Joe Ludwig (Queensland, Australian Labor Party, Manager of Opposition Business in the Senate) Share this | Link to this | Hansard source

I rise today to speak on the government’s amendments to the Anti-Money Laundering and Counter-Terrorism Financing Act 2006, more commonly known as the AML-CTF Act. The Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2007 represents another step in the long and painful process that only last year resulted in the passage of the act itself. Once again, we see more evidence of the government’s lax approach to this critical area of Australian security. The government has tried to talk tough on protecting Australia, yet its actions let us down again. Before I begin, I would like to make clear that Labor supports this bill. In fact, it was Labor’s efforts in highlighting the delays in this process that shamed the government into action on the anti-money-laundering and counterterrorism financing front. It is Labor’s support for business that ensures we arrive at a workable model. However, here we are again trying to correct the government’s legislative drafting errors in an act that is, in fact, still largely to take effect.

It must be pointed out that all of these amendments could have been dealt with last year when we were debating the bill that became the principal act, but the Howard government insisted on shunting the bill through the parliament without it even being corrected. It is no wonder that the Howard government has become the master of red tape. It is a government that operates at only two speeds: legacy and panic. After the passage of this bill, the AML-CTF Act will accumulate another layer of unwieldy complexity. We will have an act, an amending act, a set of regulations, a set of rules, and no doubt there will be guidelines somewhere as well. The bill before us will introduce a range of technical amendments to the AML-CTF Act. As I have already indicated, the act itself was only passed finally last year after what will, I am sure, be remembered by all as one of the longest and most drawn-out legislative processes in parliamentary history—subject, I think, to the native title legislation.

The impetus for the AML-CTF Act were the recommendations of the financial action task force, more commonly referred to as FATF. FATF is essentially an international cross-governmental body which sets out international standards for financial security to fight money laundering, and it updates these from time to time. The bill’s general provisions are contained in FATF’s 40 general recommendations. Since late 2001, FATF has also developed another set of recommendations relating to counter-terrorist financing. These were released in the wake of the September 11 attacks. All up, there are 40 general recommendations and nine special recommendations representing the international standard for financial security and the prevention of money laundering and terrorist financing. Let me be perfectly clear about how important these recommendations and standards are: they are fundamental to a coordinated fight against international crime and terrorism. The previous Minister for Justice and Customs, Senator Chris Ellison, said as much in 2002 when he stated that criminals and terrorists will continue to take advantage of jurisdictions where the law enforcement and regulatory powers are the weakest.

Legislation to bring Australia into line with our international obligations was promised back in 2003. But, as I have already said, the previous minister’s actions and those of the government have not matched the rhetoric. For years, the government dithered and refused to bring legislation before parliament to bring Australia’s legislation in line with the international standards. If FATF provided the impetus, the government provided the inertia. In fact, in 2005 two international reports were released which slammed Australia’s tardy response. Firstly, the FATF country report found that under the Howard government Australia had met only 12 of the 40 general recommendations and not a single one of the nine special recommendations. Secondly, a department of the United States released a report in the same year which was also scathing of Australia’s response. Australia was labelled as a ‘major money-laundering country’ and ‘a country of primary concern’. In other words, the United States labelled the Howard government as a soft touch on money laundering and terrorist financing. The scathing international criticism of Australia had one advantage, however, because—combined with pressure from Labor—it finally started to convince the Howard government of the urgent need for reforms.

Still, the government’s response in late 2005 and through 2006 could best be described as a panic in slow motion. We saw the first raft of bandaid solutions in the Anti-Terrorism Act (No. 2) 2005. This introduced a few of the measures that were required to bring us closer to the international standards. The problem with these bandaid solutions, though, was that the Attorney-General’s Department failed to consult properly with affected industries. During the Senate committee’s inquiry, it was revealed that the government had not shown the final draft to industry. In fact, the affected industry and the government disagreed strongly on the critical question of the cost of the new arrangements. To little surprise, the industry had the better estimate of the cost. Before the bandaid solutions contained in the Anti-Terrorism Act (No. 2) 2005 had even commenced operation, the government was forced to go back and revise it. It was forced to do this because, and here I quote directly from the explanatory memorandum of the bill:

If the amendment to restrict the application of Division 3A of Part 11 of the FTR Act to ADIs is not made, then certain legitimate non-bank money remitters assert that they could be put out of business.

The government was forced to concede that their own legislation had been so poorly drafted that it would have put people out of business had it actually come into force. This is the low standard of law making to which the Howard government has declined.

We finally saw the complete legislation at the end of last year, but even at the 11th hour the government was making last-minute alterations. The explanatory memoranda were written and withdrawn and new ones were released.

Finally, I would point out that, even after half a decade of delays, international criticism and bandaid solutions piled upon bandaid solutions, the legislation that was passed by parliament last year does not even contain the full complement of the recommendations. The government is still to bring forward a second tranche of reforms to finally bring Australia into line with our international obligations. But I will not be holding my breath. Without the implementation of the full range of recommendations, you have what is at best a maginot line—that is, a wall of seemingly impregnable defences that might look threatening but can be circumnavigated with surprising ease.

