Arch Bevis (Brisbane, Australian Labor Party, Shadow Minister for Aviation and Transport Security) Share this | Hansard source

The bill, of course, deals with the financing of terrorist activities. The AWB’s $300 million kickback to Saddam Hussein under the watch of this government and the opportunity that presented for terrorist organisations to get their hands on a tidy sum of money is very much about the financing of terrorism. It is an indication of this government’s disjointed approach to this matter that they can sit there and think that there is no connection between their mismanagement of the AWB scandal and the fact that we are now debating a bill that deals with money laundering and financing of terrorists. Of course there is a connection. That is what the whole Cole inquiry was about. That is why the United Nations sanctions were put in place: to stop money from being provided to those people who perpetrate acts of terror. This bill, had it been in place some time ago, might have afforded the Cole commission the opportunity to recommend charges that are provided for in this bill. I certainly am keen to contain my remarks to the bill, and that is exactly what I have been doing.

The story of the bill—which, I have to say, Labor supports—is yet another case of a minister who has been asleep at the wheel. This legislation should have been in place years ago and its provisions should have caught the culprits responsible for the Australian Wheat Board scandal. This bill will hopefully take Australia some of the way towards final compliance with our international obligations. Unfortunately, I have to say ‘some of the way’ and not ‘all of the way’, because even at this late stage it represents only the first of two tranches to reform our woefully outdated laws. We are still waiting on the government to announce even a timetable to bring forward the rest of the reforms. Labor supports the bill but will be moving amendments in the Senate on at least two issues, which I will deal with later, and, I suspect, a range of other issues that might arise as a result of the Senate committee’s investigation and report into this bill.

As I am sure the Senate and the House of Representatives are aware, the amendments being introduced to the act by this bill are designed to bring Australia into compliance with important international obligations dealing with the threat of terrorist financing and, more broadly, money laundering activities. Specifically, they will bring us into line with two sets of recommendations released by the Financial Action Task Force, FATF, which is an important international intergovernmental group that has been tasked with the development of standards to combat money laundering for illegal activities, including terrorism. This is a welcome development and one supported by the Labor Party although, as I said, we will be moving amendments to improve aspects of the legislation that we think are deficient. However, it is a development that has been far too long in the making.

The history of this bill is one of delays, failed consultations and international embarrassment. It is more than five years after the September 11 attacks. Finally, this sluggish government has now brought a bill before the parliament dealing with these important matters. The Howard government is negligent in leaving Australia inadequately protected from criminals and terrorists who use our financial system to launder money. Only now—five years after 9-11—do we see an implementation of the special recommendations, of which eight of the nine were released in the aftermath of those horrendous attacks in 2001. Furthermore, we should make no bones about the importance of this legislation in the fight against organised crime and terrorism. In 2002, Senator Ellison, in a press release, made pointed reference to that fact when he said that criminals and terrorists:

... will continue to take advantage of jurisdictions where the law enforcement and regulatory powers are the weakest.

Of course, he was right. That is exactly what terrorists and criminals will seek to do. That statement was made in 2002. Recommendations were released in 2003. But it is now five years since the September 11 attacks, five years since the recommendations were first released, three years since the revised recommendations were released and three years since the new laws were promised, and only now are we seeing the bill for the first time here in the parliament. That is not the performance of a government in command of the tasks of dealing with money-laundering problems and anti-terrorism financing.

Just like Senator Ellison’s handling of the Customs container management re-engineering project, this has become a lesson in how not to implement complex new laws. The first serious problem was the botched consultation process undertaken throughout 2004 and 2005. In fact, the term ‘consultation process’ is too kind a term to use. Industry was not consulted. There was no proper consultation process about these proposed laws, and the government essentially attempted to jam everything into a one-size-fits-all approach. The minister attempted to persevere with that approach and in the middle of 2005 faced the humiliating result of being rolled by cabinet after a concerted campaign by industry and then being told to go back to the drawing board and start again.

In 2005 Australia faced the further international humiliation of two reports which slammed our responses to anti money-laundering and counter-terrorism financing. Firstly you had the release in May of that year of a report by the United States State Department in which Australia had the dubious honour of being named alongside Haiti and the Dominican Republic as a ‘major money-laundering country’ and a ‘country of primary concern’, owing to the Howard government’s weak legislative framework. We should contemplate that. The people of Australia would be appalled to know that the negligence of the Howard government resulted in our listing in a United States State Department document as being a major money-laundering country. Bear in mind that it was Senator Ellison who pointed out, quite correctly, that terrorists seeking finance and international criminals wishing to launder money will shift their operations to those jurisdictions with the weakest law. We happen to be in that category alongside the dubious company of Haiti and the Dominican Republic. That was the assessment of our closest ally, the United States.

