By Rachel Nicolson, Andrew Wilcock and Arlou Arteta
In brief: A review of Australia's anti-money laundering and counter-terrorism financing laws will determine whether Australia can and should strengthen its response to money laundering and terrorism financing. Partner Rachel Nicolson ( view CV) and Lawyers Andrew Wilcock and Arlou Arteta report.
HOW DOES IT AFFECT YOU?
- The Federal Attorney-General's Department (the AGD) and AUSTRAC are leading a broad review of Australia's anti-money laundering and counter-terrorism financing (AML/CTF) regime, and will produce a report of the review to be tabled in Parliament, most likely in 2015.
- The review will address issues relevant to entities currently regulated under the AML/CTF regime, including the regulatory burden created by the AML/CTF, enforcement and reporting.
- The review will also consider whether the regulated population should be expanded to include entities not currently regulated under the AML/CTF regime, including lawyers, accountants, real estate agents and trust and company service providers.
- Interested parties have the opportunity to make written submissions to AGD, and should do so before 28 February 2014.
Australia's AML/CTF regime comprises the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) (the Act), the Anti-Money Laundering and Counter-Terrorism Financing Regulations 2008 (Cth) (the Regulations) and the Anti-Money Laundering and Counter-Terrorism Financing Rules.
The AML/CTF regime was implemented to combat the threats that money laundering and terrorism financing pose to national security and the integrity of key sectors of the economy, and to bring Australia into compliance with international AML/CTF standards developed by the Financial Action Taskforce (FATF).
On 4 December 2013, the Federal Minister for Justice announced a review of Australia's AML/CTF laws, as required by the Act. The review has commenced and is being led by the AGD and AUSTRAC.
SCOPE OF THE REVIEW
The Terms of Reference state that the objectives of the review are to examine:
- the operation of the AML/CTF regime;
- the extent to which the policy objectives of the AML/CTF regime remain appropriate; and
- whether the provisions of the AML/CTF regime remain appropriate for the achievement of those objectives.
KEY AREAS OF INTEREST
AGD and AUSTRAC have published an Issues Paper that outlines AGD and AUSTRAC's key areas of interest in conducting the review. This statement is not exhaustive, and AGD and AUSTRAC may examine other issues relating to Australia's AML/CTF laws and related laws and policies.
AGD and AUSTRAC's key areas of interest include the following.
Scope of the AML/CTF regime
At present, the AML/CTF regime regulates four primary sectors: banks and other lenders; non-bank financial service providers; gambling and bullion service providers; and money service providers. At the time the regime was introduced, it was intended that it would be extended to a second tranche of sectors, including lawyers, accountants, real estate agents, trust and company service providers and high-value dealers.
The review seeks feedback as to whether any gaps in the operations of the AML/CTF regime exist. In particular, it seeks comment on whether the second tranche of sectors or other sectors should be brought within the regulated population, and whether the AMF/CTF regime enables the Federal Government to respond to new and emerging services and risks.
Reducing the regulatory burden of the AML/CTF regime The Federal Government has committed to reducing the regulatory burden on industry. Consequently, the review seeks comment on how the regulatory burden imposed by the AML/CTF regime on industry might be reduced and, in particular, whether a more risk-based approach to AML/CTF could be adopted.
AUSTRAC has various enforcement powers, ranging from a power to issue notices to entities requiring them to provide information to AUSTRAC, to a power to refer criminal matters to the Australian Federal Police or the Commonwealth Director of Public Prosecutions for investigation or prosecution.
The review seeks submissions on whether the current enforcement regime is effective and whether it could be improved by granting AUSTRAC additional enforcement powers.
Under the Act, reporting entities must submit various transaction reports to AUSTRAC. The review seeks comment on the appropriateness of the current transaction reporting regime, and whether and how it can be improved or enhanced.
The review seeks comment on whether current arrangements under the AML/CTF regime provide an adequate framework for cooperation between AUSTRAC and foreign regulators, and how such arrangements could be improved.
TIMING AND OUTCOMES OF THE REVIEW
The review has already commenced, and interested parties who wish to comment on the issues discussed, or other relevant issues, can do so by making a submission to the AGD's Criminal Law and Law Enforcement Branch by 28 February 2014.
The review will coincide with a mutual evaluation of Australia's AML/CTF laws by FATF.
A report of the review, which will take into account relevant FATF findings and written submissions, will be prepared and tabled in Parliament, most likely in 2015.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.