Chris Ellison (WA, Liberal Party, Minister for Justice and Customs) Share this | Link to this | Hansard source

Mr Chairman, before we start the committee proceedings I table a supplementary memorandum relating to the government amendments to be moved to this bill. The memorandum was circulated in the chamber on 5 September 2006.

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

I have an amendment but I will not move it at this time. I have some questions, arising out of those amendments, that I would not mind a response to. It was pointed out in a submission by Allens Arthur Robinson that the restriction of cash dealers to ADIs in sections 17FA and 17FB would lead to noncompliance with special recommendation VII. When asked whether this was the case, the response from the Attorney-General’s Department, as far as I can see, did not quite answer the question. The Attorney-General’s Department said in section 4 of its answer to the first question on notice that the limitation in the FTR Act framework meant that special recommendation VII obligations could only be applied in a more limited class than would be the case when the AMLCTF bill is enacted at a later date.

Provisions in the AMLCTF bill comply with special recommendation VII, so I am curious as to the answer to the original question. Should we assume that it applies in a more limited class—and is that a euphemism for noncompliance? I will go through that again. Allens Arthur Robinson pointed out that the restriction of cash dealers to ADIs in sections 17FA and 17FB would lead to noncompliance with special recommendation VII. The answer given did not seem to address that issue. The answer was that the limitation in the FTR Act framework meant that special recommendation VII obligations could only be applied in a more limited class than would be the case when the AMLCTF bill is enacted at a later date. As you can see, that does not quite answer the question.

I will go on to other things while you reflect on that. Perhaps it is worth while to talk a little about this issue. This bill amends changes to the Financial Transaction Reports Act which were enacted last year by the Anti-Terrorism Bill (No. 2) 2005 but have not yet gone into operation. The bill before the Senate is regrettable in that it has amendments to a poorly drafted piece of legislation which the government rushed through in 2005. But it is less than a year since we passed the Anti-Terrorism Bill (No. 2) 2005 into law and already we have returned to fix this piece of legislation. Not only that, but we have also brought in further amendments to fix it again—and it seems to be only on an interim basis, in any event. I am happy for that to be clarified further in the committee stage.

It seems to me that the provisions in the ATB have not yet even come into force. Already, the government has been forced to concede that there are significant problems not only in the bill itself but also in the explanatory memorandum that further amends that legislation. It has gone so far that it seems to me that the government now concedes that this legislation as it stands, without this amendment, would destroy legitimate businesses when it goes into operation.

It would be helpful if we understood as well—and you might want to take this question on notice during the committee stage—what feedback has been received, from what industries, to indicate that, and when it was received by industry. It seems to me that industry was not consulted in the first instance. In addition to that, if this is going to be, as I understand it, an interim solution, will it then be resolved in the first or second tranche of the AMLCTF legislation? Is it going to be rectified or covered again in the first tranche? The bill is currently in an exposure draft, on which the government has received submissions, but it has not yet been introduced into this chamber.

The provisions introduced by the Anti-Terrorism Act, which this bill amends, implement the special recommendations of the Financial Action Task Force, FATF, in relation to combating terrorism funding. FTAF is an intergovernmental body designed to develop and promote policies to combat international money-laundering and terrorist financing. To that end, as we know, there are 40 recommendations on anti money laundering and, since September 11, a further nine special recommendations in relation to the financing of terrorist activity.

The history of the situation so far is that in 2003 the Minister for Justice and Customs, Senator Ellison, promised that we would have an updated financial transaction report brought into line with those special and general recommendations. It is now more than three years since that promise to bring the legislation before the parliament. The minister could indicate in this debate when that bill is likely to be brought forward. As I understand it, there is a commitment for that legislation to go to a committee as well for a further look. The minister could also provide assurances that that will be the case and that there will be sufficient time for that committee to have a look at the legislation in toto.

It is a substantive piece of legislative drafting. I understand the department has been drafting it for some time—and I think that would be an understatement—with the draft legislation going back and forth between industry and the department. So the additional factor would be that the committee does have sufficient time to hear from industry—in other words, we need to allow sufficient time for it to be advertised and for us to hear from industry as to what issues may arise in respect of the bill, and then to allow the committee sufficient time to report back to parliament. If it is the intention of the minister to have the matter passed before the end of the year, time is now running out.

