Senate debates

Thursday, 10 December 2020


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

9:44 am

Photo of Kimberley KitchingKimberley Kitching (Victoria, Australian Labor Party, Shadow Assistant Minister for Government Accountability) Share this | | Hansard source

Money laundering and terrorism financing are not just problems for Australia; they are global problems. They threaten Australia's national security and the integrity of Australia's financial system. This is why Labor is supporting the Anti-Money Laundering and Counter-Terrorism Financing and Other Legislation Amendment Bill 2019. It implements a second phase of reforms arising from the recommendations of the Report on the statutory review of the anti-money laundering and counter-terrorism financing act 2006 and associated rules and regulation, tabled in parliament on 29 April 2016. The bill will also address some of the deficiencies identified by the Financial Action Task Force in its Mutual evaluation report on Australia's anti-money-laundering and counterterrorism-financing regime in 2015.

It is crucial to note, however, that the bill does not address all these deficiencies. Australia's anti-money-laundering and counterterrorism-financing framework will remain noncompliant or only partially compliant with many of the recommendations made by the Financial Action Task Force in its 2015 Mutual evaluation report. Labor has consistently called for this government to ensure Australia's anti-money-laundering and counterterrorism-financing framework continues to evolve. Labor is concerned about the slow pace of reform by the Morrison government to improve Australia's ability to combat money laundering and terrorism financing. It seems quite unusual that the Minister for Home Affairs seems to be so uninterested in cutting terrorists off from access to their money, which is what strengthening Australia's financial crime legislation would do. Indeed, we have seen over the past few months, via the New South Wales casino inquiry, just how large the gaps are in Australia's AML/CTF framework. Through the New South Wales inquiry, we have heard allegations of widespread money laundering and terrorism financing taking place in casinos through junket operations. These money-laundering and terrorism offences have been taking place for years.

The government knew all about the risks from casino junkets because Australia financial crime watchdog, AUSTRAC, told them about the risks. In 2017, AUSTRAC warned the government that compliance by casinos appeared to be generally more with the letter than the spirit of the law, and that casinos used these technicalities to absolve themselves of conducting robust due diligence in relation to the source of the funds presented to them. Of greatest concern, however, is that AUSTRAC told the government that the current laws were not fit for purpose. There is a limited extent to which state based regulation could be said to mitigate the gaps in AUSTRAC's regulation of junkets. What has this government done in response? Nothing. This government must do more. Australia cannot become a weak link in the global financial system and a soft touch for organised criminals around the world seeking to launder the proceeds of crime.

I will also say that Labor has considered the Greens amendment. While we support the intent of the additional designated services proposed by the Greens, Labor does not believe this is the right way to achieve considered law reform. We are concerned about the unintended consequences of this amendment and want to make sure our counterterrorism-financing laws make it harder, not easier, for money launderers or terrorist financiers.

I would like to conclude my remarks with these thoughts:

Money is the lifeblood and motivation behind organised crime and the ability to prevent money-laundering and detect the flow of the proceeds of crime and terrorism funding is an essential part of deterring and disrupting serious crime and terrorist activity.

The emergence of new technologies and faster and more efficient ways to move money around the world means that international cooperation between financial intelligence units has never been more important.

These are powerful words. Commanding. Forceful. Sadly, they're only words. They are the rhetorical and empty words from the man who's responsible for anti-money-laundering and counterterrorism financing in this country, the Minister for Home Affairs.

Since becoming minister, Mr Dutton has barely stepped up to the plate to fight money laundering and terrorism financing. Of course, he's not the first coalition minister to not deliver the reforms Australia needs. Since 2013, the coalition has repeatedly missed its own anti-money-laundering and counterterrorism-financing reform timetable. Australians are becoming more and more accustomed to this kind of governing. This is government Scott Morrison style. He's a Prime Minister who loves making announcements but doesn't deliver. Australians need a government that delivers. It's time for the Prime Minister to deliver on real anti-money-laundering and counterterrorism-financing reform.