George Brandis (Queensland, Liberal Party, Minister for the Arts and Sport) Share this | Link to this | Hansard source

You do not circumnavigate land walls.

Joe Ludwig (Queensland, Australian Labor Party, Manager of Opposition Business in the Senate) Share this | Link to this | Hansard source

The legislation that we have seen to date delivers only part of what is required. Senator Brandis, I see that you are here in the chamber today. I turn now to the bill before the Senate. This legislation continues the government’s piecemeal approach under which legislation is constructed in patchwork one fix at a time.

George Brandis (Queensland, Liberal Party, Minister for the Arts and Sport) Share this | Link to this | Hansard source

I am just trying to patch up your cliches.

Joe Ludwig (Queensland, Australian Labor Party, Manager of Opposition Business in the Senate) Share this | Link to this | Hansard source

Let us hope, Senator Brandis, that when you bring legislation to parliament you do not follow this outline. Before us today is the latest attempt from the government to patch up its money-laundering regime. But if you do, Senator Brandis, I will be here looking.

The bill makes a number of changes, the most significant of which I will quickly address. The substantive amendments to the bill extend the operation of the AML-CTF Act to the Australian Secret Intelligence Service, ASIS. It effectively gives ASIS the same access to AUSTRAC information that ASIO has. In Labor’s view, this is a sensible amendment which will give Australia’s chief foreign intelligence agency the same access to information that Australia’s chief domestic intelligence agency has. There does not seem to Labor to be any reason not to extend the availability of AUSTRAC’s financial intelligence. Labor is in support of the general principle that our intelligence agencies should have access, provided civil liberties are adequately protected.

In this case, ASIS is governed by the Intelligence Services Act 2001, which provides a range of safeguards and oversight mechanisms for ASIS. There is also a raft of amendments to improve the technical operation of the act. For instance, the bill will clarify that signatories to a range of types of accounts, rather than simply the holder of the account—as provided for under the current legislation—fall under the aegis of the legislation. Similarly, exemptions from certain obligations under the act are extended to merchant terminals. There appears to be a drafting error in the act because the term ‘merchant terminal’ is not defined, although we can glean from the explanatory memorandum that it is intended to refer to EFTPOS and like services, but it is not defined. I ask the minister responsible—and I am sure the advisers will take note—whether, in his summing-up, he could indicate whether ‘merchant terminals’ was intentionally meant to be read on the plain words or whether an actual definition is required, and whether the government has taken into account the possible impact of technological changes in this area.

Before I conclude, I would like to address the government’s response to a range of recommendations made by the Senate Standing Committee on Legal and Constitutional Affairs, which examined what is now the principal AML-CTF Act. The government has agreed to a number of recommendations that were made by the committee and, in some instances, has gone further. Labor welcomes these improvements. Unfortunately, a range of recommendations were not adopted by the government but should have been.

I foreshadow that Labor will, again, be moving amendments in the Senate to improve the AML-CTF Act. Firstly, I turn to recommendation 4 in the committee report. This recommendation stated that clause 6(7) be deleted from the bill. Briefly, this is a matter that has obviously been aired before. That clause is a Henry VIII clause, a clause which allows regulations to alter legislation. Clause 6(7) would allow the government, by regulation, to expand the range of products and services to which the act applies. In effect, the government would be able to expand this piece of legislation to include any financial service it wished. Indeed, this is precisely the government’s argument for its retention. Labor does not agree and believes it is unacceptable.

If there is a need to alter the legislation then the bill should be brought before parliament and the legislation should be altered in that way. The government, in its response, indicated that these provisions were necessary and gave a commitment that it would not use the power to expand the legislation to include services that were intended to be dealt with in the second tranche of the legislation. But this is beside the point.

Whether or not the government intends to expand the operation of the legislation to include tranche 2 services, it still intends to retain the power to expand the legislation to any service it wishes by executive fiat and without adequate parliamentary oversight. Labor does not believe this is acceptable, and I foreshadow that I will be moving amendments in line with the committee’s recommendations.

The committee made the further recommendation, recommendation 5, that the CEO of AUSTRAC be given the power to deregister or refuse registration to an organisation which is seeking registration as a designated remittance service. The government rejected this with the reasoning that registration did not confer any status on designated remittance providers and existed solely to locate and identify remittance providers. Again, I believe this response from the government missed the point. Quite simply, if there is a repeat offender then the CEO of AUSTRAC, as a regulator, should have the power to refuse to allow that organisation to operate as a designated service provider or to deregister it. Again, I foreshadow that I will be moving amendments in line with that recommendation.

Recommendation 1 was a recommendation by me and my Labor colleagues on the committee which went to the oversight of AUSTRAC by the Australian Commission for Law Enforcement Integrity, or ACLEI. Currently, there is no oversight by ACLEI because the government claims it is not required at this stage. This is despite AUSTRAC’s new role as a regulator. Given that AUSTRAC, for the very first time, now holds powers both as a regulator and as a law enforcement intelligence collector, to leave it without effective oversight is not acceptable. Labor will be calling on the government to rethink its position on this recommendation, and I foreshadow that I will be moving amendments in the Senate to give ACLEI oversight of AUSTRAC.

