Third reading agreed to
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Accountants will need to prepare for new obligations under the expanded anti-money laundering and counter-terrorism financing regime following the passage of amendments through Parliament.
Anti-money laundering reforms pass both houses
Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2024
Money laundering funds serious and organised crime and impacts our economy
Anti-money laundering bill receives green light
A Senate committee has concluded that the bill to implement changes to the anti-money laundering and counter-terrorism financing regime should be passed with minor amendments.
The Senate Legal and Constitutional Affairs Legislation Committee has handed down its report on the Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2024, recommending that the bill be passed.
The bill extends the existing Anti-money laundering and Counter-Terrorism Financing regime to certain higher-risk services provided by real estate professionals and professional service providers including lawyers and accountants.
While the committee recommended that the bill be passed, it also made a number of recommendations for amendments to the bill.
The committee recommended that the bill be amended so that the reforms to the tipping off offence commence 31 March 2025 instead of 31 March 2026.
Schedule 5 of the bill reforms the current prohibition against reporting entities ‘tipping off’ their customer about the formation of a suspicion.
The new offence is focused on preventing the disclosure of suspicious matter report (SMR) information or information related to a notice issued under section 49 or 49B of the AML/CTF Act where it would or could reasonably prejudice an investigation.
The new offence framework is designed to be more flexible for reporting entities seeking to share information for legitimate purposes, including within reporting groups to manage risk and prevent further crime.
The committee said amendments to the commencement of the tipping off offence would provide greater certainty for stakeholders by removing or minimising the risk for reporting entities to reapply for current exemptions in the transition period between royal assent and the commencement date.
The committee said the the bill would "reduce complexity and close regulatory gaps in the current regime, to ensure that Australia has an effective system to deter, detect and disrupt illegal flows of money internationally, and protect Australian businesses from exploitation by criminals".
"The committee considers that this bill is a necessary and timely reform. In bringing legislation forward in 2024, the government is finally addressing a long-overdue oversight, and modernising our current AML/CTF regime, strengthening its protections, and making it more effective," it said.
Committee report ignores cost burden for small business
In additional comments provided within the report, Senator Paul Scarr said the Committee report had failed to address the impact analysis undertaken by the Attorney-General’s Department with respect to the bill and the concerns with the estimated costs.
"In the Committee report, there is no discussion of the $13.9 billion in estimated regulatory costs. There is no discussion of the detail in the impact analysis released by the Attorney-General’s Department in August 2024," said Senator Scarr.
"The concern is that this omission reflects a lack of appreciation on the part of the government of the impact of the cost burden upon the private sector, including many small businesses."
Scarr warned that the amendments would have a "disproportionate impact" on small businesses in particular.
The impact analysis indicates that the average cost per business over a ten-year period for a business with a turnover between $200,000 and $2 million is $33,230 with an initial upfront cost of $28,650.8
"This is the average. If $33,230 were the annual cost for a business with a turnover of $1.1 million (the midpoint of the range), that would equate to approximately 3 per cent of turnover. That is as a percentage of turnover, not profit," said Scarr.
"The impact on a small regional practice could be the difference between remaining in operation or closing.
"This is a serious issue which needs to be carefully considered by the Senate; especially given that there is no visibility with respect to the AML/CTF rules which will have a material impact on what the ultimate cost burden will be."