9:49 am

Photo of Nick McKimNick McKim (Tasmania, Australian Greens) Share this | | Hansard source

The Anti-Money Laundering and Counter-Terrorism Financing and Other Legislation Amendment Bill 2019 makes sensible and progressive reforms to Australia's anti-money-laundering and counterterrorism regime, and the Greens will be supporting this legislation.

However, this bill is quite remarkable. It's remarkable for what is not in it rather than for what is in it. Once again, what is not in this bill is an expansion of the scope of Australia's anti-money-laundering laws to include real estate agents, accountants and lawyers, the gatekeepers, as providers of designated services and to require those professions to report to AUSTRAC. These are the fabled tranche 2 reforms, promised right back in history and lost in the mists of time in 2006 but still, 14 years later, to be brought to this parliament. LNP governments and ALP governments have failed in their duty to bring these fabled tranche 2 reforms into this parliament so we can crack down on terrorism financing and on the international crime syndicates against whom Australians are bidding for homes at auction at the moment and with whom they are competing for properties in an already overheated property market that is pricing young people out of the great Australian dream of owning their own home. Part of the reason that so many people can't afford their own home in this country is that the international crime syndicates are buying them out from under them, using their deep pockets to outbid them at auction and deny them their dream of owning their own home.

This is a gaping hole in the system that is meant to protect Australia and the world against money laundering and terrorism financing. Australia is now one of only six countries in the world not to have included the gatekeepers within the scope of anti-money-laundering and counterterrorism-financing laws. We are alongside such luminaries as the United States, China, Madagascar, Mauritius and Mongolia. The failure by Australia and this handful of other countries to include these gatekeepers is the weak link in the global fight against money laundering and terrorism financing, particularly money laundering through the real estate sector. As former AFP officer John Chevis recently told 60 Minutes, 'Everyone in the world who is involved in anti-money-laundering and counterterrorism financing knows that lawyers, real estate agents and accountants are well used by people who have illicit wealth to transfer.' AUSTRAC estimates that $1 billion in suspicious transactions flowed through the Australian property market from just one country, China, in just one year, 2016, and you can bet your bottom dollar it's a lot more now. Yet this government—as we've just heard, facilitated by the Labor Party—once again is failing to do what needs to be done to stop dirty money being laundered through the Australian real estate sector.

I can only conclude that the major parties in this place are okay with prospective homeowners having to bid against terrorists and international crime syndicates at auction. I can only conclude that this government's more interested in appeasing those in the property industry who donate so handsomely and who benefit from dirty money going into real estate than it is in protecting Australia's integrity and reputation. We can only conclude that this government is happy to signal to the kleptocrats and dictators of the world that, if they want a safe place to park their ill-gotten gains, Australia is open for business, because it's not as if the major parties don't know about this problem and it is not as if they have not been warned.

The Financial Action Task Force is the world's standard-setting body for anti-money laundering and counterterrorism financing, and do you know what? Australia is a member. In the Financial Action Task Force's 2015 mutual evaluation report, they said:

Australia is seen as an attractive destination for foreign proceeds, particularly corruption-related proceeds flowing into real estate, from the Asia-Pacific region.

In other words, if you're from this corner of the world and you're looking for somewhere to launder your money, Australian real estate is top of the list.

Of course, the Financial Action Task Force recommended in 2015 that real estate agents, accountants and lawyers be brought within the scope of the act. What have we had from this government? Deafening silence. Now, it's interesting, isn't it? You hear a lot about terrorism from this government. You hear a lot about the need to crack down on terrorists from this government. Every time they need a 'look over here' distraction, they roll out Minister Dutton and frighten Australians about terrorists so they can take away our country's freedoms and our country's liberties. But what do you get when you propose cracking down on terrorism financing, when you propose trying to take a bit of the heat out of the massively overheated property market in this country so more Australians have an opportunity to buy a home? What do you get from the government? Crickets—absolutely nothing. In 2018, the Financial Action Task Force follow-up report noted Australia was still not compliant with international standards. Again, crickets from the government. Interestingly, the Financial Action Force was due to arrive in Australia last summer to begin a new round of evaluations. They never came. Why didn't they come? There still hasn't been an explanation from government.

