Bills Digest no. 60 2006–07
Anti-Money Laundering and Counter-Terrorism Financing Bill 2006
WARNING:
This Digest was prepared for debate. It reflects the legislation as introduced
and does not canvass subsequent amendments. This Digest does not have
any official legal status. Other sources should be consulted to determine
the subsequent official status of the Bill.
CONTENTS
Passage History
Purpose
Background
Financial Implications
Main Provisions
Endnotes
Contact Officer & Copyright Details
Passage History
Anti-Money Laundering and
Counter-Terrorism Financing Bill 2006
Date introduced: 24 October 2006
House: House
of Representatives
Portfolio: Justice and Customs
Commencement:
The commencement of the Bill is staggered over 24 months.
Parts
1, 4, 5, 6, 9, 10 to 18 and Schedule 1 commence the day after the Bill
receives Royal Assent.
Part
3 Division 5, Part 8, and Part 10 Division 6 commence 6 months from the
day after Royal Assent.
Part
2, excluding Division 6, Part 7, Part 10 Division 3, and Part 10 Division
5 commence within 12 months of the day after Royal Assent.
Part
2 Division 6 and Part 3 Divisions 1, 2, 3, 4 and 6 commence within 24
months from the day after Royal Assent.
The Explanatory Memorandum states that the Anti-Money
Laundering and Counter-Terrorism Financing Bill 2006 (‘the Bill’)
is aimed at addressing the issue of money laundering in Australia which
is estimated to have a value of approximately $11.5 billion in per year.
The additional concern is the threat to national security posed by the
financing of terrorism.
The Bill also seeks to implement Australia’s international obligations
including a commitment to bring the Australian legislation in line with
the international standards as set out by the Financial Action Taskforce
on Money Laundering (FATF).
When introducing the Bill, Attorney-General, The Hon Philip Ruddock stated:
The primary purpose of the legislative package is to
ensure Australia has a financial sector that is hostile to criminal
activity and terrorism.(1)
The Anti-Money
Laundering and Counter-Terrorism Financing (Transitional Provisions and
Consequential Amendments) Bill 2006 (‘the Transitional Bill’) primarily
replaces the secrecy and access provisions in the Financial Transaction
Reports Act 1988 (FTR Act) and permits the parallel operation of both
the FTR Act and Anti-Money Laundering and Counter-Terrorism Financing
Bill. The Transitional Bill will limit the application of the FTR Act
to cash dealers who are not reporting entities under the Anti-Money Laundering
and Counter-Terrorism Bill.
The Bill passed through the House of Representatives
on 28 November 2006 with limited debate and is listed for debate in the
Senate during the final sittings.
The Explanatory Memorandum for the Bill was replaced and then a correction
to the Explanatory Memorandum was issued dealing with the strict liability
provisions. A substantive set of corrections was also issued for the
Explanatory Memorandum to the Transitional Bill.
Due to these developments, in order to produce the Digest in time for
the Senate debate, the Bill will focus on key themes, directing readers
to further resources about the Bill and providing a summary of the main
changes made by the Bills:
All references to the Explanatory Memorandum in this Digest are to the
final version of the amended Explanatory Memoranda as at 29 November 2006.
Australia’s principal anti-money-laundering legislation is the Financial
Transactions Act 1988 which is administered by Australian Transaction
Reports and Analysis Centre (AUSTRAC).
The FTR Act requires the identification of persons opening or becoming
a signatory to an account with a 'cash dealer'. It also requires reporting
of certain transactions and transfers and creates certain record-keeping
obligations. The purpose of the FTR Act is to reduce the incidence and
facilitate the tracking of money laundering and terrorist financing.
The Federal Government is currently considering a range of other reforms
which are designed to improve and strengthen Australia's anti-money laundering
(AML) and counter-terrorism financing (CTF) system, in line with international
standards issued by the Financial Action Task Force on Money Laundering
(FATF).
The Financial
Action Task Force is an international organisation chiefly concerned
with strengthening anti-money-laundering provisions in the global financial
system, including through individual countries implementing appropriate
legislative and enforcement measures. To this end it developed a series
of 40 AML recommendations in 1990, which have been revised twice since.
In the aftermath of the 11 September 2001 attacks, it also adopted nine
special recommendations for combating the financing of terrorism. New
Zealand, Fiji and other Pacific nations participate with Australia in
the Asia/Pacific Group on Money-Laundering
established in February 1997.
