The question of whether lawyers, accountants, real estate agents and other professional service providers should be regulated under anti-money laundering and counter-terrorism financing law is about to come up for debate yet again, with this and a number of other questions about Australia’s AML/CTF regime referred to a parliamentary committee last week.
The Senate Standing Committee on Legal and Constitutional Affairs will review the adequacy and effectiveness of Australia’s AML/CTF regulatory arrangements, with a focus on the extent to which they could be strengthened, particularly how weaknesses can be identified before systemic or large-scale breaches occur.
The committee will look at how well the system is working outside the banking industry, no doubt prompted by the revelations of AML/CTF failings at Crown.
It will look at the performance of Austrac – how it responds to reporting and how well it identifies emerging problems based on this reporting.
It will look at Australia’s compliance with Financial Action Task Force recommendations and also look at the impact of Australia’s adherence to FATF rules on the Australian economy, particularly Australia’s capacity to access international capital.
But the hot topic in the review will be what it has to say about extending AML/CTF reporting obligations to designated non-financial businesses and professions – lawyers and the rest.
Back in 2014 FATF released a review of the Australian regime, which included the observation that one of its shortcomings was that "professional groups did not demonstrate an adequate understanding of their AML/CTF risks or have measures to mitigate them effectively".
FATF said: "Some improvements are needed for preventive measures and supervision for non-financial businesses and professions."
In response, Austrac issued briefing papers to help legal practitioners, real estate agents and others identify suspicious activity and put customer due diligence programs in place.
It said organised crime groups were using increasingly complex commercial structures to support their activities and launder money and, as a result, they were engaging the services of professionals more often.
It said it wanted to see more reporting of suspicious activity from the professions.
In 2016, the then-Minister for Justice Michael Keenan released The Statutory Review of the Anti-Money Laundering and Counter-Terrorism Financing Act. One of its recommendations was that the regime be extended to cover other services that pose AML/CTF risk.
It said these might include new payment types (such as digital currencies) and professional services provided by lawyers, accountants and real estate agents.
Later the same year, the Attorney-General’s Department issued a plan for “a program of work with industry” with a number of “priority projects” for AML/CTF. One of those was to work with industry on how to extend the regime to cover other services that pose AML/CTF risk, including professional services. That aspect of the program of work appears not to have progressed.
When AML/CTF amendments were passed last November, giving reporting entities access to third party providers of customer due diligence and toughening correspondent banking rules, there was no mention of extending the regime to cover professions.
This was called out by Labor and the Greens but the Government did not respond.
The committee has set a deadline of August 27 for submissions and will report by December 2 this year.