It's not just the Financial Action Task Force; there's been a plethora of other people calling on the government to plug this dirty hole in this country where the dirty money flows. In 2017, the OECD recommended that Australia address the risk that the real estate sector could be used to launder the proceeds of foreign bribery. In 2019, the IMF called for real estate agents, accountants and lawyers to be listed as providers of designated services. And earlier this year the Tax Justice Network said that Australia is undoubtedly a host of significant quantities of illicit drug funds from outside the country. Even the banks want this fixed. Here's the Australian Banking Association in 2017:

The ABA recommends progressing the Tranche 2 reforms as a priority. It is vital that Australia closes the current gaps in the money laundering/terrorism financing regime.

I tell you what: when the government's lagging behind the Australian banks on money laundering, my word you know something rotten is going on in this country. This is a government of its mates, by its mates, for its mates, and this Prime Minister is the Property Council's Prime Minister.

The failure to include lawyers, accountants and real estate agents within the scope of anti-money laundering laws has turned Australian property into the washing machine of the Asia-Pacific, and that is why the Greens will be moving an amendment to this legislation which would require the government to introduce into this parliament by 1 July next year an amendment to the Anti-Money Laundering and Counter-Terrorism Financing Act to expand the scope of the act such that lawyers, conveyancers, accountants, high-value dealers, real estate agents and trust and company service providers are providers of designated services and are subsequently reporting entities.

The Australian Labor Party have just got up and, with a small caveat, have made effectively the same speech I made, wringing their hands about how long it's taken to bring in these fabled tranche 2 reforms. Yet Senator Kitching then got up and said that, even though they agreed that these reforms should be brought in, they weren't going to support the Greens amendment which would actually require these reforms to be brought in within six months.

Let's make no mistake about it, the Australian Labor Party gets plenty of donations from the property sector as well. Here we go again—dirty money buying outcomes in this parliament from the major parties and, ironically, on legislation that's supposed to be cracking down on dirty money, cracking down on money laundering. Who can forget Mr Bowen before the last election grandstanding in the Australian media, promising that Labor would introduce these reforms and saying how terrible it was that the Liberal-National party haven't done it. The first chance the Labor Party get to put their money where their mouth is they squib. What actually is the point of the Labor Party in this place? What is the point of them? The refugee-torturing, neoliberal, coal-hugging, strip-mining-our-forests party—

Photo of Kimberley KitchingKimberley Kitching (Victoria, Australian Labor Party, Shadow Assistant Minister for Government Accountability) Share this | | Hansard source

Mr President, I have a point of order. I'm loath to interact with Senator McKim on this, but I do think that that is a breach of standing order 193(3).

Photo of Scott RyanScott Ryan (President) Share this | | Hansard source

I didn't hear anything personal in nature, Senator Kitching. Despite insults being objectionable, when they're directed collectively they are not necessarily a personal reflection—as long as the language is not unparliamentary.

Photo of Nick McKimNick McKim (Tasmania, Australian Greens) Share this | | Hansard source

I stand by that description of the Labor Party. I repeat: just what is the point? Seriously, there is no argument for the Labor Party not to support the Greens amendment. I'll make a prediction here. This amendment will fail for only one reason today, and that is because the Labor Party are not going to support it. If the Labor Party had supported our—

Senator Cash interjecting

I look forward to the government supporting our amendment, Senator Cash. I will congratulate you if you get up and say that you are going to support it. At the moment I am not talking about you, but you can place your position on the record and I'll respond to that in due course. I stand to be corrected, but I think it's unlikely that the government will support our amendment. If that is the case then it will fail for one reason and one reason only, and that is because the Labor Party have squibbed. Why have they squibbed? Because they will look after their donors in the property industry as well.

I say to the Labor Party: by failing to support the Greens amendment this morning you will be placing the interests of international crime syndicates and the financiers of terrorism around the world ahead of the interests of ordinary Australians who want to buy an affordable home for themselves and their families. That is what you are doing today by indicating that you will not support it.