On 8 December 2003 the Minister for Justice and Customs issued a media
release that announced a review of Australia’s AML/CTF policy and regulation:
“…the Government will now proceed with a fundamental
overhaul of Australian legislation, including the Financial Transaction
Reports Act 1988, which will balance effective regulation and a sensible
approach to the impact of the new laws on industry and small business…
Australia will now commit to implementing FATF's revised 40 Recommendations
which will require a significant review of Australia's anti-money laundering
regime, including some new measures intended to counter terrorist financing,"
Senator Ellison said.”
The Australian consultative process has been protracted, with industry
groups raising concerns such as compliance costs and competitive neutrality
between different sectors.
The Government has split the implementation of the scheme into a number
of different legislative parts:
-
Proceeds of Crime (Consequential Amendments and Transitional Provisions)
Act 2002
-
Suppression of the Financing of Terrorism Act 2002
-
Schedule 9 of the Anti-Terrorism Act (No. 2) 2005
-
Financial Transactions Reports Amendment Bill 2006 (Bills Digest)
(passed Senate) On 22 June 2006, the Senate referred the Bill to the
Senate Legal and Constitutional Legislation Committee for inquiry
and report by 1 August 2006. The Senate Committee Inquiry received
seven submissions, some of which raised a number of concerns in relation
to the changes proposed in the Bill.
The Commonwealth is currently in consultation with the States and Territories
about the enactment of laws to address a fourth FATF CFT special recommendation,
that of preventing the use of non-profit or charitable organisations for
the financing of terrorism.
On 9 February 2006, the Senate referred the Exposure
Draft of the Anti-Money Laundering and Counter-Terrorism Financing Bill
2005 to the Senate Legal and Constitutional Legislation Committee for
inquiry and report
by 13 April 2006.
The Attorney-General's Department also conducted a public consultation
process in relation to the Exposure Draft of the Bill and the Rules.
The Exposure Draft of the Bill and associated documentation is available
on the Attorney-General's Department's website at www.ag.gov.au/aml.
On 8 November 2006, the Senate referred the Anti-Money Laundering and
Counter-Terrorism Financing Bill 2006 and the Anti-Money Laundering and
Counter-Terrorism Financing (Transitional Provisions and Consequential
Amendments) Bill 2006 to the Legal and Constitutional Affairs Committee
for inquiry and report
by 28 November 2006.
The Committee recommended that the Bill be passed subject to thirteen
recommendations, which dealt mainly with consultation, delayed commencement
times and privacy concerns.
The Explanatory Memorandum states that:
It is not possible to estimate the cost of preventing,
detecting and deterring money laundering and terrorist financing. It
is also not possible to quantify accurately the extent of money laundering
and terrorism financing in Australia as the very nature of these activities
mean that they are hidden.(2)
However, the Government refers to the International Monetary Fund estimate
from 1996 that the aggregate size of money laundering in the world could
be somewhere between two and five per cent of the world’s gross domestic
product, and estimates that ‘for the Australian economy this is as much
as $11.5 billion per year’.(3)
The Regulatory Impact Statement (RIS) refers to a significant increase
in the available intelligence on money laundering and terrorism financing,
as well as improving systems for sharing of information between domestic
and foreign law enforcement agencies.
The RIS also refers to the 1995 AUSTRAC report ‘Estimates
of the Extent of Money Laundering In and Throughout Australia’ by
John Walker Consulting Services. This study also highlights the difficulties
in reaching conclusive results but provided an estimate of the extent
of money laundering to be $3.5 billion, up to an estimated $4.5 billion.
The RIS also notes that it is ‘perhaps even more problematic to accurately
quantify the benefit of stopping a terrorism attack’.
On introducing the Bill, the Attorney-General stated that initial funding
of $1.8 million over four years has been provided to the Office of the
Privacy Commissioner for the purpose of assisting small businesses with
compliance. The Attorney-General announced that the Government is committed
to ensuring that Australians understand their new obligations under the
legislation. To this end $13.1 million has been allocated to a public
education and awareness program. He also noted that the Australian Transaction
Reports Analysis Centre, AUSTRAC, which will have a range of new regulatory
functions, will receive an additional $139 million over four years.
