David Shoebridge (NSW, Australian Greens) | Link to this | Hansard source

The Australian Greens strongly support the implementation of tranche 2 of the anti-money-laundering reforms and the expansion of the scheme to financial services, real estate agents and lawyers. Having an effective anti-money-laundering scheme, we believe, is essential for the functioning of a democratic system and trust in decision-making.

In the course of the inquiry into the Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2024 held by the Legal and Constitutional Affairs Legislation Committee, there were a number of issues identified with the bill. They were raised by stakeholders, and they raised very real concerns about how this legislation would work in practice. They included the fact that barristers were initially being roped in, despite the primary obligation lying with their instructing solicitors, even in circumstances where barristers across the country indicated that their practices did not have the resources or the capacity to comply with the proposed AML and CTF obligations.

There remain concerns with the scheme as to how lawyers can meet their competing obligations, their principle or primary duty being to the court, as well as meet their statutory obligations under this legislation. The Greens will be moving an amendment to seek to address that. Of course, there are also risks created by laws, if this is going to require reporting on financial transactions—which goes back to undemocratic regimes that can often, by changing their opinion on a person engaged in business, turn somebody from a business person to an enemy of the state. The concerns about potentially reporting to those non-democratic regimes under this scheme, remain real to the Greens. I come back to the fact that, on balance, the Greens support this legislation, particularly with the amendments that will be moved by the government.

I also want to recognise Fraser Brindley. I know I won't be the only Greens senator to do this. I want to recognise Fraser for his efforts in pushing for these laws, within the Greens and in the parliament, over many years. I had the immense good fortune of getting Fraser's advice from his experience and his passion for this law reform, when I was initially made the justice spokesman and the responsibility moved to the Attorney-General's. I know Fraser was working for years on this. He's not here to share this win, but from our side, from the Greens, we see this as Fraser's win. We want his family to know that. Thanks, Fraser.

I also want to note that in relation to this bill there has been a positive and constructive approach to the bill from the Attorney's office. These concerns that were raised in the course of the inquiry and which have been the subject of ongoing discussion with the Attorney's office, have, in significant part, been addressed but not entirely addressed. I want to also thank the many legal organisations who've engaged with our office and engaged in the inquiry. This was a proper inquiry, where we had time to consider the evidence and then, having considered the evidence, had the chance to put forward considered amendments. I note that there is a whole series of legislation that has not had that benefit.

I want to thank the law societies in the various states and the Law Council. I want to thank the bar associations for their engagement. As I indicated in the inquiry, and indicate in this debate, as a member of the New South Wales Bar Association, I also want to acknowledge the work of the New South Wales Bar Association in bringing forward a constructive approach to this bill.

I know that amendments that will be moved to this bill today make a number of changes in how this legislation will work. One of the most important is actually carving out barristers from the reporting and due diligence obligations under the AML and CTF, where they are instructed by a solicitor. As the profession pointed out—to a person—where the obligation on reporting and due diligence is already being undertaken by an instructing solicitor, there is no utility to have that also replicated by a barrister who has been instructed through that firm of solicitors. It is just additional expense and red tape. When you look at the nature of a barrister's practice, requiring the quite onerous due diligence and reporting obligations to be mirrored by both the barrister and the instructing solicitor is contrary to the interests of justice. I am grateful that the Attorney has reviewed the evidence from the inquiry and considered the representations put almost to a person by the legal profession. We will be supporting those amendments that make it clear that, where a barrister has received instructions from a solicitor and that solicitor is covered by the scheme, we won't have pointless, unnecessary and damaging double reporting by the barrister as well.

I will also be moving, on behalf of the Greens, a further amendment to this bill, which seeks to address the circumstances where a lawyer's duty to the court comes into conflict with their statutory obligations under this bill. We had multiple submissions about this in the course of the inquiry. I'll briefly set out the circumstances where that conflict could occur. For example, it may be well into a trial—two or three weeks or multiple days into a trial. There may be subpoenaed evidence that comes in. There may be further instructions that are obtained which may raise concerns about whether or not the solicitor needs to make reporting under the scheme. The reporting under the scheme is confidential, and it's an offence to tell anybody that a report has been made, let alone the nature of the report. The legal profession were united in their position that, once a solicitor or a barrister formed the view that they needed to report their client under this scheme, that created an immediate conflict of interest with their client. Even if they couldn't tell their client that it had happened and even if they couldn't tell the court that it had happened, the conflict would be there, and there would be an ethical obligation on those lawyers to end their instructions because of that conflict.