The other matters I will come to shortly, when I seek to move the amendment that I have made. But I will first give others the opportunity to participate in this debate and deal with some of the questions I have raised, if there are any to answer at this point; if there are not, I will go on with some other issues.

Andrew Murray (WA, Australian Democrats) Share this | Link to this | Hansard source

Just before the minister responds to Senator Ludwig, I wish to say that I hope it is the intention of the government to refer the final bill to a committee. In his response, I would ask the minister to consider whether the appropriate committee would be the Senate Standing Committee on Legal and Constitutional Affairs or the Joint Committee on Corporations and Financial Services, because obviously the bill is of great interest from a corporate law perspective and from the perspective of matters which arise through the APRA regime, all of which have been matters of interest to the joint committee. Maybe you are not in a position to give an answer now or today, Minister, but you need to think carefully as to which committee you send it to.

Chris Ellison (WA, Liberal Party, Minister for Justice and Customs) Share this | Link to this | Hansard source

I wish to make it clear that the government does believe that this bill, when it is introduced, should be referred to a committee. I believe the Senate Standing Committee on Legal and Constitutional Affairs would be an appropriate committee to deal with the bill. There was an exposure draft which we referred to that committee. It was done for the reason that this is a complex area and we wanted to give the committee a preliminary opportunity, if you like, to look at the legislation and to look at issues in the broad, so that the Senate Standing Committee on Legal and Constitutional Affairs now has a fairly good appreciation of the issues involved in this. I think that, for that reason, there would be benefit in sending the final bill, as introduced, to that committee. That is my thinking on that. Of course, it is up to the Senate as to what it refers, and I will not pre-empt that decision, but that would be the government’s view in relation to that.

In relation to the time line, Senator Ludwig has asked that there be adequate time, and it is certainly planned to introduce the bill in these sittings. The bill has the appropriate status for that to happen and I believe that the committee would have the time to look at the bill.

There has been extensive consultation in this process: two exposure drafts, which is quite unusual. The two exposure drafts have been the subject of comment by industry. Consultation is ongoing. Indeed, part of the consultation that was conducted in relation to this particular bill formed part of the broader consultation for the more general aspects of the legislation which we will be dealing with later.

In relation to Senator Ludwig’s other queries, I think that, of the question on notice he mentioned, I can say that, in relation to special recommendation VII of the Financial Action Task Force on Money Laundering, the amendments to restrict division 3A of part II of the FTR Act to authorise deposit-taking institutions will not achieve full compliance with special recommendation VII. I think that answers the question that Senator Ludwig posed.

That further compliance which is needed will be done under the bill—if I can call it this—which is dealing with the wider issue of anti-money-laundering reform. It will be dealt with when it is brought into the parliament. The amendments to schedule 9 of the Anti-Terrorism Bill (No. 2) 2005 are meant to provide an interim solution to the issues identified by the non-bank money remittance businesses. That is how we are approaching it with special recommendation VII.

In relation to the submissions by the private sector and when they were received, some of the government amendments that we are moving today are the product of consultation with the private sector, and I can indicate those when I deal with each of the government amendments in turn. If Senator Ludwig’s question is a broader one, dealing with all the submissions that we received and when they were received, then we will have to take that on notice.

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

No, it’s a narrower one.

Chris Ellison (WA, Liberal Party, Minister for Justice and Customs) Share this | Link to this | Hansard source

Then I think I can address that, Senator Ludwig, when we come to each of the amendments in turn. As for the date we received them, I would have to take that question on notice. But I think I can cover that when we deal with the government amendments shortly. I think that covers all the issues we were dealing with.

Ross Lightfoot (WA, Liberal Party) Share this | Link to this | Hansard source

The question is that the bill stand as printed.

Chris Ellison (WA, Liberal Party, Minister for Justice and Customs) Share this | Link to this | Hansard source

Having dealt with those other issues, I now seek leave to move government amendments (1) to (5) together.

Leave granted.

I move government amendments (1) to (5) on sheet RB308:

(1)    Schedule 1, page 3 (after line 25), after item 4, insert:

4A  After subsection 17FA(1)

Insert:

          (1A)   For the purposes of paragraph (1)(b), if:

                  (a)   an ADI (the first ADI) is acting on behalf of, or at the request of, another ADI (the second ADI); and

                  (b)   the second ADI is (whether or not as a result of one or more previous applications of this section) acting on behalf of, or at the request of, a person who is not an ADI;

then:

                  (c)   the first ADI is taken to be acting on behalf of that person; and

                  (d)   for the purposes of providing customer information in relation to that person, the first ADI is entitled to rely on the information provided by the second ADI.

