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Thursday, 16 June 2011
Page: 3140

Senator HUMPHRIES (Australian Capital Territory) (16:35): I rise to speak on behalf of Senator Brandis on the Combating the Financing of People Smuggling and Other Measures Bill 2011. The purpose of the bill is to reduce the risk of money transfers by remittance dealers being used to fund people-smuggling ventures and other serious crimes by introducing a more comprehensive regulatory regime for the remittance sector. The bill also introduces measures to permit the sharing within the Australian intelligence community of financial intelligence prepared by the Australian Transaction Reports and Analysis Centre, AUSTRAC, and makes a number of amendments to that effect.

In schedule 1, the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 is amended to strengthen the Commonwealth legislative framework on the regulation of remittance dealers and the providers of remittance networks. Schedule 2 amends the same act to expand the list of agencies with which AUSTRAC can share financial intelligence. It enables AUSTRAC to share intelligence with 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. Schedule 3 amends the same act and the Privacy Act 1988 to enable reporting entities to use credit reporting data to verify the identity of their customers. Schedule 4 amends the Financial Transaction Reports Act 1988 to enable the CEO of AUSTRAC to exempt a person from one or more provisions of that act. This will allow the CEO to provide regulatory relief in circumstances which otherwise would result in unnecessary or unduly onerous obligations being imposed.

The bill seeks to reduce the risk that remittance dealers will be involved in financing people smuggling, money launder­ing or the financing of terrorist activities. One of the newer and more sophisticated methods of money laundering is the use of bank accounts of unsuspecting third parties. The term used for this practice is an exotic and curious one. It is known as 'cuckoo smurfing'. It was coined by international authorities after the nesting behaviour of the cuckoo bird and the tiny blue figures of a popular Belgian cartoon—of which I have never heard but is apparently well known in Belgium. Birdwatchers have long noted the cuckoo's practice of laying its eggs in the nests of other birds, who then hatch the chicks as their own. Smurfing refers to the division of large sums of criminal money into smaller amounts. 'Cuckoo smurfing' is described in the AUSTRAC Money laundering methodologies report in the following way:

Cuckoo smurfing begins when a legitimate customer deposits funds with an alternative remitter in a foreign country for transfer into another customer's Australian bank account. This is a legitimate activity and is often a cheaper and faster alternative to using a mainstream bank.

Unbeknown to the customer, the alternative remitter is part of a wider criminal syndicate involved in laundering illicit funds. This criminal remitter, while remaining in the foreign country, provides details of the transfers, including the amount of funds, to a criminal based in Australia. This includes the account details of the intended recipient in Australia.

The Australian criminal deposits illicit cash profits from Australian crime syndicates into the bank account of the customer awaiting the overseas transfer.

The cash is usually deposited in small amounts to avoid detection under transaction threshold reporting requirements. After an account balance check, the customer believes that the overseas transfer has been completed as legitimately arranged.

The Australian criminal travels overseas and accesses the legitimate money that was initially deposited with the alternative remitter.

The illicit funds have now been successfully laundered—the criminal owes nothing but a commission to the money launderer for its work.

One other issue worth noting was brought up by the Australian Crime Commission in its submission to the Senate Legal and Constitutional Affairs Legislation Committee inquiry into this bill. The ACC stated:

A potential consequence of increased regulation may be where illegitimate remittance providers might become more covert and move into a more unregulated and non-reporting environment than currently exists. This 'black market' would need to be carefully monitored over an extended period of time to identify what, if any, emerging methodologies might be used to facilitate financial crimes including money laundering activities or the financing of people smuggling activities.

That is the effect of this legislation and it is, with respect to that effect, quite supportable. It does need to be recorded, though, that the very title of this bill was a matter of some contention within the Legal and Con­stitutional Affairs Legislation Committee. Liberal senators on that committee wrote a minority report and they put the view:

… the title of the Bill does not relate to either its content or intended purpose. While the key measure in the Bill deals with the enhanced regulation of the remittance sector … the title of the Bill focuses only on one aspect of the possible misuse of the remittance sector, namely the financing of people smuggling … The title of the Bill is clearly uninformative and misleading …

Certainly a hard-hitting title like Combating the Financing of People Smuggling and Other Measures Bill 2011 may well carry that sort of connotation. We are by now, of course, quite accustomed to this govern­ment's commitment to spin and its desperation to be seen to be doing anything on border protection, as we recall from the debate just finished. But apparently, in this case, it cannot even introduce a rather routine update of money-laundering legisla­tion without spinning it into a people-smuggling initiative.

The methods of organised crime are in a state of constant evolution. It is therefore imperative that our front-line agencies are adequately equipped to deal with their increasing sophistication. This is what the bill seeks to achieve and therefore, notwith­standing the rather Orwellian deceit in the bill's short title, it has the support of the coalition.