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What changes are the federal government looking to introduce regarding anti-money laundering legislation?

8 Sep 2014, by Informa Australia

Justice Minister Michael Keenan
Justice Minister Michael Keenan

In December 2013, the federal government revealed that a statutory review of anti-money laundering legislation was underway.

Justice Minister Michael Keenan said the Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) Act 2006 will be scrutinised in an effort to continue preventing criminal activity in this area.

“The Coalition government is committed to protecting Australia’s financial system, and these laws play a vital role in tracking and identifying money laundering – the lifeblood of criminal gangs – and other criminal activities such as terrorism financing,” he explained.

“Transaction information provided under AML/CTF laws is vital for following the money trail to crack down on serious and organised crime groups, such as outlaw motorcycle gangs, profiting from illegal activities.”

The current set-up

AUSTRAC is Australia’s anti-money laundering (AML) and counter terrorist financing (CTF) regulator, and the organisation’s objective is to uphold the integrity of the country’s financial system.

The authority does this by requiring businesses within its remit to remain compliant with the AML/CTF Act. AUSTRAC also provides information to law enforcement and other agencies to aid in the administration of justice.

According to the Attorney-General’s Department, AUSTRAC received 84 million transactions from regulated companies in the 2012-13 fiscal period.

This information was then converted into financial intelligence to facilitate revenue collection, national security and social justice.

“The 2013 report includes examples of crimes such as money laundering, drug trafficking, child exploitation, fraud and tax evasion,” Mr Keenan said.

Section 251 of the AML/CTF Act required a review of how the legislation is being implemented, which had to commence before December 13 2013.

The justice minister said the review is the ideal opportunity to consult with businesses and organisations on ways to make the laws “even more effective”.

What changes could be made?

Following the announcement of a review, the government released an Issues Paper that outlined areas in which the AML/CTF Act could be revised.

Some of the issues under consideration included:

Amending primary objects: The government said the current Act, while representing industry best practice, fails to include the wide-ranging benefits that AML/CTF rules have on the country’s financial system and economy.

As such, the government proposed adding new policy goals to the terms of the law, such as the importance of detecting and deterring ML and TF to reduce risk. Other objectives include provisions for the protection of privacy and personal information, allowing officials the access they need to data that prevents ML/TF crime, and expanding the powers of AUSTRAC.

The adequacy of a risk-based approach: The government sought comments on whether the current risk-based approach is adequate or whether a rules-based (prescriptive) method could help regulated businesses comply, particularly small and medium-sized enterprises.

Minimising regulatory burden: Aside from a more rules-based approach, other ways to minimise the burden of compliance on reporting entities were requested. The review will also attempt to examine how regularly organisations currently use simplified due diligence tools.

AML/CTF scope: This sections covers recommendations on whether the current legislation is wide enough in scope to sufficiently manage new and emerging threats, with a focus on technology and offshore providers. The government also seeks clarification on how to regulate certain designated non-financial businesses, such as accountants and lawyers.

Technology: The paper asked for submissions regarding how technology could be implemented to make compliance easier. This includes the potential development of online identity verification systems.

The consultation period remained open until Friday March 28, with a number of industry organisations, businesses and agencies taking part.

However, it is not yet clear what measures the government will take regarding AML/CTF legislation, with further consultations set to commence in the coming weeks.

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