(2)    Schedule 1, items 9 and 10, page 4 (lines 5 to 15), omit the items, substitute:

9  Subsection 17FA(3) (definition of customer information)

Repeal the definition, substitute:

customer information, in relation to an international funds transfer instruction transmitted out of Australia, means the following information about the ordering customer on whose behalf, or at whose request, an ADI sends the instruction:

        (a)   the ordering customer’s name;

       (b)   any one of the following:

                   (i)    the ordering customer’s full business or residential address (not being a post office box);

                  (ii)    if the ordering customer is an individual—the ordering customer’s date of birth and the country and the town, city or locality of the ordering customer’s birth;

                 (iii)    a unique identification number given to the ordering customer by the Commonwealth or an authority of the Commonwealth (for example, an Australian Business Number or an Australian Company Number);

                 (iv)    a unique identification number given to the ordering customer by a foreign government;

                  (v)    a unique identification number given to the ordering customer by the ADI that the ordering customer originally asked to send the instruction;

        (c)   either:

                   (i)    if the money is, or is to be, transferred from a single account held by the ordering customer with the ADI that the ordering customer originally asked to send the instruction—the account number; or

                  (ii)    in any other case—a unique reference number assigned to the instruction by the ADI that the ordering customer originally asked to send the instruction.

10  Subsection 17FA(3)

Insert:

unique reference number, for an international funds transfer instruction, means a combination of any or all of the following:

        (a)   letters;

       (b)   digits;

        (c)   characters;

       (d)   symbols;

which distinguishes the instruction in a way that, either:

        (e)   alone; or

        (f)   in conjunction with any other information in the instruction;

enables the ADI that the ordering customer originally asked to send the instruction to identify the ordering customer.

Examples:

        (a)   a combination of a BSB and account number;

       (b)   a reference number generated by the ADI that the ordering customer originally asked to send the instruction.

(3)    Schedule 1, page 5 (after line 1), after item 16, insert:

16A  Subsection 17FB(6) (subparagraph (b)(ii) of the definition of customer information)

Omit “date and place of birth”, substitute “date of birth and the country and the town, city or locality of the ordering customer’s birth”.

(4)    Schedule 1, item 17, page 5 (lines 2 to 5), omit the item, substitute:

17  Subsection 17FB(6) (subparagraph (c)(ii) of the definition of customer information)

Repeal the subparagraph, substitute:

        (ii)   a unique reference number assigned to the instruction by the ordering organisation.

(5)    Schedule 1, page 5 (after line 5), at the end of the Schedule, add:

18  Subsection 17FB(6)

Insert:

unique reference number, for an international funds transfer instruction, means a combination of any or all of the following:

        (a)   letters;

       (b)   digits;

        (c)   characters;

       (d)   symbols;

which distinguishes the instruction in a way that, either:

        (e)   alone; or

        (f)   in conjunction with any other information in the instruction;

enables the ordering organisation to identify the ordering customer.

Examples:

        (a)   a combination of a BSB and account number;

       (b)   a reference number generated by the ordering organisation.

19  At the end of Division 3A

Add:

17FC  Transmission into or out of Australia—intermediaries

This Division does not require the provision of customer information in relation to an international funds transfer instruction if:

        (a)   the instruction is transmitted by an ADI into or out of Australia; and

       (b)   the transmission into or out of Australia occurs in the course of, and for the purpose of, the transmission of the instruction by or on behalf of another financial organisation from a place outside Australia to another place that is also outside Australia.

20  Paragraph 29(4)(ba)

Omit “a cash dealer”, substitute “an ADI”.