The question is: if you're two weeks into a three-month trial, what on earth does an instructing solicitor or a barrister tell the court in those circumstances? It's a crime to inform the court that you've made the report and to disclose the nature of the report. It's an offence to tip your client off. So what on earth does a solicitor or a barrister do in those circumstances? There has been no credible answer given to us about that by the Attorney, despite requests. Indeed, the response we've got from the Attorney's office is that no such conflict exists. On the one hand the Attorney is saying that, and on the other hand the entire legal profession is saying the opposite. In those circumstances, we have proposed an amendment that would seek to address that conflict. We're grateful for the assistance of the profession in drafting that. I particularly want to note the engagement of the New South Wales Bar Association, again, in drafting that amendment—my office takes responsibility for the amendment entirely—and in helping us put forward an amendment which we think gets a balance in that. We do not want to undermine the reporting requirements, but we are deeply troubled that that overriding duty to the court might be lost and deeply troubled by the circumstances that would put lawyers in, if this bill were passed unamended.

I also want to note that, whilst we're debating this bill—and we have time to debate this bill—there are a bunch of bills we don't have time to debate, which are going to be guillotined this afternoon. One of those I want to raise is the privacy bill that will be coming. Again, I want to note that the Attorney's office has engaged with us on this bill and that some of the issues that we raised in relation to the potential breadth of the doxxing offence have been addressed in an amended explanatory memorandum. I'm pleased the government will also, following negotiations with the Greens, insert a two-year independent review of the doxxing clauses. There is very real concern on their face the doxxing provisions may silence legitimate political commentary. This review and the additions and the amendments in the explanatory memorandum will go some way to do that.

The Greens will also be moving amendments to address some of the most glaring oversights in what's called the tranche 1 privacy bill. The Greens' amendments will endeavour to update the definition of 'personal information' so that it's in the 21st century and includes things like 'IP addresses' and 'data tracking', which are essential for any modern privacy laws. We will move to have the consent provisions mirror those that the government puts forward in the social media ban, which will be real, effective, modern consent provisions. If they're good enough for the social media ban bill, we ask the government, 'Why wouldn't we include them as the standard in the privacy law?' We will also move amendments to introduce a fair and reasonable requirement on the treatment and the holding of data from those who take personal information.

Finally, I want to say this on the privacy bill. Once the bill is law, I want to be clear that the Greens and every informed stakeholder in this space expect to hear from the Attorney a firm timetable for when tranche 2 and the balance of privacy law reform is coming. Change is desperately needed. We've seen that in repeated data breaches and privacy breaches that keep happening to ordinary Australians while this government refuses to act. Every delay sees more online tracking and more data scraping and other exploitative practices continue.

In the course of the inquiry on the privacy bill, one of the most glaring responses we had was this candid response from the department. And I don't criticise them for their candidness and for telling us straight what was happening. When we asked the department why tranche 1 of the privacy reforms had almost zero effective content to improve our privacy laws and why it did everything but bring our privacy laws into the 21st century, the response we got from the department was that it was the government's intention that nothing in the tranche 1 of privacy reforms have a material impact on a regulated entity. That's bureaucratic code for not wanting to change the substantive privacy laws despite the calls from across society to do exactly that.

We need to change our substantive privacy laws. We need to have privacy laws that at least look like they've been written in the 21st century, not in the 20th century. We need to protect kids' data. We need to stop being tracked without our consent. We need to stop our data being weaponised and commercialised against us. We need our consent to be real and informed. And we look forward to the Attorney making it clear when that will happen.

Matt O'Sullivan (WA, Liberal Party) | Link to this | Hansard source

I rise to speak on the Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2024. Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2024 seeks to expand the scope of the Anti-Money Laundering and Counter-Terrorism Financing Act of 2006. This was a Howard government initiative. The AML/CTF legislation was defined to defend against money-laundering and terrorism-financing schemes. This bill before the Senate will expand the scope of the AML/CTF regime to include a small range of small businesses, including lawyers, real estate agents and accountants. This reform will impact approximately 90,000 businesses nationwide and should not be taken lightly, despite the process, sadly, we've seen by this government here today.

