Tania Lawrence (Hasluck, Australian Labor Party) Share this | Link to this | Hansard source

On the initiative of the Group of Seven, the Financial Action Task Force was created in 1989 to develop policies to combat money laundering. In 2001, it added the enormously problematic issue of terrorism financing to its mandate. The Group of Seven was concerned with the billions of dollars raised by the trafficking of human beings, arms and drugs and by the issue of tax evasion and cybercrime. From these crimes, more crimes were funded—crimes which included child abuse. Back in 2015, during the years of coalition misrule, the Financial Action Task Force reported that Australia had failed to comply with some critical standards. What did the coalition government do about it? As you'd expect, nothing much, for year after year after year.

In our first term, the Albanese Labor government is introducing the reforms that will give Australia's anti-money-laundering and counterterrorism-financing activities some badly needed teeth. We're working on an important area of vulnerability in the relationship between such people as lawyers, accountants, real estate professionals, and dealers in precious stones and metals. It's an area which is increasingly used to launder money. The Financial Action Task Force has pointed out that diamonds, other jewels and precious metals carry value in small, easily transportable quantities. They are traded in international transactions by the most modern means available, by multinational companies and major financial centres. They are also traded in local markets by dealers who include, in the words of the Financial Action Task Force, 'very poor individuals in some of the most remote and troubled places on the planet'. These transactions might be exchange based, government regulated deals or may take the form of anonymous cash given for goods in hand. Dealers understand the risks of theft and fraud—diamonds might not be what they are claimed to be, for example. But new money-laundering methods are not necessarily on the radar in the same way.

Thanks to the coalition's usual neglect, Australia has become one of only five jurisdictions, out of 200, which did not regulate appropriately or at all in the complex modern terrain encountered by dealers and by real estate professionals, who are facing challenges of their own, together with lawyers and accountants. I suppose coalition members thought, as they often do, that these things would just somehow sort themselves out. They thought things like aged care and housing supply would just miraculously take care of themselves.

This puts us at serious risk of being greylisted. The grey list is not a list is not a list you want to be on. It's politely referred to as the 'other monitored jurisdictions'—in other words, places the world needs to keep an eye on. It's one step above the blacklist of 'non-cooperative countries or territories'. This was happening while the coalition was visibly harassing almost half a million Australians, who had committed no crimes at all, with unlawful debt notices. The coalition's shameful and disgraceful pursuit of robodebt victimised innocent people. It insulted honest men and women and caused untold misery and distress to them and to their families. And let us never forget the more than 2,000 people who received a robodebt letter and then took their own lives.

This bill, the Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2024, will implement effective measures to combat real financial crime by real criminals. Money laundering is meant to be challenging to authorities, and it is. The Australian Institute of Criminology, created by the Whitlam Labor government, is Australia's national research and knowledge centre on crime and criminal justice. Its role was and remains that of promoting justice and reducing crime by undertaking and communicating evidence based research to inform policy and practice. The AIC has recently conducted research which demonstrates the uses organised crime makes of money laundering. Money laundering is a means of getting away with crimes and a means by which criminals avoid detection and go on with whatever it is that they were doing without being disturbed. What they're doing is harming Australians and Australian society. The AIC has found that, when an organised crime group was involved in money laundering, the amount of crime related harm it caused increased by 49 per cent, compared to the harm it would have caused if it had not laundered the money. Money laundering allowed these groups to reinvest in themselves.

It's estimated that serious and organised crime has cost the Australian community up to $60 billion in just the one year of 2020-21. Legitimate markets have been distorted. That means economic activity itself is being distorted. Getting away with anything emboldens people. Getting away with criminal activity encourages the repetition of crimes and increases the likelihood of greater crimes. Money laundering has contributed to the growth and commission of such crimes as the illicit drug trade, child abuse and terrorism. Something clearly needs to be done, and we're doing it.

The bill is also directed at reducing the regulatory burden on businesses, making it easier for them to understand and implement effective measures against these crimes. The reforms will help produce better quality financial data so that businesses can better protect themselves. They're the product of extensive consultation with the affected sectors and with national security, law enforcement and regulatory agencies.