21  Section 42A

After “3A”, insert “, 3AA”.

customer information, in relation to an international funds transfer instruction transmitted out of Australia, means the following information about the ordering customer on whose behalf, or at whose request, an ADI sends the instruction:

                   (i)    the ordering customer’s full business or residential address (not being a post office box);

                  (ii)    if the ordering customer is an individual—the ordering customer’s date of birth and the country and the town, city or locality of the ordering customer’s birth;

                 (iii)    a unique identification number given to the ordering customer by the Commonwealth or an authority of the Commonwealth (for example, an Australian Business Number or an Australian Company Number);

                 (iv)    a unique identification number given to the ordering customer by a foreign government;

                  (v)    a unique identification number given to the ordering customer by the ADI that the ordering customer originally asked to send the instruction;

                   (i)    if the money is, or is to be, transferred from a single account held by the ordering customer with the ADI that the ordering customer originally asked to send the instruction—the account number; or

                  (ii)    in any other case—a unique reference number assigned to the instruction by the ADI that the ordering customer originally asked to send the instruction.

unique reference number, for an international funds transfer instruction, means a combination of any or all of the following:

        (ii)   a unique reference number assigned to the instruction by the ordering organisation.

unique reference number, for an international funds transfer instruction, means a combination of any or all of the following:

This amendment will ensure that there is no gap in the legislation if an Australian bank which is asked to send a funds transfer instruction to a foreign bank is not able to deal directly with the foreign bank but has to deal through an intermediary bank in Australia. The amendment will provide that the intermediary bank is taken to be acting on behalf of the original customer and not the originating bank and will have the obligation to ensure that the relevant information accompanies the funds transfer instruction. The intermediary bank, however, will be able to act on any information it receives from the originating bank. It will not have to make its own inquiries of the original customer. That is a technical amendment and one which was identified during the drafting of this legislation.

The second amendment is the product of a suggestion by the Australian Bankers Association. This deals with the definition of customer information. This meets industry’s request to amend the definition of customer information in section 17FA(3) to better reflect the wording that will be used in section 67 of the Anti-Money Laundering and Counter-Terrorism Financing Bill. This amendment also inserts the definition of ‘unique reference number’ into section 17FA(3). This definition is consistent with that term as it will be defined in the AMLCTF Bill—that is the bill to be introduced.

Amendments (3) and (4) are again somewhat technical. Amendment (3) is the result of a request from AUSTRAC. It amends section 17FB(6) paragraph (b)(ii) to omit date and place of birth and substitute date of birth, the country and the town, city or locality of the ordering customer’s birth. Amendment (4) is another technical amendment that is consequential on government amendment (2). That amends section 17FB(6) paragraph (c)(ii) to now provide that a unique reference number assigned to the instruction by the ordering organisation be included in the international funds transfer instructions. The reference to the term ‘unique reference number’ is consistent with the definition of that term as it will appear in the Anti-Money Laundering and Counter-Terrorism Financing Bill.

The final government amendment deals with four aspects. The first inserts the definition of a unique reference number into section 17FB(6). This definition is consistent with the terms in which it will be defined in the AMLCTF Bill. That is a technical amendment recognised by government drafters. The second aspect of amendment (5) inserts a new section, 17FC. This amendment will ensure that the provision of complete customer information in an international funds transfer instruction is not required where that is transmitted from a place outside Australia to another place outside Australia and merely passes through Australia. This was a suggestion made by the Australian Bankers Association. It is a technical amendment and one which we think is a worthwhile suggestion. We have accordingly taken it up. The next aspect of amendment (5) deals with a drafting error. It amends section 29(4)(ba) that was inserted into the Financial Transaction Reports Act 1988 by schedule 9 of the Anti-Terrorism Bill (No. 2) 2005 to refer to an authorised deposit-taking institution rather than a cash dealer to ensure consistency with the amendment to restrict division 3A of part II of the FTR Act to authorised deposit-taking institutions only. That is a technical amendment and one which has been recommended by the drafters. The final aspect of amendment (5) comes from a suggestion by AUSTRAC—and that is to amend section 42A, amendment of schedules by regulations, to include a reference to schedule 3AA as inserted into the FTR Act by schedule 9 of the ATA, the Anti-Terrorism Act (No. 2) 2005. Again, this is a technical amendment. That deals with all of the government amendments that are proposed. I commend those amendments to the committee.

