Andrew Giles (Scullin, Australian Labor Party, Shadow Minister for Cities and Urban Infrastructure) Share this | Link to this | Hansard source

I rise in continuation of my remarks on the Anti-Money Laundering and Counter-Terrorism Financing and Other Legislation Amendment Bill 2019. Just before the debate was interrupted earlier today, I was in the process of introducing a second reading amendment. I move:

That all words after "That" be omitted with a view to substituting the following words:

"whilst not declining to give the bill a second reading, the House:

(1) notes that Australia has still not implemented all of the recommendations from the 2016 report on the statutory review of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 and associated rules and regulations;

(2) further notes that other international jurisdictions are already moving ahead of Australia with stronger anti-money laundering and counter-terrorism financing protections; and

(3) calls on the Government to ensure Australia is not regarded a soft-touch for money launderers or terrorism financiers".

I now want to talk about the consideration of the Senate Legal and Constitutional Affairs Legislation Committee in respect of this bill. Labor was successful in referring the bill to that committee on 14 November 2019—again showing the lack of haste the government has shown in dealing with the important measures that are the subject of this bill. Labor senators, in their consideration, demonstrated a concern that much of the important detail appears to remain in the explanatory memorandum to the bill and is not reflected in the terms of the legislation itself. I share these concerns. Of course these are not concerns that are confined to this piece of legislation; this government has a habit of leaving important terms in subordinate legislation or not sufficiently prescribing terms that should be in substantive legislation.

With regard to some of the most significant details referred to in the explanatory memorandum, Labor senators noted:

Proposed Section 37A allows for a reporting entity to enter into a written agreement with 'another person' but does not appear to stipulate that this person is either a reporting entity or otherwise subject to appropriate AML/CTF regulation and supervision. This stipulation exists only in the Explanatory Memorandum and we submit should ideally be reflected in the legislation—

The substantive legislation, that is. They go on:

Proposed Section 37A allows for two entities to enter into a CDD Arrangement that allows for a second entity to rely on the customer identification procedure undertaken by the first entity. Proposed Subsection 37A(2)(d) requires that the second entity obtain information from the first entity regarding the identity of the customer but does not impose any requirements or restrictions as to the currency of that information. If the intention is to impose such a restriction, such as a timeframe for how old that information can be, we submit that this should be reflected in the legislation.

That is a very reasonable request, given the subject matter of this legislation.

As for concerns raised by industry, both the Australian Financial Markets Association and the Financial Services Council have raised concerns that there are some definitional deficiencies in the current bill which need to be addressed. The Financial Markets Association said:

Firstly, given that the proposed Rule will relate to opening an account, we request that the term "opening an account" be specifically defined in the AML/CTF Act to ensure consistency of approach across reporting entities. There is some ambiguity as to when an account is actually opened, such that a designated service is provided.

The Financial Services Council stated in their submission:

We note that the amended section 32 under the Bill does not materially change the current obligations to carry out an Applicable Customer Identification Procedure (ACIP) prior to the provision of a designated service. However, it is suggested that the term "opening an account" needs to be specifically defined in the AML/CTF Act to ensure consistency of approach by all reporting entities. Also, in this regard, the FSC notes that AUSTRAC intends to issue Rules under section 33 to stipulate special circumstances where a designated service can be provided prior to ACIP being completed. Similarly, it is suggested that such Rule changes need to be made carefully to ensure consistency of approach overall, including with Section 32.

Labor senators noted these outstanding definitional deficiencies 'could undermine Australia's anti-money laundering and counter terrorism financing laws in the future'. Labor senators also noted that the Senate Standing Committee for the Scrutiny of Bills had reviewed the legislation and requested the minister's advice as to why it is proposed to use offence-specific defences which reverse the evidential burden of proof in this instance. While the scrutiny committee accepted the minister's explanation, the minister also undertook to table an addendum to the bill's explanatory memorandum to include further information about the use of offence-specific defences in response to these comments. As I understand it now—exactly a year after that time—the Minister for Home Affairs is yet to table this addendum, again demonstrating a lack of attention to detail and to the seriousness of the matters this bill, which has bipartisan support, is intended to address.

In concluding my remarks, I want to touch on recent money-laundering scandals involving Crown and Westpac. In November last year, AUSTRAC launched Federal Court action accusing Westpac of breaching AML-CTF laws more than 23 million times, including by allowing a dozen customers to transfer money to the Philippines in a way that is consistent with child exploitation. The current system meant that there was no action taken against Westpac until it had breached the anti-money-laundering and counterterrorism financing laws 23 million times. I repeat: 23 million times. How can that be adequate? How can it be adequate that we have taken so long to substantively respond to this? Westpac later admitted that it took the bank six years to identify as a risk the client known as 'customer 1', who made 625 transactions worth $136,000 in a manner consistent with guidance on transactions that could indicate child exploitation. It's disgusting and unacceptable. I'm sure all members and senators would agree.

With respect to Crown casino, the chairperson, Helen Coonan, submitted that the casino had facilitated laundering. The ongoing NSW Independent Liquor and Gaming Authority inquiry into Crown casino has revealed shocking noncompliance with money-laundering laws by Australian casinos and junket operators. Yet AUSTRAC, the regulator, gave these casino and junket operations its tick of approval only three years ago. Since then tens of billions of dollars have poured into Australia through such channels.

It is deeply worrying that we have needed a New South Wales government licencing authority to bring systemic breaches of money-laundering laws to light, given the profound responsibility of the Morrison government to protect all Australians from money launderers and the funders of terrorism. It demonstrates that the protections and oversight in this area need to be beefed up and enhanced, and this needs to be done expeditiously with due attention to detail—things that have not been in evidence.

Labor is supporting the passage of this bill through the House of Representatives. I proposed, on behalf of the opposition, in the second reading amendment, some suggestions to improve the bill because Labor understands the importance of strong, robust, anti-money-laundering and counterterrorism laws. We are concerned that the Morrison government has been too slow to act in this area—and too slow to act on the advice of the intergovernmental body which has done such important work—and that this could have contributed to some of the shocking and unacceptable revelations of money laundering, including at Westpac and Crown. Above all, we do not want Australia to become a soft touch for money launderers and those involved in terrorism financing.

Steve Georganas (Adelaide, Australian Labor Party) Share this | Link to this | Hansard source

Is the amendment seconded?

Andrew Leigh (Fenner, Australian Labor Party, Shadow Assistant Minister for Treasury) Share this | Link to this | Hansard source

I second the amendment and reserve my right to speak.

Steve Georganas (Adelaide, Australian Labor Party) Share this | Link to this | Hansard source

The original question was that this bill be now read a second time. To this the honourable member for Scullin has moved as an amendment that all words after 'That' be omitted with a view to substituting other words. If it suits the House, I will state the question in the form that the words proposed to be omitted stand part of the question.