Businesses providing one or more of the services currently being exploited by organised crime and money launderers will have to put in place measures to protect themselves. Those measures will include processes that allow for easy and early identification of criminality or potential criminal activity. They will need to enrol with the Australian Transaction Reports and Analysis Centre, which is AUSTRAC, established under the Labor government by Bob Hawke. They'll need to develop and maintain an appropriate program tailored to their business, along with conducting and maintaining due diligence and record keeping. Certain transactions and activities designated as 'suspicious' will have to be reported.

We don't want this to be onerous. Regulations need to be kept to a necessary minimum. They need to be simplified, without obtuse language and relevant to our times and circumstances. The businesses involved will have flexibility in meeting their obligations. The costs and compliance will vary from business to business. They don't all face the same level of risk, and we're sensitive to that. AUSTRAC will work with industry to develop sector-specific guidance on the new regime. It is there to help inform, and its scaled-up call centre will address any questions that will arise from different businesses.

AUSTRAC understands the increasingly sophisticated methods used to disguise the proceeds of crime and integrate those funds back into the financial systems. International trade is of particular interest to those wishing to move illicit money. They can attempt to hide their funds in the sheer volume of transactions. People conducting honest businesses may be either unaware or confused by the complexities of trade financial products and import/export processes.

Illegality is more difficult to detect because reporting entities will probably not have oversight of the whole transaction chain. It is relatively easy to hide what you're doing in multiple supply chains with multiple processes in multiple jurisdictions. There are many involved parties with many transactions which take place at great speed. The outcome we're seeking with this bill is improved and enhanced deterrence, detection and accurate reporting, protecting the Australian public and legitimate businesses. We'll be doing this by helping those who are at the frontline carrying out law-abiding businesses. We don't want those businesses abused. We understand their situations are individual to them and that due diligence will be different in different places.

The Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill is also aimed at modernising the regulation of digital currency, virtual assets and payment technology. We want to ensure the Anti-Money Laundering and Counter-Terrorism Financing Act keeps pace with the increasingly digital nature of our global financial system. We're closing the gaps that professional criminal organisations seek to exploit.

This bill is preparing us for the realities of today's world and the likely and possible directions of future development. We've demonstrated our commitment in this year's budget, allocating $166 million to implement the proposed reforms which are well overdue. This is an investment which will enable AUSTRAC to implement a new regime that has been simplified at the same time it's being expanded. As world trade grows, so does money laundering and its possibility of financing crime such as terrorism. We have to understand the risks and deal with them practically for the sake of the wellbeing of the people of Australia.

We need to do this efficiently and well in a way that is appropriate for Australia, and that is what we are doing here and now. I commend the bill to the House.

Jason Wood (La Trobe, Liberal Party, Shadow Minister for Community Safety, Migrant Services and Multicultural Affairs) Share this | Link to this | Hansard source

When it comes to having an understanding of counterterrorism, we on this side of the House we have a very good understanding. My background was with the Victoria Police counterterrorism coordination unit; I got to see and hear firsthand from other agencies what was happening in this space when it comes to money laundering, especially when it comes to counterterrorism. I acknowledge the member for Herbert, who went over to Afghanistan and served Australia in taking on the Taliban, the terrorist organisation group. On this side we very much understand the importance of doing everything we possibly can to counter terrorism and make sure we don't have terrorist attacks committed in Australia.

I congratulate all our law enforcement agencies, who, over the years, have done such an incredible job in having such an amazing success rate when it comes to stopping and preventing terrorist attacks in Australia. Also, our Australian agencies have played a role overseas in taking on terrorists—as I said before, when it comes to Afghanistan. One very important factor—this is something I learned in the Victorian police force—is that you always have to follow the money. That's what this bill, the Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2024, is all about. The bill expands the Anti-Money Laundering and Counter-Terrorism Financing Act, the AML/CTF Act, which AUSTRAC looks after.

Money laundering undermines Australia's national security, economy and social security system. Billions of dollars in illicit funds are transferred annually, causing substantial economic harm to Australia. Money laundering is prohibited under part 10.2 of the Criminal Code Act 1995, with penalties ranging from life imprisonment to six months depending on the offence. Money laundering syndicates create a shadow economy, enabling further criminal activities. While law-abiding Australians pay taxes, organised crime gangs use illicit funds to grow their wealth and fund crimes like drug trafficking et cetera.