Andrew Murray (WA, Australian Democrats) Share this | Link to this | Hansard source

Through you, Mr Temporary Chairman, to the minister, I am going to ask the minister to take something on board which I think needs to be attended to. I am of the opinion that this bill needs to pass as rapidly as possible and that we need to get on with the anti-money-laundering legislation as fast as possible, for obvious reasons that I enunciated in my speech in the second reading debate and elsewhere. But I want to draw your attention to amendment (3). Through the chair, Minister, I have come across a large number of residents and citizens of Australia who do not know their date and place of birth. I was exposed to that first of all, and most materially, with respect to the Senate Community Affairs References Committee inquiry into child migrants. I have discovered since that there are many circumstances—it probably runs into thousands; it is not a question of hundreds—where such individuals exist.

In the old days, the term used was ‘foundling’—abandoned children. Abandoned children did not know when they had been born or to whom they had been born. Often they knew where, of course, because they were found in a particular locality—unless like Moses they floated down a river, in which case you would not know where they had come from; although I understand that they did find that out in the end. This is a serious issue. I have had adult Australians who were child migrants, who believed themselves to be Australians, weeping in my office at the humiliation of being made to justify who they were and not being able to produce a birth certificate. If they had a birth certificate, it might have been wrong because they were put into an institution and the details about them were made up.

There have been instances of people who came into this country as child migrants being employed by and serving in the Australian armed forces—including in places like Vietnam—and later on, as adults, going overseas, losing their passport, applying for another one, not being able to prove who they were and being refused re-entry into the country in which they grew up. It really is a material issue for a small but sizeable number of Australian residents and citizens.

I would like to request through the chair, if the minister would take my remarks on board, that the department refer to the Senate Community Affairs References Committee’s reports on child migrants, Lost innocents, and Australian children in institutions, Forgotten Australians. With institutionalised children, including foundlings and people who do not know the details of their birth, birthplace and parents, we are talking about over 500,000 Australians last century. That is a sizeable proportion. My feeling is that some kind of protocol, process or mechanism is needed to deal with these circumstances if and when they arise, such as a statutory declaration process or some other means which addresses this problem. By my remarks, please do not infer that I am opposed to your amendment; I am not. I think it is perfectly reasonable for it to be as detailed as it is, but some people just will not be able to comply, and I suspect now and again it is going to prove a problem.

Really, my request through the chair to the minister is to take my remarks on board and think about whether this issue should be addressed in the forthcoming bill, which is to go to a committee, or addressed by some sort of regulatory or administrative process or means, because I suspect it will arise. It arises right now when people want to get married—they cannot say who they are and where they came from—when people apply for a passport, when they apply for bank facilities and so on. It is a problem, and the Senate has recognised it is a problem in its reports. I think, with respect to this sort of measure, the government should be alert to the fact that it might arise as a problem and you need to think about it.

Chris Ellison (WA, Liberal Party, Minister for Justice and Customs) Share this | Link to this | Hansard source

I will deal with that issue. Does the current legislation allow for the situation that Senator Murray has mentioned? I am aware of those cases that I have come across personally where people who have come to Australia from another country do not have that detail available as to date and place of birth, and I accept that it is an issue out there for some people. We do not want to disadvantage them because of that. The section which deals with this in the Financial Transaction Reports Act 1988 is section 17FB(6), which puts it this way:

customer information, in relation to an international funds transfer instruction transmitted into Australia, means the following information about the ordering customer on whose behalf, or at whose request, an ordering organisation sends the instruction:

It then lists the details that are required:

the ordering customer’s name—

You do need that, and that is straightforward. It goes on:

(b)

any one of the following:

(i)

the ordering customer’s full business or residential address (not being a post office box);

(ii)

the ordering customer’s date and place of birth;

(iii)

a unique identification number given to the ordering customer by a foreign government;

(iv)

the identification number given to the ordering customer by the ordering organisation—

So there are four requirements there which are alternatives. I would suggest that, where you have someone in this position, who does not have their date and place of birth, the other three criteria could be met and any one of them would suffice, according to the wording of the section.

That said—and I would submit to the committee that it addresses the concern raised by Senator Murray—certainly I will take on board the comments by Senator Murray in dealing with this change to the legislation to ensure that in the private sector, as much as we can ensure it, no-one is disadvantaged in the application of this legislation and no-one is disadvantaged who is in the position of not knowing their date and place of birth because of reasons beyond their control. Certainly they should not be disadvantaged. I think the legislation does accommodate it because it prescribes it in the alternative, but I still take on board Senator Murray’s point. That is something we will bear in mind when we are looking at this.

