Sussan Ley (Farrer, Liberal Party, Shadow Minister for Justice and Customs) Share this | Hansard source

I am pleased to speak on the Financial Transaction Reports Amendment (Transitional Arrangements) Bill 2008. Under the Financial Transaction Reports Act 1988, certain regulated businesses must report information about transactions to AUSTRAC, the Australian Transaction Reports and Analysis Centre. These obligations cease on 12 December 2008, when updated measures begin under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006, the AML/CTF Act. However, there is a 15-month grace period under the AML/CTF Act to allow businesses to make reasonable steps to improve their systems in order to comply with the new obligations. New systems must be in place by 11 March 2010.

The Financial Transaction Reports Amendment (Transitional Arrangements) Bill 2008 fixes an unintended loophole which was: during the grace period, companies would not be required to report transactions after 12 December 2008 until their new systems were in place. The bill requires that reporting bodies continue reporting transactions under their old systems until their new systems are in place, thereby ensuring that AUSTRAC maintains full records during the transition period. The Anti-Money Laundering and Counter-Terrorism Financing Act 2006 is aimed at addressing the issue of money laundering in Australia, which is estimated to have a value of approximately $11.5 billion a year. The additional concern is the threat to national security posed by the financing of terrorism. The act also sought to implement Australia’s international obligations, including a commitment to bring Australian legislation in line with international standards, as set out by the Financial Action Task Force on Money Laundering.

The first tranche of reforms of the AML/CTF Act 2006 cover the financial sector, including banks, credit unions, building societies and trustees, and extends to casinos, TABs, wagering service providers and bullion dealers. The second tranche of the AML/CTF Act is for the expansion of designated services. On 13 July 2007, the Attorney-General’s Department released draft provisions setting out designated services which will be covered by the second tranche of the AML/CTF legislation. The sectors which will be affected by this second tranche legislation are: real estate agents, in relation to the buying and selling of real estate; dealers in precious metals and stones engaged in transactions above a designated threshold; lawyers, notaries, other independent legal professionals and accountants when preparing for or carrying out certain transactions; trust and company service providers when they prepare for or carry out for a client the transactions listed in the glossary to the FATF recommendations. AUSTRAC, the Australian Transaction Reports and Analysis Centre, plays an integral role as Australia’s anti-money-laundering and counterterrorism financing regulator and specialist financial intelligence unit. AUSTRAC is an essential partner in the global fight against crime. In its regulatory role, AUSTRAC oversees compliance with the reporting requirements of the AML/CTF Act and the FTR Act by a wide range of financial services providers, the gambling industry and other specified reporting entities, and cash dealers.

In its intelligence role, AUSTRAC provides financial transaction reports information to state, territory and Australian law enforcement, security, social justice and revenue agencies, as well as to certain international counterparts. The information from these reports is retained, compiled, analysed and disseminated by highly qualified AUSTRAC personnel using sophisticated tools. In collecting financial transaction reports information and ensuring signatories to accounts are identified, AUSTRAC assists its partner agencies in the investigation and prosecution of criminal and terrorist enterprises in Australia and overseas. The coalition recognises that Australia needs laws such as these to reduce the incidence and facilitate the tracking of money laundering and terrorism financing.

Due to the top-secret nature of terrorist investigations, including tracking their finances, we do not always hear about the successes that our agencies and organisations have. We have been fortunate enough not to have had a mass terrorist attack on Australian soil. It is a tribute to the skill, dedication and hard work of the AFP, our intelligence agencies and bodies such as AUSTRAC that we have prevented such attacks from taking place. These bodies are in many ways the quiet achievers and protectors of our society, and they deserve adequate support from the government.

There are currently five types of information that are reported to AUSTRAC: significant cash transaction reports, suspect transaction reports, international funds transfer instructions, cross-border movements of physical currency and cross-border movements of bearer negotiable instruments. AUSTRAC also acts as a primary source of information that identifies Australian taxpayers who may be engaged in tax evasion using tax havens. AUSTRAC routinely monitors domestic transactions over $10,000 as well as international transactions.