When it comes to money laundering and what the criminal networks do—in this case, it can be terrorists or those supporting terrorists—to commit a terrorist act, you need money. Money can be transferred to Australia overseas. This is where the anti-money-laundering and counterterrorism legislation comes into effect, with transactions over $10,000 being tracked by AUSTRAC. The first tranche of the anti-money-laundering legislation under the Howard government was very much focused on making sure that banks and financial institutions report those transactions. When it comes to fines being issued, for example, a massive fine of $1.3 billion was imposed on Westpac when they were not complying with what was required. Crown Melbourne and Crown Perth received penalties of $450 million, and the Commonwealth Bank was fined $700 million. It's very important that, if institutions don't do the right thing, they are penalised and punished.

This bill aims to create a regulatory environment for money-laundering and terrorism finance. The act currently applies to entities providing a range of designated services, including banks, credit unions, casinos and other high-risk sectors. This bill seeks to extend the regime further. When it comes to lawyers, real estate agents, accountants and gemstone dealers and other designated non-financial businesses and professions, we on this side of the House are not opposed to the bill at this stage.

What we want to do is make sure that we understand what measures real estate agents and other small businesses need to have in place, because there will be a big financial burden—$13.9 billion over the next 10 years, based on the government's own information. The Attorney-General was asked by the shadow attorney-general to release an exposure draft so that everyone could have a look at it beforehand. Instead, the bill was put before the parliament, and now we're speaking about it today. It must go off to a Senate inquiry so that we can find out how this is actually going to work and what measures will be put in place for small businesses to ensure that they can actually meet all the requirements of this bill.

In terms of the coalition's history on this, the Howard government's initiative had its roots in international cooperative efforts to combat terrorism after September 11. In 2002 the coalition criminalised terrorism financing as part of the Criminal Code, and then moved money-laundering into the Criminal Code. In 2006, the coalition introduced and passed the AML/CTF Act, conferring AUSTRAC with the significant powers that it has today, and I mentioned before the massive penalties that have been given out.

The concern for those on this side of the House is that we need to understand the effect of the $13.9 billion impost on businesses. The real estate sector will face extra costs of $5.9 billion; accountants, $3.6 billion; legal services, $2.8 billion; bullion traders, $136 million; and gambling services, $99 million—not that that bothers me at all. That amounts to $13 billion over the next 10 years. We really want to get to the bottom of this. We know the Real Estate Institute of Australia is concerned that the effect of the bill will be to slug a business between $30,000 and $60,000. The Law Council of Australia is concerned about the impact of increased regulatory costs.

When it comes to counterterrorism, I would say that all members of parliament would be very supportive of doing everything we can to prevent terrorist attacks here in Australia. AUSTRAC has done an amazing job over the years of notifying law enforcement in relation to those who use international trading firms to transfer money. When AUSTRAC are concerned about the number of transactions to individuals or to a company overseas, they step in and provide the intelligence to law enforcement, who then take action. As I said, on this side, we want to know where that $13 billion impost on small business is going to be spent. We also want to know, precisely, what information a small business needs to provide. Obviously, the best way to get to the bottom of this is to go to a Senate inquiry.

David Gillespie (Lyne, National Party) Share this | Link to this | Hansard source

The Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2024 expands the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 and aims to create a hostile regulatory environment for money laundering and terrorism financing, which are very eminent ideals. I would just like to remind members of this House that the coalition is concerned about some of the unintended consequences of this rushed-in bill.

The government's own modelling predicts that the regulatory cost to industry and to the economy will be $13.9 billion over 10 years. In rural Australia, people like accountants, car dealers, real estate owners and people involved in advising trusts and companies are really concerned that they will be left holding these costs, which will make small business in those particular fields of professional work unviable, which will just put more work back into big corporate organisations. We have a long history of supporting anti-money-laundering and counterterrorism financing. The actual act that is being amended and deleted by this bill was created by the Howard government. After the September 11 terrorism attacks, we really got involved with stamping out terrorism financing and the act has been very successful thus far.

