This Bill makes some technical amendments to the Anti-Money Laundering and Counter-Terrorism Financing Act 2006, and legislation affected by the Anti-Money Laundering and Counter-Terrorism Financing (Transitional Provisions and Consequential Amendments) Act 2006.

The Anti-Money Laundering legislation enacted last year implements the Recommendations of the Financial Action Task Force on Money Laundering in Australia in relation to the financial and gambling services sector, and protects both sectors from abuse by those who would seek to use our economy to engage in criminal activity and terrorism. 

Following introduction of the Anti-Money Laundering and Counter-Terrorism Financing Bill and the Anti-Money Laundering and Counter-Terrorism Financing (Transitional Provisions and Consequential Amendments) Bill, the Senate Standing Committee on Legal and Constitutional Affairs, and the Senate Standing Committee for the Scrutiny of Bills reported on the contents of the Bills.

During my speech in reply to the Senate, I responded to the recommendations in these reports.  I also indicated that I would introduce a Bill this session to make technical amendments to the legislation and to implement some of the recommendations of the committees.

The Report of the Senate Standing Committee for the Scrutiny of Bills raised concerns about the application of absolute liability rather than strict liability to some elements of offences under sections 136, 137, 139, 140 and 141 of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006.  I undertook to amend these sections to replace the application of absolute liability with strict liability. These amendments are made at items 41-47 of the Bill.

As recommended by the Committee in recommendation 7 of the Report of the Senate Standing Committee on Legal and Constitutional Affairs, the Government was happy to  continue to work with industry groups and other stakeholders to resolve certain technical issues, and if necessary, to address these by way of amendments, in the foreshadowed Bill.  

Following further consultation with industry it was agreed that no amendments were necessary.

The technical drafting issues nominated by the Committee in recommendation 7(a), concerned the suggestion by industry that certain services relating to stored value cards might be excluded from the definition of ‘stored value card’ in the AML/CTF Act. This was based on a misunderstanding of that definition. The misunderstanding was that the definition was restricted to the types of devices in the definition.  However the definition is inclusive so it has its ordinary meaning as extended by the definition.  This means that paragraphs (a) and (b) of the definition merely extends the ordinary meaning of ‘stored value card’. 

In Recommendation 7(b) the committee recommended consultation to resolve technical issues in relation to ‘the capture of funds managers selling securities on an exchange by Item 35 of table 1 in clause 6’. However after further consultation it was agreed that it is appropriate that item 35 capture fund managers issuing or selling a security or derivative.

Further consultation by AGD, Treasury and AUSTRAC will take place with industry on the issue that item 35 appears to capture broker to broker transactions where the brokers are buying and selling as principals. This will be finalised before the identification obligations commence in December 2007. Any issues that require modification of item 35 can be dealt with under paragraph (d) of item 35 which enables item 35 AML./CTF Rules to be made.

Recommendation 7(c) related to industry concern that the definition of ‘owner-managed branch’ in section 12 would exclude some community bank branches.   The issue has been discussed between government officials and affected industry groups who have agreed that amendments are not required to section 12. This is because industry has agreed that the issues are resolved through the application of the common law rules of agency.

Further consultation raised technical issues that are addressed in this Bill including:

Reporting entities will gain additional rights to seek review of decisions made by the AUSTRAC Chief Executive Officer under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006. This includes a right to a merits review by the Administrative Appeals Tribunal of decisions by the AUSTRAC Chief Executive Officer to appoint an external auditor to carry out a risk management audit under section 161, and decisions by the AUSTRAC CEO to give a remedial direction under section 191.

In addition, the Administrative Decisions (Judicial Review) Act 1977, will be amended to remove the general exemption given to decisions under the AML/CTF Act from review under the AD(JR) Act.  All decisions will now be subject to review under the AD(JR) Act apart from decisions by the AUSTRAC Chief Executive Officer to apply to the Federal Court for a civil penalty order under section 176, and decisions to grant exemptions from, or modifications to, a requirement of the Act under section 248. This amendment will ensure greater accountability for decisions by the AUSTRAC CEO under the AML/CTF Act.

The Australian Secret Intelligence Service (‘ASIS’) is to be made a designated agency thereby granting ASIS officials access to AUSTRAC information to ensure that financial intelligence is available to counter the financing of terrorism. This brings ASIS into line with ASIO which is already a designated agency entitled to access to AUSTRAC information.

Amendments to the secrecy and access provisions of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 are to ensure national security and intelligence agencies which are designated agencies can fulfil their functions under their enabling legislation.

Minor amendments to the Commonwealth Electoral Act 1918 will ensure that a person who has an arrangement with a reporting entity to verify customer identity under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 will have equivalent access to the Electoral Roll to that which is currently provided for the purposes of the Financial Transaction Reports Act 1988.

Additional minor technical amendments are made to the Surveillance Devices Act 2004, Inspector-General of Intelligence and Security Act 1986, and the Financial Transaction Reports Act 1988.

The amendments made by the Bill will assist in ensuring the effective operation of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 to combat money laundering and terrorist financing.

The Anti-Money Laundering and Counter-Terrorism Financing Act 2006  provides that the legislation is to be reviewed 5 years after the end of the  24 month phased implementation period. As I indicated in my speech in reply for the debate on that Act, this review will be able to take into consideration a number of recommendations in the Report of the Senate Legal and Constitutional Affairs Committee.  The recommendations to which I am referring here are recommendation 3 on the re-examination of Rules to provide safe harbour provisions, recommendation 5 on whether Part 6 should be amended to provide the AUSTRAC CEO with powers to refuse registration as a designated remittance services provider, and recommendation 8 regarding further threshold limits. Apart from these specific issues the operation of the Act can be reconsidered at this time in light of experience by industry, Government and community stakeholders.

The Government acknowledged prior to the introduction of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 that it may take some time for industry to adjust their existing business systems and processes to comply with the Act’s requirements. For this reason the Act is being phased in over a 24-month period. In addition, a grace period of 15 months from Royal Assent to the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 was agreed with industry, during which the AUSTRAC CEO will only take civil penalty action against a reporting entity where that reporting entity has failed to take reasonable steps towards compliance with its obligations. This grace period is articulated in the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 Policy (Civil Penalty Orders) Principles 2006 which was tabled in the Senate on 7th February 2007.

Ongoing consultation is currently occurring between AUSTRAC and industry with regard to finalisation of remaining AML/CTF Rules.

The Anti-Money Laundering and Counter-Terrorism Financing (Amendment) Bill 2007 will make the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 more effective in the fight against money laundering and the financing of terrorism.

I commend the Bill to the Senate.