The Senate Committee noted that there were concerns amongst affected
parties about the staggered commencement provisions of the Bill. The
most complex and costly obligations of the Bill are to be implemented
24 months after Royal Assent. The Explanatory Memorandum states that:
This will allow industry time to develop necessary systems
in the most cost efficient way. There will also be a period of 12 months
after each stage is implemented during which AUSTRAC will focus on education,
with punitive action only being taken if a business is making no reasonable
attempt to move towards compliance.(4)
The Senate inquiry also noted that industry groups and stakeholders have
continuing specific issues ranging from requests for technical re-drafting
to issues regarding the intent and the scope of the Bill. In particular,
stakeholders have concerns in relation to the practical impact of some
provisions, as well as privacy and discrimination concerns.
Clause 4 provides a simplified outline of the Bill.
Financial institutions, or other legal or natural persons, listed in
column one of the tables in sub-clauses 6(2), (3), (4) and (5) of the
Bill, who provide a designated service to the customers listed in column
two of the tables. These entities will acquire reporting responsibilities
under the Bill.
- reporting entities must carry out a procedure to verify a customer’s
identity before (or in some special cases, after) providing a designated
service.
- existing customers of reporting entities and certain services which
are considered to pose a low risk of money laundering or terrorist financing
have modified identification procedures.
-
reporting entities must report to the AUSTRAC CEO suspicious matters,
transactions which exceed a certain threshold and international funds
transfer instructions.
-
cross-border movements of currency above a threshold must be reported
to the AUSTRAC CEO or a customs or police officer. Where requested,
a person must report cross border movements of Bearer Negotiable Instruments.
-
electronic funds transfer instructions must include customer originator
information.
-
providers of designated remittance services must be registered with
the AUSTRAC CEO. Reporting entities must develop anti-money laundering
and counter terrorism financing programmes. Financial institutions
are subject to restrictions as to entry of correspondent banking relationships.
Reporting entities must comply with certain record keeping obligations.
Clause 3 establishes the constitutional basis for the Bill. The
Bill relies on the external affairs power for its general operation. It
also relies on the heads of power set out in Schedule 1. This approach
has been adopted to ensure that the Bill does not go beyond power and
to ensure that the heads of power set out in Schedule 1 may also be relied
upon.
The Explanatory Memorandum refers to other international influences such
as: the USA Patriot Act, the Third European Directive on Money Laundering,
Basel Committee Guidance on Customer Due Diligence and the Wolfsburg Group
Principles on managing money laundering risk. There are also obligations
under United Nations Conventions and UN Security Council and General Assembly
Resolutions set out in subclause 3(2).
Money laundering has been defined as the process by which illicit source
moneys are introduced into an economy and used for legitimate purposes.
Under the definitions in section 5, money laundering means
conduct that amounts to:
(a) an offence against Division 400 of the Criminal
Code; or
(b) an offence against a law of a State or Territory that
corresponds to an offence referred to in paragraph (a); or
(c) an offence against a law of a foreign country or
of a part of a foreign country that corresponds to an offence referred
to in paragraph (a).
Under section 5, financing of terrorism means conduct that
amounts to:
(a) an offence against section 102.6 or Division 103
of the Criminal Code; or
(b) an offence against section 20 or 21 of the Charter
of the United Nations Act 1945; or
(c) an offence against a law of a State or Territory
that corresponds to an offence referred to in paragraph (a) or (b); or
(d) an offence against a law of a foreign country or
a part of a foreign country that corresponds to an offence referred to
in paragraph (a) or (b).
Schedules 3 and 9 of the Anti-Terrorism Act (No. 2) 2005
were enacted to amend the money-laundering rules in the FTR Act and better
implement some of the Financial Action Task Force special recommendations
on combating the financing of terrorism. It is to come into force on 14
December 2006. See further the Bills Digest
for the Anti-Terrorism Bill (No 2) 2005, and the Bills
Digest for the Suppression of the Financing of Terrorism Bill 2002.
The provisions amending the Criminal Code noted above were controversial
and have attracted adverse comment in the current Senate inquiry. As
Liberty Victoria stated:
These offences, in particular, that found in section
102.6 of the Criminal Code, are very broad and capture conduct
that go far beyond intentional funding of politically or religiously
motivated violence. Under section 102.6 of the Criminal
Code, it is illegal to fund a ‘terrorist organisation’ regardless
of the use to which the funds are put. For example, giving money
to Hamas for the sole purpose of assisting its humanitarian activities
is punishable by 25 years if the donor knows that recipient of funds
is Hamas.