On your weaselly, pathetic excuse, Senator Kitching, I say: you talk about process and about needing to make sure that things are done carefully, but it has been 14 years. How much longer do you need? It has been 14 years since these fabled reforms were promised. As I said, they have been lost in the mists of time. Yet, even though we have done the responsible thing in our amendment and offered a window of over six months to the government to do the work and the consultations necessary and bring it into this place, that's still not good enough for the Labor Party. What even is the point of them?

We're obviously very disappointed that Labor is not going to support our amendment. I hope that the government will. We'll wait to see what Senator Cash says about this. As I said at the start of my speech, this is an unobjectionable bill that the Greens will support, but this is a massive missed opportunity to crack down on money laundering in this country, to crack down on terrorism financing in this country and to do something—just something—to take the heat out of the housing market to allow more Australians, particularly young Australians, an opportunity to buy their own homes.

10:04 am

Photo of Slade BrockmanSlade Brockman (WA, Liberal Party) Share this | | Hansard source

In the interests of time, I'll just give a short contribution today on the Anti-Money Laundering and Counter-Terrorism Financing and Other Legislation Amendment Bill 2019. We obviously have a very full agenda ahead of us. However, before getting started on this bill—in his speech, Senator McKim just spoke a lot about the interactions with donations to political parties, but I will remind those listening that the largest single donation ever made in Australian political history was to the Greens party. It is greatly ironic that Senator McKim gets up in here, speaks about an anti-money-laundering bill and turns it into an attack on the Labor Party. Whilst I would never stop the Greens and Labor from fighting with each other over on the other side of the chamber, I think it is very important to remember that anti-money-laundering and counterterrorism financing is actually an extraordinarily important issue to the future of this country.

Senator Watt interjecting

Who knows! This is an area where, as a nation, we are in a constant arms race. The techniques used by criminal organisations, by terrorist organisations, are constantly changing and constantly evolving, and so the law in this space must constantly change and evolve with those who wish to involve themselves in illegal activities or the financing of terrorism.

Obviously, this government is absolutely committed to strengthening our anti-money-laundering and counterterrorism financing regime. In this bill, we are reducing compliance costs by around $3.1 billion over 10 years by allowing industries to work more closely together to discharge customer identification and verification obligations. We're improving and streamlining obligations relating to correspondent banking relationships, customer identification and verification procedures, the sharing of financial intelligence and cross-border reporting of monetary instruments. We're also addressing the barriers to the successful prosecution of money-laundering offences. The bill also makes it an offence for a person to dishonestly represent that a police award has been conferred on them. Obviously, we had a situation in Western Australia quite recently that involved a member of parliament with particular claims of a particular history of police service that turned out to be untrue. Again, I do not want to make this a long contribution. We do have a lot of material to get through today. But this is an extraordinarily important area of law reform and something that this government is strongly committed to. I commend the bill to the house.

10:07 am

Photo of Sarah HendersonSarah Henderson (Victoria, Liberal Party) Share this | | Hansard source

It's my great pleasure to rise and speak on the Anti-Money Laundering and Counter-Terrorism Financing and Other Legislation Amendment Bill 2019. The Morrison government's focus on keeping Australians safe is one of our most important priorities, and this bill represents further measures to keep Australians safe. The passing of this bill is a critical element of our commitment to dismantle the criminal business model, and I am pleased to hear that this bill is receiving the support of all parties in the chamber today. I do note Senator McKim's comments and his reservations, and I respect the fact that he has some reservations, but, in referring to Senator McKim's contribution, I do want to just take note of the Legal and Constitutional Affairs Legislation Committee, which conducted an inquiry into the bill and made a recommendation, shared by all members of the committee, that the bill be passed. Senator Whish-Wilson, in his opening paragraph in the Greens' additional comments on that inquiry, said:

On the whole, this Bill makes sensible and progressive reforms to Australia's anti-money laundering and counter-terrorism financing (AML/CTF) regime.

