Michael Danby (Melbourne Ports, Australian Labor Party) Share this | Hansard source

I rise to speak on the Anti-Money Laundering and Counter-Terrorism Financing Bill 2006 and the Anti-Money Laundering and Counter-Terrorism Financing (Transitional Provisions and Consequential Amendments) Bill 2006. Both these bills are designed to bring Australia into compliance with international standards to combat money laundering by both criminals and terrorist organisations. The bills thus have a criminal justice dimension and a national security dimension. The bills are needed so that Australia will be in compliance with the recommendation of the OECD’s Financial Action Task Force, known as FATF. Initially developed in 1990, the FATF recommendations were revised in 1996 to take into account changes in money-laundering trends and to anticipate potential future threats.

In October 2001, a few weeks after the September 11 attacks, FATF held an emergency session in Washington in which it agreed that a whole new legislative regime was needed to combat terrorist-financing networks. More recently, in order to bring member states into compliance with these requirements as quickly as possible, FATF has completed a thorough review and update, known as the forty recommendations—perhaps to catch the 40 thieves of the Ali Baba story—which was published in 2003. All OECD member states are expected to legislate for compliance with these recommendations.

Specifically, FATF called on OECD member states to take immediate actions to implement nine special recommendations, and I am going to read these out for a specific reason. Each country should:

1.

Take immediate steps to ratify and implement fully the 1999 United Nations International Convention for the Suppression of the Financing of Terrorism.

2.

Criminalise the financing of terrorism, terrorist acts and terrorist organisations.

3.

Implement measures to freeze without delay funds or other assets of terrorists, those who finance terrorism and terrorist organisations.

4.

Require financial institutions and other businesses to report promptly their suspicions to the competent authorities if they suspect that funds are being used for terrorism, terrorist acts or by terrorist organisations.

5.

Afford other countries the greatest possible measure of assistance in connection with proceedings relating to the financing of terrorism, terrorist acts and terrorist organisations.

6.

Take measures to ensure that persons or legal entities that provide a service for the transmission of money or value, including transmission through an informal money or value transfer system or network, should be licensed or registered.

7.

Take measures to require financial institutions, including money remitters, to include accurate and meaningful originator information on funds transfers and related messages.

8.

Review the adequacy of laws and regulations that relate to entities that can be abused for the financing of terrorism, including non-profit organisations.

9.

Have measures in place to detect the physical cross-border transportation of currency and bearer negotiable instruments.

I have taken the time to read these recommendations into the Hansard because they are a benchmark by which Australia’s performance in this area should be judged. As the honourable member for Brisbane has noted—and I will come back to this shortly—we are a long way short of measuring up to these benchmarks.

Labor generally supports these bills, which reflect international agreements on the best ways to combat money laundering by criminals and terrorists. However, we are opposed to several procedural aspects of this bill, particularly the Henry VIII clause, which allows the minister to override provisions of this bill at his discretion. Senator Ludwig, the shadow minister for justice in  the other place, will be moving amendments to remove, among other things, this unacceptable overriding of the rights of parliament to decide what the law is.

Despite our general support for the bills, however, we have to ask why it has taken three years for the government to respond to the FATF recommendations. We do not deny that there are a number of complex technical matters in these bills and that many interested parties needed to be consulted. Nevertheless, in a matter of such urgency it seems to us that it should not have taken three years since FATF published its recommendations and five years since the OECD’s original call to action after September 11 to bring this bill before the House, particularly when we realise that these bills are only the first in a series of bills which will be needed to bring Australia into full compliance with the recommendations from FATF that I just read out. In 2002, the Minister for Justice and Customs, Senator Ellison, told us:

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

Yes, Senator, that is quite true; so what has been happening for the last four years? Senator Ellison told us that this was an urgent matter for the government. I do not think that long delays in producing these bills meet any definition of ‘urgent’.

The honourable member for Brisbane has outlined the reason these bills have taken three years to develop. Senator Ellison made a complete mess of the consultation process during 2004 and 2005, effectively wasting two years. The government failed to consult properly with those who would be most affected by the new laws and then tried to push through a one-size-fits-all approach. After intense lobbying by industry, Senator Ellison was rolled in cabinet in mid-2005 and told to go and start again.

Industry had legitimate grounds for complaint. The provisions of the Anti-Terrorism Act (No. 2), passed in such haste in 2005, implemented a number of recommendations, but the bill was so badly drafted that the government was forced to amend many of its provisions in a later act, the Financial Transaction Reports Amendment Act 2006. The act as first drafted would have put some legitimate non-bank money remitters out of business.

I hope the government’s incompetence in this area will not prevent the charging and trial of individuals recently identified by AUSTRAC’s Mr John Visser and the Australian Federal Police who allegedly have been, during a recent period, transferring thousands of dollars to Hezbollah, an organisation identified by this parliament as terrorist. I also hope that legislation that is now being passed can still be used to effect against people who have been involved in such activity if it is proved to be so.