In the context where all but one of the listed ‘terrorist
organisations’ under the Criminal Code are self-identified Muslim
groups, the Criminal Code ‘terrorist organisation’ provisions
have resulted in a tangible sense of fear and uncertainty amongst Muslim
Australians especially in relation to charity giving.(5)
The Bill will cover the financial and gambling sectors, bullion dealers
and lawyers/accountants (but only to the extent that they provide financial
services in direct competition with the financial sector – legal professional
privilege will still apply) who provide designated services listed in
the tables in section 6. The second tranche will cover real estate
agents, jewellers, lawyers and accountants.
Obligations under the AML/CTF Bill are imposed when entities provide
designated services. Entities providing any of the designated services
listed in Tables 1-4 of section 6, Part 1 of the Bill are
referred to as reporting entities. The services covered by the
Tables in clause 6 are separated into financial services, bullion, gambling
services and prescribed services (i.e. a service specified in the regulations).
The Bill adopts a risk based approach to AML/CTF compliance, under which
principal obligations are set out, but businesses will have flexibility
to develop procedures according to different risks which they identify
using their own AML/CTF Programs. The Rules are not yet available. This
attracted adverse comment from industry during the Senate inquiry.
The designated services in the tables in section 6 cover
a wide range of financial services including opening an account, accepting
money on deposit, making a loan, issuing a bill of exchange, a promissory
note or a letter of credit, issuing a debit or stored value card, issuing
traveller’s cheques, sending and receiving electronic funds transfer instructions,
making money or property available under a designated remittance arrangement,
acquiring or disposing of a bill of exchange, promissory note or letter
of credit, issuing or selling a security or derivative, accepting a contribution,
roll-over or transfer in respect of a member of a superannuation fund
and exchanging currency.
Persons who provide the designated services to a customer become reporting
entities (REs) who incur reporting and other obligations under the Bill,
such as:
-
Identification and verification. REs must verify
a customer’s identity before providing a customer with a designated
service. REs must carry out ongoing due diligence on customers.
-
Reporting. REs must report suspicious matters, certain
transactions above a threshold and international funds transfer instructions.
-
Developing and maintaining an AML/CTF Program. REs
must have and comply with anti-money laundering and counter-terrorism
financing programs (AML/CTF programs), which are designed to identify,
mitigate and manage money laundering or terrorist financing risks
a reporting entity may reasonably face. Members of a designated business
group (DBG) may enter into a joint AML/CTF program with other members
of that DBG.
-
Record keeping. REs must make and retain certain records
(and other documents given to REs by customers) for 7 years.
The Bill includes provisions relating to ‘correspondent banking’, which
prevent financial institutions from entering into a correspondent banking
relationship with a ‘shell bank’ or another financial institution that
has a correspondent banking relationship with a shell bank.
The legislation provides the Australian Transaction Reports Analysis
Centre, AUSTRAC, with new regulatory functions.
AUSTRAC is Australia’s financial intelligence unit (FIU) and anti-money
laundering and counter-terrorism financing regulator. AUSTRAC was established
in 1989 under the FTR Act as a statutory authority within the Attorney-General’s
Portfolio. The Director of AUSTRAC reports to the Minister for Justice
and Customs.
Under the FTR Act, AUSTRAC is not an investigative or prosecutorial agency.
AUSTRAC collects financial transaction reports information from a range
of cash dealers including the financial services, bullion and gaming sectors,
as well as solicitors and members of the public. These reports include
suspect transactions, significant cash transactions, international funds
transfer instructions and international currency transfer reports. This
information is stored, analysed and disseminated as financial intelligence
to domestic law enforcement, revenue, national security and social justice
agencies, as well as international FIU counterparts with which AUSTRAC
has exchange agreements. AUSTRAC also oversees the identification of accounts
and account signatories (for example, the 100 point check).(6)
Under the new legislation, AUSTRAC will have a significantly expanded
role as the national AML/CTF regulator with supervisory, monitoring and
enforcement functions over a diverse range of industry sectors. AUSTRAC
will also have an education role in providing guidance for business on
AML/CTF compliance.(7) In his foreword to AUSTRAC’s 2005-06
Annual Report, the AUSTRAC Director commented:
In the proposed AML/CTF environment, the breadth of AUSTRAC’s
role will change. The agency will become focused on reporting entities
having appropriate systems and controls in place to identify, manage
and mitigate money laundering and terrorism financing risks within their
business.
