FATF Chance: Senators tackle Australia’s status as paradise for white collar criminals

by Nathan Lynch | Jun 23, 2021 | Finance & Tax

For 15 years political parties have blocked action on stopping money laundering through Australia. Labor is planning to bring on a vote today for a parliamentary inquiry that could finally end the stalemate and ensure the nation is no longer a haven for the proceeds of foreign crime and corruption. Nathan Lynch reports.

The Labor Party will lead the Greens and independent cross-benchers in demanding a parliamentary inquiry into the long-stalled reforms to the country’s anti-money laundering regime.

Labor Senator Deborah O’Neill is set to call a vote tomorrow for a broad-ranging inquiry into the “adequacy and efficacy” of Australia’s Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) regime.

If the vote is successful, the proposal will be referred to the Senate Standing Committee on Legal and Constitutional Affairs with a deadline of December 2, 2021; Labor chairs the committee.

Australia has been condemned as a laggard on money-laundering globally, by the Financial Action Task Force (FATF).

Surprise announcement

The surprise announcement comes on the back of strong lobbying from Greens Senator Nick McKim to set a hard deadline for the passage of the 15-year-old “Tranche 2” AML reforms. Insiders said the proposal was likely to pass the Senate, provided it maintains the support of One Nation senators.

Rex Patrick, independent senator for South Australia, will also support the move: “This is in area that concerns me and needs to be examined in detail and I will be supporting the move for an inquiry.”

Senator O’Neill said the terms of inquiry were drafted broadly enough to examine “what Australia needs to do so we are no longer one of the world’s money-laundering weak links”.

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The inquiry would look at the effectiveness of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 to prevent money laundering outside the banking sector. The primary targets of inquiry will be the designated non-financial businesses and professions.

The Senate would consider the attractiveness of Australia as a destination for proceeds of foreign crime and corruption, including evidence of such proceeds in the Australian real estate sector. The inquiry would also assess Australia’s compliance with the Financial Action Task Force (FATF) recommendations ahead of the fifth-round mutual evaluation, which is scheduled for 2024/25.

Daniel Mulino, federal member for Fraser, said that since 2013, the Coalition Government had repeatedly missed the deadlines in its own AML/CTF reform timetable.

“Strengthening Australia’s AML/CTF laws and implementing Tranche 2 legislation has apparently been this government’s policy since it was elected, but we’ve seen no action.


While other countries have strengthened their AML/CTF defences, the government’s inaction has left the door open for illicit capital to flood into Australia.

The Senate inquiry would scrutinise AUSTRAC’s regulatory operations and ensure it has the capability to work with the 100,000 additional businesses that would come within the regime under the Tranche 2 reforms.

“If the government’s serious about this crucial national security issue — and if it’s committed to ensuring that Australia doesn’t become an even softer touch for organised criminals and terrorism financiers — it must support this inquiry,” Mulino said.

Fit for purpose

Neil Jeans, a financial crime consultant at Initialism in Melbourne, said the terms of the inquiry were comprehensive and would look at whether Australia’s AML/CTF regime is fit for purpose.

The AML/CTF framework is only ever as good as its weakest link, Jeans said. During decades of experience with the UK’s Metropolitan Police and the National Crime Agency, Jeans worked on numerous cases where criminals laundered funds through professional service providers.

Lawyers, accountants and real estate agents were common targets in Australia due to the lack of regulatory obligations and financial crime expertise in those sectors, he said.

“To protect our economy, it is now more important than ever that Australia is not or seen to be the weakest link.”

Australia’s reputation at stake

Counter-money laundering officials said designated non-financial businesses and professions had nothing to fear from being brought into Australia’s AML/CTF regime, based on the international experience.

Similar laws have been passed in comparable jurisdictions including New Zealand, the UK, Singapore and Hong Kong.

“The experience in New Zealand, which introduced AML/CTF for DNFBPs in 2018, shows that the benefits far outweigh the costs,” Jeans said.

Paddy Oliver, managing director at AML Experts, said failing to move would have greater costs for businesses by impairing Australia’s international standing and reputation as a clean economy.

And while there might be the political and law enforcement will to suppress money laundering in Australia, Oliver said there was certainly not the political will to give law enforcement all the necessary tools to finish the job.

“Be it extending the AML/CTF Act to lawyers, accountants, and real estate agents to unexplained wealth orders to a register of beneficial ownership, successive governments have shied away at the first sign of industry resistance.”

Money laundering has again hit the headlines in Australia following the revelations from the Operation Ironside encrypted communications takedown.

Last week the Australian Federal Police (AFP) blew the lid on a three-year operation to intercept communications through the ANOM encrypted chat platform used by organised criminals. Operation Ironside has led to the arrest of more than 220 accused members of mafia groups, outlaw motorcycle gangs and other organised criminals over serious drug and weapons offences.

Jeans said the long-overdue Tranche 2 legislation was a critical tool to assist in fighting serious and organised crime.

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Nathan Lynch is a writer and international speaker who has spent two decades investigating the hidden world of dark money that fuels organised crime, corruption and violent extremism around the globe. He is certified by the US Department of Justice's elite CCIPS Cybercrime Laboratory and is a program expert with the Financial Services Volunteer Corps, which provides support to developing countries to help them combat the scourges of money laundering and other serious financial crimes. Nathan has trained police, government officials and bankers across Asia and the Middle East on the techniques the world's criminals use to conceal and clean their dirty money.

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