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Wednesday, 9 February 2011
Page: 135

Mr BRENDAN O’CONNOR (Minister for Home Affairs, Minister for Justice and Minister for Privacy and Freedom of Information) (10:00 AM) —I move:

That this bill be now read a second time.


This government is determined to disrupt and deter people-smuggling operations. People smugglers need money to launch ventures. People smugglers charge large sums to vulnerable people for the dangerous and illegal voyages that they organise.

Remittance dealers accept cash, cheques and other forms of payment in one location and arrange the payment of an equivalent amount of cash to someone in another location overseas. Remittance dealers range from global money transfer businesses and their franchisees and agents, to smaller entities that may operate out of a small business, such as a grocery store. There are around 6,500 remittance dealers operating in Australia. We believe that the vast majority of remittance dealers conduct legitimate businesses and provide important services to the community.

We need to make sure that remittance dealers are not misused to give people smugglers the funds they need to organise illegal smuggling ventures, or to support other forms of criminal activity.

Australian law enforcement agencies have indicated to the government that they are concerned about the role the remittance sector can inadvertently play in facilitating payments for people smuggling. Further, law enforcement agencies have already used financial intelligence to counter people-smuggling ventures. For example, AUSTRAC data is relied upon to profile targets that facilitate payments to other countries for people-smuggling activities.

This bill will reduce the risk that remittance dealers will be involved, deliberately or inadvertently, in financing people smuggling, laundering money or financing terrorism. It will improve intelligence and also protect against criminal infiltration of the sector and ensure the Australian Transaction Reports and Analysis Centre, known as AUSTRAC, can crack down on remitters acting unlawfully and improperly.

These initiatives build upon the legislative changes made in 2010 as part of the Anti-People Smuggling and Other Measures Act. As a result of these laws, those who provide material support to people smuggling face 10 years imprisonment, and fines of up to $110,000.

Enhanced regulation of the remittance sector

Enhanced registration scheme

Remitters are already required to register with AUSTRAC. Providing services without being registered is an offence that carries a penalty of two years imprisonment or a $55,000 fine, or both. The automatic granting of registration to a remitter upon application, however, affects AUSTRAC’s ability to effectively regulate and supervise the sector.

This bill will introduce a more comprehensive registration scheme. Remitters applying for registration will be required to provide information relating to their suitability for registration. The AUSTRAC CEO will have the power to refuse, suspend, cancel or impose conditions on registration. Standard internal and external administrative review mechanisms will be available for all registration decisions made by the AUSTRAC CEO.

People who pose an unacceptable risk of people smuggling, money laundering, or terrorism-financing risk will not be allowed to provide remittance services in the community.

Enforcement Powers

Sanctions available to AUSTRAC under the existing act to ensure compliance with AML/CTF obligations require AUSTRAC to initiate civil proceedings or take criminal action. In many cases, particularly where minor breaches are involved, this may not be a proportionate response to the alleged breach. These processes can be costly and time consuming for all parties involved.

The bill enables the AUSTRAC CEO to issue infringement notices if a person:

  • provides a remittance service without being registered; or
  • fails to advise the AUSTRAC CEO of material changes in circumstances relevant to registration.

The bill makes provision for the AML/CTF Rules to set tiered penalties for breaches, not exceeding 24 penalty units for an individual or 120 penalty units for a body corporate. The higher end of penalty amounts will apply where: lower amounts would be an insufficient deterrent, or to take account of multiple contraventions, or previous infringements. The infringement notice scheme will provide the AUSTRAC CEO with an efficient enforcement mechanism which will act as an effective deterrent against noncompliance.

Regulation of Providers of Remittance Networks

Networks play a key role in the remittance industry. Currently, large entities that are profiting from providing remittance networks that enable money transfers to and from Australia are not responsible for addressing money laundering and terrorism-financing risk within the network. Instead, the AML/CTF Act focuses on the smaller businesses taking and receiving money from customers including the smaller, relatively unsophisticated remittance dealers that are agents of these network providers.

Many remittance network providers already provide considerable support to their agents to assist them to comply with their AML/CTF Act obligations. The proposed reforms will ensure that the regulation of the sector reflects the structure of the industry. It will regulate the remittance sector more efficiently.

The bill introduces a new, designated service into the AML/CTF Act, which will extend regulation to businesses that operate a network of remittance dealers.

