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Thursday, 5 February 2009
Page: 537


Mr SIMPKINS (10:44 AM) —I rise today to speak on the Foreign Evidence Amendment Bill 2008. This bill intends to amend part 3 of the Foreign Evidence Act 1994, which is the part that relates to foreign material obtained by a request for mutual assistance to be put forward as evidence in legal proceedings in our courts here in Australia—whether in criminal or civil proceedings. It is understood that there have been problems in using such overseas information because of the need for foreign business records to comply with the rules of evidence in the states and territories. Further, this material has been even more important in money laundering and fraud cases. I will take that point up a little later. This bill will apply to Commonwealth proceedings not only in Commonwealth courts but also in the courts of the states and territories. This bill will establish the presumption of admissibility of information obtained through that mutual assistance, unless the court determines that the records are unreliable or privileged. These are the main aspects of this bill and the amendments that I wish to cover.

It is true that in this globalised world this country will continue to face the threats of white-collar crime, fraud and money laundering. It is therefore important that measures such as these are progressed, and they have my full support. It is, however, appropriate to also make mention of the previous important legislation that has helped address these specific problems in recent years. These acts form the framework of legislation to fight money laundering and the financing of terrorism. Firstly, I would like to mention the very important Financial Transactions Reports Act 1988, the FTR Act, which was designed to ensure the reporting of specific transactions of $10,000 or more, the retention of specific documents and the identification and knowledge of customers. That act is, of course, administered by the Australian Transaction Reports and Analysis Centre, AUSTRAC, which was established under the FTR Act as Australia’s anti-money-laundering regulator and specialist financial intelligence unit.

The FTR Act covered the cash dealers, including the banks, down to securities dealers and even TABs and cash carriers. The FTR Act has been supplemented by the Anti-Money Laundering and Counter-Terrorism Financing Act 2006, which was another significant regulatory reform by the previous government. That act was initiated to help enable Australia’s financial sector to maintain international business relationships, to prevent and detect money laundering and terrorism financing by meeting the needs of law enforcement agencies for targeted information about possible criminal activity and to bring Australia into line with international standards. Moving beyond the FTR Act, the AML/CTF Act now covers the financial sector, gambling sector, bullion dealers and other professionals or businesses, now known as reporting entities.

Given the increased requirements, including costs, and regulations, the act was designed to be implemented in stages, with up to 24 months being provided to achieve full implementation of the act, which has now occurred. The obligations that came with the AML/CTF Act included customer identification and verification of identity, record-keeping and establishing and maintaining the whole program. It also included ongoing customer due diligence and reporting, particularly of suspicious matters, threshold transactions and international funds transfer instructions. The AML/CTF Act imposed a risk based approach to regulation. Reporting entities are now determining the way in which they meet their obligations based on their assessment of the risk of whether providing a designated service to a customer may facilitate money laundering or terrorism financing. AUSTRAC has continued to operate under that act in its role as the nation’s financial intelligence unit. One of the great regulatory improvements imposed in the AML/CTF Act was to expand AUSTRAC’s role as the national AML/CTF regulator with supervisory, monitoring and enforcement functions over a diverse range of business sectors.

With these previous acts and with this bill, the question is: what are they designed to deal with? I would now like to speak about one aspect of that—that is, combating money laundering. It is generally considered that there are three stages of money laundering. The first stage is called placement. This is where funds that are derived from illegal activities are actually moved to a more convenient place or into a different form that will arouse less suspicion from regulators. The funds can be moved into a retail economy or into a financial institution, whether it is a traditional or untraditional kind. The second stage is layering, and this is where the funds are moved in via complex financial transactions. This is done to remove clarity and obscure and hide the money and its trail. The third stage is where the money is converted into what appears to be legitimate business earnings or proceeds through normal financial transactions.

The final issue I will raise is the difference between organised crime money laundering and terrorism money laundering. Some commentators have described how organised crime money laundering is circular in its operation because ultimately organised crime is about greed and using the illegal proceeds for the sole benefit of those responsible. The funds have to come back clean, for the use of those who planned the whole process. Terrorism money laundering is linear in its nature because it is designed to move funds from an origin to a destination to be utilised for terrorist activities. Working off estimated figures from 2001-02, the financial flow of funds into terrorist organisations at that time were significant and therefore capable of financing great harm to innocent people. They demonstrate the need for vigilance in the future. I will quote some of the estimated figures. It is estimated that Al-Qaeda had a cash flow of between $20 and $50 million in that financial year, Hamas had around $10 million and Hezbollah had about $50 million. These huge funds give terrorists great capacity to organise their evil and cowardly campaigns, and we should be and are committed to engage them on this level, as we should on all levels.

In both the organised crime and terrorism forms of money laundering, the characteristics of these operations are clearly complex. To combat them we need careful regulation and ongoing reviews of our legislation. It is therefore right and appropriate that this bill be passed, and I support its passage.