an area where it is possible to get lost in the weeds—the weeds of banking regulations, the weeds of payment systems. But what we always need to draw ourselves back to is the fact that this is not a victimless crime; this is not just about bits and bytes flowing around the world; it's not just about dollars being transmitted between one person and another, under regulators' eyes. This is about money laundering as an integral aspect of crime; it is about money laundering as an integral aspect of fraud, terrorism, human trafficking, and conveying the ill-gotten assets of totalitarian regimes. We talk often in this place about the importance of proper regulation when it comes to terrorism. We talk of fraud and the way we react internationally with regimes that don't respect human rights. We talk about all of these first-order issues but it means nothing if we don't at the same time regulate appropriately the ways in which these activities are funded or the ways in which the proceeds of these activities are distributed. It is absolutely critical that we get this right.
This bill, as I said, is a useful step forward; but it is a tiny step forward—at a time when anti-money-laundering, in its scale and sophistication, is evolving so rapidly. By some estimates—by the UN, by Ernst & Young and many other entities—global money laundering is now worth more than US$1 trillion. As I said, that US$1 trillion isn't just a number to put out there; it's a number that underpins a range of activities that are dangerous to our national interest and involve significant harm to vulnerable people.
As the member for Scullin pointed out, this government has missed so many deadlines since 2013. The then minister for justice said in September 2016 that the Turnbull government would be closely consulting on regulation of tranche 2 entities. In 2017 he said a cost-benefit analysis for extending the AML/CTF regulation was well advanced. And then he said 'it is well progressed and will be completed by July this year'—July 2017. Clearly, that didn't happen. The previous member for Higgins, when she was minister for revenue and financial services, said 'the tranche 2 cost-benefit analysis has been completed in 2017 and is being considered by the government'. That was three years ago. As the member for Scullin indicated, this is in response to a review commissioned by this government and it is also a response to numerous pieces of analysis undertaken by the Financial Action Task Force and other international bodies which point to Australia as being a laggard in this area. So by the government's own comments on its performance it is years behind schedule—and a bill like the one we are discussing today is simply not good enough.
Let's look at the OECD. The OECD said in 2019 that Australia's real estate sector, which is very attractive to foreign investors, was at significant risk from money laundering. We have had a number of instances of the media, regulators and other entities pointing to dubious transactions. Money laundering occurs in the most sophisticated ways but we in Australia, given the lack of comprehensiveness of our regulatory regime, are also exposed in a number of sectors to the old-fashioned brown paper bag of money as well. The OECD lines up with the Financial Action Task Force. The IMF says recent high-profile money-laundering cases have pointed to weaknesses in Australia's AML/CTF regime. This is absolutely critical. Money laundering is now very much an international phenomenon. It is absolutely critical that Australia does not become the weakest link, that Australia does not become a magnet for laundered money, a place where inappropriate activities that punish vulnerable people and are against our national interest are funded by international flows of money. That is a serious risk this government is taking far too long to deal with.
As the member for Scullin pointed out, we need only look at a number of very high-profile cases in recent years. The Crown junkets are a classic example of where this government is not keeping up with high-risk activities that are occurring under its nose. Indeed, it took New South Wales government investigations to turn a spotlight on this for there to be real action. AUSTRAC, the government's own regulator, gave a number of these risky casino junket operations a tick of approval three years ago, and it was only fighting for unredacted documents that demonstrated that the risk that these junkets posed was actually better known at the time than was admitted. It is a material risk that we need to better deal with. The full report made it plain that AUSTRAC and this government knew about those risks and took no action. As I said, it's disturbing that a New South Wales casino inquiry has been necessary to bring a number of these systemic problems into the light of day.
We also, of course, have Westpac, with 23 million breaches and $11 billion in suspicious transactions, with a number of those transactions relating to child abuse. Again, that reinforces the fact that this is not just about dollars swishing around the globe; this is very much not a victimless crime. In so many instances of AML, we can point directly to money being used for inappropriate activities or money flowing from inappropriate activities. We also had the Commonwealth Bank, which reported 53,000 suspicious activities at high-value ATMs. This is a bill that we will support, but so much more needs to be done, something that we have pointed out on numerous occasions. We look forward to seeing much more substantial activity in the future.
I thank colleagues in the House for their contribution to the debate. Combating transnational serious and organised crime groups is a key priority for the government. These groups eat away at the heart of our society, mercilessly pursuing profit at the expense of the health, prosperity and safety of ordinary Australians. The Crimes Legislation Amendment (Economic Disruption) Bill 2020 takes the profit out of crime by strengthening money-laundering offences, criminal asset confiscation and controlled operations, ensuring that law enforcement has appropriate powers to cut off the lifeblood of organised crime. I will shortly seek to table an addendum to the explanatory memorandum in response to comments raised by the Senate Standing Committee for the Scrutiny of Bills. I commend the bill to the House.
The original question was that this bill be now read a second time. To this the honourable member for Scullin has moved as an amendment that all words after 'That' be omitted with a view to substituting other words. The immediate question is that the words proposed to be omitted stand part of the question.
Question agreed to.
Original question agreed to.
Bill read a second time.
Message from the Governor-General recommending appropriation announced.