Andrew Wallace (Fisher, Liberal Party) Share this | Link to this | Hansard source

) ( ): I rise in support of the Anti-Money Laundering and Counter-Terrorism Financing and Other Legislation Amendment Bill 2019. Money laundering is a serious business in Australia. It's an illegal business. Some people talk about it being a victimless crime, but, of course, nothing could be further from the truth. Where money laundering is committed, taxes aren't paid on that money, and, more often than not, the concept of money laundering arises because, as the name suggests, they are trying to clean ill-gotten gains. The ill-gotten gains are derived from criminal offences, often from organised crime, which, as I'll talk about shortly, could be anything from illegal gambling to paedophilia and child molestation groups and the evil that they peddle on the internet.

Money laundering is a very, very significant problem worldwide. The United Nations estimates that the amount of money that is laundered around the world is somewhere between two and five per cent of the world's GDP—that is, somewhere between US$800 billion and US$2 trillion a year. One of our pre-eminent regulators in this space is AUSTRAC. It's AUSTRAC's responsibility to identify criminals involved in money laundering, involved in offences such as tax fraud, drug trafficking, tobacco smuggling, people smuggling and scams such as the now infamous Nigerian loan scams. Money laundering comes under many different guises. Money laundering is achieved certainly not just in Australia but around the world. It's often achieved through casinos, through pubs and clubs, and through banks. We know that, as a result of the banking royal commission, Justice Kenneth Hayne made 76 recommendations to clean up the banking, superannuation and financial industries. We know that the Commonwealth Bank of Australia was fined $700 million for 53,700 breaches of anti-money-laundering and counterterrorism finance laws. Not to be outdone, Westpac was recently fined for 23 million breaches of the anti-money-laundering and counterterrorism finance laws involving $11 billion in transactions. These included transactions linked to child exploitation and resulted in a $1.3 billion fine. Tabcorp, at a much smaller end of the spectrum, was recently fined $45 million—it's not exactly a small fine, but it's not $1.3 billion—for failing to report suspicious behaviour to regulators over more than five years.

Around 2017, in my electorate on the Sunshine Coast, the Sunshine Coast Council made a public announcement that they were considering building a casino on the Sunshine Coast. That was not going to happen on my watch, and I vociferously fought against it, as did many people on the Sunshine Coast. The Sunshine Coast is a family friendly environment. It's where many people in this place and, in fact, from all over Australia go to holiday because of its family friendly environment. When we let you back in—and when we let those Victorians back in—why would we, as a community, give up our biggest natural advantage, that differentiates ourselves from places like Brisbane and the Gold Coast?

But council was hell-bent on building a casino, and I and a number of community leaders fought against it during that time. I'm very proud to say that that is now dead—d-e-a-d—as a dodo. And I will hold Premier Palaszczuk to her commitment to me that she will never allow a licence for a casino on the Sunshine Coast, to her credit. On a number of occasions during that public campaign, I was asked, 'What's wrong with a casino?' People would say, 'A casino would be great for the Sunshine Coast.' Well, apart from hollowing out the local economy, my biggest concern was the attraction it would have to organised crime and money laundering on the Sunshine Coast, something that is not what you would call prevalent on the Sunshine Coast today.

In relation to anybody needing any further evidence as to why we should never have a casino on the Sunshine Coast, I want to speak about the inquiry currently going on in New South Wales in relation to Crown casino. I want to preface this by saying that the inquiry is ongoing. There have been no final determinations, although the counsel assisting has certainly made recommendations. The counsel assisting has certainly recommended that Crown casino is not a fit and proper person to hold a licence for the Barangaroo casino in Sydney. Why is that relevant? Well, the counsel assisting, Adam Bell, told the inquiry that Crown was not suitable to hold a licence. He said that, ultimately, it was harmful to the public interest for Crown to do so. He said:

In summary, we submit that the evidence presented to this inquiry demonstrates that the licensee is not a suitable person to continue to give effect to the licence and that Crown Resorts is not a suitable person to be a close associate of the licensee.

In the course of the hearings, the inquiry heard allegations Crown encouraged staff to continue to work in China, despite warnings from Beijing that it was cracking down on foreign casino agents. We've seen stories on 60 Minutes and in the newspapers—these are allegations—about wholesale money laundering being undertaken in their casinos. In Melbourne, people have been turning up to casinos with large duffel bags of cash. They have been walking in, getting chips, having a bet and then cashing those chips back in and walking out. The money is cleaned and goes back out. It's legitimised. And that money is often the result of ill-gotten gains. We have to do better. We have to do more. Think about the evils that are being perpetrated by these organised crime gangs on our children, on our communities. That's why I am so very pleased to see this bill come before the House.

This problem is not just confined to casinos. One former Clubs New South Wales anti-money-laundering and counter-terrorism-finance compliance auditor claims that between $65 billion and $75 billion is laundered through clubs and pubs just in New South Wales each year. These are legitimate clubs—RSLs, sports clubs and bowls clubs—but the crime gangs are using legitimate clubs and pubs to wash this money. We need to do more than we have been doing in the past, and that is why this bill today is so very important.

This bill contains a range of measures to strengthen Australia's capability to address money-laundering and terrorism-financing risks and generate regulatory efficiencies, including amendments to expand the circumstances in which reporting entities may rely on customer identification and verification procedures undertaken by a third party; to explicitly prohibit reporting entities from providing a designated service if customer identification procedures cannot be performed; to strengthen protections on correspondent banking by prohibiting financial institutions from entering into a correspondent banking relationship with another financial institution that permits its accounts to be used by a shell bank and by requiring banks to conduct due diligence before entering, and during, all correspondent banking relationships; and to expand exceptions to the prohibition on tipping off, to permit reporting entities to share suspicious matter reports and related information with external auditors and foreign members of corporate and designated business groups. It will also provide a simplified and flexible framework for the use and disclosure of financial intelligence to better support combating money laundering, terrorism financing and other serious crimes. It'll create a single reporting requirement for the cross-border movement of monetary instruments, and it will also address barriers to the successful prosecution of money-laundering offences by clarifying that the existence of one Commonwealth constitutional connector is sufficient to establish an instrument of crime offence, and by deeming money or property provided by undercover law enforcement as part of a controlled operation to be the proceeds of crime for the purposes of prosecution.

The Anti-Money Laundering and Counter-Terrorism Financing Act requires reporting entities to identify and verify their customers through customer due diligence procedures, which represents a major component of the compliance costs. The bill will provide reporting entities with further options to rely on customer due diligence procedures undertaken by a third party. These options could reduce the time involved in identifying each customer by 66 per cent and the costs of verifying each customer by 80 per cent. This reform alone is expected to deliver significantly reduced compliance costs and an estimated regulatory saving of $3.1 billion over 10 years. So this is good news. Aside from reducing the risks of the evils that come from it, it's going to reduce compliance costs, and I commend the bill to the House.

Julian Hill (Bruce, Australian Labor Party) Share this | Link to this | Hansard source

I couldn't disagree with anything that the previous speaker said, but I want to turn some pretty substantive or serious remarks to what's not in the Anti-Money Laundering and Counter-Terrorism Financing and Other Legislation Amendment Bill 2019. The reality is that, despite the government's tough talk on crime and terror and its noble objectives in this area, our anti-money-laundering regime and counter-terrorism-financing legislation are embarrassingly weak and we're falling even further behind the rest of the world. The government's in its eighth year. It has had seven years to address these issues and make a real difference, but still it has failed to include critical intermediaries known to be part of the money-laundering enterprise, such as real estate agents, accountants and lawyers, in the regime. These intermediaries are identified as high risk in the government's own risk assessments by the regulators, including in the national threat assessment. So the bottom line is: despite the fine words of government speakers, the bill gets about a two out of 10 in terms of what's actually needed. It doesn't bring us into line with the global standards.