Australia’s status as a soft touch on money laundering and terrorist financing was confirmed later that year following an investigation and the release of a country report by the FATF which found, incredibly, that Australia was fully compliant with only 12 of the 40 general recommendations. But, even more alarmingly, it found that Australia was not compliant with a single solitary one of the nine special recommendations relating to terrorist financing. Our record on the international stage has been an appalling embarrassment and an indictment of the mismanagement that the Howard government has brought to this important issue. Two years after Senator Ellison had promised the laws, the international community gave Australia a big fat zero out of 10.

If there is an upside to the international humiliation, it is that it seems to have finally spurred the Howard government into some activity. In the meantime the government has been forced to rush through a number of bandaid solutions to keep up the appearance of compliance with the recommendations. The government’s approach to this legislation has been more like watching a really bad movie that never seems to end rather than any proper process of legislative management and reform. It has been an excruciatingly painful process, when there has been no need for it. It has been compounded by the government’s own errors.

The first of these, contained in the Anti-Terrorism Act (No.2) 2005, was passed last year in what can best be described as a slow panic in response to the FATF report. It implemented a number of the FATF recommendations, but before these had even commenced the government was forced to amend a number of these in a later act, the Financial Transaction Reports Amendment Act 2006. It was forced to introduce these amendments because, to quote directly from the government’s own explanatory memorandum:

If the amendment to restrict the application of Division 3A of Part II 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.

Those are the government’s own words. The government, in its own words, was saying that the legislation that it had presented and put through the parliament was so poorly drafted that it would have put legitimate businesses out of business. That is no real surprise. The government, in answer to questions put on notice at the Senate committee inquiry into the anti-terrorism bill, admitted that it did not consult with industry on the final version of the bill, so it was forced to continue piling bandaid upon bandaid onto the legislation. More than half a decade after the September 11 attacks, the Howard government has decided that it is finally time to bring Australia into line with our international obligations and introduce legislation to attack terrorist funding at its source.

As I said before, with some provisos: this is only the first tranche—Labor will be supporting it. There are serious holes left in the regime which we are told the government will fix in further legislation. Labor calls upon the government to release the time frame in which it expects to complete those further reforms. Its track record to date does not give either the Labor Party or affected industry in Australia any great confidence. Until those reforms are completed and Australia is compliant with all the recommendations in all the areas, you have what is essentially a Maginot line. It is a set of scary and imposing defences that on the face of it seem impenetrable but that in actual fact are easily outflanked and circumvented. That is precisely what the government has created here. While these bills are a long overdue step in the right direction, it cannot be emphasised enough that they are only part of what is required. Until Australia completes the second tranche, we are going to be left with the Maginot line.

I will now turn to the Senate committee, which I believe is due to table its report into the bill at some point today. I make these remarks without the benefit of having read the report. However, to get some understanding of the issues before the committee, we can turn to the evidence presented in submissions, transcripts and answers to questions. For consultation, we saw industry repeating concerns similar to those it had raised earlier—specifically, I am thinking of the Anti-Terrorism Act. In that case, industry’s concerns were later shown by the amendment of the Financial Transaction Reports Act to be quite valid, because they were not properly consulted on the final text on that occasion. In a similar vein, we saw lacklustre consultation during the early stages of the draft, which resulted in the unusual situation of a minister being rolled in cabinet on his own bill and told to go back and start again. So the consultation process is not a new concern with this bill, and industry has every right to be wary of the perceived lack of consultation so far. I hope that the minister, AUSTRAC and the department have taken some steps to allay the stakeholders’ concerns.

Equally, the implementation period of the legislation is of great concern. The bill places an onus on the private sector to monitor and report to AUSTRAC suspicious transactions or transactions over $10,000. So we need to make absolutely sure that the private sector are able to come to grips with the obligations imposed by this bill. The private sector have told the Senate committee, in submissions and hearings, that they need certainty so that they can start building systems and training staff before the legislation comes into effect. In response, the department has indicated that it will have the rules available by 31 March next year. The Labor Party will continue to push for this, particularly given the minister’s track record of not giving industry sufficient time to implement the required changes.