I'm concerned that we've got 165 pages for people to digest. There are lots of businesses that, as I said, this bill classifies as high-risk businesses, because they have a perception that all this money laundering is going through small legal firms and real estate deals in country Australia or regional Australia. They think every crook is buying a Lamborghini and then cashing it out, or bringing in money from overseas, buying Australian property and then rinsing it out on the other side. But these costs are going to be huge for people that deal in these industries. They called for the regulation of designated non-financial businesses and professions, or the so-called 'tranche 2' entities, which may be big players in money laundering and terrorism financing. I can tell you that in Laurieton, Wingham, Taree, Foster-Tuncurry and Wauchope we have hardworking lawyers, accountants and businesspeople that sell land and houses and, trust me, they are not financing terrorism. I think it's a long bow to put in a bill that's going to cost all these people $13.9 billion over 10 years, yet the government predicts that there might be—might be—a $2.4 billion return to the government in stopping dodgy terrorism financing using mum-and-dad businesses in regional Australia.

There is a concern that if we don't do this, we will be given a black mark or a grey listing by the international finance industry, but I don't think that will happen because we will know by our tax records and by our listing of real estate. We have a very transparent property transfer system. It's there for anyone to look at and see if there are concerns. Likewise, cars are all registered and sold, and cash transactions already have to be reported. It's not just me that's thinking: 'Slow down. We need to really work this through.' The regulatory cost is one thing, but the mismatch between the allocation of costs and the benefits is huge. The Real Estate Institute of Australia has come out against these proposed reforms. Even the Law Council have come out against this because they are concerned that small legal firms will have to employ people to do due diligence on just about every transaction that is bread and butter for a country legal firm. I'll tell you, if the Law Council are concerned about it, they are not the only professional body. Accountants from CPA Australia, CA Australia and the Institute of Public Accountants are also concerned because they are just being buried in paperwork. They have to be up-front with people about their fees but, if they're going to have compliance officers in every country accounting firm, people will be paying through the nose for simple transactions and for management of trust and super funds. They're already paying thousands of dollars every year. If you're a business, you are paying an accountant and getting audited. All these processes we have already. COSBOA, the Council of Small Businesses of Australia, also has concerns on the impact for small businesses and their ability to comply due to limited resources.

I also note that there are huge proposed regulatory or legislative instruments and directions that the minister responsible for this act will have for the next four years, which could totally redefine things. The so-called Henry VIII clause will give the minister four years to make rules under the bill. I think it would be a case of making haste slowly. Rather than rushing this through, wait until the Senate legislative committee has finished its review. Then we can be realistic about how we can reduce the costs on all these industries that were badly affected and all consumers who will be paying through the nose for their legal advice on property purchasing, tax matters and trust and family business matters. It is a really significant change, so I would make haste slowly, listen to what the Senate committee comes up with and look at the amount of heartache you will cause for what appears to be a marginal benefit over 10 years.

Mark Dreyfus (Isaacs, Australian Labor Party, Cabinet Secretary) Share this | Link to this | Hansard source

The Anti-Money Laundering and Counter Terrorism Financing Amendment Bill 2024 delivers on the Albanese government's commitment to protecting Australians from the serious harm caused by criminals. The bill will bolster Australia's anti-money-laundering and counter-terrorism financing regime to prevent criminals from hiding their illicit profits and funding illegal activities. It will also stop funds from falling into the hands of terrorists and disrupt activities of authoritarian and corrupt regimes. The reforms in this bill are long overdue. The former government's inaction has led to significant regulatory gaps and vulnerabilities. We are acting now to make sure that Australia stops being an attractive destination for illicit financing.

The bill will extend AML/CTF regulation to high-risk services provided by real state agents, professional service providers such as lawyers and accountants, and dealers in precious metals and stones. It will also expand the regulation of virtual asset related services and modernise financial sector specific regulation. These amendments bring Australia's framework in line with the international standards set by the Financial Action Task Force, FATF, which is the global financial watchdog, and will prevent Australia from being greylisted. This bill will help ensure Australia is not deemed a high-risk jurisdiction, which would have significant economic impacts for businesses and all Australians.