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

I will deal with a couple of issues. The Anti-Terrorism Bill (No. 2) in this instance, in terms of the amendments, moved to a position where there would be compliance with special recommendation VII. I am wondering whether the government accepts that position. Now we are retreating from full compliance with SR VII to the position where, because of the lack of consultation in the original bill, we have consultation which puts it in a position where industry will be substantially affected. I know those industries are cash dealers, but perhaps the government could give a more concrete example of who they are and, in particular, to what extent their businesses would be disrupted by this amendment. Perhaps they could also indicate whether or not there was a matter raised by the ABA or how it came to the attention of the department or the minister that there was a problem that needed to be retreated from or rectified. How long will it take before you will be fully compliant with SR VII, given that you now say, even after this bill, you will still not be compliant with it?

Chris Ellison (WA, Liberal Party, Minister for Justice and Customs) Share this | Link to this | Hansard source

At the outset, I think it is fair to say that the government never said in the Anti-Terrorism Bill (No. 2) that we would be fully compliant with special recommendation VII. That piece of legislation was always acknowledged as being an immediate response which was needed, and further work would be done on the special recommendations made by FATF. Indeed, today I have said that, even after this bill, further aspects of special recommendation VII will be incorporated in the wider response. Certainly, I see the whole area of anti money laundering as being a work in progress. The area in which financial institutions work is ever changing—the products, the packages that people invest in and the way people structure their financial affairs. There is always something coming up in the financial sector which needs to be addressed, especially with emerging technology.

I would make very clear to the chamber that I would not regard the passing of any bill in relation to anti money laundering as being the final response. Further work will always be needed. With respect to special recommendation VII, it is fair to say that the government certainly said that, notwithstanding the Anti-Terrorism Bill (No. 2), further work would still be done. This is the further work that is designed to respond to special recommendation VII, and there will be further aspects which will complete our response in the final legislation.

The other question Senator Ludwig asked is: was there some submission from the private sector and, if so, what did we receive? I am not so sure that that applied to special recommendation VII. I will take that on notice. I think the work on special recommendation VII was as a result of further drafting by the government, but I will take that on notice and just make sure. But, if there was a submission from the private sector, we will advise the chamber of that.

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

I am happy for the chamber to be provided with the answer but, as I understand it, I do not think this fixes the problem with SR VII. I think you will agree with that, Mr Temporary Chairman. The main problem was the exclusion of ‘cash dealer’ from the section and the substitution of ‘ADI’. I thought that had to do with an objection raised by the ABA which related to hub and spoke transfers. My understanding is—and this is partially taken from the EM itself—that a customer goes to bank A and wants funds transferred to bank B. Bank A sends the transfer instructions to a related bank, bank C, which has a corresponding banking relationship with bank B.

Under the amendment, for the purposes of the legislation, bank C is taken to be acting on behalf of the customer, who is entitled to rely on the customer information provided by bank A. Apparently, this fixes an error which would have required bank C to verify the details of the customer before sending on the instructions. The AGD said they would consult with the ABA as part of their response to original questioning by me. It looks as though, in that instance, the ABA found another hole—or, alternatively, the department, in looking at this area, turned up the issue. But are these amendments designed to address the issues that were raised by the ABA in the Senate committee? Was the ABA consulted on the final wording of the FTR amendment to this bill? If not, then an explanation of where it came from would be helpful. What other industry bodies were tacking changes onto this particular bill? That is in relation to amendment (1).

What I am concerned about is that we do have to meet the 40 recommendations from FATF, plus the nine special recommendations. The OECD report earlier this year did not give Australia a very—in my words—good report. Since that time, there have been the Anti-Terrorism Bill (No. 1) and Anti-Terrorism Bill (No. 2) which, in part, were brought about to address some of the deficiencies discovered, including the fact that we, at that time, were not fully compliant with any special recommendations.

The minister says that it is a work in progress, but it has been a work in progress since November 2003 and it is still not finalised—in fact, it is significantly not finalised when we have a second tranche as yet unseen and an unknown date as to when it will be brought forward. We still have not finalised the first tranche and it is now 2006 and counting.

As to the government’s response that it is a work in progress, I am concerned that there is a requirement to meet the 40 plus nine recommendations to be fully compliant. The OECD will revisit this issue to establish whether meeting the 40 plus nine recommendations by, I think, later this year, is a reasonable timetable. You can correct me about that if I am wrong, Minister. You would certainly know better than me.