To conclude, we are yet again correcting mistakes in important national security legislation. At some point you have to ask: when will the Howard government get the legislation right? The previous Minister for Justice and Customs liked to talk about security as a work in progress, yet in a large part much of the progress seems to be fixing up the government’s own mistakes. Have no doubt: sloppy legislation is a threat to national security. We have already had parliament recalled to specifically change the drafting of a single word. It is my hope that both the new Minister for Justice and Customs and the current Attorney-General will wake up to this government’s past failings and lift its performance.

Notwithstanding the outstanding problems, as I have said in my opening, Labor will support this bill as the amendments contained within it are appropriate and ones with which we agree. In addition, as I have foreshadowed, we will move amendments to improve both the bill and the act, but I reiterate Labor’s support and commend the bill to the Senate.

Andrew Murray (WA, Australian Democrats) Share this | Link to this | Hansard source

The shadow Attorney-General has put the case very clearly with respect to the Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2007that is, the bill is still part of a process to which, regrettably, the government has had to be pushed. There are areas where the government has acted promptly and well, such as Corporations Law and laws to better advance corporate governance. But there are other areas where it has not done anything at all and, in fact, has moved backwards—for instance, political governance. In the area of anti-money laundering, the Labor Party indicated that it had put the government under considerable scrutiny with respect to its very slow progress—so too did the Democrats. In my portfolio responsibility, I argued the case many times for the advancement of counter-money laundering measures and questioned the responsible minister on the matter. This is one of those cases where we have to be thankful for the existence of vigorous foreign organisations and bodies, supported by foreign governments, which are very anxious for Australia to catch up in this area. That time line has been outlined by the shadow minister.

The second area that the shadow minister has covered successfully is that of continuing concern about the provisions within the legislation itself. I note with some approval that amendments which were previously put to the substantial bill and which failed are to be put again by Labor. These amendments will again attract the support of the Democrats because they are necessary.

I noted with mild amusement the shadow minister’s historical reference to the maginot line. I expected him to then start quoting Sun Tzu, Clauswitz or even Shaka Zulu—all of whom were quite expert on the issue of frontal versus flanking attacks. I think all three came to the conclusion that a flanking attack was often more effective than a frontal attack and that a frontal attack should only be used when the other side would be surprised by it. Maybe an analogy in politics might be apposite. I tend to see far too many frontal attacks in politics, and I would suggest flanking attacks might be as effective in politics as in war.

Returning to the bill—and moving away from an indulgence—it makes technical amendments to seven acts. Those seven acts include the substantive act, the Anti-Money Laundering and Counter-terrorism Financing Act 2006 and its companion act, the Anti-Money Laundering and Counter-Terrorism Financing (Transitional Provisions and Consequential Amendments) Act 2006, the Administrative Decisions (Judicial Review) Act, the Commonwealth Electoral Act, the Financial Transaction Reports Act, the Inspector-General of Intelligence and the Security Act and the Surveillance Devices Act. It is not an omnibus bill. It is just a sign that when you are making a series of technical amendments to a piece of legislation which has tentacles into other areas of responsibility, you are going to have to amend a number of acts.

The legislation does take into account—and the government is to be congratulated on this—concerns raised by reports of both the Senate Standing Committee on Legal and Constitutional Affairs and the Senate Standing Committee for the Scrutiny of Bills. Some of the amendments before us address concerns raised by the Democrats, Senate committees and Senate colleagues last year. In particular, the bill addresses the issue of absolute liability rather than strict liability and moves down the scale somewhat, at the request of the Scrutiny of Bills Committee, from absolute liability to strict liability provisions. Amendments also address the issue of the merits review, AUSTRAC Chief Executive Officer decisions and the right to apply to the Federal Court. Like ASIO, ASIS is also going to be made a designated agency, granting its officials access to AUSTRAC information. Further technical amendments will enable intelligence agencies to fulfil their functions under legislation and consequential technical amendments.

The amendments in the bill address the concerns of several stakeholders both in the public policy field and in the political field. What remains are concerns about how the act and the amended act will operate and how effective this legislation will be at counteracting money laundering. As I have emphasised when I have addressed this matter before, in that regard this legislation is as important to tax integrity issues and the health of our economy and society as it is to the concerns surrounding terrorism.

The other point with respect to how this bill will operate is privacy concerns—whether in the proper exercise of this policy there will be transgressions in privacy matters which we might end up regretting or which might upset members of the community. Any government needs to watch that with care and react to it with sympathy and understanding if, indeed, the legislation is found to go further in its practice than it was intended.

When introducing the bill into the House of Representatives the Attorney-General did note that the Senate Standing Committee for the Scrutiny of Bills had raised concerns about the application of absolute liability rather than strict liability to some elements of offences under many sections in the act. The Minister for Justice and Customs, a former member of that committee, did undertake to amend these sections to replace the application of absolute liability with strict liability. It is with some pleasure that I note that the new minister in that portfolio, who I congratulate on his promotion, was indeed recently a respected and valued member of the Senate scrutiny of bills committee. I look forward to as few transgressions of that committee’s reference as possible under a minister who is sensitive to those areas.