Remittance network providers will also have responsibility for undertaking some of the AML/CTF Act reporting obligations on behalf of their agents. This measure takes into account the relationship between network providers and their agents and largely reflects the support already offered by network providers as part of the international funds transfer process.


In keeping with the tenor of the AML/CTF Act, the amendments in the bill provide the high-level principles for the enhanced regulation of the remittance sector, with the operational detail to be set out in the AML/CTF rules. AUSTRAC will develop the rules in consultation with the remittance sector.

Other Measures

There are a number of other measures contained in the bill, which are designed to improve Australia’s AML/CTF regime.

Increased information sharing

The December 2008 National Security Statement recognised the growing threat of these transnational activities to Australia’s national security and identified the need for improved coordination among Commonwealth agencies, including enforcement, regulatory and intelligence agencies.

The current arrangements do not fully provide for the contribution financial intelligence could make to the analysis of national security issues, particularly organised crime, terrorism and counterproliferation.

The measures in this bill build on the steps already taken by the government to enhance information sharing between agencies, such as the new Criminal Intelligence Fusion Centre in the Australian Crime Commission, which was launched in July 2010, to generate and share information and intelligence on organised crime.

The bill will improve information sharing of the financial intelligence prepared by AUSTRAC amongst the Australian intelligence community, ensuring a more holistic approach to Australia’s national intelligence effort. The bill will extend the list of designated agencies with which AUSTRAC can share financial intelligence to include the Department of Foreign Affairs and Trade, the Defence Imagery and Geospatial Organisation, the Defence Intelligence Organisation, the Defence Signals Directorate and the Office of National Assessments.

This bill will enhance information sharing to ensure that government agencies work together in a coordinated way to counter threats to Australia’s national security.

Verification of Identity

The Australian Law Reform Commission considered the use of credit reporting information for electronic verification in its 2008 report, For your information: Australian privacy law and practice. The verification of identity measures implements one of the recommendations made by the ALRC.

The bill will also amend the AML/CTF Act and the Privacy Act 1988 to enable reporting entities to use credit-reporting data to verify the identity of their customers. The bill introduces a number of privacy protections to ensure that information is only used for the purpose of verifying identity.

Firstly, customer consent will be required before a business can verify identity against credit-reporting data and alternative verification options must be made available to them.

Secondly, a credit-reporting agency will not be permitted to disclose personal information held on the credit information file. It will only be able to report on whether the personal information it was provided matches information that it holds on the file—for example, a person’s full name, date of birth, or current address.

It also requires credit-reporting agencies and reporting entities to retain information about verification requests for seven years and to delete it at the end of that period. These requirements enhance the transparency of the verification process by ensuring that records can be reviewed to ensure compliance with the act and to enable individuals to obtain access to verification requests or assessments that relate to them.

Finally, the bill establishes the offences of unauthorised access to verification information, obtaining access to verification information by false pretences and unauthorised use or disclosure of verification information. Each offence carries a penalty of 300 penalty units, which currently amounts to $33,000.

The verification of identity measures will make it easier, for example, for consumers to open bank accounts online, improving competition between online businesses and those with traditional branch structures.

Exemptions from obligations under the FTR Act

The Financial Transaction Reports Act 1988, which I will refer to as the FTR Act, preceded the AML/CTF Act and imposed reporting controls on the financial, bullion and gambling sectors. The FTR Act continues in force and operates parallel to the AML/CTF Act.

The bill will introduce into the FTR Act an exemption power that will enable the AUSTRAC CEO to exempt, by way of written instrument, a specified person from one or more provisions of the act. This will bring the FTR Act in line with the AML/CTF Act.


The enhanced regulation of the remittance sector will reduce the risk of criminal infiltration and abuse of the remittance sector in Australia by giving AUSTRAC greater knowledge of, and control over, those operating in the sector. The reforms will also shift the compliance burden away from small business agents who make up the vast majority of the remittance sector and on to their remittance network providers. This reflects the existing structure and practices of the sector.

The reforms will ensure that the government has measures in place to reduce the risk of remittance dealers facilitating access to funds for people smuggling, money laundering, terrorism financing and other serious crimes.

The bill demonstrates the government’s commitment to stopping the funding of people smuggling and preventing organisers of these dangerous and inhumane ventures profiting from this serious crime. It will also serve to prevent money laundering, terrorism financing and related criminal activities at home and abroad. I commend the bill to the House.

Debate (on motion by Ms Gambaro) adjourned.