I foreshadow that my colleague Senator Ludwig will be moving a range of amendments in the Senate on Labor’s behalf. In addition to such amendments as arise from the committee report, there are two matters I will flag here in the House today. Firstly, Labor will be moving to strike out section 6(7), which gives the power to regulations to effectively override and amend the act. This is what is commonly known as a Henry VIII clause, after the well-known king’s penchant for legislation of that type. Simply stated, it provides the opportunity for legislation passed by the parliament to be changed by subordinate authority. This is not the normal practice of our parliament or, indeed, any parliament in the Westminster system. If legislation needs to be altered, that should be the job of the parliament, not regulations. So we will be moving to strike out that clause. From the point of view of good governance, Henry VIII clauses are always to be opposed unless there are very sound reasons to support their existence. They are of particular concern in this bill given the extensive exemptions and delegations it already contains. The government’s argument for flexibility is, in Labor’s view, not enough to authorise these unusual procedures.

Secondly, Labor will be moving an amendment to bring forward the date of review. This is currently set at seven years, which, for a piece of legislation of this complexity, is simply too long. We will be moving amendments to shorten that review period. Let me state again that the Labor Party supports the bill. We will be moving amendments to improve it, but we fundamentally support it, as we have supported all reasonable legislation designed to protect Australians and fight terrorism and crime. Our concerns about this bill arise primarily from the fact that such an important piece of legislation has taken so long to reach the parliament. Our concerns are about a minister who refuses to consult and work with industry to achieve appropriate outcomes. Senator Ellison has been a repeat offender at botching consultation with industry, as his efforts to implement the new Customs cargo system showed us at about this time last year.

This is important legislation and it is high time it was brought before the parliament. It is high time we improved our standing in the international community and removed ourselves from the list of easy touches on the international money-laundering market, alongside Haiti and similar countries. It is time we removed ourselves from a list we should never have been on. It is a black mark against the Howard government that it has taken so long to bring these measures forward. I move:

That all words after “That” be omitted with a view to substituting the following words: “whilst not declining to give the bill a second reading, the House:

(1)

notes that the Financial Action Task Force (FATF) took swift action after September 11 2001, adding eight special recommendations on Counter-Terrorist Financing to the forty recommendations on Anti-Money Laundering by October 2001;

(2)

notes the Minister for Justice (Senator Ellison)’s statement of June 5 2002 that “criminals and terrorists will continue to take advantage of jurisdictions where the law enforcement and regulatory powers are the weakest”;

(3)

notes that the Government promised to meet FATF standards in 2003 and further notes the failure of the Minister for Justice to progress this legislation from that time until the present;

(4)

notes that, in the interval between indicating an intent to produce legislation and actually tabling it:

(a)

the Government, either through collaboration with AWB or the grossest incompetence, enabled AWB to fleece the UN of some $300 million in funds to channel them to the evil Iraqi Dictator, Saddam Hussein;

(b)

in March 2005, the US State Dept Report Released by the Bureau for International Narcotics and Law Enforcement Affairs named Australia as a “major money laundering country”.

(c)

in April 2005, the Minister created a new anti-money laundering taskforce, but incredibly left off AUSTRAC, the nation’s prime anti-money-laundering agency.

(d)

important anti-terrorism legislation was drafted incorrectly and the Parliament had to be recalled at great expense to fix sloppily-drafted anti-terror legislation by changing one word;

(e)

further, provisions of the Anti-Terrorism Bill (No. 2) 2005 were also drafted incorrectly and had to be amended to avoid significant hardship to Australian business.

(f)

in October 2005, the FATF reported on Australia’s compliance and found the Government had failed to meet the FATF standards, scoring just 12 out of 40 on anti money laundering, and 0 out of 9 on counter-terrorism financing.

(5)

condemns the Government for allowing criminals and terrorists to launder money for three full years while the Minister fumbled the drafting and consultation process;

(6)

condemns also the Government’s collaboration with AWB or gross incompetence in allowing the channelling of funds to Saddam Hussein;

(7)

notes that the present legislation, while a substantial improvement on the past five years of soft and weak legislation on terrorist financing, still represents just the first tranche of the required reforms;

(8)

calls on the government to outline a timetable for passage of the second tranche, so Australia will no longer be a target for criminals and terrorists seeking to take advantage of the Government’s soft and weak AML/CTF laws”.

I note this matter will be carefully considered, clause by clause, in the Senate. My colleague Senator Ludwig, who has been intricately involved in the work of the committee and the Senate and is shadow minister with direct responsibility for these matters, will pursue detailed amendments—the two that I have mentioned and I suspect others that may come to light as a result of the consideration of the Senate committee. I would urge the government to look carefully at the recommendations that come from that Senate committee and at the amendments my colleague Senator Ludwig will move in the other place.

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