Australia's inadequate regime allows corruption to flourish, and it's no surprise that, in their eighth year, the government are still not taking integrity and corruption seriously in the private sector, given their own shameful record on integrity. There's still no legislation for the National Integrity Commission in this House—still. Sports rorts, dodgy land deals, designer watches, cuts to the Auditor-General's budget—that's what they do in the public sector. So it's no surprise that they won't put this regime over real estate agents and other critical property-sector intermediaries.

I'll make the point that the context is important. This stuff is technical and complicated, but it matters in the real world, because right now there are two million children dying of acute malnutrition in Yemen, kids being trafficked and exploited for financial gain in places like South-East Asia and arms dealers selling weapons to small militias in the Horn of Africa, the profits of which will end up in offshore bank accounts. So what might this have to do with money-laundering and counterterrorism financing bills and debates here in Australia? Well, global conflict, political violence, sophisticated criminal syndicates and the institutions that facilitate and smoke-screen their transactions are the underlying and complex elements creating the need for this legislation. It's all interconnected, and it manifests well beyond our borders. It's not just someone else's problem. The laws that we make here, the barriers that we put in place, impact everyone in the global community, and we have to remember that context when we debate what is, in many ways, dry legislation, and to recognise the human cost, because we all lose when these crimes are left in darkness.

The reality is: this happens in our own backyard. There are some industries and individuals, I would say, who are unwittingly caught up in this process. I'd call out some of the smaller money transfer or money remittance businesses that are so critical for so many people in my electorate for sending money home to loved ones and trying to get around the higher fees that the big banks pay, and some of those have been inadvertently caught up in supporting criminal enterprises. But I also think that we've seen anti-competitive behaviour by the banks, using these anti-money-laundering laws as a way of shutting down competitors who are undercutting, and that's a balance that AUSTRAC and the competition regulator need to have a look at.

But it's true that money laundering and the financing of terrorism are also systematically facilitated and entrenched. Transparency International reports that trillions of dollars in suspected dirty money has been laundered through the global financial system over the last 20 years and more than $200 million flowed directly through Australia's banks. Criminal syndicates and arms dealers are benefiting from untold human suffering.

If all that human cost isn't alarming enough, Transparency International's global corruption rankings place Australia now at 12th position. Since this government was elected, we've slid eight points, from being the fourth least corrupt country in the world to the 12th. We have to ask why. There are many factors which are said to contribute to this fall in the rankings, including the decline in the perception of a robust rule of law, with the attempted prosecution of whistleblowers and journalists and secret trials becoming more common. But key to Australia's falling corruption ranking was also the perception that institutions and political representatives were lacking independence and oversight. The government's behaviour this year has certainly reinforced that concern. The failure to introduce a national integrity commission feeds into these surveys and the perceptions which then drive our further fall down the global rankings.

Political violence and the threat of terrorism also remain enduring and pressing issues for Australia, but we're not alone in this. These are problems that cross borders, due more now to internet based criminal activity, trafficking, military intervention, foreign interference and increasingly sophisticated terrorism networks. These aren't just petty thugs. They're transnational political actors who are also using the loopholes in the system, which the government's legislation still does not address, to profit from human destruction for political reasons. They trade in misery and death, for political reasons.

It's in that context that Australia's commitment to the prevention and criminalisation of money laundering—and stronger laws to stamp out the financing of terrorism—has never been more vital. It's not just a legal necessity; it's an ethical imperative. But our actions will be effective only if we work globally, implementing agreed global standards with other countries. Disgracefully, it's clear that we're becoming the weakest link in the global chain of protection. The international money-laundering and counterterrorism financing framework, FATF, provides the agreed framework for our obligations. It's not sexy stuff. It's not interesting stuff. It's incredibly detailed and dense, but it really matters.

Recent exposes—which the previous speaker, the member for Fisher, spoke about—have uncovered money laundering throughout the Australian banking industry. There was Westpac's $1.3 billion fine for its breaches of money-laundering laws and failure to stop child exploitation, with massive funds filtered by the gambling industry remaining concealed. AUSTRAC's recently announced investigation into Crown casino for its potential noncompliance with the anti-money-laundering laws and involvement in illegal offshore activities should concern everyone. Only recently the Crown Resorts chairwoman fronted the New South Wales Independent Liquor & Gaming Authority's inquiry into Crown casino and conceded that its Melbourne casino facilitated money laundering.

Whilst this bill implements some reforms arising from the 2016 report into Australia's regime—that's four years ago—it only amends a few of the deficiencies identified by the FATF. It still does not address all of the identified problems. The most recent 2018 compliance report notes:

… 14 Recommendations remain non-compliant or partially compliant.

In supporting this bill, as I hope everyone in the House will do, we should be very clear eyed that this bill only addresses a few of those issues and that Australia, once we pass this legislation, will still not comply with those international standards. We become the weak link in the global chain, which means we become a more attractive place for dodgy money to come to. Further changes are urgently needed.

The most important concern for the House, as the second reading amendment touches on, is not what the bill does but what it does not do. The primary concern, the huge outstanding weakness in Australia's regime, is the key non-financial businesses and the professional sectors and intermediaries that remain outside the remit of Australia's anti-money-laundering and counterterrorism financing legislation. Real estate agents, accountants and lawyers are still not covered. Of course the vast majority—and we need to say this—of real estate agents, accountants and lawyers are not dodgy and do the right thing. But it is clear by AUSTRAC's own work and advice to the government—this is not some socialist opposition plot over here because we don't like real estate agents!—that there are people in these industries doing the wrong thing. People in these industries are helping to facilitate money laundering and terrorism financing, and the government is not doing enough to stop it. A good government, in its eighth year, would be out there talking to the industry about how to combat this problem and how to get the regulations right to stop money laundering and terrorism financing in these industries while protecting the good operators in the industry and their good reputation. The bill, again, fails to extend the regime to these sectors, who, inadvertently or deliberately, become gatekeepers for money laundering. The gap was highlighted years ago by the FATF and in a subsequent report by the Australian Strategic Policy Institute. The security analysts keep telling the government, 'This is a weakness; this is a problem,' but they don't do anything.

I spoke before on similar legislation two or three years ago—still, nothing has happened. Other members have raised this issue—nothing has happened. You do have to wonder whether the real estate agents have something over the government, don't you? In 2018 they successfully lobbied the government to be exempt from regulations that would have ensured that they would have to report any suspect transfer of money, including offshore transfers. It doesn't sound that unreasonable, does it—that a real estate agent would have a positive obligation to report suspected dodgy transfers of money to the regulator? But they lobbied the government and the government said to their real estate mates: 'Yeah, no worries. We'll let you off that. Don't worry about that. We won't put that obligation on you.' Seriously, it's their eighth year of government.