It will also ensure compliance with the reporting obligations
outlined within the legislation. AUSTRAC’s principal regulatory philosophy
of co-operation and facilitation, working in partnership with those
entities with AML/CTF obligations, will continue. However, in cases
where serious non-compliance is detected, AUSTRAC will seek to take
appropriate enforcement action.(8)
Briefly, the new AUSTRAC functions will include:
-
Reporting entities (REs) must give AUSTRAC reports about suspicious
matters;
-
REs must advise AUSTRAC about threshold transactions (over $10,000).
A number of submissions to the Senate Inquiry into the Bill noted
that this amount has not changed in the 18 years since the FTR Act
was introduced, the increased number of financial transactions now,
and the smaller purchasing power of $10,000, may indicate that it
is time to revise the threshold upwards.
-
A person sending or receiving an international funds transfer
instruction must advise AUSTRAC about the instruction.
-
Cross-border movements of physical currency must be reported to
AUSTRAC, a customs officer or a police officer if the total value
is above $10,000.
-
A RE may be required to give AML/CTF compliance reports to
the AUSTRAC CEO.
- AUSTRAC will monitor compliance by REs of their obligations
under the Act and Rules and Regulations, and may give remedial directions
to a RE that has contravened a civil penalty provision.
-
AUSTRAC may require a RE to carry out an external audit on their
compliance with the Act or their risk management relating to money
laundering and terrorism financing. The Insurance Australia Group
questioned AUSTRAC’s expertise in interpreting risk assessments from
specialised industries, and noted that the significant cost of such
risk assessments would presumably be borne by RE.(9)
-
AUSTRAC may seek a federal court injunction restraining a person
from engaging in conduct which contravenes the civil penalty provisions
within the Act and requiring the person to take action, if considered
by the Court desirable to do so.
-
AUSTRAC may accept enforceable undertakings from a person regarding
actions (or lack thereof) which may contravene the Act or the Rules
and Regulations. If AUSTRAC believes that the person has breached
the undertaking, AUSTRAC may apply for a Federal Court order to direct
the person to comply, pay the Commonwealth any financial benefit obtained
as a result of the breach, pay compensation to another person who
has suffered loss as a result of the breach, or any other order. The
Minter Ellison submission to the Senate Inquiry recommended that the
Bill be amended to ensure that enforceable undertakings are confidential,
or AUSTRAC only publish a summary of undertakings without naming names.(10)
-
The Bill also allows the Australian Taxation Office and other
designated agencies access to AUSTRAC information, for the purposes
of performing that agency’s functions. Privacy groups raised concerns
about this provision in their submissions to the Senate inquiry, and
questioned why agencies such as Centrelink, the Child Support Agency
and state and territory agencies should have access to sensitive personal
financial information.
General commentary and most submissions to the Senate Inquiry have supported
the above changes to AUSTRAC’s functions. Most concerns have been raised
surrounding the power of AUSTRAC to make the Rules and Regulations, and
privacy issues. These are further outlined below.
Part 16 of the Bill covers administrative aspects of AUSTRAC’s
functions. It replaces the role of Director of AUSTRAC with that of Chief
Executive Officer (CEO), and outlines the role and functions of the AUSTRAC
CEO and AUSTRAC staff.
Section 229 of the Bill allows the AUSTRAC CEO to make the AML/CTM
Rules which are referred to throughout the rest of the Bill. These Rules
are Legislative Instruments. The Minister may direct the AUSTRAC CEO to
make such AML/CTM Rules (s. 299 (3)). Minter Ellison Lawyers expressed
concern about the ability of AUSTRAC to make such rules:
… the Bill gives AUSTRAC even wider powers to make Rules,
making the Bill simply a framework to be completed by AUSTRAC. However,
although AUSTRAC has over 85 different rule making powers, it has only
released Rules arising under 10 of them.(11)
Part 11 of the Bill outlines secrecy and access provisions regarding
information obtained or held by AUSTRAC. Part 11 applies to the new Act
and also to the FTR Act. It replaces Part IV of the FTR Act, which is
to be repealed by item 114 in the consequential amendments bill.
Sections 121 and 122 outline the secrecy provisions surrounding
AUSTRAC information and documents containing AUSTRAC information.