That was the opening position of the Greens. I understand the Greens are seeking an amendment in relation to including real estate agents, accountants and lawyers as 'designated services' under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006. I appreciate that, but it is important to reiterate the Greens strong support for this bill, even though the Greens are seeking an amendment.

It is always interesting to hear the Greens and Labor at each other's throats in this place. I certainly won't take issue with Senator McKim's statement: 'What is the point of the Labor Party?' It's a very strong point. I hope when the Greens are thinking about their preferences at the next election they might reflect on that. We have seen a very sorry history there. No matter how much the Greens are at odds with the Labor Party and how disgusted they are in the Labor Party, we do see a situation at elections where the Greens roll over. They don't tend to look at the substance of what other parties are offering, including our party, and they will roll over and do a cosy deal with Labor in exchanging preferences. Sadly, that certainly happened in Corangamite when I was running in the last federal election. So I hope that all Australians can reflect on that very profound statement of Senator McKim: 'What is the point of the Labor Party?'

Senator Watt interjecting

Senator Watt, many Australians did ask that question at the last federal election when Mr Shorten was your leader and, of course, they made a very significant decision not to put the Labor Party into government.

This is very important law reform. I'm just going to make a brief contribution. The bill implements a range of measures to strengthen Australia's capabilities to address money-laundering and terrorism-financing risks and to generate greater regulatory efficiencies. It includes amendments to expand the circumstances in which reporting entities may rely on customer identification and verification procedures undertaken by a third party, and to explicitly prohibit reporting entities from providing a designated service if customer identification procedures cannot be performed. It strengthens protections on correspondent banking by prohibiting financial institutions from entering into a correspondent banking relationship with another financial institution which permits its accounts to be used by a shell bank, and it requires banks to conduct due diligence assessments before entering and during all correspondent banking relationships. The bill expands exceptions to the prohibition on tipping off to permit reporting entities to share suspicious matter reports and related information with external auditors and foreign members of corporate and designated business groups. It provides a simplified and flexible framework for the use and disclosure of financial intelligence to better support combatting money laundering, terrorism financing and other serious crimes.

I also want to make the point in relation to Senator McKim's contribution—in which he tended to focus mainly on the real estate market—that the bottom line is in this country anti-money-laundering is not acceptable in any form, for any purpose, no matter what it is. That's what this bill is all about. It also addresses barriers to the successful prosecution of money-laundering offences by clarifying the existence of one Commonwealth constitution or connector is sufficient to establish an instrument of crime offence, and by deeming that money or property provided by undercover law enforcement as part of a controlled operation to be the proceeds of crime for the purposes of prosecution. The bill also expands the rule-making powers of the Chief Executive Officer of AUSTRAC across a number of areas. Another important amendment is that the bill amends the AFP Act to make it an offence for a person to dishonestly represent that a police award has been conferred on them.

This is very important law reform. The Morrison government is committed to doing everything possible to stop criminals from exploiting hardworking Australians and their families. We are committed to combatting transnational, serious and organised crime, and that's why this bill is so important. I commend this bill to the Senate.

10:14 am

Photo of Paul ScarrPaul Scarr (Queensland, Liberal Party) Share this | | Hansard source

I think Senator McKim might have been watching a bit too much Netflix over the last year. Obviously he's watched a lot of episodes of Breaking Bad, and Better Call Saul, which, I must say, is one of my favourite spin-offs of a TV series. He seems to have this view that the Australian legal profession is infested with people who are prepared to engage in money-laundering practices. The truth of the situation is far, far removed from that.

