House of Representatives

Explanatory Memorandum

(Circulated by authority of the Minister for Justice and Customs, Senator the Honourable Chris Ellison)

Schedule 6 - Amendment of the Financial Transaction Reports Act 1988

The purpose of this Schedule is to amend the Financial Transaction Reports Act 1988 (the FTR Act) to:

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to include persons who collect, hold, exchange, remit or transfer cash and non-cash funds on behalf of others (underground bankers) within the definition of cash dealer;

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confirm, for Criminal Code harmonisation purposes, that certain elements of offences relating to failure to report financial transfers carry strict liability;

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give the Western Australian Anti-Corruption Commission and the Queensland Crime Commission access to financial transaction reports information by deeming those agencies to be law enforcement agencies; and

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provide that foreign intelligence information provided to AUSTRAC by a foreign country or agency of a foreign country is afforded the same secrecy and access regime under the FTR Act.

Item 1

This Item amends the definition of cash dealer in subsection 3(1) to provide that a real estate agent acting in the ordinary course of real estate business is not a cash dealer for the purposes of the FTR Act. This will ensure that real estate agents who only collect rent and hold deposits in the form of currency will not be considered as remittance dealers within the cash dealer definition. A real estate agent conducting other activities that come within the definition of a cash dealer will not be excluded from that definition.

Item 2

This Item amends subparagraph (k)(i) of the definition of cash dealer in subsection 3(1) by repealing subparagraph (k)(i) and proposing three new subparagraphs.

Proposed subparagraph (k)(i) re-enacts existing subparagraph (k)(i) and provides that a cash dealer is a person (other than a financial institution) who carries on a business of collecting currency, and holding currency collected, on behalf of other persons.

Proposed subparagraph (k)(ia) provides that a cash dealer is a person (other than a financial institution) who carries on a business of exchanging one currency for another, or converting currency into prescribed commercial instruments, on behalf of other persons. This will ensure that the definition of cash dealer covers persons carrying on the business of exchanging currency, and converting currency into some other form of instrument of value. (Item 3 proposes the definition for prescribed commercial instrument .)

Proposed subparagraph (k)(ib) provides that a cash dealer is a person (other than a financial institution) who carries on a business of remitting or transferring currency or prescribed commercial instruments into or out of Australia on behalf of other persons or arranging for such remittance or transfer. This will ensure that the definition of cash dealer covers so-called underground bankers, ie persons who collect funds on behalf of others and then remit those funds out of Australia. (Item 3 proposes the definition for prescribed commercial instrument .)

Item 3

This Item inserts a definition of prescribed commercial instrument into subsection 3(1) and provides that it will mean:

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a cheque, bill of exchange, promissory note or other like instrument creating an entitlement to currency; or

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any instrument (including an electronic instrument) that is declared to be a prescribed commercial instrument for the purposes of this definition

The definition basically provides that a prescribed commercial instrument is an instrument of value other than currency. (The proposed expression is used in proposed subparagraphs (k)(ia) and (k)(ib) of the definition of cash dealer - see Item 2).

Item 3A to 3F

These items would amend subsections 15(1) and 15(5) of the FTR Act. Subsection 15(1) and 15(5) create offences relating to a failure to report a transfer of currency of not less than $10,000 into or out of Australia. The amendments would clarify the operation of the offences for Criminal Code harmonisation processes, by making it clear that:

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failure to report a transfer is an element of the offence, rather than a defence that can be raised;

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strict liability (as defined in section 6.1 of the Criminal Code ) applies to a failure to report.

These amendments confirm the interpretation placed on these offences in R v Wai Yai Fu (Unreported; District Court of NSW, 24 April 2001)

Item 4

This Item inserts a new section 17J which provides that, for the purposes of the FTR Act, information concerning a specific financial transaction that is received by AUSTRAC as a result of a request to a foreign country or to an agency of a foreign country is taken to have been obtained under that Act. This will ensure that information provided to AUSTRAC by foreign countries is given statutory recognition and afforded the same strict secrecy and access regime that applies to all other information received by AUSTRAC under the FTR Act.

Item 5

This Item inserts a new subsection 27(1A) which provides that the Director of AUSTRAC may only authorise the Queensland Crime Commission or the Anti-Corruption Commission of Western Australia to have access to Financial Transaction Reports information where those bodies undertake to comply with the information privacy principles set out in section 14 of the Privacy Act 1988 in respect of that information.

This will ensure that the Queensland Crime Commission and the Anti-Corruption Commission of Western Australia must comply with the same privacy requirements as Commonwealth agencies that have access to financial transaction reports information

Item 6

his Item adds two new paragraphs in subsection 27(16) to provide that the Queensland Crime Commission and the Anti-Corruption Commission of Western Australia are agencies that are deemed to be law enforcement agencies for the purpose of section 27. This will enable those Commissions to have access to financial transaction reports information.

Item 7

This Item adds four new paragraphs to subsection 27(17) to provide that:

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the Queensland Crime Commissioner or an Assistant Queensland Crime Commissioner, and

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a member of the staff of the Queensland Crime Commission and

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a member, or a member of the staff, of the Anti-Corruption Commission of Western Australia

are law enforcement officers for the purpose of section 27. This will enable those officers to have access to Financial Transaction Reports information.

Item 8

This Item inserts a new subsection 27C(2A) to provide that for the purpose of monitoring the compliance of an approved cash carrier with the record-keeping obligations required by section 8, an authorised officer may inspect accessible records containing reportable details (within the meaning of section 8) of significant cash transactions to which the approved cash carrier is a party. The authorised officer may also inspect any system used by the approved cash carrier for keeping such records. This provision will enable AUSTRAC to monitor compliance of an approved cash carrier with record keeping obligations under the FTR Act.