I might add, the work was done under the Rudd government. The work was done. The legislation and the stuff was ready. They'd done the consultation. They'd worked with the accounting bodies and the real estate industry. It was put on hold, quite sensibly, in about 2009 because of the GFC. The government lost office and then nothing. They've had the work there for eight years and nothing has happened. It's well established that these professions are being used to filter and funnel money and facilitate criminal enterprises. The cases are extensive.

AUSTRAC estimated that suspicious transactions in the real estate sector amounted to approximately $1 billion from China in the 2016 financial year. There were $3.36 billion worth of suspicious transactions in 2015-16. AUSTRAC's 2015 strategic analysis brief, five years ago, recognised that the use of real estate for money laundering is a well-established method in Australia. It filters down to the community, of course, by inflating property prices in certain suburbs, making it harder for Australians in those suburbs to bid against the dodgy money that's coming in, and the problem's real. One AUSTRAC case study report outlines a terrorism financing syndicate that used fundraising procurement procedures to purchase real estate and deposit the funds into bank accounts under the guise of expenses relating to the administration of a charitable organisation, and the money was then used to fund extremist activity.

So, if it's clear from the government's own advice from their regulators, from the independent security experts that the use of accountants, lawyers and real estate agents in these syndicates is not new, why won't the government act? Who are they trying to protect? If the government's serious and their fine words mean something about addressing money laundering and the financing of terrorist organisations then they have to include the gatekeeper professions in their regime.

They've been looking at this stuff for the past few years in America. Even in President Trump's America, their regulators have been doing trials in certain states and discovered, 'Goodness me: when you put these regulations on for positive reporting you find more dodgy, suspect transactions and money laundering going on.' In other jurisdictions they've taken more steps than us to fill that gap. We should be ashamed of that. When the government came to office we were the fourth least corrupt country in the world on Transparency International's rankings, and we've fallen to eighth. That's a fall of one spot per year. If this government gets another term we'll probably be at 11 or 12, and down we'll go, to 12 or 15; we'll just keep going.

It's not that hard. We say we're a global citizen, we say we want world's-best regulation, we say we're serious about that stuff, we go to the international meetings and we sign up to the codes. But what that means is that the government actually has to do the work, bring the legislation into the House and implement the rules. There's no point saying you'll do it if you don't actually do it. There's no point having the spin and the marketing and saying, 'Oh yeah, we're stopping money laundering' if you don't actually do the hard work of drafting the legislation and delivering. It is another example of spin and marketing but no actual delivery.

The world of money laundering and financing of terrorism is certainly dependent on the darker side of humanity, and those involved are enmeshed in greed, the perpetration of exploitation and sometimes the most horrific cruelty in the form of child sex trafficking. We owe it to those in Australia and across the world who are the most vulnerable to ensure that everything that can be done is actually done. That means shining a light onto places that we would prefer did not exist and ensuring that the web of the law catches not just the small flies but also those very skilled transnational actors who know how to avoid the net—and they will see and they know about the weaknesses in our regime. Eight years, and we still don't cover real estate agents and all the intermediaries in the property sector—eight years. It's not that hard.

If the government allows these gaps to remain, they're harming our national security, as they keep being advised by their own regulators, by the security experts. They're weakening the global protections and doing the wrong thing by countries that are actually implementing the standards, and they risk even greater injustice to the most vulnerable in society, here and across the world. So, the bill's minor steps are welcome. They've been well outlined. I won't go through them. But I do note the concern of stakeholders such as the Australian Financial Markets Association and the Financial Services Council that the government cut short the opportunities for consultation and clarification before this bill was introduced to the parliament. They fear that, as we've seen with so much of the government's legislation—even stuff that the opposition in principle supports, around foreign interference—the actual drafting is sloppy; it's not done effectively. And the independent experts say that there are definitional deficiencies in the bill that can undermine its effectiveness.

So, even though the government is doing far too little far too late, there are concerns that it's actually not being properly done. I urge the government: take this seriously. Bring back some legislation. It was drafted by the previous, Labor, government. Bring back some legislation to bring real estate agents, property sector intermediaries, accountants and lawyers into this regime and show that you're serious about stopping money laundering.

Anne Aly (Cowan, Australian Labor Party) Share this | Link to this | Hansard source

I've waited a long time to speak on this legislation, the Anti-Money Laundering and Counter-Terrorism Financing and Other Legislation Amendment Bill 2019—a very long time. It seems that it isn't one of the priorities for this government and it keeps getting put off. But it does come at a timely moment, because just today I finished writing a book chapter on counterterrorism financing in which I argued that our counterterrorism financing and anti-money-laundering legislation needs to be stronger in order to capture cyber-enabled serious and organised crime transnationally as well as cyber-enabled terrorism.

In 2016, I believe it was, a terrorist organisation based in Indonesia managed to raise US$600,000 utilising cybercrime and money-laundering provisions in order to carry out a terrorist attack before they were stopped. So the importance of this legislation cannot be understated. And its because of the importance of this legislation that Labor supports this bill in the House. But I think it's also equally important that I, like the member for Bruce, point out some of the deficiencies of this legislation; it certainly does not go far enough.

The bill implements a second phase of reforms that arise from the recommendations of the report on the statutory review of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 and associated rules and regulations that were tabled in parliament on 29 April 2016. That's more than four years ago now. As I said, I've been waiting a long time to speak on this bill. It has taken four years to implement legislation—importantly, legislation that does not capture all of the recommendations of that report that was tabled in April 2016. That's a really sad indictment on this government. We know that, during COVID, criminal syndicates, criminal organisations and transnational terrorist organisations have ramped up their efforts in other ways, in novel ways. So we need to be sure that our system is not exploitable, that they don't exploit any vulnerabilities in our system. This legislation was needed in its current form but also in a more comprehensive form four years ago. We've been waiting four years for this.

The bill also addresses some of the deficiencies identified by the Financial Action Task Force in its mutual evaluation report on Australia's anti-money-laundering and counterterrorism financing regime. Those deficiencies were identified in 2015. It has taken five years since those deficiencies were identified for the government to act on it. As the member for Bruce said, this bill does not address all of the necessary deficiencies. While it goes some way towards hardening our anti-money-laundering and counterterrorism financing regime, it does not do everything that it should do to ensure that Australia is not seen as an easy target for criminal syndicates and transnational terrorist organisations who would use our systems to raise funds for criminal activities, to launder money that has been garnered through criminal activities or to raise funds to carry out a terrorist attack.

Labor successfully referred this legislation to the Senate Legal and Constitutional Affairs Legislation Committee. It's important to note that Labor senators from that committee recommended that the government note and consider several concerns that were raised by industry. Let me go through some of those concerns. The Australian Financial Markets Association, in their submission, stated that opportunities for consultation and clarification were cut short by the government entering into caretaker mode and with the introduction of the bill into parliament. They waited five years to introduce the bill, they have known about deficiencies in the system for five years—and I've been waiting to speak on this bill for at least six months—and then they cut the consultation period short. Both the Australian Financial Markets Association and the Financial Services Council expressed concern about the term 'opening an account', which is included in the bill. They said it should be specifically defined in the Anti-Money Laundering and Counter-Terrorism Financing Act to ensure consistency of approach across reporting entities, as they believe there is some ambiguity as to when an account is actually opened. Labor senators also noted that a vast amount of detail for the bill lies in the explanatory memorandum, and noted concerns raised by the AMFA that some elements of the explanatory memorandum need to be placed in legislation—in other words, it's a sloppily written bill. These points were raised by people who took the time to write a submission to the Senate inquiry, but none of those points have been taken up in this current iteration of the bill we have before us.