The question then is: what will be the Democrats’ attitude to this bill? Despite being cautious on privacy matters, we are nevertheless of the belief that an anti-money-laundering and counterterrorism financing act was an essential element in our criminal law and in our fight against these diseases that exist at large in international and domestic affairs. We are supportive of these amendments. We think though that regular review and regular oversight should be dedicated to this new act to ensure that its actual operation does not go further than its intention. I conclude by again indicating that it is our intention to support the Labor Party’s amendments.

Kerry Nettle (NSW, Australian Greens) Share this | Link to this | Hansard source

Australians value their privacy. They expect that if their government is to create new powers for Commonwealth agencies that will potentially violate their privacy, such changes are necessary and justified. Such an expectation is reflected in the history of government attempts to introduce a national ID card. First Labor’s Australia Card and now the Howard government’s access card have floundered after the failure of both governments to justify such intrusions into people’s human rights and privacy.

The changes outlined in the Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2007 have been characterised by the government as technical amendments that have arisen out of further consultation regarding the controversial anti-money laundering and counter-terrorist financing laws. Whilst that is true for most aspects of the bill, it is not true in one important respect—this bill will, for the first time, give Australia’s overseas spy agency, the Australian Secret Intelligence Service or ASIS, access to the personal financial information held by the Australian Transaction Reports and Analysis Centre, or AUSTRAC. The government have not justified why they believe that this is necessary. They have said virtually nothing at all about the reasons why ASIS needs this unprecedented power.

As far as we know, the government have not raised this plan in discussions regarding the first round of money laundering bills that this piece of legislation is seeking to amend. There has been no Senate inquiry into this proposed change and there has been virtually no public discussion about this particular aspect of the changes. In fact the government are seeking to make what the Australian Greens consider to be a very significant change under the guise of a technical amendment. The Greens want to know: is it a technical amendment to allow ASIS access to the financial records of many Australians? Is it a technical amendment to allow ASIS access to the financial records of many Australian businesses? Is it a technical amendment to allow ASIS to access such records in secret? Is it a technical amendment to give ASIS a substantial and powerful new means to collect information on many Australians? The answer is that this is not just a technical amendment; this is a substantial and questionable new power being given to ASIS without the necessary safeguards and without reasons having been put forward as part of public debate.

AUSTRAC is Australia’s anti-money laundering regulator and specialist financial intelligence unit. It collects a wide range of financial information and regulates a risk based reporting regime that requires the finance industry to report on their customers where they believe that there is a risk of funding terrorism or money laundering. As such, it holds information on and has access to the financial dealings of large numbers of people, businesses and organisations in Australia. The Australian Greens accept that there may be cases where it might be justified to allow access to AUSTRAC information by ASIS—for example, ASIS may be involved in disrupting a terrorist effort—however, we believe that such access should be clearly limited by legislation and mediated through the domestic security and police agencies or a judicial authority. We do not accept that ASIS, Australia’s most secret intelligence organisation, should have such wide access as this bill would provide.

It is worth recalling exactly what ASIS is, what it does—or at least what we know about what it does—and some of its history so as to understand the concerns that the Australian Greens have about this particular aspect of this legislation. ASIS’s function is stated in the Intelligence Services Act 2001. The role of ASIS is defined as being: to collect foreign intelligence, not available by other means, which may impact on Australian interests; to distribute that intelligence to the government, including key policy departments and agencies; to undertake counterintelligence activities which protect Australian interests and initiatives; and to engage other intelligence and security services overseas in Australia’s national interests. According to the government in their reports they put out about the various different intelligence agencies that exist, ASIS is not a domestic law enforcement agency—it does not have a policing role; its job is to collect overseas intelligence. Like America’s CIA and Britain’s MI6, ASIS was born at the beginning of the Cold War in 1952. Its activities are so secret that it was not even publicly acknowledged until 1977, by the Fraser government. It has only been governed by legislation since 2001. So this is an organisation that came into effect in 1952 and was only governed by legislation for the first time in 2001.

At times ASIS has been mired in controversy, firstly for its role in the bloodletting following the 1965 military coup by Suharto in Indonesia, where it was alleged to have provided lists of names to death squads, and then for its work in Chile under the Pinochet regime. Its 1983 bungled hostage exercise in Melbourne’s Hilton Hotel left guests and employees being terrorised by ASIS members wearing masks and carrying machine guns. This, of course, caused an uproar at the time. Even the hotel manager was assaulted by ASIS officers. More recently, in 1993, ASIS attracted attention when former employees claimed that it was out of control and compiling dossiers on Australian citizens. A subsequent royal commission found these claims to be substantially unproven, although the foreign minister at the time, Gareth Evans, acknowledged that some files on Australians were being kept by ASIS.

In short, ASIS has had a chequered history in the eyes of the public, and the fact that people know little about this secretive organisation means that there are lingering concerns about its accountability activities. It is certainly assumed, and this is what the government tells us, that its job is to spy on overseas governments and organisations, not to spy on Australians. This was reflected in the original charter for the organisation established by the Menzies government, which expressly required ASIS to operate ‘outside Australian territory’.

