Kimberley Kitching (Victoria, Australian Labor Party, Deputy Manager of Opposition Business in the Senate) Share this | Link to this | Hansard source

I rise to speak on the Crimes Legislation Amendment (Economic Disruption) Bill 2020. I will say from the outset that Labor supports these reforms. Labor has consistently argued that Australia's anti-money-laundering and counterterrorism financing framework must continue to evolve to counter attempts by actors to thwart it. Now, more than ever, the risk of money laundering and terrorism financing remains significant as criminals and terrorists seek to stay one step in front of the law. It's a race we cannot afford to lose. Money laundering and terrorism financing are issues not just here in Australia; they are global problems facing many countries. They threaten to undermine Australia's national security and destroy the integrity of our financial system if left unchecked. So Labor welcomes efforts by the Morrison government to improve our anti-money-laundering and counterterrorism financing framework. Australia cannot afford to be a weak link in the global financial chain, nor can it be a soft touch for organised criminals around the world seeking to launder the proceeds of their crime.

It is unfortunate, however, that Australia still lags significantly behind our international counterparts in this field. It's appropriate that a government led by Scott Morrison, a former advertising man, has made Australia such an attractive destination for a very niche audience. As a nation our laws have lagged behind, so we have become a target for nefarious actors wishing to exploit our soft defences.

The Morrison government has repeatedly missed deadlines in its own anti-money-laundering and counterterrorism financing reform timetable. This 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. Nearly five years later, this legislation fails to implement many of these 2016 recommendations. While other countries have strengthened their defences against the proceeds of criminal and corrupt business practices, the Morrison government has left the door open for illicit capital to flood into Australia.

The world's anti-money-laundering and counterterrorism financing watchdog, the Financial Action Task Force, has expressed serious concerns about Australia's regulatory framework in regard to these issues and this government's failure to implement reforms according to its own timetable. These concerns are why the FATF placed Australia on an enhanced follow-up remediation program in 2015 following a major evaluation of Australia's anti-money-laundering and counterterrorism financing framework which found major noncompliance with international best practice in several areas. The FATF's 2015 mutual evaluation report made clear that Australia is 'an attractive destination for foreign proceeds of crime, particularly corruption related proceeds flowing into real estate'. Serious and sustained breaches of 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.

There are growing risks to Australia from the failure of this government to fully implement either the FATF or the statutory review's recommendations. Other jurisdictions have been able to race ahead of Australia with much stronger protections. This year, Australian banks reportedly unknowingly washed over $500 million for violent South American cocaine cartels with the proceeds of crime moving through multiple countries before they were finally disrupted by Australian law enforcement. This is clear proof that while Prime Minister Scott Morrison has underperformed in his position, his failure to implement basic anti-money-laundering and counterterrorism financing measures has made Australia an attractive destination for criminals and terrorists to launder money. We can't afford to be a soft touch for these criminals. Australia needs to ensure its anti-money-laundering and counterterrorism financing laws are compliant with international best practice. It is unacceptable that Australia remains behind its international counterparts in this crucial area, but the government has been slow to even make a start on bringing on Australia's anti-money-laundering and counterterrorism financing laws and making them up to scratch. The FATF's 2015 report noted that Australia lacked focus on 'addressing risk from abuse of complex corporate structures' and that authorities were challenged to present convincing evidence about what outcomes their efforts were achieving. This, as well as the government's failure to properly enforce existing laws, meant that no action was taken against Westpac until it had breached AML/CTF laws 23 million times. This is obviously unacceptable.