With respect to my profession, the legal profession, I note that Senator Watt, on the other side of the chamber, is an extremely honourable member of that most noble profession. He practised with great distinction in my home state of Queensland. Who knows where that may lead Senator Watt in the future? I should say that the legal profession has many legitimate concerns with respect to the extension of anti-money-laundering laws to the profession. I note that Senator McKim often refers to submissions from the Australian Law Council, and I myself do the same thing. I want to quote from a submission from the Australian Law Council in the context of anti-money-laundering legislation:

If a client is not able to rely on the security of client legal privilege from the very outset of their relationship with their solicitor or barrister, it risks diminishing the effective and proper administration of justice …

When the Australian Law Council raises legitimate concerns with respect to the extension of anti-money-laundering legislation into the domain of their profession, I think that all of us in this place should pay great heed. This isn't some sort of rhetorical flourish or some sort of hypothetical. The reality is that, in Canada, the Canadian Supreme Court has actually struck out parts of Canadian anti-money-laundering law on that very basis—that it inappropriately infringed upon that all-important lawyer-client professional privilege relationship. This isn't fanciful stuff; this isn't Senator Scarr getting up and seeking to put forward obscure hypotheticals. The fact of the matter is: the Canadian Supreme Court actually struck down some of the Canadian anti-money-laundering legislation on the basis that it improperly infringed upon the lawyer-client professional relationship—an extremely important relationship—which is one of the things that goes to the heart of the rule of law in our country.

Senator McKim interjecting

I'll take that interjection from Senator McKim. These are very complicated issues. If you don't have appropriate regard to institutions such as lawyer-client professional privilege, then you'll get the result that they got in Canada, where the Canadian Supreme Court actually struck down anti-money-laundering legislation because it inappropriately infringed on that all-important lawyer-client professional privilege.

In relation to real estate agents, which Senator McKim referred to, I must say that the characterisation of Australians going to their local auction and competing and bidding against money launderers and terrorist organisations et cetera—and as they're bidding against each other, the price of houses goes up and up and up—did tend to go into the realms of absolute fantasy. I, like many Australians, go to my local auctions in my local area. I can't resist. I tell my beautiful wife, Louise, that I'm happy where we live, that we don't need to move. But we can't resist the urge to go to local auctions in our local neighbourhood. I must say, when I attend my local auctions, I don't see them particularly well populated with money launderers and terrorists and others bidding up auction prices so that good, hardworking Australians are kept out of the property market—quite the contrary, actually.

I must say Senator McKim does speak with great rhetorical flourish. I've been in this place for nearly 18 months, and I do admire watching Senator McKim talk. Sometimes the phrases he uses are somewhat repetitive—'government for the mates, by the mates' et cetera. There are a few stock standard phrases that get repeated from time to time. Senator McKim is extremely effective in what he says, but I think he lets himself down when his rhetorical flourishes enter into the world of fantasy. I think it actually erodes his arguments. The practical concern that has been raised by real estate agents across this country is that the vast majority of real estate agents do not come into contact with money-laundering activities—the vast majority. The figure I've seen in the literature that I've read is that 80 to 90 per cent of real estate agents are not at all exposed to the activities of those who launder dirty money.

In this debate, as with everything that comes before this chamber, I think we have to strike the right balance. We have to strike the right balance between regulation that promotes the rule of law and regulation that promotes identifying the rotten fruit that grows from the evil tree of organised crime and terrorist activities et cetera. We need to balance that legitimate public concern with the cost of regulation that would be imposed upon a whole range of professions if Senator McKim were to have his way. The bill before the chamber, the Anti-Money Laundering and Counter-Terrorism Financing and Other Legislation Amendment Bill 2019, strikes the right balance. Australians should be heartened that both the coalition and the Labor Party in this place see the bill as striking the right balance. I think that's a very good touchstone.

Lastly, I commend the provisions of the bill which deal with identification procedures. In my prior life, I had cause, as a company secretary and general counsel, to deal with what are typically called KYC—know your client, know your customer—identification procedures. I remember on one occasion, in dealing with a finance transaction where there were 10 banks involved, having to produce folders and folders of personal identification data. Having all the parties in the transaction going through that repetitive administrative process was, in my view, an example of where there were opportunities for regulatory savings to be made if businesses could meet their obligations in a more cost-effective manner and streamline the customer experience with respect to those 'know your customer' identification procedures. The streamlining of these procedures is not undermining the intent of the legislation to tackle money laundering. It is considered that the reforms contained in this bill will potentially result in an 80 per cent reduction in the costs of customer verification. That has to be a good thing. These arrangements are expected to generate a regulatory saving of approximately $3.1 billion over 10 years. That's one of the reasons why I'm very pleased to commend this bill to the chamber.