The laws that we are talking about bring Australian standards in line with international standards issued by the Financial Action Task Force on Money Laundering, FATF. The FATF is an intergovernmental body whose purpose is the development and promotion of national and international policies to combat money laundering and terrorist financing. The FATF was established in 1989 by the G7, and Australia was a founding member. The FATF currently has 33 members, two of which are regional organisations. In October 2005, the FATF evaluated the AML/CTF systems in place in Australia. The evaluation found that, despite some strength in Australian systems, there was still work which needed to be done. The recommendations provide the starting point for reforming Australia’s anti-money-laundering and counter-terrorism financing systems. The AML/CTF Rules address key issues raised in the evaluation report.

Each year vast amounts of funds are generated from illegal activities such as drug trafficking, theft, people smuggling, arms trafficking and other corrupt practices. The criminals who raise these funds need to bring them into legitimate financial systems without raising suspicion. ‘Money laundering’ is the name given to the process by which illegally obtained funds are given the appearance of having been legitimately obtained. This could mean legitimate businesses or charities are used as a front for otherwise illegal activities.

It is estimated that up to $4.5 billion is involved in money laundering in Australia every year. Money-laundering risks will continue to increase with commercial and technological developments. It was therefore crucial that Australia’s anti-money-laundering laws were adapted to a changing international security and commercial environment. When Australia’s existing primary anti-money-laundering legislation, the Financial Transaction Reports Act 1988, was developed, most financial transactions were carried out face to face, over the counter at financial institutions. Banking services were offered through manual passbooks at branches that were generally open only from Monday to Friday. Electronic transactions, such as those conducted through ATMs, EFTPOS, and telephone and online banking, are rapidly replacing traditional banking and finance methods. In Australia today, fewer than 10 per cent of transactions are carried out in bank branches. The Anti-Money Laundering and Counter-Terrorism Financing Act 2006 takes into account the extensive changes which have occurred in banking and financial services in Australia and overseas in recent years.

The Howard government introduced the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 in order to ensure there was a proper regulation of financial transactions in a way that would help detect and prevent money laundering and terrorism financing. These laws meet higher international standards and are in place to protect Australian businesses from being used for money laundering and terrorism financing. These laws were designed to make it harder for criminals to use the profits of crime and terrorism to receive money to carry out terrorist acts.

It is important to note, however, that terrorist organisations do not necessarily require a lot of money to achieve disastrous results. Today we remember the Bali bombings, costing only A$60,000 to execute. The September 11 attack on the World Trade Centre cost A$600,000 to execute. The Madrid attack cost $12,000, and the London bombings cost less than A$18,000 to execute. Considering the small amounts of money required by these terrorist organisations to cause death and economic destruction, it is vital that we support bodies such as AUSTRAC, the AFP, ASIO and ASIS and continue to fund them appropriately. They need to be well resourced to be able to detect terrorist finances when they are in such small amounts that would not usually cause suspicion. Globally, trafficking in illicit drugs and weapons is a profitable means for terrorists to boost their funds. Terrorists have been involved in trafficking illicit drugs, as they are the most lucrative commodities to be traded. It is important to recognise the excellent work the Australian Customs Service does, in conjunction with the AFP, to prevent illegal drugs from entering Australia.

Australian law enforcement and intelligence organisations need to be supported in the effort to manage terrorist threats to Australia and our region. In East Asia, terrorist organisations have exploited trafficking in drugs and weapons, as well as engaging in organised crime, to finance their operations—serious international crimes. In South Asia, the al-Qaeda network is reported to have trafficked heroin to support its operations globally. Terrorists and their financial supporters frequently commit illegal fundraising, money laundering, tax evasion, fraud and international currency violations. Thus, prosecuting individuals for financial crimes can be effective in coordinating the efforts of law enforcement authorities such as the AFP and can facilitate international investigations and ultimately may lead to the detention of terrorists. Following on from the Howard government’s proactive approach towards combating global terrorism, the coalition supports the Financial Transaction Reports Amendment (Transitional Arrangements) Bill 2008.

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