NEED TO KNOW

On 4 December 2013, the Federal Minister for Justice, Michael Keenan, announced a review of:

  • the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) (AML/CTF Act);
  • the Anti-Money Laundering and Counter-Terrorism Financing Regulations 2008 (Cth) (Regulations); and
  • the Anti-Money Laundering and Counter-Terrorism Financing Rules  (Rules),

together encompassing the AML/CTF regime.

BACKGROUND

The AML/CTF regime implements Australia’s international AML/CTF obligations under the international Financial Action Taskforce’s (FATF) 40 Recommendations on AML/CTF.  A central aim of the regime is described as being the striking of a balance between efficient conduct of business and effective regulation to combat money laundering and terrorism financing.    

Section 251 of the AML/CTF Act requires a review of the operation of AML/CTF regime seven years after the commencement of that section (12 December 2006) and a report of the review to be prepared and tabled in Parliament. 

The Attorney-General’s Department is responsible for the review of the AML/CTF regime, which the Minister describes as a source for vital transaction information for following the money trail to serious and organised crime groups that profit from illegal activities.  Some examples of crimes and case studies that demonstrate the value of the reporting requirements can be found in the Typologies and case studies report 2013 released by the Australian Transaction Reports and Analysis Centre (AUSTRAC).   

The statutory review of the AML/CTF regime is set to coincide with the mutual evaluation of Australia’s AML/CTF regime by the FATF in 2014.  The findings from the FATF mutual evaluation will be taken into account in the statutory review of the AML/CTF regime.

SUMMARY

The Terms of Reference for the review are broad to ensure any view or issue raised by the industry, partner agencies and any other interested parties can be considered.  Broadly, the review will consider:

  • the operation of the AML/CTF regime and whether there is a need for the ongoing operation of the Financial Transactions Reports Act 1988 (Cth)(FTR Act)[1];
  • the extent to which the policy objectives of the AML/CTF regime remain appropriate; and
  • whether the AML/CTF regime provisions remain appropriate for achieving those policy objectives.

The Guiding Principles accompanying those Terms of Reference state the Review will be guided by principles including:

  • creating a financial environment hostile to money laundering and terrorism crime;
  • ensuring Australia meets its international obligations;
  • achieving government objectives in the most appropriate, efficient and effective manner; and
  • addressing privacy considerations appropriately.

The Attorney-General’s Department and AUSTRAC have released an Issues Paper, which outlines areas the review proposes to examine but is not intended to be exhaustive or limit the broader scope of the review provided by the Terms of Reference.  Topics raised in the Issues Paper include (without limitation):

Click here to view table.

The following two topics are excluded from the statutory review:

  • enhancements to customer due diligence measures as this topic is the subject of an existing consultation process that commenced in May 2013 (however, the review will consider this topic to the extent that any additional issues arise from that consultation process as relevant); and
  • the AUSTRAC supervisory levy as this is the subject of a separate statutory review.

TIMING AND METHODOLOGY FOR THE REVIEW

The closing date for written submissions on matters contained in the Terms of Reference and Guiding Principles, and on the operation of the AML/CTF regime generally, is 28 February 2014.

The review will then also consider and involve:

  • face to face consultations; and
  • a consideration of the mutual evaluation by FATF in 2014.

The Review Team will then present a report to the Government, which may include recommendations for reform of the AML/CTF regime.  The Minister is expecting the report to be provided to him in 2015.