Senate committee waves through Australia's AML/CTF amendments

The committee considers that the Bill includes important measures that will strengthen Australia's capabilities to address money laundering and terrorism financing risk, and has recommended its passage

The Senate Legal and Constitutional Affairs Legislation Committee has made one recommendation after reviewing the proposed amendments to Australia's Anti-Money Laundering and Counter-Terrorism Financing Amendment and Other Legislation Bill 2019 (AML/CTF Bill), asking for it be passed.

"The committee recommends that the Senate pass the Bill," it wrote in its report [PDF].

"The committee considers that the Bill includes important measures that will strengthen Australia's capabilities to address money laundering and terrorism financing risks."

The Bill was introduced to Parliament in October and, if passed, would be an amendment to the AML/CTF Act 2006.

The AML/CTF Act, together with the Financial Transaction Reports Act 1988 (FTR Act), provides the basis for regulation of certain businesses by the Australian Transaction Reports and Analysis Centre (Austrac), which is the nation's financial intelligence unit and AML/CTF regulator.

According to Austrac, the amendments simplify and streamline the corresponding banking obligations in the AML/CTF regime, prohibit financial institutions from forming correspondent banking relationships involving shell banks, expand the exemptions to the prohibition on "tipping-off", consolidate the reporting requirements into a single "monetary instruments" reporting scheme, and increase civil penalties for non-compliance with the cross-border movement reporting obligations.

Among other things, the Bill hopes to expand the circumstances in which reporting entities may rely on customer identification and verification procedures undertaken by a third party, as well as provide a simplified and flexible framework for the use and disclosure of financial intelligence to better support combatting money laundering, terrorism financing, and other serious crimes.

See also: Law enforcement leaning on Austrac as legislation 'lags' behind technology

The Department of Home Affairs believes that, if passed, the Bill has the potential to deliver AU$1.3 billion in regulatory cost savings.

Where privacy is concerned, the Bill would repeal the current list of designated agencies who may access, use, and disclose Austrac information and replace it with a broader definition of "Commonwealth, state, and territory agency", which specifies categories of agencies rather than individual agencies.

During the committee's hearings, the Office of the Australian Information Commissioner (OAIC) said that while some of those organisations are currently required to comply with the Privacy Act, others -- including individuals engaged to conduct an audit or review, members of a taskforce, and state and territory agencies -- are not.

To ensure there are consistent privacy protections for Austrac information handled within Australia, the OAIC recommended that all individuals and entities who are permitted to access, use or disclose Austrac information are covered by the Privacy Act to the extent that they deal with that information.

Home Affairs confirmed that Commonwealth, state, or territory agencies may only access Austrac information if the agency head provides a written undertaking to the Austrac CEO that their officials will comply with the Australian Privacy Principles (APPs) in the Privacy Act when dealing with Austrac information.

Home Affairs and Austrac are content that this would oblige all individuals and entities that are permitted to access, use, and disclose Austrac information to do so in accordance with the APPs.

"The committee acknowledges the privacy concerns raised by the Office of the Australian Information Commissioner. However, the committee is satisfied that there are privacy safeguards in place to ensure that officials accessing and sharing Austrac information are obliged to comply with the Australian Privacy Principles in the Privacy Act 1988," the committee wrote.

"The committee further notes advice that additional privacy safeguards may be built into the Austrac CEO's instrument of authorisation and other policies. "

Previous amendments to the AML/CTF Act included giving Austrac authorisation to regulate digital currency exchanges.

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