On 17 August 2017 the Senate referred the provisions of the Anti-Money
Laundering and Counter-Terrorism Financing Amendment Bill 2017 (the bill) to
the Legal and Constitutional Affairs Legislation Committee (the committee) for
inquiry and report by 16 October 2017.
The Selection of Bills Committee recommended that the bill be referred
to the committee, commenting that:
This Bill deals with Australia's efforts to combat money
laundering and terrorism financing. Given the importance and complexity of
these matters, it would be prudent to have this Bill considered by Committee
ensure proper scrutiny of the measures contained in the Bill;
engage with stakeholders who will be impacted; and
hear evidence from agencies working in this area.
Background and overview of the bill
On 17 August 2017, the Hon. Michael Keenan MP, Minister for Justice and
Minister Assisting the Prime Minister for Counter Terrorism (the Minister)
announced a package of measures to amend the Anti-Money Laundering and
Counter-Terrorism Financing Act 2006 (AML/CTF Act).
The Minister stated that the bill is the first stage of reforms to strengthen
the AML/CTF Act and increase the powers of the Australian Transactions and
Reporting Analysis Centre (AUSTRAC).
The reforms were prompted by the recommendations of the Report on the
Statutory Review of the Anti-Money Laundering and Counter-Terrorism Financing
Act 2006 and Associated Rules and Regulations (Report on the Statutory
Review), which was tabled in the Parliament on 29 April 2016. Conducted by the
Attorney-General's Department (AGD), the Report on the Review made 86 recommendations
to strengthen, streamline and simplify the Australian anti-money laundering and
counter-terrorism financing legislative regime.
This bill, consisting of a schedule containing seven parts, seeks to amend
the AML/CTF Act and the Financial Transaction Reports Act 1988 (FTR
expand the objects of the AML/CTF Act to reflect the domestic
objectives of AML/CTF regulation;
regulate digital currency exchange providers;
provide regulatory relief to industry with measures such as
clarifying due diligence obligations, qualifying certain terms and allowing
certain bodies to share information;
strengthen AUSTRAC's investigation and enforcement powers by
expanding the powers of the AUSTRAC CEO;
give police and customs officers broader powers to search and
seize physical currency and bearer negotiable instruments (BNI) and establish
civil penalties for failing to comply with questioning and search powers; and
clarify other regulatory and administrative powers.
Conduct of the inquiry
Details of this inquiry were advertised on the committee's website, including
a call for submissions to be received by 8 September 2017. The committee
also wrote directly to some individuals and organisations inviting them to make
The committee received twelve submissions, which are listed at appendix
1 of this report and are available in full on the committee's website.
A public hearing was held on 20 September 2017 at Parliament House
in Canberra. A list of witnesses who appears before the committee is listed at
appendix 3, and a Hansard transcript of the hearing is also available on
the committee's website.
Financial implications of the proposed measures
The Explanatory Memorandum (EM) includes a financial impact statement
stating that the bill will be implemented within existing resources.
The EM also notes:
The overall financial impact of the Bill is estimated to be
savings to industry each year for the ten years after the measures come into
force totalling $36,086,393.
This financial impact includes average annual regulatory
costs of $662,221 for business and community organisations arising from
measures to regulate digital currency exchange providers.
Additionally, the financial impact to government also includes annual
offsets for the ten years after the measures come into force, totalling around
The EM states that these measures will have a positive financial impact
by helping to prevent fraud against the Commonwealth and increase recovery
...from 2012 to 2015 the Australian Institute of Criminology
estimated there was over $1.2 billion in reported fraud, but only $50 million
was recovered during that period. The Bill reduces the complexity of
investigating or otherwise controlling fraud against the Commonwealth to help
increase recoveries and prevent fraud occurring.
Compatibility with human rights
The EM states that the bill is compatible with human rights.
However, the committee is aware that the Parliamentary Joint Committee
on Human Rights (PJCHR) expressed concern regarding the civil penalty
provisions contained in section 175 of the AML/CTF Act, which would result in:
...an individual potentially being liable for a civil penalty
of up to $4.2 million for a failure to notify the AUSTRAC CEO of a change
in circumstances that could materially affect the person's registration; a
failure to declare an amount of currency or a bearer negotiable instrument when
leaving or entering Australia; or providing a registrable digital currency
exchange if not registered.
The PCJHR noted that civil penalty provisions are treated in accordance
with the rules and procedures that apply in relation to civil matters (the
burden of proof is on the balance of probabilities)'.
However, it noted that:
...if a civil penalty provision is in substance regarded as
'criminal' for the purposes of international human rights law, it will engage
criminal process rights under articles 14 and 15 of the International Covenant
on Civil and Political Rights (ICCPR).
After examining the provisions in mind of the PJCHR's Guidance Note 2
which sets out some of the key human rights compatibility issues regarding
civil penalties, the PJCHR found that while the provision was stated in the
bill to be a civil penalty, it was in fact likely to be a criminal penalty due
to its purpose as a deterrent measure.
The PJCHR particularly noted concerns with the severity of the penalty. The
PJCHR indicated that the 'very significant' penalties arising from section 175
further indicate that it is a criminal penalty, and subsequently raises the
concern that the provisions may be 'criminal' for the purposes of international
human rights law. The PJCHR stated:
...the consequence of this would be that the civil penalty
provisions in the bill must be shown to be compatible with the criminal process
guarantees set out in articles 14 and 15 of the ICCPR. However, in this case
the measure does not appear to be consistent with criminal process guarantees.
For example, the application of a civil rather than a criminal standard of
proof raises concerns in relation to the right to be presumed innocent. The
right to be presumed innocent generally requires that the prosecution prove
each element of the offence to the criminal standard of proof of beyond
reasonable doubt. Accordingly, were the civil penalty provisions to be
considered 'criminal' for the purpose of international human rights law, there
would be serious questions about whether they are compatible with criminal
The PJCHR sought the advice of the Minister as to whether:
the civil penalty provisions in the bill may be considered to be
'criminal' for the purposes of international human rights law; and
if they are considered 'criminal', whether the measures could be
amended to accord with criminal process rights as per articles 14 and 15 under
To date, the PJCHR is yet to confirm whether a response has been
These concerns were shared by other submitters, and will be further examined
in Chapter 2 of this report.
Structure of this report
This report consists of two chapters:
This chapter provides a brief background and overview of the
bill, as well as the administrative details of the inquiry.
Chapter 2 outlines the provisions of the bill in more detail,
discusses the concerns raised by submitters, and sets out the committee's view.
Note on references
References to Committee Hansard are to proof transcripts. Page numbers
may vary between the proof and official transcripts.
The committee thanks all organisations and individuals that made
submissions to this inquiry and all witnesses who attended the public hearing.
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