Indeed, an ongoing New South Wales Independent Liquor & Gaming Authority inquiry into Crown casino has revealed shocking noncompliance with money-laundering laws by Australian casinos and junket operators, even going as far as being accused of turning a blind eye or being recklessly indifferent to money laundering. But AUSTRAC, the government's own regulator, gave these risky casino junket operations its tick of approval only three years ago. Since then, tens of billions of dollars have poured into Australia through these channels. Labor had to fight to get AUSTRAC to release its full 2017 report into casino junkets. Initially, AUSTRAC would only release a heavily redacted report. It was when Labor senators moved an order for the production of documents, which forced the government to release the document, that we found out that AUSTRAC had warned the government, back in 2017, that there were major gaps in the regulation of junkets in 2017. AUSTRAC went on to say that compliance by casinos appeared to be generally more with the letter than the spirit of the law. Casinos use these technicalities to absolve themselves of conducting robust due diligence in relation to the source of the funds presented to them.' AUSTRAC was concerned that casinos appeared to underestimate money-laundering risks involved in the provision of junket services. While there was a theoretical acceptance that junkets may be exploited, it was AUSTRAC's view that this possibility was not taken seriously. These are all quotes from that report.

So we asked: did the government proactively release this information in 2017? No, it did not. We asked: did the government work to close these regulatory gaps in 2017? No, they did not. And what was the result? It was through the work of Nick McKenzie from Nine News and later the New South Wales casino inquiry that it became obvious that there was widespread money laundering and terrorism financing. That's how it was exposed. This was happening under the noses of this government. The government had this information in 2021 and yet did nothing. It's worrying that we've needed a New South Wales casino inquiry to bring systemic breaches of money-laundering laws to light, given the profound responsibility of the government to protect all Australians from money launderers and the funders of terrorism.

We need to get Australia's anti-money-laundering and counterterrorism financing laws right. It's too important to get it wrong. Labor will not oppose this much delayed legislation, but we do call on the Morrison government to take anti-money-laundering and counterterrorism financing laws seriously. If nobody follows up on this, we are going to be left susceptible in the battle that we must engage in against money launderers and terrorism financing.

David Van (Victoria, Liberal Party) Share this | Link to this | Hansard source

The coalition government firmly believe in enforcing the rule of law and holding law-breakers to account. The introduction of the Crimes Legislation Amendment (Economic Disruption) Bill 2020 demonstrates our commitment. This bill is a significant step forward in the Morrison government's fight against transnational, serious and organised crime groups.

As a government we are committed to ensuring that Australians are protected from all crimes, but transnational, serious and organised crime—or TSOC, as it's known—has significant impacts on our communities, our economy and our national security. TSOC groups are systematically affecting the health, wealth and safety of Australian citizens through abhorrent conduct such as illicit drug trafficking, mass fraud and child exploitation. Corruption and money laundering do real harm to people, hold back development and undermine confidence in government and public institutions.

The Crimes Legislation Amendment (Economic Disruption) Bill 2020 deals with the fact that money laundering is an important aspect of serious crime. Money laundering is an important aspect of fraud, terrorism, human trafficking and supporting totalitarian regimes. We must deal with these issues properly. By introducing the new measures in this legislation to tackle money laundering, we are helping to ensure that Australian dollars are not being used to support these criminal organisations.

According to the Australian Institute of Criminology, each year TSOC organisations cost Australia up to $47.4 billion. But when indirect social impacts are considered the true cost is immeasurable. It is estimated that money laundering alone now costs more than US $1 trillion globally. TSOC groups have evolved into sophisticated, multinational businesses that are primarily driven by a profit motive, with no care or concern for the people who their actions are affecting. TSOC groups operate as sophisticated and compartmentalised businesses, generating huge profits from their criminal pursuits.

In order to clean their proceeds of crime and realise these profits, the TSOC business model relies on money laundering. This allows profits to be concealed and reinvested in further criminal activity used to fund lavish lifestyles or to funnel money to terrorism and other nefarious activities. These groups are so sophisticated that they are deliberately structuring their operations to avoid prosecution. They are well financed and are intent on retaining their profits through any means necessary. The Morrison government do not accept that this is good enough. We believe Australia needs a tough regime and that destroying their business model through this bill will create just that.

