PROPOSED CHANGES to the Financial Transactions Reporting Act (FTR) should not be rushed through prior to the Federal Government’s reform of anti-money laundering laws (AML), the Office of the Privacy Commissioner has warned.
The Privacy Commissioner is concerned that Government plans to amend the FTR Act before the consultation process for the AML reforms is complete will have a severe impact on the effectiveness of the new AML regime.
“The effective implementation of legislative measures to counter money-laundering and the financing of terrorist activities will depend in large part on the willing cooperation of the business community in providing critical financial data to law enforcement agencies,” officials from the Office wrote in a submission to the Senate enquiry on new terrorism laws.
“This in turn will be underpinned by the understanding and confidence on the part of the community as to what happens to their financial data. The Office is concerned about the consequences of bringing forward the amendments to the FTR Act before the planned consultation process for the proposed AML Bill. Such an outcome may produce an unintended loss of community and business confidence in the anti-mony laundering and counter-terrorist financing framework.”
While the Government has quelled some of the concerns of business over the upcoming rules, after a series of delays in publishing the exposure draft resulted in Australia’s non-compliance with the Financial Action Task Force (FATF) recommendations on money laundering, observers said Australia cannot afford further alienation. FATF is a France-based global body responsible for setting global standards on anti-money laundering.
The amendments to the FTR Act require community support to work effectively. The first amendment covers the registration of information networks widely used for the transmission of money. Informal networks, or underground banking systems as they are often referred to, are increasingly being seen as a conduit for money laundering and terrorist financing.
At present, under the FTR Act and the US Patriot Act, the sector continues to flourish and remains largely off the radar of the authorities. Meanwhile, a recent paper authored by Rob McCusker, a research analyst at the Australian Institute of Criminology (AIC), said attempts to regulate the sector could drive it further underground, increasing the potential for money laundering and terrorist financing out of reach of government.
The FTR Act amendment requires registration of the networks.
Additionally, the amendments will require customer data to be included in all international funds transfers and a requirement for trans-border couriers to prepare reports for Austrac about the person on whose behalf they are carrying various instruments.
While the Privacy Commissioner does not oppose the amendments, there is concern over the timing. “The Office is concerned about the consequences of bringing forward the amendments to the FTR Act before the planned consultation process for the proposed AML Bill,” the submission said.
“Such an outcome may produce an unintended loss of community and business confidence in the anti-money laundering and counter-terrorist financing framework. Rather than the amendments to the FTR Act being made at this time, the Office recommends that Schedule 9 remain the subject of the careful consultation and assessment process being undertaken by the Minister for Justice and Customs and his department as part of the AML reform agenda.”
Stuart Fagg is the Editor of Risk Management magazine, Lawyers Weekly’s sister publication.