10:23 am

Photo of Andrew McLachlanAndrew McLachlan (SA, Liberal Party) Share this | | Hansard source

I rise to speak to the Anti-Money Laundering and Counter-Terrorism Financing and Other Legislation Amendment Bill 2019, and I would like to associate myself with many of the remarks of Senator Scarr who, like me, has spent some time in regulatory and corporate positions.

An honourable senator: Do you associate yourself with the remarks of Senator McKim?

I will get to Senator McKim in a moment. Whilst I don't have a great deal of knowledge of the property market, unlike my honourable friend Senator McKim, having listened to his contribution to the debate, I would have thought that these provisions would act upstream to regulate or observe the flow of money before it went into a real estate agent's bank accounts. So I'd have to say in response to Senator McKim that I wasn't entirely convinced by his arguments and I will reflect on those after the debate.

I do notice with some interest, as a legislator, that we are also, in part 7, putting in the provision 'Dishonestly representing conferral of police awards'. It is an interesting amendment in what is a very complex and considered bill addressing money laundering and counterterrorism. I've always found it of interest that some people feel they need in life to confer on themselves awards for personal advancement. Certainly I would endorse this amendment, since police officers work very hard and contribute much to our security in society and our sense of safety, and their awards are justly deserved and should not be undermined by the actions of those seeking to improve their own standing, social or otherwise.

I go back to the substantive matters of the bill. I too have had to grapple with the compliance obligations associated with anti-money-laundering measures and I fully endorse the thrust of this legislation and the acts that came before it and will come after it. It is certainly an area of law that has to be constantly revisited and addressed. We are fighting an ongoing battle with innovative crime syndicates who are constantly trying to undermine our regulatory arrangements. As a consequence, we must be increasingly flexible as legislators, as a parliament, to be able to address these things. At the same time, every time we try to shut the gate, as it were, to a particular innovative measure we increase compliance costs on industry, and those compliance costs are then inevitably passed to the client, including the ordinary Australian who deals with financial institutions. So we also need to be very careful in balancing our response so that we don't increase costs for ordinary Australians—the same Australians that Senator McKim pointed out are, in his view, suffering from higher house prices, although I don't necessarily accept that point. So we have a trade-off, and it is pleasing to see that this legislation, if passed, will reduce compliance costs. As I said, I know from a previous life that complying with Commonwealth legislation can be an industry in itself, and you often reflect: are we really protecting the state, at the end of the day? I commend the government for this initiative on the basis that it's achieving its regulatory intent but, at the same time, with an eye on those who are using the system.

The previous speakers in this second reading debate have not addressed the issue of privacy. Again, this is another difficult trade-off. The more you impose a regulatory burden and require the exchange of information, which you always need to ensure compliance and to restrain and, hopefully, stop terrorism organisations from using their moneys, the more a client's individual details have to be shared. In my understanding of this bill, and in my reading of its provisions and the submission from the Office of the Australian Information Commissioner, it does strike the right balance between privacy impacts and law enforcement and national security objectives. Of course, again, that is, for any government, a watching brief and a careful balance to maintain.

The bill targets shell banks and prohibits financial institutions from entering into relationships with those shell banks. It also prohibits the tipping off of individuals, and that would certainly apply to private client advisers or banks that may feel, incorrectly and wrongly, an obligation to their client over and above their obligation to their fellow Australians and to law and order. There is also strengthening of cross-border movement of monetary instruments and physical currency. Again, these provisions reflect the efforts of the government to match the innovation of the crime syndicates.

Terrorism has to be financed. It is financed often with criminal activity, more generally in the world of drugs, from my understanding and my reading, so we have two effects to address: the first is the actual criminal activity of drug dealing. The second is the money that comes from drug dealing has to be brought back into the legitimate financial system, and that is what we're trying to prevent. And then there is also the flow, if it does manage to find its way into the legitimate financial system, to organisations which have ill intents and seek to take on our way of life and challenge it with violence. In my experience, this bill is to the credit of the government, and I commend it to the chamber.