The importance of this bill and of a comprehensive framework for strengthening our anti-money-laundering and CT financing laws cannot be underestimated. We need to ensure, as I said earlier, that Australia is not seen as an easy target and an easy place to do business for those who would seek to launder money garnered through criminal activities or raise funds in order to carry out a terrorist attack. In February 2020, February of this year, the Financial Secrecy Index declared that Australia is a nation—get this—that continues to host 'significant quantities of illicit funds from outside the country'. Australia has been named and shamed as a country that's an easy target for money launderers and criminal activity.

The Financial Secrecy Index also states that Australia needs to do more to counter money laundering. We need to do more, more than what's in this bill. We need to fully implement the recommendations that were made more than four years ago. That's what we need to do. We need to listen to the experts. The government needs to listen to its own agency when it's told that this bill has serious deficiencies that are still going to leave Australia vulnerable to money-laundering and terrorism financing.

The world's anti-money-laundering and counterterrorism financing watchdog, the Financial Action Task Force, has expressed serious concerns about Australia's anti-money-laundering and counterterrorism financing regulatory framework and has expressed concerns about this government's failure to implement the reforms according to its own timetable. I have spoken about this in the four years or five years it has taken. The FATF, the Financial Action Task Force, placed Australia on an enhanced follow-up remediation program in 2015. Five years ago we were warned. Five years ago Australia was told it needs to do better by an international watchdog in this space. The FATF undertook a major evaluation of Australia's anti-money-laundering and counterterrorism financing framework, and it found major noncompliance with international best practice in a number of areas. This is not just a matter that leaves Australia and Australians vulnerable; we have an obligation to the rest of the world to do as much as we can to ensure that criminal syndicates and terrorist organisations who operate transnationally do not use and exploit Australian systems for their means. The FATF's 2015 mutual evaluation report made clear that Australia is an 'attractive destination'—an attractive destination—not for tourism but for 'foreign proceeds of crime, particularly corruption related proceeds, flowing into real estate'.

Australia has been listed as a major money-laundering country by none other than the United States. Now we've all seen Ozarkwell, some of us have. Money laundering isn't some fun family adventure. It is actually serious business. This legislation and particularly the shortcomings in this legislation have serious consequences. The shortcomings in this legislation far outweigh the minor gaps that the legislation closes. In the past few months, we've seen some very-high-profile money-laundering cases: the Commonwealth Bank, Westpac, Crown casino and other casino operators. But the government has been slow to act. I don't think anyone can argue that four years and five years waiting on legislation based on reports that very clearly stated and very clearly outlined where the deficiencies were is acceptable. That is not acceptable.

Since 2013, the government have repeatedly missed deadlines in their own anti-money-laundering and counterterrorism financing reform timetable, and I find it quite extraordinary for the government to walk around crowing about how tough they are on security, like they're the protectors of the universe. I half expect half of them to walk in here with their undies on the outside, sometimes, the way they go on about national security. Of course national security should be one of our priorities—

An honourable member: 'Captain Underpants' was Senator Conroy!

I'll take the member's interjection. It was something about 'Captain Underpants'. But, either way, you cannot be a government that talks strongly about national security and not follow it up with action, particularly when that action is really quite simple. It's really as simple as implementing a number of recommendations to close gaps and address deficiencies that you have been aware of for five years.

Other countries have strengthened their defences against the proceeds of criminal and corrupt business practices. But, in Australia, our door is left wide open. Serious and sustained breaches of FATF standards and obligations can result in jurisdictions being greylisted or blacklisted, increase the cost of doing international business and restrict access to international finance. So, if you don't want to listen to the national security argument, listen to the economic argument. There are ripple effects to not addressing the deficiencies in this legislation.

An ongoing NSW Independent Liquor & Gaming Authority inquiry into Crown casino, as I mentioned earlier, revealed some shocking noncompliance with money-laundering laws by several Australian casinos and junket operators. And, as I mentioned earlier, we had the case with Commonwealth Bank and Westpac—can you believe it? They breached the anti-money-laundering counterterrorism financing laws an astounding 23 million times. I can understand one mistake, but 23 million mistakes? I think it's very, very hard to argue that our laws are sufficient when a bank can overlook 23 million breaches of the Anti-Money Laundering and Counter-Terrorism Financing Act. The government's own regulator, AUSTRAC, gave risky casino operations its tick of approval only three years ago, so they continue to operate under this government.

Those who spoke before me spoke at length about the implications of not strengthening this act, and I stand to reiterate that point here today. This government has an opportunity to do more in this space. They have an opportunity to walk the walk, so to speak, on national and international security. You cannot claim to be tough on national security and allow a law like this to continue. You cannot possibly be tough on national security and allow this to continue.

Daniel Mulino (Fraser, Australian Labor Party) Share this | Link to this | Hansard source

When most of us hear the phrase 'anti-money laundering', we think of something that is very dry and complex. We think of financial sector payment systems, of arcane banking standards and of big data. It is true that anti-money laundering is a very complicated area and is becoming increasingly technical and complex. But, as previous speakers have indicated, what is also true of money laundering is that it is a growing problem. It is growing in scale and it is growing in terms of the threat that it poses right across our sector, with very disturbing real-world consequences. That's why it's so concerning that we see a bill today, the Anti-Money Laundering and Counter-Terrorism Financing and Other Legislation Amendment Bill 2019, that is, frankly, too little too late. It's a bill which doesn't address major issues which other countries have dealt with, which have grown over recent years and which this government said that it would deal with years and years ago.

Crime is as old as society, and, of course, dealing with the proceeds of crime is as old as crime itself. We're used to thinking of anti-money laundering, of dealing with the proceeds of crime, as perhaps dealing with stolen goods or bags full of cash. But what we see with money laundering is a crime that has a number of characteristics that are important to note here at the outset. Firstly, with money laundering, we're seeing crime on a scale that is becoming almost unimaginable. We are now seeing money laundering in tranches, through our banking sector, through our real estate sector and right across our economy, that are in the billions of dollars and the millions of transactions. Not only that, but in money laundering we are seeing activities that are changing in their nature and their scale at such a rapid pace that it is absolutely critical that our regulatory system and our regulators keep up with that change.

We are also seeing in money laundering activities that cross the gamut of technical sophistication. In some areas of money laundering we are seeing brown paper bags full of money, but of course, at the other end of the scale, we see the most sophisticated actors that exist in society. We see transnational actors, as earlier speakers have noted—very well-financed transnational actors using multimillion-dollar schemes and multimillion-dollar technology to try to evade regulation. So we're seeing activities that are of such a breadth of technology and complexity that it is extremely difficult for regulators to use a one-size-fits-all approach. Regulation, of course, is also complicated by the fact that, in the anti-money-laundering regulatory space, we see the need to use both proactive and reactive approaches. We have a regulatory system that is also very complicated because the regulators themselves are using a very different range of techniques. In some areas of anti-money laundering, they rely upon reporting from actors in the system. In other areas, they actively look for money-laundering activity. So that again adds to the complexity and the challenges.