Let me make this clear: the coalition supports efforts to combat money laundering. We always have. It was the coalition government that criminalised terrorist financing as part of the Criminal Code and moved money- laundering offences into the Criminal Code in 2002. It was the coalition government that first passed the AML/CTF Act in 2006. It was the coalition government that led Australia through its last mutual evaluation process in 2015. It was the coalition government that upgraded the AML/CTF Act in 2017 to implement the first suite of changes from that process. And it was the coalition government that once again upgraded the regime in 2020.

We understand and support the fight against money laundering, and we understand the costs. On this bill, the costs are, frankly, too high; they are damaging. This bill really needs to go back to the drawing board. Let me explain why this is the case. The committee's process for this bill has once again—like we've seen right throughout this term of parliament with this Albanese led government, and like we're seeing here in the Senate today—been rushed and inappropriately abbreviated, undermining the essential role of the Senate as the very important house of review. The Senate's primary function is to provide thorough scrutiny of proposed legislation, and all curtailing committee timeframes does is compromise the critical responsibility that we as senators have and, indeed, this Senate has. Unfortunately, abbreviated processes have become a recurring hallmark of bills introduced by this Attorney-General. While urgency can sometimes justify expedited processes, this bill addresses issues that have been under discussion for a considerable period, making the rushed timeline unnecessary and unjustified.

The reforms proposed in this bill are of immense importance—as underscored by the Attorney-General's impact analysis, which estimates the regulatory costs at a staggering $13.9 billion. That is $13.9 billion of regulatory costs that is going to be upon businesses across this country—most of whom will be small businesses, who will disproportionately carry the burden of this cost. Such a substantial financial burden should have prompted extended consultation and careful deliberation rather than a truncated process.

The coalition is particularly concerned about the increased compliance costs this bill will impose on small businesses across the country, many of whom are grappling with the challenges of the cost-of-living crisis. We're seeing this in my home state of Western Australia. Small businesses who make up over 90 per cent of the business community in Western Australia, carrying the big burden of employment opportunities for Western Australians, will be the ones that will carry the cost of this burden.

Government modelling predicts that regulatory costs will total $13.9 billion over the next decade. These costs are likely to be passed on to consumers, at a time when we have the cost of living out of control. We're seeing inflation start to moderate but the problem is the increased costs are baked in; Australians are carrying those forward. It's going to be some time, as the RBA and other economists have said, before wages, incomes and the profitability of businesses get to a place where they overcome the costs of doing business and the costs of everything in this country that have been incurred under this government. People are hurting, people are feeling the pressure and small businesses, no less, particularly those in my home state of Western Australia, are feeling the pressure.

The bill's effect will be felt most acutely by accountants, small law firms, real estate agents and other community based service providers throughout Australia. Regional areas in particular will face disproportionate challenges. Sole practitioners and small firms, which make up 93 per cent of law firms in this country, will be especially vulnerable. These firms, often situated in outer suburban and regional communities, play a vital role in providing accessible services. Many will be forced to close due to the additional financial pressures imposed by the bill. This will not only increase the costs for families seeking legal assistance but also reduce access to legal representation in these outer suburban, regional and remote areas, further disadvantaging these communities.

Once again, a bill that will impact the lives of so many Australians is being rammed through the Senate by this Albanese Labor government. Time and again, the government has shown nothing but contempt for Middle Australia. This is a government that hands out flyers claiming to assist with cost-of-living relief while it heaps $13.9 billion of costs onto Australian businesses. This is a government that claims to value co-designed policies and comprehensive public consultation while it attempts to sweep almost 40 bills through the Senate on one single sitting day—like we're dealing with today.

When we say that we take money laundering and terrorism financing seriously, the evidence, as I illustrated earlier, is on our side. We can point to both the enforcement actions undertaken on our watch and the existence of AML/CTF Act itself. We understand the importance of strong legislative and enforcement frameworks to combat money laundering and we fully support this fight.

Small businesses in your electorate will pay additional costs as a result of this bill. This is not just the coalition's perspective; this is actually what the government's own modelling says. We're talking about $13.9 billion of regulatory costs over 10 years. For those in the real estate sector, the Prime Minister's 'Merry Christmas' to you will be a $33,000 bill over the next year. That's incredible. Legal service small-business owners, you, too, are going to receive as a Christmas bonus—or Christmas pain, a bit of coal in your stocking—a $33,000 deficit. This is incredible. For Australians in accounting services, there's $33,000 in costs for your hard work.