Under the Crimes Legislation Amendment (Economic Disruption) Bill 2020 we are enhancing key laws to take the profit out of crime, striking at the heart of criminal business models and reducing its impact on everyday Australians. This bill seeks to attack transnational, serious and organised crime groups by targeting the illicit wealth that sustains them. This bill is designed to remove TSOC from our country and our economy, giving honest Australians a fair go. This bill includes an overhaul of the Commonwealth's money-laundering offences in the Criminal Code to address the increasingly complex methods employed by TSOC actors. It will strengthen money-laundering offences by targeting money-laundering networks that deal with illicit property at arm's length, those that remain wilfully blind to its criminal origins and those who actively seek to conceal these origins.

TSOC networks are typically led by controllers who issue directions to others to launder criminal profits while keeping themselves at arm's length to avoid criminal liability. The person who physically deals with the money or property is intentionally kept ignorant of its criminal origins. This bill says, 'Enough is enough.' We are changing the current legislation so that our law enforcement officers can effectively target the controllers at the heart of the operation by treating them as though they deal with the criminal money or property themselves, and they are punished accordingly.

The bill also strengthens criminal asset confiscation laws by enhancing information-gathering powers, preventing criminals from buying back property, improving powers to preserve the value of seized property and clarifying key provisions to ensure that illicit overseas property and benefits obtained through the criminal avoidance, deferral or reduction of a loss, duty or liability can be confiscated. This bill also strengthens undercover operations by clarifying that undercover operatives are not bound by the same obligations as identifiable law enforcement officers. This includes the obligations to caution a person who is under arrest or a protected suspect before starting questioning.

Operational experience has demonstrated a willingness by suspects to obstruct the information-gathering process. This means that the offences for noncompliance are currently impractical to enforce. This bill also seeks to enhance the ability of law enforcement to enforce compliance with the information-gathering powers in the Proceeds of Crime Act. These powers provide law enforcement with valuable information about an individual's property and its potential links to crime.

Make no mistake: if you are engaged in transnational, serious or organised crime, the Morrison government is coming for you. We will catch you. We will arrest you and try you in court. We will disrupt your network and we will confiscate your property. The Australian public are sick and tired of organised crime gangs thinking they can come into our country and run amok. Every TSOC organisation working in Australia is having a negative effect on the health, wealth and safety of Australian citizens. With this bill, the Morrison government says, 'Enough is enough.' I'll say it again: enough is enough. As a government we are proud of our tough stance on crime, and these amendments to the crime legislation will make it harder for offenders to evade the reach of our law enforcement.

I want to conclude by saying that I'm grateful for the work of all members of the Legal and Constitutional Affairs Legislation Committee, chaired by my good friend and colleague Senator Stoker, for their work in reviewing this legislation. It is a very technical piece of legislation, but it is vitally important for protecting Australians. Finally, I say thank you very much to the wonderful men and women who work in law enforcement. Their contribution to our national security does not go unnoticed by those of us in this place.

Helen Polley (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak on the Crimes Legislation Amendment (Economic Disruption) Bill 2020. This bill introduces amendments to adapt and update money-laundering offences in an attempt to combat modern money-laundering networks, which have become increasingly sophisticated, and to enhance asset confiscation laws and strengthen undercover operations.

Together, these proposed amendments would increase the pressure on the growing strengths of transnational, serious and organised crime groups by targeting the financial benefits they gain from their illegal activities. As a result of a lack of action by the coalition government over the past seven years, Australia has slipped in its defence against criminal practices and allowed criminal enterprises to flood illegal assets and money into Australia. That's happened under this government's watch. The Australian Institute of Criminology estimated that transnational, serious and organised crime groups—TSOC—cost Australia up to $47.4 billion per year. Money laundering remains a fundamental enabler of almost all TSOC activities, and it's grown in scope and complexity as once-localised activity now has a global reach and there is a wide range of products and channels available to them for transferring money around the world.

