Australia to ban cash payments over AU$10,000 in the name of thwarting crime

The law making it illegal to make or accept cash payments over AU$10,000 was meant to come into force on January 1, but the Bill is still being probed by a Senate committee.

In October, the Currency (Restrictions on the Use of Cash) Bill 2019 passed the lower house. The proposed Bill, if passed, would essentially block the purchase of goods over AU$10,000 via cash and as the explanatory memorandum [PDF] details, it would also introduce offences for entities that make or accept cash payments of AU$10,000 or more.

Under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act), businesses that provide certain "high risk" services must report cash payments for goods and services of AU$10,000 or more. Similarly, a person entering or departing Australia must declare amounts of physical currency of AU$10,000 or more.

The idea to extend this to transactions between businesses and individuals came as a recommendation from the Final Report of the Black Economy Taskforce.

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The government previously already agreed to introduce the cash payment measure, expecting it to take effect from 1 January 2020, after it had already been pushed back from 1 July 2019.

Facing the Senate Economics Legislation Committee and its probe into the Bill ahead of its passage, Treasury's Black Economy Division head Patrick Boneham was on Thursday asked about the potential loophole in the law that allowed two lots of purchases, for example, to stay under the AU$10,000 limit.

In response, he said if it falls under the same "job", using purchases from Bunnings as his example, it would be a breach of the law.

Asked about how the government intends to avoid different interpretations of the law, Boneham said he wasn't concerned there would be any confusion.

"There will be information and there will also be how we consider the law to work in particular circumstances, so it's similar to what the Australian Taxation Office (ATO) would do. But it's reasonably black and white at the moment -- you either breach it or you don't," Boneham said.

Touching on who would handle the prosecution element, Boneham said the ATO and Australian Federal Police (AFP) would be the most effective channels.

"Let's say the ATO is doing an audit on a business and finds evidence that they are accepting transactions greater than AU$10,000 in cash. Then it is up to the ATO as to whether they then take that to the AFP and the [Director of Public Prosecutions]," he continued.

"We think that is the most effective way to do this because it's going to cut across a lot of different areas, and more enforcement agencies are looking at things.

"We would also imagine that the AFP would consider this as an ancillary measure in relation to investigations they're doing on organised crime gangs."

One argument raised by both Boneham and the Black Economy Taskforce was that Australia is increasingly moving towards a cashless society and with the rise of subscription services being mostly direct debited, small businesses in Australia are probably not ever seeing a transaction over AU$10,000. Boneham expects not many organisations in the country would need to do too much differently to comply with the impending law.

For those that deal in high-value transactions, such as travel company Flight Centre, which also appeared before the committee on Thursday, systems and training procedures would need to be amended so as to avoid penalties for taking payments for holidays over AU$10,000 in cash.

ATO Assistant Commissioner Peter Holt told the committee his department received nearly 31,000 tip-offs in the last six months regarding cash payments -- not necessarily over AU$10,000, however.

"We've analysed 75% of those 31,000, and some of those tip-offs relate to black-economy activity, which includes cash for discounts, unexplained wealth, and phoenixing behaviours. And, of those tip-offs that we've been analysing for black-economy risks, almost 3,000 of those tip-offs from the community are tipping us off in respect of cash transactions," Holt said.

"The reason I raise that is that what could become important to us if this Bill is passed is: we would be able to collect that intelligence that comes into the tax office that we might receive, AUSTRAC may receive intelligence, federal police might receive intelligence, but, when the tax office receives any intelligence in respect of breaches of this particular legislation, we would be able to identify that through our Tax Integrity Centre, through the intelligence we collect.

"We'd then be able to report on the breaches of the law that may be reported or suspected by the community … we do not have a clear indication of the transactions greater than AU$10,000 that are evading tax."

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