Tony Zappia (Makin, Australian Labor Party) Share this | Hansard source

I rise to support the Financial Transaction Reports Amendment (Transitional Arrangements) Bill 2008 for a number of reasons. This bill seeks to amend the Financial Transaction Reports Act 1988 and extends the transition period of the 2006 amendments to that act to 11 March 2010, enabling businesses which are not yet compliant with the 2006 reporting obligations additional time in which to become compliant. They will be required to report financial transactions in accordance with their obligations under the 1988 FTR Act until such time as they can comply with the 2006 amendment or until 2010, whichever comes first. The 1988 FTR Act targets money-laundering activities often used to transfer the proceeds of criminal activities or to fund terrorist activities. In March this year, the Minister for Home Affairs stated that, according to the Australian Institute of Criminology, some $4½ billion are laundered in Australia each year.

The FTR Act can also be effective in identifying white-collar crime activities such as tax evasion, fraud or scams where the money is transferred overseas into the fraudster’s bank account. I note the comments of the member for Blair in respect of tax evasion. The contribution he made is one which I endorse. I will not repeat the argument he put but he certainly made the case very strongly that tax evasion is an important issue that needs to be responded to in this country and, for that matter, across the world.

The area that I want to focus my remarks on in respect of this bill is the area relating to the use of scams, which are regularly taking place and stripping millions of dollars from hardworking victims. It is a serious issue which sometimes perhaps tends to be sidetracked because of the emphasis placed on money laundering for criminal purposes or terrorist activities and so on. Sadly, it is a very real issue that occurs on a daily basis out there in the community and affects so many people. Sadly, many of the victims who are affected lose their life savings or their retirement provisions, leaving them devastated or ruined. More frustrating is that most of the funds lost can never be traced and therefore are never recovered.

According to information provided by the Parliamentary Library, in 2007 Australians lost $980 million through scams and personal fraud. The most common types of scams were lottery scams, with some 84,100 victims recorded; pyramid schemes, which affected 70,900 victims; and phishing, a term which I have not heard before and which I may have mispronounced, which affected about 57,800 people. Phishing, which is spelled with a ‘ph’, is where victims are tricked into handing over bank account or credit card details. These figures only reveal part of the problem. According to the first national personal fraud survey, commissioned by the Australian Bureau of Statistics and released in June of this year, a total of 806,000 Australians reported that they were victims of at least one incident of personal fraud in the previous 12 months, and around six million Australians had been exposed to a range of selected scams. Of these, 453,100 Australians lost an average of $2,160 as a result of personal fraud.

Many of these frauds or scams originate from overseas and where scams are perpetrated from within Australia in many cases it is very likely that scam funds are then transferred to overseas bank accounts. In one international case reported by the Australian Competition and Consumer Commission in August 2007 more than $316,936 was recovered from a North American based scam operation after a joint investigation between the Australian Competition and Consumer Commission, the Queensland Police Service and the Competition Bureau of Canada. This was a common scam method where victims receive correspondence advising them that they have won a lottery or come into some other type of financial benefit or prize. The victims are told that, before the funds can be transferred to them, they must pay an upfront fee. In the North American scam case, authorities were alerted by a vigilant employee of the Adelaide based Powerstate Credit Union. In this case the joint action disrupted the operations of 37 scam promoters. Regrettably, there are many other scam methods being perpetrated every day where the funds are never recovered. The Nigerian based scams that most people are familiar with, where upfront fees are paid, are estimated to raise up to $680 million per year globally.

But the scams are not limited to unsuspecting individuals. In one case that I am aware of, the scams have also targeted Australian charities that rely on the goodwill and generosity of individuals and on community donations. Our charities often receive bequests both large and small from within Australia and also from overseas. It is unfortunate that our own Australian charities are a target. The charity is notified that someone has left a large bequest to the charity foundation, usually several million dollars. The scammer begins to groom the charity by requesting that the charity officially apply in writing as to what they propose to do with the bequest funds. Once the charity’s proposal for the bequest is approved—this is by the scammer—they then ask for a transfer fee. They say that funds to cover those fees must be transferred into an overseas account prior to any bequest funds being transferred to the Australian charity’s bank account. They say that once they have the transfer funds, they will then request the charity’s bank account number so that they can transfer the bequest funds. The bequest funds never come because they do not exist. This then leaves the charity vulnerable to internet fraud. In the particular case that I am familiar with, the scam originated in Nigeria but the funds were transferred to a bank in the USA. Nigeria, however, is not the only country that is known as being the origin of global scam operators, with Britain, the US and Germany often being mentioned.

