Consultation on major reform of Australia’s anti-money laundering and counter-terrorism financing laws
The Albanese Government has commenced consultation on overdue reforms to Australia’s anti-money laundering and counter-terrorism financing (AML/CTF) regime.
No legitimate business wants to assist the laundering of money which funds serious crimes including terrorism, child abuse and the illicit drug trade.
The purpose of the AML/CTF regime is to assist businesses to identify these risks in the course of providing their services.
The former government failed to reform the AML/CTF regime to respond to the changing threat environment and evolving international standards.
Significant regulatory gaps and vulnerabilities have made Australia an increasingly attractive destination for laundering illicit funds.
Left unaddressed, Australia’s financial system would remain vulnerable to criminal exploitation through the use of professional services, weakening the overall integrity of Australia’s AML/CTF regime. As the rest of the international community strengthens their regulation of these sectors, Australia would continue to fall further behind.
The need to streamline obligations has long been called for by industry and was recommended by the 2016 Report on the Statutory Review of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006.
The former government had six years to implement the 2016 recommendations but left office without taking action to address these industry concerns.
The existing regime is complex, resulting in regulatory inefficiencies for business and government. The Albanese Government is committed to simplifying and modernising the regime to address these inefficiencies.
Lawyers, accountants, trust and company service providers, real estate agents, and dealers in precious metals and stones (known as tranche-two entities) are particularly vulnerable to exploitation by transnational, serious and organised crime groups and terrorists.
Australia is a founding member of the Financial Action Task Force (FATF), the global financial crime watchdog which sets international standards for tackling money laundering and counter-terrorism financing.
Since 2015, Australia has failed to comply with 16 out of 40 FATF Standards, including extending the AML/CTF regime to tranche-two entities. As a result, Australia now risks being ‘grey-listed’ by the FATF, which could result in significant harm to our economy.
Australia is now one of only five jurisdictions, including China, Haiti, Madagascar and the United States, out of more than 200, that do not regulate tranche-two entities.
The Government has accepted all recommendations of the Senate Legal and Constitutional Affairs References Committee Inquiry into the adequacy and efficacy of Australia’s anti-money laundering and counter-terrorism financing regime.
The Committee made four bipartisan recommendations, including that the AML/CTF regime be extended to tranche-two entities and I thank the Committee for its work.
Today I released the first of two consultation papers on these proposed reforms. The first Consultation Paper is available on the Attorney-General’s Department consultation hub. Submissions will close on 16 June 2023.
The Department will also hold roundtable discussions on issues raised by stakeholders in submissions to the Consultation Paper.