We must acknowledge that Australia is home to stolen assets that have been shifted across borders. The Australian Federal Police have reported they restrained more than $250 million in criminal assets in courts across Australia and overseas last financial year—and I acknowledge the work that the AFP does in this country and beyond. Criminal organisations operate as sophisticated and compartmentalised businesses, generating huge profits from their criminal pursuits. In order to clean their proceeds of crime and realise profits, the TSOC business model relies on money laundering. This allows profits to be concealed and reinvested in further criminal activities or used to fund extravagant lifestyles.

These criminal organisations always aim to be one step ahead of the law. That's why it is so important for the government to be extremely agile in responding to constantly evolving threats and challenges. Our world is highly globalised and we face threats that aren't and are never going to be constrained by borders. In order to keep in step, the bill has seven schedules and will propose to amend the Crimes Act 1914, the Criminal Code Act 1995, the COAG Reform Act 2008 and the Proceeds of Crime Act 2002 to do the following: it will update Commonwealth money-laundering offences to address the behaviour of modern money-laundering networks, it will remove unnecessary obstacles to securing convictions and it will introduce new sentencing thresholds.

It clarifies that the obligations imposed on investigating officials under part 9 of the criminal act do not apply to undercover operations. It will ensure that buyback orders under the Proceeds of Crime Act cannot be used by criminal suspects and their associates to buy back property forfeited to the Commonwealth or to delay Proceeds of Crime Act proceedings. It will also clarify that the POC Act permits courts to make orders confiscating the value of a debt, loss or liability that has been avoided, deferred or reduced through criminal offences.

It clarifies the operation of the Proceeds of Crime Act in relation to restraint and confiscation of property located overseas. It will strengthen information-gathering powers under the POC Act by increasing penalties for noncompliance and clarifying the circumstances in which information gathered under these powers can be disclosed and used. Finally, it will expand the Official Trustee in Bankruptcy's powers to deal with property, to gather information and to recover costs under the Proceeds of Crime Act to allow the official trustee to discharge its functions in a more cost-effective manner.

Labor welcomes efforts by the government to improve our anti-money-laundering and counterterrorism financial framework, and we support this legislation. But we must note that this bill comes almost five years after the then Minister for Justice tabled the report on 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 to be made back in March 2016. Five years later, this legislation fails to implement many of those recommendations.

The world's watchdog, the Financial Action Task Force, has expressed serious concerns about Australia's regulatory framework and this government's failure to implement reforms according to its own timetable. So, while government senators come in here and pat themselves on the back, this should have happened at the very least in 2016. While other countries have strengthened their defences against the proceeds of crime and corruption business practices, this government has sat back and allowed illegal capital to stream into this country. It was again recommended in 2017 when an ongoing New South Wales Independent Liquor & Gaming Authority inquiry into Crown casino revealed shocking noncompliance with money-laundering laws by Australian casinos and junket operators. Despite these findings, AUSTRAC—this government's own regulator—gave these risky casino junket operations its tick of approval only three years ago. Since then, tens of billions of dollars have poured into Australia through these channels.

To get even this information, Labor had to fight to get AUSTRAC to release in full its 2017 report. Only after Labor senators moved an order for the production of documents, which forced the government to release the document, did we find out that AUSTRAC warned the government, back in 2017, that there were major gaps in the regulation of junkets in 2017. AUSTRAC then conceded that casinos were using technicalities to pardon themselves of conducting robust due diligence in relation to sources of funds presented to them. AUSTRAC was concerned that casinos appeared to underestimate the risks of money laundering involved in the provision of junket services. Did the government proactively release this information in 2017? No. Did the government work to close these regulatory gaps in 2017? No. What was the result? Only because of the work of Nick McKenzie from the Nine papers and later the New South Wales casino inquiry was widespread money laundering and terrorism financing exposed. Right under the noses of this government, right under the nose of Mr Morrison, money laundering and terrorism financing has been occurring. The government had this information in 2017, and they did nothing. It's concerning that we've needed a New South Wales casino inquiry to bring systemic breaches of money-laundering laws to light. Getting Australia's anti-money-laundering and counterterrorism financing laws right is too important to get wrong.