Another year was wasted while a new bill was drafted and another round of consultations was held. This is how the Howard government deals with ‘urgent’ matters such as bills that have not only huge financial implications for Australian industry but also important national security dimensions. We can be sure that terrorists and organised crime bosses have not spent the last three years waiting for the government’s legislation. They have been developing increasingly sophisticated ways of making money, moving money around and concealing their actions from governments.

It is now more than three years since I spoke in the House about the need for tighter scrutiny of bogus charities, such as some of those based in Saudi Arabia which serve as fronts for terrorist groups such as al-Qaeda, raising funds from the zakat, the voluntary tax for charity which the Muslim faithful pay, and diverting it to terrorism. I referred then to testimony before the US Congress about ‘the Golden Chain’, the Saudi Arabian based funding system for al-Qaeda which is based on bogus Islamic charities that launder zakat funds and pass them on to al-Qaeda.

I also referred to Omar al-Faruq, who, after his arrest in Indonesia in 2002, told his interrogators that al-Qaeda’s operation in South-East Asia was funded through a Saudi charity known as the al-Haramain Foundation. According to al-Faruq, this money was laundered through the al-Haramain Foundation by donors in the Middle East who were close to Osama bin Laden. It is very good to see that the Indonesian authorities have made some moves against al-Haramain over the last few years as well.

In the US at any rate, these bogus charities are now under much tighter supervision. The unofficial financial transfer system known as hawala, widely used in the Islamic world, is also being brought under closer scrutiny, since it is well known that this system has been exploited by al-Qaeda as a fundraising mechanism. The ‘Golden Chain’ is apparently still operating in Indonesia and Malaysia, however, providing the infrastructure for terrorist groups such as Jemaah Islamiah. Although I know that progress is being made by Asian countries such as Indonesia in cutting off funding to these terrorist networks, this work is far from complete, and it makes it all the more urgent that we prevent Australia being used as a base both for fundraising and for money laundering.

One of the most alarming trends in recent years has been the closer cooperation that exists between organised crime and terrorism. Since it is becoming more difficult for terrorists to raise funds from fake charities, they have moved into money laundering. Terrorists are now working with drug traffickers and other criminals to launder the proceeds of crimes such as drug dealing, prostitution, intellectual property theft and smuggling. They use these activities to fund their operations, using legitimate businesses such as hotels and taxi operators as fronts to launder money. They are now also moving money through the new online payment systems as well as international ATM transfers. These transfers are very good because citizens travelling all round the world can make use of any ATM, but they are obviously of great benefit to people with nefarious purpose who can also use ATMs all round the world to transfer money. In the face of these trends, governments cannot afford to be complacent.

Unfortunately, complacency is what we see all too often when we consider this government’s record on matters related to counter-terrorism. The government is happy to exploit fears of terrorism for political gain but is slow when it comes to actually doing what needs to be done to protect Australia against terrorism and to prevent Australia being used as a base for terrorist fundraising, recruiting and money laundering. We saw this most conspicuously with the recent spate of maritime and aviation security bills—far too little, too late and inadequate legislation in any case, because this government always puts the interests of its various lobby groups ahead of the national interest.

These bills cover the financial, gambling and bullion-dealing industries, as well as lawyers and accountants. They expand the provisions of the Financial Transaction Reports Act 1988. The provisions of the bills will apply to a wider range of businesses than the 1988 act and will impose a wider range of obligations on them. We will apparently have to wait even longer for the second stage of the government’s compliance legislation, which will cover other activities of lawyers and accountants as well as the real estate industry. We do not even have a date for that legislation. It is no wonder that the May 2005 report of the US State Department ranked Australia with Haiti and the Dominican Republic as a ‘major money-laundering country’ and as a ‘country of primary concern’. It is disgraceful that Australia is ranked along with countries like Haiti and the Dominican Republic by our great American ally.

The fact is that, in 2005, four years after September 11 and four years after the OECD’s call for urgent action to combat money laundering and terrorist financing, a FATF report found that Australia was fully compliant with only 12 of the 40 recommendations that I identified earlier and that it was not fully compliant with a single one of the nine special recommendations, which I read out, relating to terrorist financing. This is a truly disgraceful state of affairs, and one that is being only partly rectified by these bills. We still have no idea when the government intends to make Australia fully compliant with the 40 FATF recommendations.

Labor support this bill as far as it goes, as we support all reasonable legislation which serves to protect Australia and to fight terrorism. But, as the honourable member for Brisbane has foreshadowed, we will be moving a range of amendments in the Senate. The deficiencies of this bill, as was the case with previous terrorism legislation, derive from the peculiar combination of delay and haste which so often marks this government. It does nothing for years, allows important matters to fester while it makes cheap political points and tries not to offend its own constituencies and then rushes in a bill so hastily and poorly drafted that it has to be amended even before it comes into effect. This seems to be the government’s way of dealing with such vital matters of national security. It is not good enough.

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