Paul Scarr (Queensland, Liberal Party, Shadow Assistant Minister for Multicultural Engagement) | Hansard source

I acknowledge at the outset Senator Whish-Wilson's kind reflection about his former staff member. That's something we should perhaps do more often in this place.

I provided extensive additional comments in relation to the inquiry. I believe that there can be more done to combat money laundering and terrorism financing. However, this is not a simple matter. It was deeply disappointing that, notwithstanding the fact that, as Senator Whish-Wilson said, these issues have been ventilated in the public domain for so long, we had such an abbreviated Senate process. I want to quote to you from the comments which were provided by the Law Council of Australia. They said:

The Bill is lengthy and complex, substantially amending legislation which already fits this description. The Bill was presented without an exposure draft and with a limited timeframe in which to analyse its impact on affected persons. It contains proposals that were not foreshadowed in the May 2024 consultation papers, including the precise definitions of 'Designated Services' … and the compulsory notice and examination powers …

In the time available, it has not been possible to make a full assessment of the impact of the Bill. It is likely that matters will arise that have not been contemplated at this point. Nevertheless, the Law Council makes this Submission to facilitate ongoing constructive dialogue.

Why is it, as Senator Whish-Wilson said, that, despite this matter being ventilated in the public domain for so long, we have such an abbreviated process for interested stakeholders, those who have been most impacted by these changes, to actually make submissions and to digest what is an extremely complicated piece of legislation? This is a point which has arisen in relation to multiple pieces of legislation during this term. The Law Council of Australia has made a similar point with respect to Senate inquiries on no less than six occasions—six occasions on bills that have come before the committee that I serve on as deputy chair and which Senator Shoebridge serves on. On no less than six occasions, they've raised the same concern. It happens again and again, and it is completely unacceptable.

I want to take on board one of the comments Senator Whish-Wilson made in relation to real estate transactions. A key concern of stakeholders in relation to, for example, a real estate transaction is typically you have a vendor and you have a purchaser. The vendor in most circumstances will have a bank. The purchaser in most circumstances will have a bank. The vendor in most cases will have a firm of lawyers acting for them. The purchaser will have a firm of lawyers acting for them. The real estate agent is the agent, in most cases, of the vendor, but the real estate agent can also be a buyer's agent. In that situation you have six entities involved in the transaction—six advisers, some of them gatekeepers, some of them banks. The legitimate concern raised by so many stakeholders was: 'Please do not force bank 1 to do the same anti-money-laundering checks, bank 2 for the purchasers to do the same checks, solicitors for the vendor to do the same checks, solicitors for the purchaser to do the same checks, the vendor's real estate agent to do the same checks and for the buyer's agent to do the same checks. That would just be lunacy.'

There is an issue with respect to costs. It may well be, as Senator Whish-Wilson says, that the gatekeepers were aware of the cost implications for some time, but that doesn't address the issue of the cost implications. There are substantial cost implications. In my view, from interaction with a number of stakeholders, that there have been positive signs that AUSTRAC is looking at how to make this regime as user friendly as possible and to minimise duplication. It would be madness that, in a typical real estate transaction as I outlined that bank 1 acting for the vendor has to go through these processes, the solicitors acting for the vendors have to go through these processes, the real estate agent acting for the vendor has to go through these processes and the exact same occurs on the purchaser's side.

There were strong submissions made, including by the Real Estate Institute of Queensland, in relation to the technology platform which is mobilised by PEXA and which accommodates the vast majority of conveyances that occur in this country on an electronic basis. It's looking to increase the proportion of transactions covered from approximately 90 per cent to 95 per cent. We haven't seen the guidelines—we don't know what the guidelines are going to say—but there were strong submissions made that accommodation should be provided to leverage off technology to minimise the cost. It's not a question of all or nothing; it's a question of leveraging technology to manage the cost so you don't have a situation where a politically exposed individual, perhaps from our Pacific region—and they exist—who has gone through AML checks at their bank has to go through the same checks with their solicitor and the same checks with respect to their real estate agent—and that has to occur on both sides of the transaction. That would be madness.

I dearly hope that, when the guidelines are released, AUSTRAC demonstrates that it has listened to the stakeholders in terms of their positive recommendations and suggestions as to how to minimise duplication. We've seen that in New Zealand. At the moment there are 6,000 applications from small businesses to be exempted from the AML scheme in New Zealand. We should learn. One of the benefits—there is a benefit of the delay—is to learn from the experience of other jurisdictions. We can do that—we can learn from the experience in New Zealand and we can learn from the experience in the United Kingdom—and we should do that.

I proposed in my recommendations that there be more transparency around the creation of the AML rules. These are the key rules that will apply to the gatekeeper professions. I would like to see that as a very public process. I think we want to see that done in an open and transparent manner. It doesn't have to be in the legislation. AUSTRAC could decide to do this, and I suggest to them that they do—that they publish exposure drafts of the guidelines, that they publish submissions on the guidelines made by the gatekeepers and others impacted by these guidelines and that they then tell us how they get from those exposure drafts to the final guidelines. We will be watching.

There are small businesses—and, potentially, sole practitioners—who are out there trying to make ends meet and trying to provide a quality service to their clients, in particular in regional and country Australia. This will be an added burden. Again, that's indisputable. This will be an added burden, and we've got to make it as simple as possible for the relevant obligations to be met, especially by small business. That is one of my primary concerns.

The other issue I've got, to be frank, is in relation to the application of suspicious matter reporting upon the legal profession. I have material issues with respect to the legal profession—lawyers, as officers of the court—having to meet a suspicious matter reporting regime. In my view—and I say this as someone of the legal profession in a previous life—there is a real issue of lawyers managing their ethical obligations as officers of the court and also being subject to the regime under the legislation, and I haven't received any satisfactory answer to that. The Supreme Court of Canada was so concerned about it that they struck down the legislation in Canada, as it applied to lawyers generally. That's a common law jurisdiction with similar traditions to what we have in Australia with respect to the legal profession.

I note Senator Shoebridge's attempt to, with the benefit of the New South Wales Bar Association, try to address the issue, but there are real ethical concerns. It wouldn't surprise me at all if, ultimately, there is a High Court challenge to the application, in particular, of those provisions to lawyers. There was enough evidence received by the committee, including from former High Court justice Nettle, in relation to the issue to cause considerable concern that the suspicious matter reporting obligations being imposed upon the legal profession may well breach some constitutional provisions with respect to the separation of powers.

The last point I'll make in relation to this matter is that I would like to see more transparency in relation to the engagement between the government and the Financial Action Task Force. I would like to know whether or not representations are being made to the Financial Action Task Force, whether or not there's a discussion at the Financial Action Task Force with respect to these legitimate issues around the cost implications for sole practitioners and micro small businesses and whether or not the legitimate concerns, especially those of common law countries with respect to their traditions in relation to the fact that members of the legal profession are officers of the court, are being ventilated in those taskforce discussions.

I'm not satisfied that they are, because there seems to be a lack of understanding in terms of the material which is produced by the Financial Action Task Force of that concern with respect to the competition, the conflict between lawyers' ethical obligations and also their obligations under AML regimes, in particular with respect to suspicious matter reporting. From my perspective, there also doesn't seem to be sufficient acknowledgement in relation to the cost burden which is imposed upon not even small businesses but micro sole practitioner businesses, be they accountants, lawyers or real estate agents. With that, I will leave my comments there and simply note that, due to an estimates spillover, I unfortunately will not be able to be here for what comes next. I do wish I had the opportunity to be here.