Shayne Neumann (Blair, Australian Labor Party) Share this | Hansard source

I rise today to speak in support of the Financial Transaction Reports Amendment (Transitional Arrangements) Bill 2008. The aim of the bill is to help business, and I am confident that it will assist the regulating entities during the transition to the new reporting format by allowing them to continue to report to the Australian Transaction Reports and Analysis Centre, commonly known as AUSTRAC, as they have done under the Financial Transaction Reports Act 1998.

In the last few weeks we have witnessed extraordinary circumstances globally, and, whilst geographically we are an island, and a very big one at that, financially we are interwoven with the world system—we are inextricably linked—and money goes back and forth at the click of a button and the lifting of a telephone. This bill is important because it maintains the regulatory status of the Financial Transaction Reports Act and does not impose any regulatory burden on business. At this particular time the businesses in my area, the federal electorate of Blair, are concerned about what is happening globally, as they are across the country. It is important that we allow our businesses to remain viable and prosperous and to keep employment as full as we possibly can, to ensure that the working families and those who are struggling in our electorates are looked after. Keeping businesses profitable is crucial in the circumstances that we currently face financially. In many ways this bill is about allowing business more time to develop the necessary compliance systems. It is important that entities comply with the Anti-Money Laundering and Counter-Terrorism Financing Act 2006, commonly known as the AML/CTF Act, and the reporting requirements necessary under that piece of legislation.

The bill that is before us applies to threshold transactions, international funds, transfer instruction and suspicious matter reports. It is going to be welcomed by businesses—I know it will be welcomed by businesses in my area—because there are businesses, small and large, that move money across the country and overseas. There will be an end to the grace period, and many businesses that are not yet compliant will eventually move to that compliance. The AML/CTF Act replaces the Financial Transaction Reports Act, which, as Bob Debus, Minister for Home Affairs, announced in his second reading speech, was Australia’s original anti-money-laundering legislation.

This piece of legislation before us today has been introduced to improve our nation’s existing anti-money-laundering and counterterrorism financing system. These new laws will meet higher international standards to protect Australian businesses from being sued for money laundering and terrorism financing. The greater the quality, accuracy, and timeliness of reports from business entities, the greater the value they have in terms of detection, deterrence and the destruction of any criminal terrorist activity and money laundering. This new law will make it harder for criminals to use the profits of crime, and it will make it far more difficult for terrorists to receive moneys, to use those moneys and to transfer moneys across international borders to engage in nefarious terrorist activities.

This act is a major reform towards enabling our financial sector to maintain international business relationships with countries in our region, with Europe and with the Americas. It prevents and detects money laundering and terrorism financing by meeting the needs of law enforcement agencies for targeting information, which is so crucial, about possible criminal and terrorist activities. It brings us as a country into line with international standards in this regard, including the standards set by the Financial Action Task Force. The reforms in this piece of legislation enhance Australia’s anti-money-laundering and counterterrorism financing legislation. It will provide law enforcement agencies with the highest quality financial intelligence to assist in the detection and prevention of terrorist activity and the laundering of the proceeds of crime. It is absolutely crucial that we engage in this sort of thing. It is absolutely vital that we have the best quality and increasing excellence of reporting to regulators to ensure they detect the instances of crime.

In my previous life as a lawyer, I can assure you that there were many occasions when clients of mine talked to me about money going between Australia and overseas and how they did it. It is difficult for law enforcement agencies to get to the point where they can actually detect how much money is being transferred between Australia and overseas. There are a lot of legitimate financial transactions in terms of gambling, bullion activities and other business related activities, but there are a lot of transactions that are simply money laundering and used for criminal activities. We have to be in the position of knowing when it happens and of being able to detect it and prevent it from happening in the best possible way.

This bill amends the Financial Transaction Reports Act and establishes transitional provisions to authorise certain cash dealers to continue reporting suspicious transactions, international funds transfer instructions and significant cash transactions to AUSTRAC under the Financial Transaction Reports Act up to the end of 11 March 2010 or until they become compliant under the AML/CTF Act, whichever comes first. It authorises solicitors, solicitors corporations—and there are many of those around the country these days—and partnerships of solicitors to continue to report to AUSTRAC with respect to cash transactions under the Financial Transaction Reports Act until the end of 11 March 2010 or until they become compliant with the new act, whichever comes first. It also authorises certain cash dealers to enter transactions into their exemption register until the end of 11 March 2010. It will enable regulated businesses to continue reporting important information to AUSTRAC as they make the transition to the new reporting regime.

AUSTRAC is Australia’s anti-money-laundering and counterterrorism financial regulator, and it is the specialist when it comes to financial intelligence. AUSTRAC was initially established under the Financial Transaction Reports Act 1988, and its role is continued under the AML/CTF Act 2006. In its regulatory role, AUSTRAC oversees compliance with the requirements of the legislation by a wide range of financial service providers, including the gambling industry and others. In its intelligence role it provides to state, territory and Commonwealth government law enforcement, social security, social justice and revenue agencies information which is crucial to the detection of crime and the prevention of terrorism. Transaction reporting obligations under the AML/CTF Act will come into effect on 12 December 2008 and from this date reporting entities will be required to report international funds transfer instructions, threshold transactions and suspicious matters.