In money laundering, we also see a problem that is international in nature, which of course adds to the complexity because we are now dealing with multiple jurisdictions with their own legal systems. One of the challenges that this raises is that it's not just the strength of any particular jurisdiction's regime—the pros and cons of the regulatory approach adopted in any particular regime—that matters; it's the relativities between jurisdictions that matter, particularly in areas where we're talking about transnational money-laundering outfits that are looking to move money across many jurisdictions. So what we see is that it's the relative strength of jurisdictions that matters. Finally, it matters that money laundering is applying in many sectors and has real-world consequences such as affecting housing affordability, facilitating child exploitation and facilitating terrorism.

All of these features mean that the regulatory system that deals with money laundering needs to be constantly updated so that we don't become the weakest link in the world, which is what we are seeing Australia become, particularly among advanced economies. It also means that it's increasingly important that we update the regulatory regime, because the consequences of failing to have a fit-for-purpose scheme are so dire.

Let's have a look at what's occurred over recent years. The government have repeatedly missed deadlines in their own AML/CTF reform timetable. Let's go back to the member for Stirling in September 2016, the then Minister for Justice, who said that the Turnbull government—which seems like a very distant memory now—would be closely consulting with industry on regulation models for tranche 2 entities. When asked for comment in 2017 about how the process of implementing tranche 2 was coming along, Michael Keenan's office responded:

A cost/benefit analysis of extending AML/CTF regulation to certain non-financial business (lawyers, conveyancers, accountants, real estate agents, trust and company service providers and high-value dealers) is well progressed and will be completed by July this year.

That was over three years ago. Back then the government were saying, 'It's about to happen', and years and years later we're presented with a bill that says nothing about tranche 2. According to the previous member for Higgins, who was then Minister for Revenue and Financial Services, the tranche 2 cost-benefit analysis was completed in 2017 and is being considered by the government. Well, it's an extremely lengthy and detailed consideration!

We see a bill that contains elements which we will support, but there are important issues which have been highlighted by the Financial Action Task Force, which have been highlighted by the OECD, and which have been highlighted by the IMF. These issues are growing, if anything, in importance. There are multibillion dollar problems in real estate and multibillion dollar problems that we're seeing across multiple banks—and what we see is a bill that doesn't even address these issues at all.

Let's look at the Financial Action Task Force and its assessment of Australia's progress over recent years. The Financial Action Task Force placed Australia on an enhanced follow-up remediation program in 2015, following a major evaluation of Australia's AML/CTF framework which found major non-compliance with international best practice in a number of areas. The Financial Action Task Force sets global standards and promotes effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats. As the member for Cowan said, if this government wants to talk big on how it deals with terrorism, it's simply not good enough for it to—over multiple years—in effect, ignore what the international agency of repute in this area is saying. This mutual evaluation report made clear—and other speakers have quoted this, but it's worth repeating—that Australia 'is an attractive destination for foreign proceeds of crime, particularly corruption related proceeds flowing into real estate'. We have seen this issue persist and, if anything, grow—although by how much who would know, given the current regime. Many other independent and international reviews have supported these criticisms of Australia's regime.

In November 2018, the FATF released their third enhanced follow-up report, and it said:

However, 14 Recommendations remain non-compliant or partially compliant.

So this remains an area where activity is far, far too slow. And, again, we go back more than three years to statements by previous ministers of this government who were saying that reform was around the corner. Clearly, this is an area where even those opposite, I don't imagine, are going to claim that COVID is to blame. This is simply an area where this government has dropped the ball for far too long, which isn't some arcane area of the financial system; this is an area of failure in regulation which is leading to billions and billions of dollars flowing inappropriately in the financial sector. It's leading to billions of dollars of transactions in the real estate sector potentially flowing inappropriately—but, again, who would know?—and having consequences for housing affordability. And, as I mentioned earlier, it's having real consequences in areas such as human trafficking, child exploitation, and terrorism. So it's absolutely imperative that this government adopts a broader reform agenda that deals with the material issues that have been raised by the Financial Action Task Force.

Let's go to the IMF: in 2019, the International Monetary Fund recommended that Australia do more. The IMF said:

… Australia’s real estate sector, which is very attractive to foreign investors, is at significant risk for money laundering …

The IMF also said that Australia should immediately:

Take appropriate steps to address the risk that the proceeds of foreign bribery could be laundered through the Australian real-estate sector.

Let's look at another reputable international agency, the OECD. The 2017 report of the OECD Working Group on Bribery in International Business Transactions found major weaknesses in Australia's regime. The OECD said: 'Recent high-profile money laundering cases have pointed to weaknesses in Australia's AML/CTF regime.' The OECD went on to say: 'The coverage of the AML/CTF regime should expand swiftly to include all non-financial and business professionals, starting with those identified to present higher money-laundering and terrorism-financing risks. This would include real estate agents, lawyers, and trust and company service providers.'

We have the FATF, we have the OECD and we have the IMF. All of these agencies are saying the same thing, and they're not saying these things yesterday, or a month ago; they said these things three, four or five years ago. And we had government ministers three, four or five years ago agreeing with this, committing to addressing it, and saying that their response is around the corner. Well, it was clearly not around the corner—it's still not here.

Let's look at what's happening in our society right now. Let's look at what's happening at Crown, and, as a previous speaker indicated, it's taking a New South Wales inquiry to uncover a lot of this. The New South Wales Independent Liquor and Gaming Authority inquiry is exposing massive and systemic breaches of AML/CTF legislation. In 2017, an AUSTRAC report said:

Casinos are broadly aware of and comply with their AML/CTF obligations regarding casino junkets.

That report also said there was a:

broad understanding of and compliance with AML/CTF requirements in relation to junkets …

I wonder if they've changed their assessment. But it's not only that particular failure. What does it say about this government's approach to regulation in this area overall? It's clearly an area of regulation where we need a more comprehensive approach and we need a strengthening.

Westpac has been fined over $1.3 billion. Let's look at the fact that Westpac was involved in 23 million transactions which involved AML/CTF breaches. Let's look at the fact that CBA has been involved in major breaches. Again, what does this say about our system? What does it say when we have major systemic breach after major systemic breach? No-one is saying that in a large, complicated system like ours there'll be zero breaches. But when we have multiple international agencies saying Australia is falling behind comparable economies; and when we have multiple international agencies—the FATF, the OECD, the IMF—saying Australia is an attractive destination and there are large gaping holes in Australia's regulatory system, should we be surprised that these kinds of incidents occur? And should we be worried about more of those kinds of situations occurring under our noses and us not knowing about it, if we're not fixing up the regulatory arrangements?

Fundamentally, this is another bill that this government has put forward which is very narrow in ambition and, in achieving even that ambition, is sloppy. AFMA and the Financial Services Council have pointed out a number of drafting errors, but to me that isn't the major deficiency here. The major deficiency is that, after three and a half years, this government appears to have indefinitely put on hold major reforms which this parliament should be considering. They've been promising these reforms. They've been saying they're around the corner—well, they're not around the corner. And what we're seeing in the financial services sector, in the real estate sector, and in money that is flowing into and out of this country, with dire consequences, is that those reforms are needed more than ever.