The recent addition of the Australian Small Business and Family Enterprise Ombudsman Small Business Pulse reported:

High business expenses continue to put pressure on profit margins. These are widespread across supplies, labour and business essentials, particularly freight, insurance and finance.

Yet this government is again adding red tape and complexities for the small-business sector. How will this address declining productivity in this country? When you add on regulatory burden and red tape, does that do anything to assist with productivity? Of course it does not. This gets in the way of the profitability of businesses. It gets in the way of more people getting more jobs, and it gets in the way of people seeing even better pay rises.

Productivity has continued to be stagnant during the tenure of this government. The Business Council of Australia's recent report Australia's flagging competitiveness and productivity highlighted the threats posed by declining productivity and the damage it will do if it's not addressed:

Productivity is the primary factor which will define Australians' future quality of life. Simply put, there are 'no free lunches' and we must be able to produce more with what we have if we are to sustain growing wages and national prosperity

They went on to say:

If the opposite is true, however, higher wages can be afforded without fuelling inflated prices.

The Council of Small Business Organisations Australia, COSBOA, has criticised the Attorney-General for failing to follow best practice, stating that the bill 'leaves the door open to cost, confusion and compliance headaches for small businesses'. The Real Estate Institute of Australia highlighted concerns based on New Zealand's experience, where real estate agents faced additional costs ranging from $30,000 to $60,000 with no clear public benefit to justify these expenses. The Real Estate Institute of Queensland has expressed significant concerns that the legislation is overly complex, places a disproportionate burden on real estate agents and will increase transaction costs associated with buying a house.

The Law Council of Australia noted that the legal profession is already the most heavily regulated in the country. They warned that dual regulation of legal services continues to be a significant issue as increased regulatory costs inevitably drive up the costs of legal services. The Law Council also raised serious concerns about the impact on small law firms, which make up 92 to 93 per cent of all legal practices. Many of these firms are at risk of closure due to the increased regulatory costs, which will have a cascading effect on access to legal services, particularly in remote and regional areas of Australia.

This bill is more than just a revision for the AML/CTF regime. This is a message to small businesses in this country that the Albanese government is bad for small business and bad for all business. Heaping on $13.9 billion over the next decade while in the middle of a cost-of-living crisis—well, only this Labor government could do that. Rushing the consultation process and sweeping the bill through the Senate, along with 30 other bills, could only be done by this Labor government. They really ought to be thinking more about small businesses that need support in this country. Sadly, we're not seeing that from this government.

Peter Whish-Wilson (Tasmania, Australian Greens) | Link to this | Hansard source

It feels a bit like the twilight zone in here this afternoon on the last day of parliament for the year. I'm hearing conservatives rally against laws that crack down on crime. I always thought that it was their mantra to be tough on crime. Here we finally have the Holy Grail for so many people before us today—what is commonly called the gatekeeper or tranche 2 laws to crack down on money laundering and terrorism financing in Australia.

I'd like to remind my colleagues across the chamber that it was actually Senator Brandis who had a red-hot go at bringing in these laws nearly 10 years ago. At the same time, in 2015, the Financial Action Task Force, the international world-standard-setting body for anti-money-laundering and counterterrorism financing, released a mutual evaluation report. It stated:

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

Other international bodies have also highlighted the inadequacy of Australia's anti-money-laundering and CTF framework, including the OECD in 2017 and the IMF in 2019. The head of ASIC in the same time period said that Australia was a haven for white-collar crime.

These laws have been sitting there and waiting for this parliament to pass them. We're only one of six countries internationally that don't have these laws. Today is a really good day to ask why we haven't had these laws. I spent a good five years or more trying to get these laws, and I congratulate Senator Shoebridge for the great work that he's done on this bill today and on the inquiry into this bill, the Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2024. On this point, I'd also like to acknowledge a previous leader of the Greens, Tasmanian Senator Christine Milne, who also campaigned on these laws; Senator O'Neill from the Labor Party, who's played an important role in getting this legislation before us today; and, of course, Senator McKim, who had the Treasury portfolio following me.