Section 121 makes it an offence for an entrusted public official
(the AUSTRAC CEO, AUSTRAC staff or contractors) to disclose AUSTRAC information
obtained under section 49 or Division 4 of the Act, to another person.
The penalty is imprisonment for 2 years, or 120 penalty units, or both.
Subsection 121(3) lists a number of exemptions for disclosure,
related to the carrying out of AUSTRAC functions. If relying on subsection
121(3) as a defence for disclosing AUSTRAC information, the defendant
bears an evidential burden in relation to a matter in subsection (3).
This is defined in the Criminal Code Act 1995 as: ‘the burden of
adducing or pointing to evidence that suggests a reasonable possibility
that the matter exists or does not exist.’(12)
Section 122 relates to the disclosure of section 49 information,
and applies to a broader range of people than section 121. Section 49
information is that gained when following up on information given to AUSTRAC
or related agencies under sections 41 (reports of suspicious matters),
43 (reports of threshold transactions), or 45 (reports of international
funds transfer instructions) of the Act. Section 122 provides that disclosing
section 49 information to another person is an offence punishable by imprisonment
for 2 years or 120 penalty units, or both. As for section 121, a number
of exemptions apply.
Section 123 creates offences for ‘tipping off’ by a financial
institution to a person or organisation that a suspicious transaction
report has been made to AUSTRAC, or that a suspicion has been formed regarding
a particular transaction. This implements Recommendation 14 of the Financial
Action Taskforce (FATF). Subsections 4-9 outline exemptions to the tipping
off provisions.
Submissions to the Senate Inquiry into the Bill highlighted a number
of concerns regarding the ‘tipping off’ provisions. Minter Ellison Lawyers
argued that under the current bill, it would be easy to inadvertently
tip off a person when fulfilling other obligations under the Act. For
example, the Bill requires a reporting entity to cease providing services
to a customer if a suspicion arises regarding their identity, until the
identity can be verified. Minter Ellison comments:
…a reporting entity is placed in a very difficult position
of having to find a way to explain a request for identification information
and disruption to existing services to the customer without disclosing
any information from which the customer could reasonably be expected
to infer that the reporting entity has formed a suspicion or reported
the matter to AUSTRAC – which is a tipping-off offence. There is a much
higher risk that a reporting entity will inadvertently tip-off a customer
in such circumstances.(13)
Minter Ellison argued for the insertion of a defence provision for inadvertent
‘tipping off’. Technology company Infosys raised similar concerns, highlighting
the need to design call centre processes that do not lead to inadvertent
tip-offs. Infosys points out that call centre staff are not lawyers, and
may need to answer questions such as ‘what is my risk rating?’, ‘why is
my transaction being delayed?’ and ‘Why are you asking me additional questions
about beneficial ownership’ – without tipping off the customer about a
suspicion.(14)
The Australian Privacy Foundation observed that the onus for implementing
the tip-off provisions may be placed on employees:
Small businesses’ relationships with their customers
will be severely threatened by the knowledge that a wide range of factors
may lead to a suspicious matter report. If asked by a customer “Are
you telling any government agencies about me?” shop assistants and counter
staff will in some cases be required by the Act to lie.
The massive extension of mandatory ‘dobbing in’, on the
most subjective of grounds, by relatively inexperienced and unqualified
private sector employees will be highly objectionable to most Australians.
Spying on citizens on behalf of the State is not something we should
find an acceptable role for Australian businesses.(15)
Privacy groups also raised concerns about the increased access for AUSTRAC
and other agencies to personal financial information, and the tip-off
provisions which may prevent an individual from knowing that AUSTRAC and
other Australian or foreign institutions possess this information. Liberty
Victoria submitted:
… if the Bill is enacted, personal information of some
citizens will through the conduit of Suspicious Matters reports be available
to a broad range of Australian and foreign authorities. Such flows of
information are, however, kept secret from the affected persons because
of the ‘tipping off’ offence that generally prohibits disclosure of
the fact that a Suspicious Matter report has been filed or the reasons
for filing such a report.
It is the secrecy surrounding these flows of information
that undermines the rule of law. Citizens subject to a Suspicious Matters
report are not in a position to ensure that the ‘reporting entity’,
AUSTRAC or other authorities in possession of his or her personal information
are complying with the law. This is simply because s/he would not know
such information has been communicated.(16)
Similarly, the Office of the Privacy Commissioner submitted:
…[an] individual’s personal information collected for
the purpose of enforcing serious crime, such as money laundering and
terrorism financing, should generally only be used for such purposes.