10:31 am

Photo of Michaelia CashMichaelia Cash (WA, Liberal Party, Minister for Employment, Skills, Small and Family Business) Share this | | Hansard source

I rise to sum up the debate on the Anti-Money Laundering and Counter-Terrorism Financing and Other Legislation Amendment Bill 2019. I do thank all senators for their contributions to the debate and I also thank them for indicating that they are supporting the legislation that the government has brought before the Senate. This bill amends the Anti-Money Laundering and Counter-Terrorism Financing Act 2006, the Australian Federal Police Act 1979, the Criminal Code Act 1995, the Inspector-General of Intelligence and Security Act 1986, the Proceeds of Crime Act 2002, and the Surveillance Devices Act 2004.

This bill implements a second phase of reforms arising from the recommendations of the report of the statutory review of the into the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 and associated rules and regulations. The purpose of the bill is to strengthen Australia's anti-money-laundering and counterterrorism-financing regime, and ensure Australia's financial system is resilient to criminal exploitation. It will also deliver significant regulatory savings to businesses providing services regulated under the Anti-Money Laundering and Counter-Terrorism Financing Act.

I also thank the Senate Legal and Constitutional Affairs Legislation Committee, which inquired into the bill, and I have its recommendations before me. One recommendation is that the Senate pass the bill and that the bill be passed, I note, without the amendments. Some committee members have made comments relating to the Financial Action Task Force 2015 mutual evaluation report. The government, I advise, is taking a phased approach to reforming the anti-money-laundering and counterterrorism-financing regime, which was signalled in 2016 when responding to that evaluation, and a domestic review of that regime. A phased approach will enable the government to more effectively consult with stakeholders and stagger the regulatory impact of the measures on regulated businesses. By phasing these reforms, the government is giving businesses time to understand their obligations, and this will have the effect, obviously, of thereby improving those businesses' compliance with the changes to the legislation. The government will continue to consider how Australia's anti-money-laundering and counterterrorism-financing regime can be further strengthened. We will be doing that to counter money laundering and terrorism financing, and we will work with businesses to co-design future phases of reform.

One committee member recommended the government introduce legislation to regulate lawyers, accountants and real estate agents under the act.

Senator McKim interjecting

Yes, as Senator McKim said, that was him. I understand the Australian Greens, as they have indicated, will be moving an amendment to this effect. This Australian government is committed to continually improving Australia's anti-money-laundering and counterterrorism-financing regime and to working with businesses to ensure that Australia's financial system is hardened against criminals and terrorists, but without placing an undue regulatory burden on industry.

Expanding the existing regime to lawyers, accountants and real estate agents would capture as many as 100,000 additional businesses, the majority of which are small businesses or sole traders and practitioners. It would also have a significant resourcing impact on the regulator, AUSTRAC, which would need to oversee compliance of these businesses. Any future phases of anti-money-laundering counterterrorism financing reform will be tailored and will be appropriate to the Australian context, and industry will be fully consulted with at that time.

In conclusion, the bill will introduce the next phase of reforms to ensure that Australia's anti-money-laundering counterterrorism financing regime will continue to effectively combat the evolving and significant threats posed by transnational, serious and organised crime. Transnational, serious and organised crime costs the Australian community up to $47.4 billion each year, threatening not just our safety and wellbeing but also our national security. The bill will give law enforcement agencies vital tools to address this threat, whilst reducing regulatory costs on industry by around $3.1 billion over the next 10 years. These reforms will ensure that Australia's law enforcement, intelligence and revenue protection agencies have appropriate and timely access to valuable financial intelligence to protect the Australian community in the global fight against organised crime and terrorism. The bill will also implement key recommendations of the 2016 statutory review of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006. Additionally, the bill will criminalise the act of dishonestly taking credit for receiving police awards, ensuring that the bravery and heroism of our police forces is respected. On that note, I commend the bill to the Senate.

Question agreed to.

Bill read a second time.