Over the years there have equally been numerous cases of tax evasion or corporate crime where funds have undoubtedly been transferred to overseas safe havens, leaving investors or creditors with huge losses. The case of Heinrich Kieber, the whistleblower who exposed the activities of the Liechtenstein LGT Banking Group, highlighted the extent of tax evasion throughout the world—and what he highlighted was possibly just the tip of the iceberg. In that very small country of Liechtenstein there are, I understand, some 15 banks in operation that currently hold assets in the order of $200 billion. One wonders just how extensive this issue of tax evasion—and corporate fraud, for that matter—is globally. We may never know, because in many cases the activities and transactions are illegal and therefore not properly recorded anywhere for us to get a true understanding of the significance of this very serious crime issue.

Interestingly, in today’s Australian, in a story by journalist Michael Pelly, it is reported that the Director of Public Prosecutions, Chris Craigie SC has called for tougher penalties for corporate criminals, who appear to be judged leniently because of factors such as personal humiliation, loss of social status and ruined careers. It is reported that Chris Craigie believes that more emphasis should be placed on the lasting harm and economic hardship caused to victims when sentences are handed down. I use the quotations from Chris Craigie because his is a view that I strongly share.

I recall that many years ago Ralph Jacobi, a former member of this place, raised the issue of white-collar and corporate crime in this House on several occasions, effectively arguing the very same case, that there are almost two standards in our society: one for what you might refer to as ‘everyday criminals’ and one for ‘corporate criminals’, who always appear to be treated somewhat differently. I believe that that needs to stop because the victims of criminal activities in both cases suffer equally.

There is one other matter I want to refer to in respect of this bill. It is a matter that has been brought to my attention by constituents in my electorate in recent weeks. I have been contacted by constituents who receive a German pension payment. For the first time, they are being charged a $3.50 transaction fee each time the payment is credited to their account. In each case the pension is from Germany and the bank referred to has been the Commonwealth Bank. The Commonwealth Bank has advised its German pension clients that the $3.50 fee has become necessary as a result of the bank’s compliance costs relating to the FTR Act. I want to quote part of a letter from the Commonwealth Bank sent to one of the constituents that I refer to. It says:

Dear valued client,

Due to the introduction of Anti-Money Laundering and the Suppression of Terrorist Financing Legislation, the Commonwealth Bank has recently made changes to the way overseas payments (including German pension payments) are processed.

These changes have imposed additional processing costs on the Commonwealth Bank and as a consequence, a fee of $3.50 will be deducted from your German pension payments from 01 August 2008.

I took the matter up with the Minister for Home Affairs and he quite rightly pointed out that banks are entitled to charge these fees. I accept that, and $3.50 may not be a large amount but, to a pensioner, it is important.

Interestingly, as a result of other inquiries I have made, I have found that it appears that no other bank is charging this same fee. My concern here is this: whilst the Commonwealth Bank of Australia is well within its rights to charge this fee, I would like to think that this particular legislation is not being used by banks or any other financial institutions as an excuse to charge additional fees. I certainly accept that, as a result of this legislation, there is greater imposition being placed on banks in order to carry out the monitoring that they are obliged to in the reporting of transactions that they are expected to report on. But in this particular case the money is coming from the German government to a pensioner and has been coming for years and years and it would seem unnecessary to be charging a fee, and I am surprised that there are additional costs incurred in monitoring this particular transaction. So I appeal to the Commonwealth Bank to drop the $3.50 fee that it charges recipients of the German pension here in Australia because, as I have stated, I believe that the $3.50 does matter to the recipients of that pension.

I support this legislation for all of the reasons outlined by other speakers who have spoken on it. It is an important piece of legislation. In effect, it is legislation that assists the Australian government in fighting crime, terrorism, corruption, fraud and scam operations. The victims of all of those activities are inevitably the Australian people and sometimes those victims have their lives destroyed as a result of any one of those activities that I have referred to. I therefore commend the bill to the House.

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