Luke Hartsuyker (Cowper, National Party) Share this | Hansard source

I welcome the opportunity to speak on this important piece of legislation. The Anti-Money Laundering and Counter-Terrorism Financing Bill 2006 seeks to address one of the core threats to Australia’s quality of life. It is now more than five years since the September 11 attacks but the threat of terrorism is still front-of-mind, and the need to take measures which will protect our citizens remains a priority of the coalition government. Tens of thousands of words have been written about the horror of September 11, but there remains a need for nations such as Australia to continue to assess what measures can be taken to ensure our people can live in a safe and secure environment.

The vision of the twin towers crumbling in New York has left an indelible scar on our memories. Today’s war on terror is like no other war. We are not fighting any one country; rather, we are at war with a loose network of cells and organisations that seek to undermine the values of Western civilisation. Across the world, governments have taken action which aims to prevent or reduce the level of terrorist activity. And while their vigilance has been successful in nullifying many potential threats, the bombings in places such as London and Bali serve to remind us of the reality.

Recently, I was reading a column in the Australian newspaper by its editor-at-large, Paul Kelly, in which he made a number of points that I believe summarise the impact of 9/11 and the subsequent actions on the war on terror. He wrote:

That assault from the sky did more than kill 3000 people. It violated the US, destroyed its immunity, provoked its religious, cultural and political passions and unleashed an American strategic response under the leadership of George W. Bush ... The civil war within Islam that inspired 9/11’s aggressive martyrdom has escalated rapidly. It invades the globe like a noxious gas as fanatics and recruits to jihad launch murderous attacks on civilians from Bali to Madrid, Baghdad to London.

The costs and consequences of the events on that day in New York and Washington are still with us. Not only are they shaping the way we live; they are still shaping the way we think. I am referring specifically to those organisations and individuals who are financing terrorist activities. Governments clearly have to take action not only against those individuals and groups who plan and carry out terrorist attacks but also against their sympathisers who finance these activities. We should also act against those who assist terrorists and who do so not out of sympathy with their aims and beliefs but out of a desire solely to make money.

The Anti-Money Laundering and Counter-Terrorism Financing Bill 2006 specifically targets those who financed these killers in New York, London, Bali and Madrid. These reforms will bring Australia into line with international standards set by the financial action task force, or FATF, with its 40 recommendations on money laundering and nine special recommendations on terrorism financing. The FATF recommendations provide an enhanced and comprehensive framework of measures for combating money laundering and terrorism financing.

I would like to take a few moments to talk about the financial action task force, because its composition and actions bring credibility and discipline to this anti-terrorist legislation. The Financial Action Task Force on Money Laundering is an intergovernmental body whose purpose is the development and promotion of policies at both national and international levels to combat money laundering and terrorist financing. The task force is a policy-making body which works to generate the necessary political will to bring about national legislative and regulatory reforms in these areas. FATF monitors members’ progress in implementing necessary measures, reviews money-laundering and terrorist-financing techniques and counter-measures, and promotes the adoption and implementation of appropriate measures globally.

In performing these activities, FATF collaborates with other international bodies working in this area. Recognising the threat posed by these financial activities to the banking system and financial institutions, FATF was established by the G7 in 1989 from G7 member states, the European Commission and eight other countries, including Australia. The FATF was tasked with examining money-laundering techniques and trends, reviewing the actions taken at a national or international level and setting out the measures required. In April 1990, FATF issued a report containing a set of 40 recommendations which provided a comprehensive plan of action needed to combat money laundering. Since then, FATF has expanded its membership, has completed additional rounds of mutual evaluations of member countries and has continued to examine and report on the methods used to launder money.

The bill imposes obligations on reporting entities when they provide designated services—that is, opening an account, making a loan or issuing a credit card. These obligations include customer due diligence such as identification, verification and ongoing monitoring. There is also provision for reporting suspicious matters, threshold transactions, international funds transaction instructions and compliance reports. The banking sector will be obliged to conduct due diligence of its correspondent banking relationships and ensure that appropriate identifying information is included in international electronic funds transfers.

The bill implements a risk based approach to regulation. This means that reporting entities will determine the way in which they meet their obligations based on their assessment of the risk of whether providing a designated service to a customer might facilitate money laundering or terrorism financing. The approach has been endorsed by the banking industry. It recognises that reporting entities have the experience and knowledge needed to assess and mitigate risk and that the legislation will impose costs on industry. Importantly, it is worth noting that similar approaches have been taken in both the United States and the United Kingdom.

Reporting entities will manage operational risks through anti money-laundering and counter-terrorism programs developed in accordance with the rules associated with anti money-laundering and counter-terrorism finance. The Australian Transaction Reports and Analysis Centre, AUSTRAC, will monitor compliance with these programs and will assess the reasonableness of the entity’s risk assessment.

The Anti-Money Laundering and Counter-Terrorism Financing (Transitional Provisions and Consequential Amendments) Bill 2006 makes a number of consequential amendments to various acts. For example, obligations under the Privacy Act 1988 will be extended to all reporting entities with respect to their compliance with the AMLCTF Bill. The transitional provisions bill will also amend the money-laundering offences in the Criminal Code 1995 to include proceeds of an offence against state and territory law. The legislative package will be supported by operational rules to be developed by AUSTRAC in consultation with industry. The use of the rules instead of subordinate legislation allows for flexibility in ensuring that the rules are appropriate to sector-specific needs.

It is important to note that the government has consulted widely on this bill. In 2003, federal cabinet agreed to Australia implementing the financial action task force’s revised 40 recommendations on money laundering and nine special recommendations on terrorism financing. Importantly, the cabinet also agreed to consultation on the anti money-laundering and counter-terrorism financing reforms, including the release of an exposure draft of proposed legislation. Extensive consultation with industry took place between December 2003 and October 2005, during which agreement was reached on the broader need for AML-CTF reforms in the form of a risk based regulatory framework with head legislation supported by operational rules.

In October 2005, cabinet agreed to progress the reforms in two tranches. The first part focused on covering the financial and gambling sectors and bullion dealers. Lawyers and accountants would also be covered to the extent that they provide services underpinning the financial sector. The second part covers real estate agents, jewellers, lawyers and accountants and will be progressed following implementation of the first tranche.

Following the release of a draft in December last year, a consultation process of four months ensued. The bill was referred to the Senate Standing Committee on Legal and Constitutional Affairs, and a report of their findings was published in April of this year. Feedback from the consultation through submissions and the report has prompted further changes. The revised drafts were then released for consultation in July this year. Over 70 submissions were received during the second consultation period. The lengthy consultation process has resulted in a legislative package that will ensure that Australia complies with its international obligations and maintains its status in the region with respect to prevention of money laundering and terror finance with minimal impact on legitimate business.

I believe this legislation is an important further step in our nation’s fight against terrorism. If we can prevent the perpetrators of terrorist activities from laundering money, then we are restricting their capacity to create fear and inflict terror on our society. This particular legislation has been carefully drafted to reflect international best practice and a comprehensive consultation process has been undertaken. As I said earlier in my contribution, this is not a traditional war, and a major part of winning this war is winning control of the finances of the terrorists. I commend the bills to the House.

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