Labor will not oppose this much-needed delayed legislation, but we do call on the Morrison government to take anti-money-laundering and counterterrorism financing laws seriously. A report undertaken by The Australian Financial Review last week found that Australian banks washed $500 million for violent South American drug cartels in a sophisticated money-laundering scheme. Between 2014 and 2017, more than $100 million in drug money was funnelled through Australian banks each year before it was routed to other destinations throughout South-East Asia and the Middle East. Once the money was in Australia, illegal profits were used to buy high-end electronics that were shipped overseas in order to move the funds, avoiding detection. What really shows here is that, in this area, as in so many other parts of this government's agenda, there is a vast gap between the rhetoric and the follow-through that undermines it. It's not good enough in any respect but particularly when we consider the risk of money laundering and terrorism financing. Money laundering is a real and pervasive threat to Australia, and it's about time that the Morrison government enacted some legislation that attempts to keep in line with the strength and the stealth of international criminal organisations. If the law does not continue to evolve in Australia, it will be more desirable to the international criminal organisations. That's not the sort of reputation Australia wants.

We must remember that it is about money laundering as an integral aspect of fraud, terrorism, human trafficking and transporting the illegal assets of violent criminal enterprises. The last thing Australians want is to become easy pickings for the money-laundering and terrorism financiers. Our framework must continue to evolve. We must continue to strengthen our laws and the Morrison government must do more to stay ahead of the curve and maintain our domestic security and integrity.

We know that our men and women who work in this area do a fantastic job, but they need to be supported by good, strong legislation, which this government was elected to provide. We on this side of the chamber will continue to hold this government to account and to do all that we can to disrupt the workings of serious organised criminal enterprises. The way to do that is to have strong legislation to ensure the AFP has agility and powers, and that the government stays ahead of the curve when it comes to these criminal organisations.

Linda Reynolds (WA, Liberal Party, Minister for Defence) Share this | Link to this | Hansard source

I thank all senators for their contributions to this debate. I also thank the Senate Legal and Constitutional Affairs Legislation Committee for its recommendation that the Crimes Legislation Amendment (Economic Disruption) Bill 2020 be passed without amendments. I note that the addendum to the bill's explanatory memorandum was tabled in the House of Representatives on 10 December last year, which responds to specific concerns raised by both the Senate Committee for the Scrutiny of Bills and the Parliamentary Joint Committee on Human Rights. During debate on the bill, the opposition recommended that the government regulate lawyers, accountants and real estate agents under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006. The Australian government is absolutely committed to continually improving Australia's AML and CTF regime and is working with businesses to ensure that Australia's financial system is hardened against criminals and terrorists without placing an undue regulatory burden on industry.

The government is taking a phased approach to reforming this regime. This phased approach allows for effective consultation with stakeholders and staggers the regulatory impact, which will ultimately result in a higher level of compliance by businesses regulated under the regime. Expanding the existing regime to lawyers, accountants and real estate agents would capture as many as 100,000 additional businesses, the majority of which are small businesses, sole traders or practitioners. It would also have a significant resourcing impact on the regulator AUSTRAC, which would need to oversee compliance by all of these businesses. Such an extension must be consulted on in a careful and considered way, with affected industries being fully consulted.

This bill is a significant next step forward in the Morrison government's fight against transnational serious and organised criminal groups. These groups harm our communities, our economy and our nation's security. That is why combating transnational serious and organised crime groups is a key priority for this government. These groups eat away at the heart of our society, mercilessly pursuing profits at the expense of the health, the prosperity and the safety of ordinary Australians. This bill takes the profit out of crime by strengthening money-laundering offences, criminal asset confiscation and controlled operations, ensuring that law enforcement has appropriate powers to cut off the lifeblood of organised crime. I commend this bill to the chamber.

Question agreed to.

Bill read a second time.