In that sense, it is not a work in progress. We do have to meet those 40 plus nine recommendations. As you would expect, as there are developments over time, legislation does change. It requires amendment and updating. But at least bedrock legislation has to be put in place, and it needs to be bedded down. You might find a slip, an error or a correction. That is not unusual. You might find that new circumstances have arisen or new procedures by industry might require amendment or change, but that is not a work in progress. It is part and parcel of the role of government to ensure that legislation remains up to date and relevant to the people who use it. But we have not got to the bedrock legislation, which I do not think should amount to a work in progress. It should in fact be here by now. It concerns me that, in an ad hoc way, we are still amending the legislation again today, when it has not even come into being. I asked a couple of questions in all of that, but I will deal with amendment (2) shortly.

Chris Ellison (WA, Liberal Party, Minister for Justice and Customs) Share this | Link to this | Hansard source

With regard to the more general issue that Senator Ludwig mentioned in relation to the transactions between banks where you have an intermediary, suggestions were made by the Australian Bankers Association which were taken on board. I understand that the private sector was consulted in relation to the wording of this bill, and I think that that covers what Senator Ludwig has said. Other countries, such as the United States and the United Kingdom, have been dealing with the same issues we have and are in the process of implementing their responses to the 40 recommendations from FATF, plus the nine special recommendations.

In a visit recently to London and Washington it was made very clear to me that they also regarded this as very much a continual work in progress and that you would never reach a specific point in time where you could rule a line through things. The complexity of it is demanding, and that is why we have gone very carefully with the private sector. I have said repeatedly that we do not want to render the financial sector of Australia uncompetitive because of inappropriate regulation. We do not want to burden that sector with such regulation and red tape that internationally we are not competitive. They work in a very global environment, if I can put it that way, and it is essential, therefore, that we achieve a balance between security needs, on the one hand, and the needs of the private sector, on the other.

To give you an example of one of the things that FATF requires, and one of the issues that we are dealing with: for credit card transactions FATF requires the full details of the customer and the number. On the one hand, this sounds like a good suggestion, and there are security aspects to it, but, on the other hand, does it really achieve that which it sets out to? We have said—and you have seen this recently with changes to credit card details—that when you get a receipt your full number is not on it for security reasons: so that people cannot hack into your credit card and commit credit fraud. One of the things I would say when somebody comes along and says, ‘This is what you’ve got to do,’ is that you have to go a bit further and see what ramifications there may be in providing the full details. Are you exposing the cardholder to possible fraud by doing that? That is just one very small aspect of what is a very big area of reform, and that is something we are taking up with FATF, for instance. FATF has suggested that and said that that is a good way to go. I think we need to have a good look at that and make sure that it is the best way to go, because it could have the reverse effect by publishing the details in such a fashion that a person’s identity could be stolen.

Andrew Murray (WA, Australian Democrats) Share this | Link to this | Hansard source

I want to add my voice very briefly to the call of the shadow minister for more haste in this area. I accept and respect the conundrum the minister and the government find themselves in. You have privacy weighted against security weighted against commercial needs and the competitive needs of the nation. Frankly, we need a less than perfect anti-money-laundering regime rather than none at all—and I recognise that we do have an anti-money-laundering regime, because that is what the financial transactions act is all about. But I am of the view that the need to limit the availability of finance for global crime or global terrorism—and sometimes they are one and the same thing, as the minister well knows—is greater than our need to make haste slowly. Global crime and global terrorism are an immediate threat, and I want to add my voice to urging the minister and his department to come forward with legislation as fast as possible, even if it does not meet the full requirements that have been put to us by the task force. It is better that, in this matter, we make rapid progress that might be less than perfect than make slow progress.

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

As we have said right from the start with this, we do not oppose the introduction of anti-money-laundering legislation that fights the financing of terrorism. It is a scourge and should be limited and got rid of. We do not object to the government bringing the legislation forward in a reasonable state, having consulted with business to ensure that it does not tie them up with red tape.

When you look at the way this has been handled, you will see that the No. 2 bill brought in the legislation, and the government limited the ability of the original committee to deal with it. As a consequence, we had a range of submitters. The government then came back to amend it, even before it came into place. So I suspect that business is getting annoyed, or at least finding that the sands are shifting underneath them all the time, because the legislation is changing and not being brought forward.