The legislation before us allows a period of grace, as I said. It covers the financial sector, the gambling sector, bullion dealers and other professionals and businesses. It will provide particular information when it comes to designated service. The reporting obligations under the AML/CTF Act come into effect on 12 December 2008. Though it is expected that many of the reporting entities will be compliant, it is recognised that, in the challenging times we find ourselves, for a variety of reasons not all of them will be compliant by that date. With this in mind, a 15-month period of compliance—that is, until 12 March 2010—is appropriate. It is crucial that we get this right.

The previous speaker spoke a lot about terrorism, but I want to concentrate for just a few minutes on offshore tax evasion because AUSTRAC plays an important role in that regard. It is crucial that we monitor regularly all domestic transactions and all international funds transfers over $10,000. AUSTRAC records the particulars of customers ordering and beneficiaries. It also records the amount being transferred, the accounts debited and credited and the financial institutions. The OECD in 2007 estimated that globally US$5 trillion to US$7 trillion is held offshore. A considerable amount of this money is held, sadly, in tax havens—and that is a major problem for many countries. In the financial year 2007 about $16 billion was sent to tax havens from Australia and about $18 billion was sent directly from tax havens to Australia, according to the Australian Taxation Office submission to the US Senate Committee on Homeland Security and Governmental Affairs for its 17 July 2008 hearing on tax haven banks and US tax compliance. The Australian Taxation Office in its submission said:

… the Australian Transaction Reports and Analysis Centre (AUSTRAC), Australia’s Financial Intelligence Unit (FIU), has sophisticated capabilities to track international fund flows.

But what worries me is that the Australian Taxation Office also said in its submission that it was:

… not aware of an effective way to estimate precisely the amount of tax at risk.

This was confirmed by the Commissioner of Taxation on 3 October 2008, in his fourth biennial meeting with the Joint Committee of Public Accounts and Audit. We simply have to find better ways to track this. We need to look at how we can do this. I am not suggesting, Madam Deputy Speaker, you have all the province in your mind as to how we do this, but we simply have to find better ways to track money that goes overseas from Australia and back into Australia. We have to find ways to estimate just how much is going into tax havens and beyond.

In fairness, the Commissioner of Taxation has said that there are a number of mitigating factors in Australia that help us in this regard. He said that the following play a role: geography; the existence of AUSTRAC itself; our own vigilance in the area; the lack of an inheritance tax or gift duty; the relative size of the flow of funds from Australia to tax havens compared to other countries; simply, the law-abiding ethic of most Australians; and the message that the Australian Taxation Office has sent with Project Wickenby and other activities. But we really must be vigilant in this regard. I commend the Australian Taxation Office for their involvement in the multiagency task force known as Project Wickenby, which was formally funded in 2006 to investigate internationally promoted tax arrangements, alleged tax avoidance or evasion and, in some cases, large-scale money laundering. The project has $305 million in funding over seven years and its focus is really on detecting these problems. We know it has led to a number of arrests and charges—and I will not go into detail about those. The ATO is looking at a number of tax havens as well. The use of Lichtenstein entities and bank accounts in these circumstances is also a worry to everyone. The Australian Taxation Office is conducting about 20 tax audits and, according to the ATO, it is likely to raise in excess of $1 million.

So these are real problems for us as a country. We need to be vigilant. This particular piece of legislation we have before us today is crucial in that regard. Audits by the Australian Taxation Office, the issuing of information and production notices domestically and offshore, formal interviews and informal interviews, accessing premises: all of those things are important for the Australian Taxation Office, but having this type of legislation in front of us today that will deal with preventing these problems is simply vital in the circumstances. It is vital for business and it is vital for the taxpayers of Australia who pay tax, although they all think they pay too much, in my experience, or they think that we do not use it as wisely as they would like. The truth is that we need to be extremely careful when it comes to money laundering and we need to be vigilant always to ensure that money that leaves or comes into this country is not used for domestic or international terrorism.

I commend this piece of legislation to the House because I think it will play an important role in helping us to be ever aware and ever keen to prevent these problems from flourishing on our shores. The vast majority of Australians are law-abiding citizens who love their country and pay their taxes—sometimes grudgingly, but always willingly in the circumstances—and they would not ever dream of engaging in the kinds of activities that this piece of legislation deals with. But for identifying those engaged in criminal activities and activities that go against the heart of our society, that go against the lifestyle that we believe is important and appropriate for Australia—that is, one of the rule of law, of freedom of association, of the right for the people of Australia to determine the kind of government we have and for that government to run the country efficiently, effectively and democratically—this type of legislation is so important. It is probably not the sexiest piece of legislation that you could imagine, but it has a very important role in preventing the kind of criminality that Australians abhor. I commend the bill to the House.

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