The bill also contains measures to modernise, clarify and simplify AML/CTF obligations to ensure the regime is easier to understand and easier to comply with. This includes making the AML/CTF programs and customer due diligence requirements more flexible, risk based and outcomes focused. The bill also repeals the Financial Transaction Reports Act 1988 to reduce complexity and duplication, and responds to a range of other issues raised by stakeholders while maintaining the overall integrity of the regime. Lastly, the bill makes timely updates to AUSTRAC's regulatory and information gathering powers, subject to appropriate safeguards. This will ensure that AUSTRAC can continue to effectively monitor, investigate and enforce compliance with the AML/CTF regime.

I have to say that we've had some very curious contributions from Liberal members who have spoken on this bill. They have all equivocated on their support for this legislation. I heard the member for Lyne say just now that the government should hasten slowly on this legislation. How slowly do you want to go? The Liberals have also all claimed credit for the passage in 2006 of the act of parliament which this bill amends, which was the Howard government's implementation of anti-money-laundering and counterterrorism financing measures. At that time in 2006, and I say this in the context of the member for Lyne's absurd suggestion that we should hasten slowly, there were two sets of regulation which the minister chose to categorise as tranche 1 and tranche 2 reforms. By 2015, the then government had not implemented the tranche 2 reforms, which were said to be coming in 2006, and at the time of the last mutual evaluation by FATF, the Financial Action Task Force, the then Liberal government in 2015 said it would implement the tranche 2 reforms.

Nine years later, after seven more years of inaction from the Liberal government, we had nothing, and I am now bringing to the parliament the tranche 2 reforms that the Howard government said they were going to do, that the Abbott government said they were going to do, that the Turnbull government said they were going to do and that the Morrison government said they were going to do. I say to the Liberal members who have spoken on this bill and I say to the opposition: time's up. Decide whether you are going to stand with criminals or not, but the time's up. Don't say 'hasten slowly' in respect of a reform that you said you were going to do in 2006 and again told the Financial Action Task Force that you were going to do when you were in government in 2015.

We are a government that gets things done, and we are getting this done because we are not about to have Australia grey listed, with dire financial consequences, and we're not about to have a continuing regime in which it's possible for black money from all over the world to compete with Australians who are bidding for houses. I'd make the other point that, as to the concern for businesses that are going to have to respond—which I hasten to say is not every business in Australia; it's businesses that have got interactions and have got potentially suspicious transactions—this gives them some reporting requirements. We got more than $160 million in the budget for a campaign that AUSTRAC is going to manage. AUSTRAC is very experienced at working with business. It's been working well with the businesses that are already regulated, which particularly include the banks, which have much more onerous reporting requirements than what any of the businesses that are being brought in in tranche 2 will have. We have more than $160 million in the current year's budget for an education campaign to ensure that businesses who will henceforth, when this legislation passes, be subject to the regime will know what the requirements are.

I say again to the opposition: time's up. You need to decide whether you're going to continue to stand with criminals by opposing this legislation—

Yes, I'll say 'continue to stand with criminals', which the member for Lyne is a bit upset about. He should go and read the op-ed in the West Australian from the shadow Attorney-General last week, in which she announced that the Liberal Party is going to oppose this legislation. That is not an acceptable position. We cannot have Australia grey listed by FATF at the next mutual evaluation, which is going to take place over the next year. That would have dire economic consequences for Australia.

At the moment we're in a select group of five countries, which include Haiti and Madagascar, in not having tranche 2 entities regulated. Time's up. You cannot put a price on the need to fight against terrorism and child abuse, as Liberal members would seek to do. We have to do everything we can to protect Australia from the dangers of money laundering, and we are. These reforms will benefit all Australians by strengthening our businesses and economy against money laundering and against terrorism financing. They'll ensure our law enforcement agencies are better able to detect and disrupt criminals and ultimately protect Australians from serious and organised crime. We are taking up the fight against money laundering and terrorism financing in Australia, and it's about time.

Question agreed to.

Bill read a second time.

Ordered that this bill be reported to the House without amendment.