We then had more changes, which appear to be me to be straight from the ABA submission to the committee with perhaps some add-ons from other industry sources as well. So we had a situation where, having the committee hear from the government, there was no change and the bill went through. We then came back before it was enacted with even more changes—even late changes through a supplementary EM. You would have to say, upon reflection, that this process is less than perfect and in fact smacks of really ad hoc changes and a bandaid solution, because it is only an interim solution. We are still waiting for the final bill, but it will deal only with the first tranche of the entire area. This is all turning into quite a saga. There are a couple of analogies I would make, but I will refrain from doing so. It is a serious issue.

The opposition is concerned about ensuring that small business, medium business and even big business are not tied up with red tape, particularly in this area, but it does require a considered, meted change to ensure that it is effective and that business is consulted. In the consultative process the changes that are brought forward need to meet business expectations in the fight against the financing of terrorism. So far the process has not been all that satisfactory.

Amendment (2), instead of requiring just a full business or residential address, provides that a range of identifiers can be used. We do not object to that change; it is sensible to bring it forward to ensure that there are a range of identifiers, such as full business or residential address. Perhaps the minister can provide an explanation as to why the changes regarding subsection b(i) were required. It is just not clear on the record, at least to me. And in subsection b(ii), why do we need to clarify that the ID code must be unique when a unique reference is subsequently defined later on?

While the minister seeks an explanation I turn to some broad issues. As I have said, the saga of this bill is not yet over. These amendments are largely to correct problems in the bill that came about through lack of consultation in the drafting process in the first place. In fact, half of the corrections seem to come straight from the comments made by the Australian Bankers Association. Labor certainly agrees that those concerns should be taken into account by the government when drafting legislation, but of course while keeping in mind the purpose of the legislation—that is, to fight terrorist financing.

The government has gone about this in a backward sort of way. The correct process, I would have thought, would have been to consult with stakeholders, bring the bill forward and deal with it through the committee process—for those people in the wider community who still have a legitimate interest—rather than wait until the last minute to amend an already amending bill. I have to say that, in my experience, this department’s attitude to consultation with industry has been less than perfect on a range of issues. In fact, I have even been assured by AGD at a committee hearing that they would lift their game in the consultative process. That was in relation to a different bill, and it may even have involved a different part of AGD. Perhaps the minister can pass it back to AGD that they should think through the consultative process a little more broadly so we do not end up spending more time than we need to when debating this issue in the chamber.

Chris Ellison (WA, Liberal Party, Minister for Justice and Customs) Share this | Link to this | Hansard source

The changes as provided for by amendment (2) were the result of industry’s requests to amend the definitions that Senator Ludwig has referred to. That was the reason for the amendment. I might just say that I have received very positive feedback from the industry in relation to the way in which the Attorney-General’s Department has handled the consultation process. I think it is fair to say that was across the board from different sectors of the financial industry in this country. As I have said, we plan to introduce the broader bill in these sittings. An exposure draft, which is almost in its final form, will be introduced in these sittings—I cannot be clearer than that—and it will naturally go to a committee. These amendments are the result of industry suggestions and we thought they were sensible.

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

I do not think we are going to be able to complete our consideration of this in the time available, but we should be able to come back to it today. There is not much left to consider. As I understand it, it will take only 10 or 15 minutes. There is one last issue which the minister can take before we report progress, which goes to amendments (3) and (4). Presumably ‘place’ was too broad. I would like an explanation as to why the amendment refers to the country and the town, city or locality. I think it goes partly to a matter raised by Senator Murray. According to the EM, it brings us in line with section 17FA(3)(b)(ii). Would the minister look at whether section 17FA(3) is the definitions section and whether subsection (b)(ii) exists? It only goes as high as (b), which provides that a unique reference number may include digits. I may have missed that, but there may be another—and I hate to mention it—drafting issue. I suspect that can be corrected on the run, if I am right. If I am wrong about that maybe I am being pointed to the wrong place by the legislation. Perhaps the minister can take that on notice.

Amendment (5) relates to section 17FB and provides for a unique reference number. It appears straightforward and consequential. Amendment (6) also involves the issue of hub and spoke, as I understand it. I would like an explanation as to whether that is the case. The system identified by the ABA basically says that if the FTA is transmitted by an ADI—

Progress reported.