Explanatory Memorandum
(Circulated by authority of the Minister for Justice, the Hon Michael Keenan MP)General Outline
1. This Bill amends the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act) and the Financial Transaction Reports Act 1988 (FTR Act).
2. The Bill implements a first phase of reforms arising from the recommendations of the Report on the Statutory Review of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 and Associated Rules and Regulations (the Report). The Minister for Justice, the Hon Michael Keenan MP, tabled the Report in the Parliament on 29 April 2016.
3. The AML/CTF Act and FTR Act provide the basis for regulation of certain businesses by the Australian Transaction Reports and Analysis Centre (AUSTRAC). AUSTRAC is Australia's financial intelligence unit and AML/CTF regulator. The regulatory framework established under the AML/CTF Act and FTR Act provides for the collection of information from the private sector and from in and outbound travellers about the movement of money and other assets. AUSTRAC shares this information and associated financial intelligence with designated agencies, non-designated Commonwealth agencies and AUSTRAC's international counterparts in order to combat money laundering (ML), terrorism financing (TF) and other serious crimes.
4. The Bill contains a range of measures to strengthen Australia's capabilities to address ML and TF risks, and generate regulatory efficiencies, including amendments to:
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- expand the objects of the AML/CTF Act to reflect the domestic objectives of AML/CTF regulation
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- close a regulatory gap by regulating digital currency exchange providers
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- provide regulatory relief to industry by:
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- clarifying due diligence obligations relating to correspondent banking relationships and broadening the scope of these relationships
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- de-regulating the cash-in-transit sector, insurance intermediaries and general insurance providers
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- qualifying the term 'in the course of carrying on a business', and
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- allowing related bodies corporate to share information
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- strengthen AUSTRAC's investigation and enforcement powers by:
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- giving the AUSTRAC CEO the power to issue infringement notices for a greater range of regulatory offences, and
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- allowing the AUSTRAC CEO to issue a remedial direction to a reporting entity to retrospectively comply with an obligation that has been breached
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- give police and customs officers broader powers to search and seize physical currency and bearer negotiable instruments (BNI) and establish civil penalties for failing to comply with questioning and search powers
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- revise the definitions of 'investigating officer', 'signatory' and 'stored value card'(SVC) in the AML/CTF Act, and
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- clarify other regulatory matters, including:
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- granting the AUSTRAC CEO a power to perform tasks that are necessary or incidental to his or her functions, and
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- the weight given to ML and TF risk in certain decisions made by the AUSTRAC CEO.
5. The Bill also expands the rule-making powers of the AUSTRAC CEO across a number of areas. The Anti-Money Laundering and Counter-Terrorism Financing Rules Instrument 2007 (No. 1) (AML/CTF Rules) are legislative instruments within the meaning of section 8 of the Legislative Instruments Act 2003. Accordingly, AML/CTF Rules must be tabled in Parliament and are subject to disallowance by either House.
Financial Impact
6. The Bill will be implemented within existing resources.
Regulation Impact Statement
7. A Regulation Impact Statement has been developed in relation to the Bill. The Regulation Impact Statement is at Annex A .
8. The overall financial impact of the Bill is estimated to be savings to industry each year for the ten years after the measures come into force totalling $36,086,393.
9. This financial impact includes average annual regulatory costs of $662,221 for business and community organisations arising from measures to regulate digital currency exchange providers. The financial impact also includes offsets for each year for the ten years after the measures come into force arising from measures to:
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- deregulate the cash-in-transit sector (total annual offset of $32,683,251)
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- clarify correspondent banking relationships (total annual offset of $9,028)
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- allow related bodies corporate to share information (total annual offset of $3,987,549), and
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- de-regulate insurance intermediaries and general insurance providers under the FTR Act (total annual offset of $68,786).