Senate

Supplementary Explanatory Memorandum and Correction to the Explanatory Memorandum

(Circulated by authority of the Minister for Justice and Customs, Senator the Honourable David Johnston)

GENERAL OUTLINE

The Government amendments to the Anti-Money Laundering and Counter-Terrorism Financing Bill 2006 contain amendments to the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act) and the Financial Transaction Reports Act 1988 (FTR Act).

The amendments to the AML/CTF Act are to allow the Australian Secret Intelligence Service (ASIS) to communicate AUSTRAC information to foreign intelligence agencies.

The amendments to the FTR Act remove an unintended consequence of previous amendments to the FTR Act that unintentionally prevent prosecutions under section 31 of the FTR Act of any structuring offences that involve transactions under the AML/CTF Act.

This Explanatory Memorandum also contains additional information on clause 2 of the Bill and items 59-61 of Schedule 1 of the Bill.

FINANCIAL IMPACT STATEMENT

There are no anticipated financial impacts from these amendments.

NOTES ON CLAUSES

Item 1

This item amends the commencement table in clause 2 of the Bill in relation to item 57A of the Bill. Item 57A amends the definition of 'non-reportable cash transaction' in the Financial Transaction Reports Act 1988 (FTR Act) and is inserted by item 4 of the amendments to the Bill. Item 1 provides that clause 57A is to be taken to have commenced on 13 December 2006 which is the day on which the earlier amendment to the definition came into effect. The earlier amendment was made by item 56 of the Anti-Money Laundering and Counter-Terrorism Financing (Transitional Provisions and Consequential Amendments) Act 2006 (AML/CTF Consequential Amendments Act). See explanatory memorandum on item 57A as to justification for this retrospective commencement.

Item 2

This item is consequential on the insertion of clause 133A into the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (the AML/CTF Act) by item 3 of the amendments to the Bill. Item 2 ensures that disclosure under section 133A is an exception to the prohibition against disclosure of AUSTRAC information under subsection 127(2) of the AML/CTF Act.

Item 3

Item 3 inserts item 40A into the Bill. Item 40A in turn inserts clause 133A (When the Director-General of ASIS may communicate AUSTRAC information to a foreign intelligence agency) into the AML/CTF Act. Clause 133A mirrors Section 133 of the AML/CTF Act. Sub-clause 133A(1) authorises the Director-General of ASIS to communicate AUSTRAC information to a foreign intelligence agency if the Director-General is satisfied that the foreign intelligence agency has given appropriate undertakings regarding confidentiality and use of the information. Sub-clause 133A(2) enables the Director-General of ASIS to authorise an ASIS official to access AUSTRAC information and communicate it to a foreign intelligence agency on the Director-General's behalf.

Item 4

This item inserts item 57A into the Bill. Item 57A amends paragraph (c) of the definition of 'non-reportable cash transaction' in section 3(1) of the FTR Act. This amendment overcomes an unintended consequence resulting from the earlier amendment of the definition by item 56 of the AML/CTF Consequential Amendments Act. Item 56 amended the definition of 'non-reportable cash transaction' by inserting paragraph (c) with the intention that future prosecutions for structuring transactions to avoid the provisions of the FTR Act be taken under the FTR Act and that future prosecutions for structuring transactions to avoid the provisions of the AML/CTF Act be taken under the AML/CTF Act. It does this by excluding prosecution under the FTR Act of cash transactions which would be designated service transactions under the AML/CTF Act. However the offence under the AML/CTF Act will not itself be fully operational until December 2008. This amendment will remove any restriction on prosecution of structuring conduct under FTR Act in the meantime. It does this by limiting designated service transactions to those which occur after the commencement of the reporting obligations in Division 3 of Part 3 of the AML/CTF Act.

Item 1 gives the amendment at item 4 retrospective effect. This is justifiable because the offence of structuring was a pre-existing offence in the FTR Act and it was always intended that such conduct remain illegal. The restriction on prosecutions under the FTR Act for structuring to avoid reporting requirements was an unintended effect of item 56 of the AML/CTF Consequential Amendments Act and item 1 will ensure that the amendment made by item 4 will remove any gap in time in the ability to prosecute such conduct under the FTR Act. The period of retrospectivity will only be for the period 13 December 2006 (when item 56 of the AML/CTF Consequential Act which created the unintended effect came into force) and the date of commencement of this Bill.

Correction to the Explanatory Memorandum to the Bill

Clause 2

After the final paragraph on clause 2 add the following paragraph:

Items 59 to 61 inclusive of Schedule 1 of the Bill which are referred to in item 7 of the table are expressed to commence on 13 December 2006 because that is the date on which all other references in the Financial Transaction Reports Act 1988 to the former title of Director of AUSTRAC were amended to the current title of AUSTRAC CEO. Items 59 to 61 inclusive are technical amendments which do not make any change in the substantive law.

Items 59, 60 and 61 Paragraph 28(1)(a) and subsections 29(1) and 30(1) AUSTRAC CEO

At the end of the paragraph add the following sentence:

Items 59, 60 and 61 commence on 13 December 2006 (see the explanatory memorandum on clause 2).