Australian senators keep pressure on for AML/CTF law reform, ahead of Senate report

The Australian Greens have introduced legislation in the Senate as part of a broader campaign to pressure the government to push ahead with Tranche 2 of the anti-money laundering and counter-terrorism financing (AML/CTF) regime. The bill would also bring forward the creation of a beneficial ownership register in Australia.

Sources in Canberra said the bill was unlikely to get traction in this term of parliament due to the fact that there are only 3 sitting days left before the election. The bill will have an impact, however, by ensuring that Tranche 2 remains in the public consciousness ahead of the report from the Senate inquiry into the AML/CTF regime, which is due to report back before the last week of parliament in March.

Greens Senator Nick McKim said the laws had been shelved despite 15 years of promises, consultations and reports.

“This government, and successive governments before them, have failed to take the necessary action to protect Australia’s financial system from misuse by criminals, kleptocrats and terrorists,” he said.

The Greens and other minority parties in the Senate are dismayed by the ongoing failure to include lawyers, accountants and real estate agents within the scope of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006.

They have also criticised the failure to establish a register of ultimate beneficial ownership. McKim said this had seen Australia become “a global hotspot for the movement of illicit funds, and for money laundering through real estate in particular.”

“Each and every year, billions of dollars in dark money washes in and out of the country, pushing up house prices and depriving governments — here and abroad — of tax dollars, while allowing criminals to evade authorities and protect their wealth,” McKim said.

The Greens bill would force the government to introduce legislation into the parliament by 30 September 2022. This would create new designated services for lawyers, conveyancers, accountants, high-value goods dealers, real estate agents and trust and company service providers. It would also set a deadline for a public register of the ultimate beneficial ownership (UBO) of companies and foreign companies registered in Australia, and other legal persons and legal arrangements, including foundations and trusts.

Both of these measures are required under the Financial Action Task Force (FATF) Recommendations.

The designation of services provided by lawyers, accountants and real estate agents — the gatekeepers — under the AML/CTF Act was forecast in the Explanatory Memorandum of the 2006 Bill.

“Fifteen years on, ‘Tranche 2′ still hasn’t happened. Given recent moves by the United States and China on this issue, Australia is now ignominiously grouped with Haiti and Madagascar as the only three countries in the world not to have acted to, or be acting to, require the gatekeepers to establish who their client is and to report any suspicious matters to the relevant authorities,” the Greens’ McKim said.

“The 15-year failure to act on Tranche 2 means that ordinary Australians who want to buy a home find themselves bidding at auction against terrorists and international crime syndicates.”

 AUSTRAC recently confirmed this situation, highlighting one of the potential consequences of criminal activity on the financial system and community was “widespread or concentrated real estate purchases with the proceeds of crime, driving property prices up and pricing legitimate buyers out of the market.”

Australia is also slipping behind the rest of the world in failing to establish a register of the ultimate beneficial ownership of companies, foundations and trusts, the Greens have said.

“This is despite member nations of the G20 having agreed to lead by example and implement the recommendations of the FATF in relation to beneficial ownership at the 2014 Summit in Brisbane; and despite the government having released a consultation paper in 2016 regarding this implementation,” McKim said.

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This article first appeared on Thomson Reuters Regulatory Intelligence.

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