It's been a long road for the Greens to get these laws. We had a fantastic Senate inquiry in 2019 that reported in 2022. I'd recommend that senators read the report. It's called Greenfields, cash cows and the regulation of foreign investment in Australia. We had a fantastic case study of a Chinese crime syndicate who spent nearly $30 million of laundered money to buy real estate in Tasmania, including a resort and highly productive farmland. It was front-page news when this syndicate was busted. At the time there was a big spread, with Mr Peter Dutton saying, 'We're cracking down on the crooks. It's not fair that these foreign crime syndicates are competing with Australian mums and dads to buy real estate in Australia.'

We know money laundering is a significant issue in this country. We found out afterwards in the Senate inquiry that it wasn't to do with any of the work of the Federal Police or our agencies—AUSTRAC or anyone else. The Chinese government actually gave the Australian Federal Police the dossier with all the information on these crooks. They'd been tracking them and asked us to bust them. That's exactly how it happened. We looked at that. What are the inadequacies in our laws that we can't actually work out whether laundered money is going into Australian real estate? It's just one example. The evidence kept coming back to the gatekeepers. Either through the royal commission into banks and financial services and through other inquiries and reports, we know that the beneficial owners of the companies and the shady shell structures that were being used to channel this kind of money weren't being reported to AUSTRAC. Real estate agents, lawyers and accountants right around the country didn't have to report the beneficial ownership details to AUSTRAC.

The Greens wanted to see a beneficial ownership register. That's something we've campaigned on for nearly 10 years as well, to try and crack down on crime. Today's legislation has been a long time coming. As Senator Shoebridge said, it's not perfect. I certainly hope the Senate supports Senator Shoebridge's amendments to try and improve these.

Let's be really clear here. You can talk about $13.9 billion in regulatory costs, but real estate agents, accountants and lawyers have known this legislation has been coming for a long, long time. I can tell you from firsthand experience. I initiated the Senate inquiry that looked at money laundering. I was on the Four Corners report 'The secret riches of a parallel universe', talking about the impact of this on the Australian economy. These groups have campaigned and lobbied really hard—and I mean ferociously—to prevent this legislation from going ahead. There's $13.9 billion in regulatory costs. What about the opportunity costs and other costs associated with money laundering in this country, not to mention the financing of terrorism? Seriously, it hasn't even been mentioned once by the coalition. I never thought I'd see the day when they'd come in here and say, 'Listen to Senator Cash's contribution today,' which was so ferociously campaigning against laws to crack down on crime. Really? This is it. This is not perfect, but it's the best we've got.

I want to finish by also making a personal reflection about Fraser Brindley, who used to work in my office before he left to go and work in Senator McKim's and Adam Bandt's office. Fraser was always pushing me—and I know he pushed the other senators that he worked for—to take this issue seriously. It was because of Fraser that we had the Senate inquiry and that we got the Four Corners program up into this, amongst other things. I'd like to also acknowledge the book The Lucky Laundry, and Mr Lynch, who wrote that book. I contacted him afterwards and thanked him very much for all the quotes he'd put in there that I'd made in terms of this issue. I let him know that it was actually Fraser's work, and it really should have been Fraser in the book. That's when as a boss you feel a bit guilty that, although you're the one who's actually out doing the work, a lot of the hard work's being done behind the scenes by people like Fraser.

I hope the Senate supports these laws. They've been a long time coming. They're not perfect, but they're certainly a step in the right direction.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Maria Kovacic (NSW, Liberal Party) | Link to this | Hansard source

I rise today to speak on the Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2024. Before I proceed, it is important to state on the record that the coalition supports efforts to combat money laundering. In fact, we always have. The AML/CTF Act is a Howard government initiative post September 11. This bill seeks to expand existing money-laundering and counterterrorism financing obligations to include tranche 2 employees, like accountants, real estate agents and lawyers. As my colleague Senator Scarr noted, these are primarily small businesses, family businesses, organisations that don't have vast and deep resourcing.

This bill is filled with inconsistencies and errors that need to be dealt with. There are legitimate concerns with respect to the regulatory cost burden of this bill, which falls squarely at the feet of Australia's small businesses. It is estimated to be some $13.9 billion over the next 10 years. There is no discussion of the details in the impact analysis released by the Attorney-General's Department. This cost burden is far too large for small businesses, which will subsequently need to pass their costs onto consumers. The government must seek to eliminate or reduce these costs.