Subsection 11(1) of the Intelligence Services Act also reflects this principle when it states that the functions of ASIS are:

... to be performed only in the interests of Australia’s national security, Australia’s foreign relations or Australia's national economic well-being and only to the extent that those matters are affected by the capabilities, intentions or activities of people or organisations outside Australia.

Concern over the privacy of Australians is also reflected in section 15 of the Intelligence Services Act, which has rules to protect the privacy of Australians. This section states that the foreign minister must make rules for ASIS regarding the communication and the retention of information concerning Australians and that the minister must ensure that the privacy of Australians is preserved as far as is consistent with the agency’s proper performance. Those rules, like almost everything else about ASIS, are secret, and the Greens are therefore rightly sceptical about the extent to which they can offer the protection that they are designed to offer.

Has Minister Downer, for example, ensured that ASIS is prevented from placing Australians under surveillance in their homes, not only now but when they travel overseas? Is ASIS able to keep files on Australian residents? What protections are there for Australian businesses? We just do not know, because the information and guidelines are not in the public realm. All of my comments are based on the little information we do have in the public realm about the activities of ASIS.

But the very existence of section 15 of the Intelligence Services Act does reflect the public concern that exists about ASIS’s operations in relation to Australians on Australia soil. With that in mind, is it legitimate to give ASIS open access to AUSTRAC’s records and information? The Greens say no, and that is why I will move, when we get to the committee stage of this legislation and amendment, to remove this power from the bill.

No doubt the government will claim that there is sufficient accountability in place from the under-resourced, understaffed Inspector-General of Intelligence and Security. It will also say that ASIO already has this access, and that is absolutely correct. That is precisely the point. It is ASIO’s job to keep an eye on people in Australia; it is ASIS’s job to be our spy agency overseas. It is the AFP’s job to do the law enforcement, as the government points out in its publications. It is not ASIS’s job to do law enforcement. We have got a situation where ASIO and the AFP already have access to AUSTRAC. Law enforcement is the role of the AFP; it is explicitly outlined as not being the role of ASIS. Therefore people’s legitimate concerns, wanting to ensure that there are protections and that there is the capacity to scrutinise the financial transactions of Australians, are covered by the existing security organisations. The two I have mentioned out of 30 organisations that have access to the AUSTRAC information are covered by the existing legislation.

Why then should ASIS have access to the personal financial information of an enormous number of Australians and Australian businesses? It should be remembered that ASIS, as is proposed in this legislation, would have access to this information in secret. That is, any Australian or Australian business that had its privacy violated would not be informed about any violation of privacy. Their capacity, then, to complain to the Inspector-General of Intelligence and Security about any breaches of their privacy is at best a nice principle; it is unable to be put into practice because this legislation is specifically designed to allow these security agents in ASIS to have access to the information in secret—that is, without people knowing. They will not have the capacity to complain to the Inspector-General of Intelligence and Security because they will not know what interaction security organisations have had with them and their information.

The Greens argue that ASIS does not need this power. It was not proposed in the original piece of legislation. There is no evidence that it was raised in the Senate inquiry into the original piece of legislation or in any subsequent public comments by the government about this particular aspect of the bill. There is no evidence that they have been calling out for access to this information prior to the enactment of the legislation last year, or indeed since then. But we have a situation where the government is coming to the Senate and asking us to approve this change, this additional organisation having access to AUSTRAC records, without a rationale being put forward. It is a fair enough question to say: ‘Where is your argument? Let’s hear it.’ And I certainly would be appreciative if we were able to hear from the minister about what the argument is, because it has not been made at all to date.

I want to talk briefly about the other aspects of the bill, because the Greens support all of the other aspects of this bill, such as the removal of absolute liability offences and the capacity to review certain decisions of the AUSTRAC CEO. We believe that all the other aspects, the technical amendments, which are rightly in the bill—although we argued for the strict liability offences earlier—will go some small way to addressing the concerns regarding the operation of this whole financial reporting regime, which has been widely criticised by both the finance industry and legal and community groups during the passage of the original piece of legislation.

It is worth reviewing some of those concerns, as they underpin the view that the Greens have that this latest extension of these laws to encompass ASIS is flawed. The Greens had a number of concerns, which I articulated previously, about the original anti-money laundering and counterterrorism financing laws that were passed in December of last year. I talked at the time about the way in which they radically changed the level and the sort of information that financial institutions were collecting on their customers and the manner in which this information would be used by national security agencies and police.

I think I described the legislation at that point as being designed to require banks to spy on their customers for the government. That was how it was being described at the time that the original piece of legislation was being dealt with. The Greens accept—and I said this at that time—that some information collected by financial institutions should be made available to government agencies when it relates to criminal behaviour, including terrorism and money laundering. But what we are dealing with here, with the extension to ASIS, does not relate to law enforcement in that area. The government has been quite clear and quite explicit in the little information it has provided about ASIS that it is not a law enforcement body; it does not have a policing role.

