Australia's anti-money laundering system was at risk of suffocating under the weight of too much unnecessary reporting to the regulator, bankers said yesterday.A panel of bankers at yesterday's Anti-Money Laundering and Counter-Terrorism Financing Conference in Sydney said there needed to be better liaison between the AML regulator Austrac, law enforcement agencies and financial institutions if the industry was to avoid over-reporting suspicious activities.The head of fraud and AML/CTF at Westpac, Andrew Smith, said risk-based regulatory systems, such as AML/CTF, could be inefficient if there was not sufficient feedback from the regulator about the usefulness of reporting.Smith said: "We need better engagement to fine tune it. It needs to lift."The head of AML at nabCapital, Gavin Coles, said the intelligence feed from the regulator and law enforcement should include ongoing cases that would give clear insight into money laundering and terrorist financing activities.Coles said: "Austrac has to give effective feedback or we end up sending too many reports."Speakers said they also had concerns about dealing with nominee companies, which did not offer a transparent view into the identity of beneficial owners, and third parties, where the identity of the ultimate client could be unclear.National Australia Bank head of group AML Neil Jeans said: "The legislation says you have got to know your client. Because it is risk-based law it leaves it up to you to work out at what point you have determined that you can say you know the customer. "What you have to keep in mind is that you might have to defend your action later."Coles said: "We are still working through the question of where we draw the line in the sand when we deal with third parties."Coles said another matter of concern was what he called jurisdictional risk. AML /CTF legislation was intended to have a high degree of global uniformity but bankers have found that there are different standards in different markets, even when it comes to such basic issues as how to identify customers.