There are various impacts on the legal, accounting and real estate professions. Senator Scarr has outlined some of those in quite significant detail. The Law Council has been clear in their position that legal practitioners owe a paramount duty of care to their client and to the court. This bill drastically impinges upon a fundamental component of the legal system, which is the power of privileged information between a lawyer and their client. This bill would undermine this trust by legally compelling lawyers to inform on their clients, eroding the foundational confidence clients place in their legal representatives. It is clear that legal practitioners should be excluded from the application of mandatory suspicious-matter-reporting requirements of this bill.

Further, in relation to the real estate and accounting professions, the Real Estate Institute of Queensland recommended that there should be a platform solution which enables tranche 2 entities to share and rely on information in the most effective way. Again, Senator Scarr spoke to this. There are multiple reporting obligations, based on the current structure of this bill, on one transaction. That doesn't make any sense whatsoever for an individual or a couple purchasing a home to have to meet the requirements three times in the purchase of a home—once to their lawyers, once to their bank and perhaps once to their accountants if they're having some assistance in relation to that matter. Finally, there should be amendments to the explanatory memorandum to erase ambiguity about conjunction agreements, and to exclude residential side agreements and land leases.

There a number of deficiencies which were identified in the Senate inquiry, and I will go through those briefly. Noting the considerable concern with respect to cost and regulatory burden, and how reforms would interact with professional responsibilities, it's disappointing that the processes for this have not been adequate. The Law Council of Australia has raised concerns with respect to the adequate time provided for it, as the peak body representing the Australian legal profession, to make submissions and engage in this process. While there are circumstances where bills are required to be introduced and passed as a matter of urgency for reasons outside of the control of the executive, this bill deals with matters which have been the subject of discussion for quite some time and which should have been open to broader consultation.

In its additional comments, the coalition have a number of recommendations, the first of which is that the Senate note the inappropriateness of the abbreviated timeline for consideration of the Anti-Money Laundering and Counter Terrorism Financing Amendment Bill, particularly given the importance of the legislation, the cost burden of that same legislation, the failure of the government to circulate an exposure draft of the bill, and the inclusion in the bill of matters which were not subject to prior consultation, including the schedule 9 powers.

Concerns were also noted with respect to the regulatory cost, and I've noted some of those already. I note that there are estimated regulatory costs of $13.9 billion over 10 years. There is no discussion of the qualifications contained in that report regarding that cost estimation. There is no discussion of the estimates of cost provided by the tranche 2 entities, legal professionals, real estate agents and accountants that were submitted as part of this committee inquiry process, and that in itself is quite a staggering omission. The AGD impact analysis estimated that the upfront cost for the provision of legal services to comply with the new regime would be $429 million, with ongoing costs of $2.454 million. Over a 10-year period, that cost, calculated on a net present value upon those providing legal services which are designated services, is estimated to be $2.833 billion, a significant impact on the industry and its many small-business owners.

There is also a cost impact on real estate agents, who are primarily small businesses. The analysis estimated that the upfront costs for the provision of real estate services to comply with the new regime would be just under $1 billion at $989 million, with ongoing costs of $4.903 million. Over a 10-year period, that total cost, calculated on a net present value basis upon those providing real estate services which are designated services, is estimated to be $5.892 billion. Again, this has a significant impact on the real estate industry and its many small business owners.

The impact analysis estimated that the upfront cost for provision of accounting services to comply with the new regime would be some $562 million, with ongoing costs of $3.12 million. Over a 10-year period, that total cost, calculated on a net present value basis upon those providing accountancy services which are designated services, is estimated to be $3.82 billion. Again, this has a significant impact on the accounting industry and its many small and family business owners. The second recommendation from the coalition on the inquiry was that, before the bill is passed, the government must address the cost burden imposed by the legislation on small business. The $13.9 billion cost is a burden far too large, and these costs, as we know, will be passed on to families and customers.

There are many issues relating to this, but, in conclusion, this bill does not have the support of small businesses, real estate agents or lawyers—the very people it will burden the most. COSBOA has criticised the lack of consultation and warned of the cost, confusion and compliance headaches it will create. Evidence from overseas paints an even grimmer picture. This bill is fundamentally flawed and needs to go back to the drawing board, and we must ensure any reforms are practical, effective and fair.

Debate adjourned.

Ordered that the resumption of the debate be made an order of the day for a later hour.