Stephen Jones (Whitlam, Australian Labor Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

Money laundering is an area of regulation where the government has a very strong game when it comes to rhetoric, but the delivery is incredibly weak, and it begs the question why. The member for Fraser has gone through that in some detail, outlining delay after delay after delay with little explanation as to why.

This bill, the Anti-Money Laundering and Counter-Terrorism Financing and Other Legislation Amendment Bill 2019, takes us only a little further down the track. Money laundering is not a victimless crime. That's why we need to take it seriously. Money laundering is an enabler for global crime organisations and some of the most horrific crimes imaginable. It facilitates modern slavery, where young women are forced into prostitution and smuggled into illegal brothels around the world. It allows children to be sexually exploited for profit. It means that gun runners can fuel civil wars in failed states and drug barons can live in mansions built on the misery of addicts, including those here in Australia. Terrorists use it to fund secretly planned attacks.

We cannot allow our country to be used as an environment where these crimes flourish, and we cannot allow our financial institutions to provide safe harbour for international syndicates that perpetrate them. We owe that much, at least, to the victims of these crimes and of the potential crimes to come. Such is the sophistication and international reach of the perpetrators that denying them the profit they so ruthlessly pursue is our only real defence. Australians are not okay with these abhorrent crimes. So, we need money-laundering laws that tell the world we're doing our bit to stop them. That should be reason enough to strengthen these laws, but there are other reasons as well. We know from the experience of other countries that once serious organised crime gains a foothold in a jurisdiction it's extremely difficult to eradicate. Prevention is the best cure, and that starts with laws that are serious to the task.

Money laundering also has a corrosive effect on our financial system. More than ever, Australia is a services economy. Our thriving financial services industry in particular is a job creation powerhouse and a sector that has provided a secure future for workers across the income scale. That success has, yes, been built on the hard work of those who toil within it, but it has also been built on confidence and trust in our financial system that stems from the rule of law and strong regulators. That reputation has been hard won over many decades but can be lost in an instant. Make no mistake: organised criminals are targeting Australian financial institutions as a way to launder profits from their illegal activities. This is why the penalties should be strong.

Look no further than the record $1.3 billion fine handed out to Westpac earlier this year for failing no less than 23 million times to support suspicious financial transactions worth $11 billion. Most concerningly, around 3,000 of these transactions are highly likely to have involved payment from paedophiles to offshore criminals for horrific sexual crimes against children. In addition, Westpac failed to assess risks or keep proper records involving suspicious transactions with high-risk jurisdictions, such as the Democratic Republic of Congo, Iraq and Ukraine. Westpac's shareholders have a right to expect better standards of corporate governance than this. They, along with Westpac's customers and the public at large, deserve nothing but the highest level of vigilance when it comes to safeguarding the bank from involvement in serious criminal activity.

That's why Labor supports this bill but says it doesn't go nearly far enough. We welcome the expansion of reporting requirements, including the collection of customer identification and verification data. We welcome increasing the protections that will be placed on cross-border banking and the simplification of suspicious-matter reporting processes. And we support making it easier for law enforcement agencies to investigate and prosecute instances of money laundering. These changes will go some way to allowing Australia to show the world, and investors here at home, that we're determined to maintain a properly governed and properly regulated financial system. But we are still lagging far behind the rest of the world. There is more that can and should be done to enhance that message—that Australia is serious about cracking down on money laundering.

Take, for example, the New South Wales Crown casino inquiry. Here, too, we have seen shocking evidence of blatant money laundering from foreign organised-crime syndicates, much of it caught on video. It's clear that Crown casino has allowed itself to become a site for this sort of activity, as the company's chair, Helen Coonan, admitted to the New South Wales inquiry. She said:

It may have been ineptitude or a lack of attention, I don't think it was deliberately turning a blind eye …

That is still an open question. It's the kindest possible interpretation of what the inquiry has uncovered.

Let's remind ourselves of that infamous video of a blue cooler bag stuffed full of wads of cash—wads of cash being dumped on a cashier's table in exchange for chips. Let's remember that the gentleman in possession of the blue cooler bag was associated with the infamous Suncity junket operator, with known links to organised crime and with whom Crown was in a formal business arrangement. Let's not forget that Crown operated two bank accounts, Southbank Investments and Riverbank Investments, which appear to have facilitated suspicious transactions for some casino patrons. And what did Crown do about the numerous red flags raised by such activities? Nothing—absolutely nothing. No wonder that the counsel assisting the inquiry, Mr Adam Bell Senior Counsel, has already said that he thinks that Crown is not a fit person to hold a licence to operate Barangaroo casino.

Helen Coonan has been on the Crown board for nine years. Helen Coonan is also the chair of the Australian Financial Complaints Authority, where she serves at the pleasure of the government. Her position in that role is clearly untenable, and the government must act to remove her. The Crown casino abject failure of corporate governance in relation to money laundering demands no less.

One of the underpinnings of the strong regulatory environment which the bill before us seeks to strengthen is the concept of continuous reporting. In fact, it is a cornerstone of corporate regulation and financial systems regulation in this country. It lies at the core of our system to ensure that wrongdoing is detected and acted upon. It requires corporates to self-report suspicious activity. It requires that proper records be kept and that relevant regulators be informed when those records indicate that something could be going amiss. How, then, can the government allow Helen Coonan to hold the chair at one of those regulators? How can she credibly enforce regulations when, in her own words, she sat on the board, and, in fact, was the chair of the very board that failed to put in place the right governance arrangements and showed, at a very minimum, ineptitude and inattention in basic matters of corporate governance?

Westpac's shareholders paid a very high price—a record fine—for the bank's record-breaking transgressions of money-laundering laws. They rightly demanded, and got, the resignation of the CEO and then the early retirement of its chairman. Crown shareholders may end up making similar demands of Helen Coonan; that's a matter for them. But the board of the Australian Financial Complaints Authority is different. It is accountable to the Australian people through the Australian government, and, for that reason, the government cannot sit on its hands and allow her to remain as the chair of AFCA.

AFCA is the banking ombudsman. It is the financial advice ombudsman. It is the insurance industry ombudsman. That means it's the regulator of last resort for Australians who are in dispute with a financial services provider. It must maintain a spotless reputation for governance or risk losing the confidence of those it seeks to serve. Helen Coonan's reputation may already be tainted by the money-laundering issues at Crown. AUSTRAC, which successfully prosecuted Westpac, has now launched an investigation into Crown over money-laundering claims. The board, which she chairs, has demonstrably failed in its basic continuous disclosure obligations and other governance requirements. That the government seeks to crack down further on money laundering is welcome. That it simultaneously allows its Liberal mate to remain at the head of a major financial regulator despite Crown's unfortunate history with money laundering can only undermine public confidence.