Collecting and sharing personal financial information for matters of
lesser gravity than AML/CTF and other similarly major crime may not
align with community expectations concerning how this information should
be handled.
The Office reiterates its previous view that the access to
personal information held by AUSTRAC should be narrowly restricted to
those agencies and other bodies that require such information as a necessary
part of responding to major crimes.(17)
The Attorney-General addressed privacy concerns in the following manner
in his second reading speech:
The new regime will impact on privacy but the impact
is a proportionate response to the problems caused by money laundering
and terrorism financing in the current climate of heightened organised
criminal and terrorist activity. The legislative package includes provisions
to ensure that the privacy of legitimate customers is not unnecessarily
affected by the legislation. The government is confident that the legislative
package strikes the right balance between privacy interests and the
needs of law enforcement agencies for targeted information about possible
criminal activity.(18)
The Attorney-General’s Department has prepared a Privacy Impact Statement
which can be accessed at http://www.ag.gov.au/aml.
The Labor Senators on the Bill Inquiry recommended that AUSTRAC be subject
to oversight by the Australian Commission for Law Enforcement Integrity
upon its establishment.
Endnotes
1. The Hon Philip Ruddock, Attorney-General,
Debates, House of Representatives, 1 November 2006, p. 1.
2. Explanatory Memorandum, p. 3.
3. id.
4. ibid, p. 20.
5. Liberty Victoria, submission to the
Senate Inquiry, available at: http://www.aph.gov.au/Senate/committee/legcon_ctte/aml_ctf06/submissions/sub01.pdf,
accessed 28 November 2006.
6. AUSTRAC internet site, ‘About AUSTRAC’,
available at: http://www.austrac.gov.au/about/index.htm,
accessed 28 November 2006.
7. Hon. Phillip Ruddock MP, Attorney-General,
Second Reading Speech, p. 1.
8. AUSTRAC Annual Report 2005-06.
9. Insurance Australia Group, submission
to Senate Inquiry, at: http://www.aph.gov.au/Senate/committee/legcon_ctte/aml_ctf06/submissions/sub03.pdf,
accessed 29 November 2006.
10. Minter Ellison Lawyers, Minter Ellison Lawyers, Submission
to the Senate Legal and Constitutional Affairs Committee inquiry into
the Provisions of the Provisions of the Anti-Money Laundering and Counter-Terrorism
Financing Bill 2006, and the Anti-Money Laundering and Counter-Terrorism
Financing (Transitional Provisions and Consequential Amendments) Bill
2006, available at: http://www.aph.gov.au/Senate/committee/legcon_ctte/aml_ctf06/submissions/sub05.pdf,
accessed 28 November 2006.
11. Minter Ellison Lawyers, Submission to the Senate Legal and
Constitutional Affairs Committee inquiry into the Provisions of the Provisions
of the Anti-Money Laundering and Counter-Terrorism Financing Bill 2006,
and the Anti-Money Laundering and Counter-Terrorism Financing (Transitional
Provisions and Consequential Amendments) Bill 2006, available
at: http://www.aph.gov.au/Senate/committee/legcon_ctte/aml_ctf06/submissions/sub05.pdf,
accessed 28 November 2006.
12. Criminal Code Act 1995, Section 13.3(3).
13. Minter Ellison, submission to Senate Committee, at: http://www.aph.gov.au/Senate/committee/legcon_ctte/aml_ctf06/submissions/sub05.pdf,
accessed 28 November 2006.
14. Infosys, submission to Senate Inquiry, at: http://www.aph.gov.au/Senate/committee/legcon_ctte/aml_ctf06/submissions/sub07.pdf,
accessed 28 November 2006.
15. Australian Privacy Foundation, submission to the Senate Inquiry,
available at: http://www.aph.gov.au/Senate/committee/legcon_ctte/aml_ctf06/submissions/sublist.htm,
accessed 28 November 2006.
16. Liberty Victoria, submission to the Senate Inquiry, available
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18. The Hon Philip Ruddock, Attorney-General, Debates, House
of Representatives, 1 November 2006, p. 1.
Sue Harris Rimmer and Bronwen Jaggers
30 November 2006
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