AUSTRAC to face parliamentary scrutiny

The Senate has passed a motion to have its legal and constitutional affairs references committee undertake an inquiry into the adequacy and efficacy of AUSTRAC and the anti-money laundering and counter-terrorism (AML/CTF) finance regime.

The motion brought by Labor senator Deborah O’Neill was approved on Wednesday (23 June).

The committee will be tasked with investigating how AUSTRAC responds to reporting, the effectiveness of the Anti-Money Laundering and Counter Terrorism Financing Act 2006, as well as how attractive Australia is as a destination for international money laundering syndicates.

The Senate committee will also explore Australia’s compliance with recommendations from international body Financial Action Task Force (FATF).

Senator O’Neill has raised concerns around the government’s delay in implementing the Tranche II reforms of the AML/CTF act, as recommended by the FATF, which would require anti-money laundering regulation to extend to more financial sector professionals. Lawyers could be regulated under the law, alongside accountants and real estate professionals.

“Australia is now one of the few major economies to not have implemented the Tranche II reforms, with organised criminals now perceiving Australia as a weak link in the world’s anti-money-laundering regime,” a statement from Ms O’Neill said.

The committee is expected to report on its findings by December.

A spokesperson for AUSTRAC commented the regulator will "provide assistance throughout the course of the inquiry".

"AUSTRAC continues to work with the department of Home Affairs on AML/CTF policy and legislation matters," they said.

The inquiry has come after Westpac copped the highest Australian civil penalty last year, a $1.3 billion fine resulting from an AUSTRAC enforcement action around the bank’s 23 million breaches of the AML/CTF Act.

More recently, AUSTRAC flagged that it had commenced an investigation into concerns with NAB’s compliance with anti-money laundering laws.

Speaking in the Senate on Wednesday, senator Jonathon Duniam noted that in the past five years, AUSTRAC’s enforcement action has resulted in more than $2 billion in civil penalties from CBA, Westpac and Tabcorp.

“The government has provided AUSTRAC with an additional $104.9 million over four years to uplift its capability, meaning that more noncompliance can be detected, investigated and addressed,” Senator Duniam said.

[Related: NAB recruits former AUSTRAC chief]

Sarah Simpkins is the news editor across Mortgage Business and The Adviser.

Previously, she reported on banking, financial services and wealth management for InvestorDaily and ifa.

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