So the genuine issue that people want to ensure is not occurring—that is, the financing of terrorist organisations—is not within the purview of what we are told ASIS does. Of course, I am basing this on the limited information that is available—that is all we have got. Even in that, the government has been very explicit in saying that it is not a law enforcement agency, it is not involved in policing, it is not involved in spying on people in Australia; it is designed to spy on people overseas. The government has quite clearly defined the role that it has.

As I have said, we are quite happy to support sensible changes to the law to address the threat of terrorism, and we have done so. As I have also said, we are happy to support the other aspects of this piece of legislation. It is just the extension to grant ASIS access to this information that we have concerns about. And we have not heard anything at all—from the government, from ASIS, in any Senate inquiry, in public debate—about why there is this requirement to list another organisation as a designated authority. There are already 30 there. They include ASIO and the AFP. Why ASIS? It is a simple question. I hope that the minister will be able to address it in his remarks.

When we were dealing with the original piece of legislation I talked about the way in which the existing terrorism laws have led to innocent people having their accounts frozen and how some communities who support independence movements overseas—for example, the Tamils or the Kurds—face criminalisation of their legitimate activities. At the time I went through a range of examples: people like the gentleman in Melbourne who owned a record store called Shining Path who had all of his assets frozen and was not able to get government agencies to allow him access to his legitimate business. It was a record store; it just happened to be called Shining Path. Because of the name, shared by a Peruvian group, his funds were frozen.

There was another example at the time that we last mentioned this legislation of an Iranian woman who runs a number of restaurants. She was transferring funds for dates or whatever she was getting in for her restaurants, and she talked about having been treated as a criminal and as though she were funding terrorism. They were legitimate business activities that had been occurring in an ongoing nature. Because of the way the legislation is designed—so that it is up to the banks to manage the risk—and in exempting the banks from anti-discrimination legislation, as was done in the original legislation, you create a situation in which it is quite legitimate for them to say: ‘You have got an ethnic name. You are sending money to Iran. We are going to freeze your assets.’

So you have this woman who is an Iranian restaurant owner trying to get her dates sent in having her assets frozen. I have raised many times, in this chamber and in other forums, the possibility of this occurring, and it is precisely what we have seen happen. The laws have enabled the two examples that I quoted at the time—the record store owner and the Iranian woman running a restaurant—to occur. These are criticisms I have raised before about how broad the definition of terrorism is and that it does allow innocent people to be caught in the web. And it does not allow us to focus on the efforts that everyone agrees that we need to be focusing on. When we throw the net too wide, these are the reasons why we create problems.

Former Justice Merkel put it very precisely when he said:

The move to granting ever-expanding coercive power to the executive arms of state and federal governments, to be exercised behind closed doors and without public scrutiny, carries with it grave risks to the democratic values we are trying to defend.

He went on to say:

One must have serious concern as to whether the political hierarchy is deserving of the kind of trust and integrity that the public are entitled to expect of them in administering that power.

The Greens say that the granting to ASIS the power to access AUSTRAC’s financial information is too great a power to be exercised behind closed doors and away from scrutiny. It is far more than a mere technical change, despite the government’s claims. There is no clear need for this power, and the government has certainly not articulated one.

ASIO and the AFP can already do this. ASIS is the overseas spy agency. It is clear from its founding charter and its current legislation that its job is to spy on overseas governments and groups, not on Australians. The Australian people have not been consulted about this change. There has not been sufficient public debate or scrutiny. The Greens will not support ASIS having these powers without such a debate. Therefore, I ask senators, when we get to the committee stage of this legislation, to support the Greens amendment to remove this change from the bill. If the government want to push ahead with this change, they can bring in specific bill that relates to this when they have had the public debate and put forward the arguments and the reasons why this extension is needed. To date, they have failed to do so and, whilst we support the rest of this bill, we are not in a position to be able to support them on that aspect of it.

Ian Macdonald (Queensland, Liberal Party) Share this | Link to this | Hansard source

I want to make a few comments on the Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2007. Before I do, I want to take the opportunity to congratulate the new Minister for Justice and Customs, Senator Johnston. I do not think there is a more able and appropriate person to take on that role following Senator Ellison’s elevation into cabinet. I know Senator Johnston, with his background in law and as a very distinguished Western Australian, will carry out these very important duties as the justice and customs minister with great skill and style.

Justice and Customs is a portfolio where there is a considerable amount of activity in keeping Australia safe and keeping our citizens safe and secure both in Australia and overseas. Customs do a fabulous job. It is a very busy part of the portfolio for the minister. I know the minister, as a Western Australian, will relish the work of the Customs marine branch, with which I had quite a lot to do during my time as fisheries minister. The Customs marine branch do a fabulous job, and I know that Senator Johnston will take a very keen interest in the great work that they do, as well as the work that Customs generally do. They perform a fabulous job right around Australia and overseas. If you have been overseas and seen how Customs operates in any other country and then you have come back to Australia and seen what a tremendous job the Australian Customs people do for ordinary tourists coming in, you feel very proud to be Australian and to be part of a government that has built this culture within the Customs Service. While I am at it, I want to pay very high regard to the work of the former minister, Senator Ellison, with whom I have had a great many dealings in the past. Senator Ellison continued to perform his duties as the justice and customs minister in a particularly able way.

