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Thursday, 4 June 1987
Page: 4036

Mr LIONEL BOWEN (Attorney-General)(5.45) —I thank honourable members for their contributions. The difficulty we face at present is that the Opposition has moved an amendment to have the Cash Transaction Reports Bill 1987 referred to a select committee of both Houses and that it report to the Parliament as soon as possible. That would kill this Bill. It is very clear that if we pass this Bill it will go to the Senate this evening, and if passed there for the first time we will have legislation that requires people to report when substantial sums of money in cash, namely $10,000 or more, are moved.

The honourable member for North Sydney (Mr Spender) was very concerned not so much with that aspect-in fact, the Opposition supports the reporting of transactions-but about the fact that the Bill had not been dealt with by what he called the Business Review Unit. If we were to look at it from the business point of view-bear in mind that we are also looking at it from the point of view of criminal action-the argument seems to be that the banks feel that it will be expensive for them not to report cash transactions but to verify accounts. If that is the case that is an extraordinary admission of weakness by the banks. Surely they have an obligation to verify the name of a person wishing to open a bank account. If we do not have this proposed system, which apparently the banks feel is difficult for them to administer, we will not really have an effective verification system at all. I remind honourable members that the banks themselves, to the present, have not made any complaint about having to report cash transactions. The concern they have expressed relates to verification provisions. That is what this debate is all about. It has nothing to do with referring the Bill to a select committee-nothing at all. For the life of me I cannot understand why the Opposition wants to move an amendment enabling the Bill to be sent to a select committee of the Parliament. To do what? Is it to work out why the banks are finding it so difficult and expensive to verify bank accounts?

I think we have to make it very clear when talking about verification-and it is very simple-that if we had a prescribed identification number as proposed on the Australia Card, we would not have any trouble. But, of course, the Opposition opposed the Australia Card. So verification has to be by some other mechanism. Banks have their own mechanisms of verification. A verification mechanism might be a tax file number. It is not very difficult to take down a tax file number. The only other form of verification could be the production of a passport or a birth certificate. If they cannot be obtained, a citizenship certificate or some other identification which, in the opinion of the financial institutions, would sufficiently establish the person's identity would be acceptable. Where is the cost in that? I just cannot imagine. When a person opens a bank account all they will be asked to do is prove who they are. The banks do that now under their voluntary code.

We have this specious argument that has gone on all day that we should not be passing this legislation because it is a little too difficult for the banks. I make the point again: They have a voluntary code which they definitely adhere to. The code includes `appropriate identification of customers opening accounts'. It includes references to many of the criteria listed in clause 17 of our Bill, such as a passport. I do not know why, for the life of me, we have this amendment which is designed to kill the Bill. Opposition members must be running away from the issue.

I only have a few minutes left to speak as the Prime Minister (Mr Hawke) wishes to make a speech. The argument was made that it was not successful in the United States of America. I have the appropriate Treasury officials in the United States who are dealing with similar legislation. They say that it is one of the most valuable methods of crime detection, apart from revenue gathering, that they have got. As it turns out one gentleman's name is Keating but he is not related to our Mr Keating.

Mr Downer —He probably puts in his tax returns.

Mr LIONEL BOWEN —At least he is catching up with those who avoid and evade tax.

Mr Downer —Catching up? But he has not caught up.

Mr LIONEL BOWEN —He had to catch up with a lot of supporters of the Opposition-let me make it very clear. That is what we are dealing with now. We have been trying to get this matter before the Parliament since about 1985. It has been the financial institutions, encouraged by Opposition members, which have been saying that we have a lot of problems here. So we are accused of delay because of this difficulty. I make this point: When we were investigating the matter in the United States we were told that massive amounts of cash were moved around. Because those transactions have to be reported, there have been substantial tax revenue benefits. This measure will net at least $30m in tax, with an administrative cost of about $1.5m. We cannot possibly lose on the matter. I think we will get a substantial amount of money in tax.

The only argument left is an argument that the American banks are opposed to the measure. They might be opposed to it; they have been fined substantial amounts. In many cases they have been fined half a million dollars or more than a million dollars for failing to comply. In 1986 the organisation administering the measure in the United States-that is, the Treasury-seized $280m. It also got substantial sums of money-for example, $117m-in recovered tax. The matter was discussed with one of the officials there who deals with narcotics cases and who talked about the benefits of cash transaction reporting. He stated:

The reporting of cash transactions has been of the utmost benefit to Federal investigators.

The gentleman gave a number of examples. The system revealed that the Federal Reserve Bank of Miami had a surplus of approximately $5.6 billion in cash. He continued:

Other investigations dependent on cash reporting systems disclosed that one operation netted $8.4m in one day. Three other investigations in November 1985 resulted in the seizure of $21m for the United States.

I say to the gentleman, whoever he is, who sent me a telex stating that the American banks were opposed to the measure because they did not think it was very beneficial that he ought to talk to the officials with whom I spoke. In one case an investigation showed that in a four month period a person had made approximately 40 deposits, totalling in excess of $15m. The bank was given wire instructions. All the money was wired out to 87 different people. The wire transfer instructions disclosed that the money was destined for the Panamanian banks through their New York and Miami correspondent banks. In other words, it was directly related to crime and other matters. In another case an amount in excess of $4m in drug profits was laundered through a maze of Panamanian and domestic corporations.

We have here the extraordinary situation that there is a tool that we can use. I say, for the benefit of the gentleman who sent me the telex which stated that this provision would not be beneficial, that on 19 March 1986 the United States Attorney in San Diego announced an indictment against nine individuals, including an 80-year-old grandmother, in connection with the laundering of in excess of $36m. The more than 100 count indictment related to cash transactions flowing from criminal activity.

I do not want to delay the House. There are other matters that we must consider. I thank honourable members for their contributions. I thank the honourable member for North Sydney for acknowledging that this is an effective piece of legislation. The only disagreement we have is that he has moved an amendment to the motion for the second reading that will kill it. I do not think he really intends to persevere with it. We reject the amendment. On a personal note I thank him for his remarks about me. The only thing I disagree with is that he said that after 11 July he would be sitting on the Government side of the House and I would be sitting on the Opposition side of the House. I very much doubt that.

Amendment negatived.

Original question resolved in the affirmative.

Bill read a second time.