Joe Ludwig (Queensland, Australian Labor Party, Manager of Opposition Business in the Senate) Share this | Hansard source

I rise today to speak on the government’s amendments to the Anti-Money Laundering and Counter-Terrorism Financing Act 2006, more commonly known as the AML-CTF Act. The Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2007 represents another step in the long and painful process that only last year resulted in the passage of the act itself. Once again, we see more evidence of the government’s lax approach to this critical area of Australian security. The government has tried to talk tough on protecting Australia, yet its actions let us down again. Before I begin, I would like to make clear that Labor supports this bill. In fact, it was Labor’s efforts in highlighting the delays in this process that shamed the government into action on the anti-money-laundering and counterterrorism financing front. It is Labor’s support for business that ensures we arrive at a workable model. However, here we are again trying to correct the government’s legislative drafting errors in an act that is, in fact, still largely to take effect.

It must be pointed out that all of these amendments could have been dealt with last year when we were debating the bill that became the principal act, but the Howard government insisted on shunting the bill through the parliament without it even being corrected. It is no wonder that the Howard government has become the master of red tape. It is a government that operates at only two speeds: legacy and panic. After the passage of this bill, the AML-CTF Act will accumulate another layer of unwieldy complexity. We will have an act, an amending act, a set of regulations, a set of rules, and no doubt there will be guidelines somewhere as well. The bill before us will introduce a range of technical amendments to the AML-CTF Act. As I have already indicated, the act itself was only passed finally last year after what will, I am sure, be remembered by all as one of the longest and most drawn-out legislative processes in parliamentary history—subject, I think, to the native title legislation.

The impetus for the AML-CTF Act were the recommendations of the financial action task force, more commonly referred to as FATF. FATF is essentially an international cross-governmental body which sets out international standards for financial security to fight money laundering, and it updates these from time to time. The bill’s general provisions are contained in FATF’s 40 general recommendations. Since late 2001, FATF has also developed another set of recommendations relating to counter-terrorist financing. These were released in the wake of the September 11 attacks. All up, there are 40 general recommendations and nine special recommendations representing the international standard for financial security and the prevention of money laundering and terrorist financing. Let me be perfectly clear about how important these recommendations and standards are: they are fundamental to a coordinated fight against international crime and terrorism. The previous Minister for Justice and Customs, Senator Chris Ellison, said as much in 2002 when he stated that criminals and terrorists will continue to take advantage of jurisdictions where the law enforcement and regulatory powers are the weakest.

Legislation to bring Australia into line with our international obligations was promised back in 2003. But, as I have already said, the previous minister’s actions and those of the government have not matched the rhetoric. For years, the government dithered and refused to bring legislation before parliament to bring Australia’s legislation in line with the international standards. If FATF provided the impetus, the government provided the inertia. In fact, in 2005 two international reports were released which slammed Australia’s tardy response. Firstly, the FATF country report found that under the Howard government Australia had met only 12 of the 40 general recommendations and not a single one of the nine special recommendations. Secondly, a department of the United States released a report in the same year which was also scathing of Australia’s response. Australia was labelled as a ‘major money-laundering country’ and ‘a country of primary concern’. In other words, the United States labelled the Howard government as a soft touch on money laundering and terrorist financing. The scathing international criticism of Australia had one advantage, however, because—combined with pressure from Labor—it finally started to convince the Howard government of the urgent need for reforms.

Still, the government’s response in late 2005 and through 2006 could best be described as a panic in slow motion. We saw the first raft of bandaid solutions in the Anti-Terrorism Act (No. 2) 2005. This introduced a few of the measures that were required to bring us closer to the international standards. The problem with these bandaid solutions, though, was that the Attorney-General’s Department failed to consult properly with affected industries. During the Senate committee’s inquiry, it was revealed that the government had not shown the final draft to industry. In fact, the affected industry and the government disagreed strongly on the critical question of the cost of the new arrangements. To little surprise, the industry had the better estimate of the cost. Before the bandaid solutions contained in the Anti-Terrorism Act (No. 2) 2005 had even commenced operation, the government was forced to go back and revise it. It was forced to do this because, and here I quote directly from the explanatory memorandum of the bill:

If the amendment to restrict the application of Division 3A of Part 11 of the FTR Act to ADIs is not made, then certain legitimate non-bank money remitters assert that they could be put out of business.

The government was forced to concede that their own legislation had been so poorly drafted that it would have put people out of business had it actually come into force. This is the low standard of law making to which the Howard government has declined.

We finally saw the complete legislation at the end of last year, but even at the 11th hour the government was making last-minute alterations. The explanatory memoranda were written and withdrawn and new ones were released.

Finally, I would point out that, even after half a decade of delays, international criticism and bandaid solutions piled upon bandaid solutions, the legislation that was passed by parliament last year does not even contain the full complement of the recommendations. The government is still to bring forward a second tranche of reforms to finally bring Australia into line with our international obligations. But I will not be holding my breath. Without the implementation of the full range of recommendations, you have what is at best a maginot line—that is, a wall of seemingly impregnable defences that might look threatening but can be circumnavigated with surprising ease.