I just want to make a few comments. I did not come here to take issue with Senator Nettle on the Greens’ views of these issues, although—without wanting to get into the precise and particular debate—the Greens have strange views on many of the issues that most other Australians consider essential for our safety, welfare and security. I can refer to some of the things that Senator Nettle mentioned by reference to an issue I want to briefly raise in the Senate.

Earlier this year I was privileged to be part of a delegation of the Australian parliament to the Asia-Pacific Parliamentary Forum, which was held in Moscow. That forum consists of parliamentarians from the Asia-Pacific region. Should anyone be wondering why an Asia-Pacific forum would be held in Moscow, east Russia is on the Pacific, and it was suggested that Vladivostok would not have the facilities for the conference—hence we held it in freezing cold Moscow in the depths of winter.

One of the topics for discussion there was international terrorism and international crime. It became very clear in talking to other parliamentarians from all of the countries in the Asia-Pacific region that one of the real problems confronting law enforcement and security agencies around the world was the transnational nature of crime and terrorism. Crime and terrorism only exist because they have the money to operate. Limiting the financing of terrorists and terrorism organisations and of organised crime gangs depends on trying to cut off the money supply to these organisations. The committee which I chair, the Parliamentary Joint Committee on the Australian Crime Commission, has just completed an inquiry into amphetamines and other synthetic drugs. In the course of that inquiry as well it became known to those on the committee that drugs were a major source of financing for international crime and international terrorism.

Senator Nettle asks: why is ASIS involved? I thought the second reading speech made it very clear, and I am sure the minister will also address the issue in his summing up. One of the purposes of the legislation is to allow the Director-General of ASIS to communicate AUSTRAC information to foreign intelligence agencies and agencies right around the world that are concerned with the international trafficking of money, and the arms and drugs that money can buy. They need a bit of coordination.

One thing that came out of my committee’s inquiry was the ridiculous situation in Australia where we have seven different states and territories, each with different laws and boundaries, and all the law enforcement agencies of those states and territories, and indeed the Commonwealth, have to abide by the laws that apply within these artificial lines on a map, and yet the criminals have no such constraint. The criminals can slip across the borders and conduct criminal activities in any state or in more than one state. It is very difficult for the law enforcement agencies to get criminals in one state, because they might have done some things in other states. I was appalled to hear of the difficulties the law enforcement agencies had because of the different styles of legislation in each state, the different nuances of the criminal enforcement activities and the different way courts in each state interpret the law. We give a free kick to organised crime within Australia by not having laws that are uniformly applied.

I know a lot of work has been done. Congratulations to Senator Ellison for bringing the states’ police ministers together to try and do something about that; I know a lot of good work has been done. But it seems inconceivable to me that in this day and age the states would still jealously guard particular criminal laws that are different from those of other states not five kilometres across the border, so to speak. The sooner we can take a national approach—certainly we do to money laundering—to the laws that currently constrain our law enforcement agencies, the better Australia will be. More directly aligned to this bill, we need to have that same flexibility in sharing information with agencies around the world which are, as our agencies are, engaged in the fight against terrorism and organised crime.

I think this bill before the Senate tonight attempts to make it easier for the law enforcement agencies around Australia to deal with terrorism and organised crime. It is part of an ongoing approach by the Howard government to try and ensure the safety and security of all Australians by acting in a way favourable to the law enforcement agencies not only in Australia but overseas where that overseas activity impacts on the security and safety of Australians. I commend the bill to the Senate.

Judith Troeth (Victoria, Liberal Party) Share this | Link to this | Hansard source

Before you rise to speak, Minister Johnston, I also congratulate you from the chair on your elevation to the ministry. It is very well deserved after all your hard work in the parliament since your entry.

David Johnston (WA, Liberal Party, Minister for Justice and Customs) Share this | Link to this | Hansard source

Thank you, Madam Acting Deputy President, for those very kind words. In summing up this second reading debate, I want to take up a few points before I generalise about this important bill. This is a very complex matrix of terms, provisions, clauses and approaches to what is a very versatile, robust, innovative financial system in Australia. We have some of the world’s most efficient financial agencies in the nature of banks, building societies and other financial institutions that are continually evolving modes and methods of dealing with large sums of money and moving them around the country. The object of this legislation is to accurately obtain data and analysis of what is happening with those large sums of money being moved around. We have the amendment bill of 2006 and the Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2007. The amendment bill of 2007, of course, is largely only technical in nature and has for some time been foreshadowed.

Senator Ludwig made some points with respect to the amending regulations regarding clause 6.7. The reason the legislation has what is called a Henry VIII clause is because the financial institutions which I have spoken of have disclosed a capacity to make ready and quick alterations to their processes such that they can avoid the provisions of legislation of this place. I point to cash management trusts as being a very real example of what evolved in response to previous legislative requirements and frameworks. That is not to suggest they are doing anything wrong; they simply order their affairs in an expeditious and convenient way to include a minimal amount of reporting and inconvenience. That is their wont and that is what they are very likely to do. Having the provisions as we do enables us to respond quickly to close off that avenue before a hole in the database collection methodology occurs.

