Additional Comments from the Australian Greens

1.1The Australian Greens strongly support the implementation of Tranche 2 of the anti-money laundering reforms and the expansion of the scheme to financial services, real estate agents and lawyers. Having an effective anti-money laundering scheme is essential for the functioning of a democratic system and trust in decision making.

1.2There are a number of issues identified with the current drafting of the scheme that we believe warrant further consideration:

1.The need for a full carve out for barristers who are briefed through solicitors

2.The need for the scheme to recognise and uphold lawyers duty to the courts and how this relates to duties under AML CTF laws

3.Risks created by the laws to dissidents in non-democratic regimes

1.3Addressing the recommendations provided in this report as well as these 3 items would enable the smooth functioning of the scheme and remove barriers to adoption by the legal profession in particular.

Barristers

1.4The Australian Greens believe there should be a full carve out for barristers who are briefed through solicitors in place of the existing recommendation 2 in the report. This would avoid unnecessary and costly duplication, provide clarity and reduce confusion.

Duty to the Court

1.5The evidence received strongly suggested the need for clarity regarding the obligations lawyers will have following the commencement of the laws - respectively their duties to the Court and their statutory obligations under these laws.

1.6Noting the critical role that lawyers play in representing clients before the courts, and recognizing the concerns as to conflict of interest regarding reporting obligations, there should be a clear legislative provision to the effect that the reporting requirements in the Act are subject to a lawyer's primary duty to the Court.

1.7This issue was considered in the exchange with Mr Izzo of the NSW Bar Association as follows:

Senator SHOEBRIDGE: That seems to me to be one of the issues. If the legislation is vulnerable to challenge based on the principles the High Court enunciated in that Lawyer X case, actually having that articulated to us in a compelling opinion or the like would be of assistance to me, and I assume would be of assistance to the committee. I assume it wasn't just a throwaway comment, Fiona; it was a matter of some consideration. So I think that consideration would be useful.

Mr Izzo: Senator, that point is addressed in some detail in the New South Wales Bar Association submission. While we don't have something that I would formally call an opinion, I can assure you that submission has the input of several very distinguished barristers. The difficulty is the fundamental point the High Court identified: that particularly in the criminal justice system but even more broadly you can't act for someone and inform against them at the same time. The law might make you inform against them, and it can do that, but then you can't keep acting. And the difficulty is how you stop acting.

1.8This was a concern shared by both barristers and solicitors. As Mr Stevens of the Law Council of Australia said in evidence:

It's really important that people go along and seek legal advice in relation to legal issues, because that is the best way and that's how our system operates to encourage people to know the law and to follow the law. Yes, sometimes people don't follow the law, but it's important that they get advice. Now, if the situation is that we bring this bill in and require suspicious matter reportings, particularly with very limited exceptions, then we're going to create an environment where people are going to be in a situation where they're not going to be frank in seeking advice if they do seek advice, or they're going to shy away from seeking advice; they're not going to be interested in seeking advice. We're going to discourage people because of the fear that they could be covertly informed upon by their lawyer. That's going to really affect the Australian legal system from what the objective is at the moment. Lawyers are officers of the court. Our duty is to promote observance of the law, and our system relies on us encouraging, as a community, people to seek legal advice. And, whether you're a dodgy client or not, if you're in fear of disclosure covertly without knowing about it, then that's going to discourage people. We need to balance whether that's an important consideration. I don't think that's been taken into account in terms of suspicious matter reporting. So as Juliana said, we support the introduction of these measures, of the application to lawyers, but there are significant issues, particularly suspicious matter reporting, which we strongly oppose, and we ask that be considered.

1.9This issue was discussed further in the exchange with Transparency International as follows:

Senator SHOEBRIDGE: What do you make of the argument, which was put by both barristers and solicitors, that if they form the view that there is a conflict between their reporting obligations and their ethical duties to both the court and the client, having informed on them for good and proper reasons—and I'm fully supportive of whatever we can do to counter money-laundering—to the authorities, they then form the view that under the bar rules or the legal profession rules they then have a conflict and are ethically obliged to cease acting? What do you have to say to that argument? If that happens and then they just cease acting, don't explain why and don't— because they have confidentiality obligations, perhaps can't—explain to the court why they're ceasing to act, because they've formed this view, it does create a bunch of very real problems in the legal system, doesn't it? And potentially it just blows the whistle as much as a report would.

Mr Wilson: Yes to all of that. It's one of those difficult situations where there's not a clear answer. It's come into prominence maybe because of the reporting obligations that are to be introduced, particularly SMR reporting. I don't have an easy answer to that question. I don't think any jurisdiction has come up with a clean answer to that issue.

Senator SHOEBRIDGE: But it's a definite problem. And ideally we would be seeking to address it, it having been raised with us. I can see that it's a very real practical problem if the barrister just says to the court, 'I'm ceasing to act.' The court wants an explanation why on day 3 of a trial the barrister is ceasing to act, and the barrister says, 'I can't tell you.' That seems to me to be a direct conflict between the duty to the court and whatever statutory obligations are being put in this legislation. And I think we should have an answer to it.

Mr Wilson: I'm not sure an answer has been found. It potentially puts the lawyer in a situation where they commit the tipping-off offence, which we don't wish to do. Perhaps part of the solution to this is education of the legal profession and the judiciary with regard to this particular issue and others as well, because—

Risks to dissidents

1.10Another concern identified in submissions and evidence heard by the committee is there are no identifiable checks and balances to prevent financial information being potentially used against dissidents in non-democratic regimes.

1.11This exchange with Mr Dametto of the AFP demonstrates this:

Senator SHOEBRIDGE: Thanks for the submissions that you each gave. There is a very real concern that— I'll just give you a concrete example of a jurisdiction like China, where somebody one day might be politically in favour with the regime and might be, in the regime's eyes, a successful business person and the next day cease to be in political favour of the regime and then become a targeted criminal. Those changes are notorious. Many people would see that as a politicised use of the criminal justice regime in a country like China. What, if any, checks and balances do you have to ensure that Australia doesn't become an unwitting or even a witting partner to that politicisation?

Mr Dametto: My understanding initially would be that, in regard to the industries we're talking about today, they would put in a suspicious matter report if they believed there was an exposed person involved. Then it's a matter then of us as an organisation—what offences we're looking at. Is it actually an offence in the Criminal Code that we're looking at in regard to that? Again, it would require offences to be committed and following the Criminal Code. That would be, I suppose, the safeguards, for want of a better word, that we would be using in regard to this.

1.12Clarity around the application of this provision and potential risks to vulnerable people is essential.

Senator David Shoebridge

Member