Banks want implementation of AML II but Turnbull has deferred doing so indefinitely!

Another PM Turnbull FAILURE to make a decision.

Legal profession faces ‘dire outcome’ if forced to comply with counter-terrorism financing laws

Guardian AustraliaFriday 17 March 2017 17.34

Nick Evershed and Paul Farrell

Extending anti-money laundering and counter-terrorism financing laws to Australia’s legal profession would erode lawyer-client privilege and could cost the industry 10% of the entire revenue of the legal profession, the Law Council of Australia has claimed.

The federal government has been consulting with industry groups about extending Australia’s anti-money laundering and counter-terrorism laws to different industry groups.

The consultation is focused on expanding the types of industries required to report suspicious matters, undertake certain types of due diligence requirements and verify identification now limited to certain types of financial institutions.

The range of bodies that could be affected by the changes includes real estate agents, lawyers, car dealers and accountants.

The Attorney General’s Department has published a series of submissions from various industry bodies, some of which outline concerns about the impact of expanding the scheme.

The Law Council of Australia’s submission is the most strident, and warns of dire outcomes for the legal profession if it were forced to adopt the changes.

The council wrote: “Regulating legal practitioners for AML/CTF would result in erosion of client legal privilege and invalidate confidentiality.

“Subjecting solicitors and members of the Bar to AML/CTF obligations would hinder the administration of justice and increase costs for the client. In particular barristers because they obtain instructions from solicitors, do not handle trust accounts or keep files are an even lower risk of ML or TF – the manner in which they practice also makes them more susceptible to the costs and burdens of AML regulation.”

It goes on to say that “set up and compliance cost will amount to 10% of the entire revenue of the legal profession. This will severely affect the profession’s ability to provide services to clients.”

A submission from Transparency International Australia supported increased oversight of lawyers, saying: “The new laws will greatly help deter and prevent criminals from hiding behind Australian companies and trusts to move illicit funds and hold tainted assets.”

Their submission highlighted risks posed by the legal industry, saying the “current lack of [anti-money laundering and counter-terrorism financing] due diligence and reporting obligations” for lawyers may “impair intelligence gathering”.

The Victorian Legal Services Board and Commissioner supported the extension of anti-money laundering and counter-terrorism financing obligations, but raised concerns about the potential cost of increased regulation.

The Australian Small Business and Family Enterprise Ombudsman submission said that while it “broadly” supported measures for a robust anti-money laundering and counter-terrorism financing regime, it had concerns about the additional regulatory burden on small businesses.

“From a small business perspective, the proposed measures will undoubtedly increase the regulatory burden. At this stage it is not clear that the evidence justifies the breadth and potential impact of this imposition.”

The Australian Bankers’ Association, which represents all the big banks in the country, supported all the recommendations: “The ABA remains fully supportive of the implementation of all 84 recommendations from the statutory review of the anti-money laundering (AML) and counter-terrorism financing (CTF) regime,” it said.

“The ABA recommends progressing the Tranche II reforms as a priority. It is vital that Australia closes the current gaps in the Australian money laundering/terrorism financing (ML/TF) regime.”

The Australian Automotive Dealers Association said that “motor vehicle dealers should not be subject to the more complex AML/CTF regime”, and outlined that it would be “a disproportionately burdensome response to a modest ML/TF risk”. It instead proposed a restriction on cash transactions for car purchases.

The Real Estate Institute of Australia also expressed caution about the level of reporting that could be required as part of the changes: “Almost all real estate agencies are small businesses and as such do not have the structure or the capacity to take on onerous regulatory oversight functions,” its submission said. “The costs associated with replicating the responsibilities and reporting that first tranche companies are undertaking would be prohibitive for the real estate sector and would most likely see the cost imposts leading to closures.”