Senator Ludwig also raised the Department of State’s International Narcotics Control Strategy Report. I want to make the point that all of what he said was, with some great respect to him, misconceived. The report assesses the level of risk of money laundering rather than the effectiveness of the country’s response. Given that we are a sovereign nation with a high-valued currency and a reliable reporting and electronic transfer system, the risk underlying money laundering in this country is very high. That is the point the report makes—and I think the report well makes the point. The onus upon the legislators, namely the government, is to make sure that we provide a robust, foolproof, reliable system of keeping track of what is going on with respect to the movement of large sums of money.

Turning to summarising where we are with respect to this legislation, the reforms implemented by the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 and the Anti-Money Laundering and Counter-Terrorism Financing (Transitional Provisions and Consequential Amendments) Act 2006 strike an important and appropriate balance between the government’s law enforcement and national security objectives on the one hand, which are of course a very important priority for this government, and the needs and operational reality for business on the other as well as the need to maintain a relatively low-cost, viable, workable regime for financial institutions.

This amendment bill should come as no surprise. In the speech and reply during the debate on those bills in December 2006, my friend and colleague Senator Ellison—and, of course, I endorse the remarks of Senator Ian Macdonald, as Senator Ellison did a magnificent job in the position that I now occupy—foreshadowed that he would introduce a technical amendments bill in the 2007 autumn parliamentary sittings to address the recommendations of the Senate Standing Committee for the Scrutiny of Bills and the Senate Standing Committee on Legal and Constitutional Affairs. This course was adopted, as the recommendations of those committees were made only a short time before the second reading debate in the Senate. Amendments caused by the Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2007 address some of those issues raised by these committees as well as some other relatively minor technical matters. I emphasise that this is a technical matrix of provisions that has been very carefully and thoroughly reviewed.

The opposition know the importance of the anti-money laundering legislative package in the fight against money laundering and the financing of terrorism. The opposition have acknowledged the significance of the legislation and, in debate in the House of Representatives on this amendment bill, supported amendments such as the one that will allow ASIS access to AUSTRAC information. In spite of their general agreement on the policy, the opposition have chosen to use this debate to reiterate the same criticisms raised in the debates on the Anti-Money Laundering and Counter-Terrorism Financing Bill 2006. In fact, in the House of Representatives debate on 28 February this year, the notice of motion for the amendment bill, moved by the honourable member for Brisbane, Mr Bevis, was effectively the same as the notice of motion he moved during the debate on the Anti-Money Laundering and Counter-Terrorism Financing Billin the House of Representativeson 28 November 2006.

The opposition alleges on the one hand that the process has been too slow and in the next breath that there was not enough consultation. The facts are that the government has undertaken extensive consultation, and this process has taken time. Indeed the bill and the committee’s report acknowledge the inordinate amount of consultation because, effectively, this legislation does require a substantial degree of cooperation from financial institutions. That is not to say that it does not have enforcement provisions, but the best way to go with legislation such as this—and I am sure Senator Ludwig understands this—is to have a degree of cooperation from financial institutions.

I reject the suggestion that the government has taken too long to implement the recommendations of the Financial Action Task Force on Money Laundering. These important reforms respond to increased and more sophisticated criminal and terrorist activity across a wide range of sectors delivering complex products and services. The need for thorough deliberation of these issues can be illustrated by the progress of the Financial Action Task Force on Money Laundering. Following its adoption of the revised 40 recommendations in June 2003 and the finalisation of the nine special recommendations on terrorist financing in October 2004, the FATF has moved carefully to develop interpretative notes and guidelines. The last of these interpretative notes was released in February 2006.

Given the importance and the complexity of the issues involved, the government has moved with appropriate speed to introduce comprehensive, well thought out legislation. I do emphasise that it is comprehensive and it is complex. The breadth and responsiveness of the consultation process has been widely acknowledged and applauded by affected businesses. The Senate Standing Committee on Legal and Constitutional Affairs has also acknowledged these consultation efforts. The government does not apologise for the time spent in achieving this balance and limiting the burden on Australian business. This has been time well spent. The ultimate objective will be one that hopefully generations in Australia will appreciate as we continue to maintain a very strong fight against money laundering and terrorism financing.

An important element in the success of the fight against money laundering and terrorism financing is the collaborative approach between government and business stakeholders. I thank industry for their contributions throughout the consultation process on this bill and on the Anti-Money Laundering and Counter-Terrorism Financing Act 2006. This cooperation continues as various obligations of the act are implemented and various rules under the act are finalised. The financial and gaming sectors are to be commended for their commitment to the important goal of fortifying the Australian financial sector against money launderers and those who would seek to use the Australian financial sector to fund terrorism. As I have said, it is a very internationally renowned reliable sector that provides high-value currency and efficiency. Accordingly, we must make it robust against the threat of money laundering and terrorism financing.

I thank the Senate Standing Committee on the Scrutiny of Bills and the Senate Standing Committee on Legal and Constitutional Affairs. The work of these committees was carefully considered when preparing the Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2007. I have pleasure in commending this bill to the Senate.

Debate (on motion by Senator Johnston) adjourned.