Matt Thistlethwaite (Kingsford Smith, Australian Labor Party, Shadow Assistant Minister for Financial Services) Share this | Link to this | Hansard source

The Morrison government are big on the rhetoric when it comes to talking about keeping Australians safe and acting to combat terrorism, but they're not big on taking action when it comes to updating Australia's laws to ensure that we have the most stringent and strongest anti-money-laundering and counterterrorism financing rules and regulations. Although this Anti-Money Laundering and Counter-Terrorism Financing and Other Legislation Amendment Bill 2019 does implement the second phase of reforms arising from the recommendations of the report on the statutory review of the Anti-Money Laundering and Counter-Terrorism Financing Act and its associated rules and regulations, it doesn't go far enough. It will also address some of the deficiencies identified by the Financial Action Task Force in its mutual evaluation report on Australia's anti-money-laundering and counterterrorism financing regime in 2015.

We don't oppose this legislation. We believe it is a step in the right direction, but it simply doesn't go far enough because it ignores some of the recommendations of those reviews that I just mentioned. We on this side do call on the Morrison government to take anti-money-laundering and counterterrorism financing seriously because we have seen instances in Australia over recent times of people getting away with quite horrific, large-scale cases of alleged money laundering.

AUSTRAC announced it was launching an investigation into allegations of money laundering associated with high rollers at Crown casinos. It comes on the back of the Independent Liquor and Gaming Authority in New South Wales recently concluding an investigation into anti-money-laundering practices at Crown casino, where many of the directors admitted in evidence that the practices that they had in place were sloppy at best. We've seen instances in the banking sector, with CBA and a record corporate fine for hundreds of thousands of instances of money laundering, and more recently Westpac. The risk of money laundering and terrorism financing remains significant. Money laundering and terrorism financing are not problems just for Australia; they are global problems which threaten Australia's national security and the integrity of Australia's financial system.

The Morrison government has dropped the ball on this crucial national security issue, while other jurisdictions have moved ahead of Australia, with much stronger AML/CTF protections, meaning that there's a growing risk to Australia from this government's failures to implement either the FTAF or the statutory review recommendations. There's a risk that Australia becomes a honey pot for these activities because of the slow nature of our reaction to some of these reports. This government's even been slow to start on bringing Australia's AML/CTF laws up to scratch. It has also failed to properly enforce existing laws, with no action taken against Westpac until it breached the law 23 million times. It highlights why Labor was completely justified in calling for numerous years for a royal commission to be established into banking and financial services, which was opposed 26 times in this place and the other place by the government. The last thing any country wants is to become a soft touch for money launderers and terrorism financers. That's why Australia's anti-money-laundering and counterterrorism financing framework must continue to evolve, otherwise Australia will become a weak link in the global financial system and a soft touch for organised criminals around the world seeking to launder the proceeds of crime.

Since 2013 the coalition has repeatedly missed deadlines in its own anti-money-laundering and counterterrorism financing reform timetable. While we welcome the efforts by the government to belatedly strengthen our anti-money-laundering and counterterrorism financing laws, the latest legislation comes more than four years after the then Minister for Justice tabled the report on the statutory review of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 and associated rules and regulations, which first called for these changes in March 2016. That's four years ago. Still, more than four years later, the legislation fails to implement many of those 2016 recommendations.

The world's AML/CTF watchdog, the Financial Action Task Force, has expressed serious concerns about Australia's regulatory framework and this government's failure to implement the reforms according to its own timetable. The Financial Action Taskforce 2015 mutual evaluation report made it clear that Australia is:

… an attractive destination for foreign proceeds—

of crime—

particularly corruption-related proceeds flowing into real estate …

That's the view of the international body entrusted with the role of keeping a check on these illicit activities throughout the world. It's their view that Australia is an attractive destination because of this government's tardiness in implementing many of the recommendation reforms.

The failure to extend reporting obligations to real estate agents, to lawyers and accountants has left a huge hole in our anti-money-laundering defences and it means Australia is out of step with the likes of Great Britain and New Zealand, which have already taken action in their property sectors to curb money laundering. Reportable transactions in Australia which intersect with the regulated sector, banks and other financial institutions, provide authorities with some visibility of potential money laundering through real estate, and yet real estate agents and other professionals linked to the property market are still not subject to the provisions of the AML/CTF regime. For example, there's no obligation for real estate agents to report any suspicious activities associated with money laundering. AUSTRAC identified in 2015-16 that there was $1 billion of suspect funds flowing from China alone into our housing market, yet the government fails to act on that recommendation to close that loophole.

If the housing market is being used to launder funds, it creates a market where people are prepared to pay more for houses than they're worth, putting upward pressure on prices and creating more issues of housing affordability. The one issue that we know has been a serious one for this country, particularly for younger generations of Australians, has been the heat in the housing market. If there is evidence that people are artificially inflating prices to launder money, that's simply unacceptable and it's something that the government needs to act on. While other countries have strengthened their defences against the proceeds of criminal and corrupt businesses in this particular industry, in real estate, the government's left the door open for illicit capital to flood into Australia. Serious and sustained breaches of the FATF standards and obligations can result in jurisdictions being greylisted or blacklisted, increasing the cost of doing international business and restricting access to international finance. This is an issue that the government needs to take seriously. It's not a by-issue of being strong on terrorism. It's not a secondary issue of being strong on terrorism. Financing for money laundering and for terrorism acts is a serious issues. They're how the acts begin. They're how the acts are financed, and the Morrison government must take anti-money-laundering and counterterrorism laws seriously. It must take seriously the recommendations of both of those reviews which ask the government to look at closing those loopholes, particularly around the real estate and legal professions, so that we don't have this honey pot in Australia anymore. Getting these crucial laws right is too important to get wrong.

Andrew Gee (Calare, National Party, Minister for Decentralisation and Regional Education) Share this | Link to this | Hansard source

I would like to thank my colleagues for their contributions to the Anti-Money Laundering and Counter-Terrorism Financing and Other Legislation Amendment Bill 2019, including the Senate Legal and Constitutional Affairs Legislation Committee, the Parliamentary Joint Committee on Human Rights and the Senate Standing Committee for the Scrutiny of Bills. Transnational and organised crime costs the Australian community up to $47.4 billion each year. This represents a significant threat not only to our community's safety but also to our national security. The Morrison-McCormack government is committed to combating these threats.

This bill will provide law enforcement with vital new tools while also reducing regulatory costs on industry. The bill will also implement key recommendations of the 2016 statutory review of the Anti-Money Laundering and Counter-Terrorism Financing Act. It will ensure that our law enforcement, intelligence agencies and revenue protection agencies have appropriate and timely access to valuable financial intelligence. The bill will also help these agencies to protect the Australian community in the global fight against organised crime. The bill will criminalise the act of dishonestly taking credit for receiving police awards, ensuring that the bravery and heroism of our police forces can be appropriately honoured. I hereby table an addendum to the explanatory memorandum in response to the comments raised by the Senate Standing Committee for the Scrutiny of Bills.

I commend the bill to the House.

Andrew Wallace (Fisher, Liberal Party) Share this | Link to this | Hansard source

The original question was that this bill be now read a second time. To this the honourable member for Scullin has moved as an amendment that all words after 'That' be omitted with a view to substituting other words. The immediate question is that the words proposed to be omitted stand part of the question.

Question agreed to.

Bill read a second time.