Australia: Attitudes to Extending the Scope of Anti‐Money Laundering Legislation
| Pages | 16-24 |
| Date | 01 March 2001 |
| Published date | 01 March 2001 |
| DOI | https://doi.org/10.1108/eb027290 |
| Author | Jackie Johnson |
| Subject Matter | Accounting & finance |
Journal of Money Laundering Control — Vol. 5 No. 1
Australia: Attitudes to Extending the Scope of
Anti-Money Laundering Legislation
Jackie Johnson
INTRODUCTION
As anti-money laundering legislation is refined,
expanded and adopted more readily by an increasing
number of countries, criminal elements are finding
the need to seek the assistance of intermediaries,
other than those currently captured by this legis-
lation, to launder the proceeds of their illegal
activities. The sophisticated launderer has both the
time and money to explore new opportunities for
laundering funds and the necessary means to purchase
the experts to organise, arrange or coordinate any
scheme necessary to bypass a country's anti-money
laundering legislation.
A current problem is the increasing participation,
in money laundering activities, of the non-financial
sector: accountants; auditors; lawyers; and real
estate agents. In 1997—98 the Financial Action Task
Force (FATF) made, for the first time, an in-depth
study of the involvement of the non-financial sector
in money laundering, giving examples of real estate
agents, lawyers and accountants either directly
involved in laundering funds or setting up company
structures to facilitate money laundering, indicating
an unacceptable level of involvement by professional
groups that would be expected to uphold the
law.1
Countries where legislation requires the financial
sector to report large or suspicious transactions have
typically left unregulated their non-financial sector
through which the launderer can still operate. The
recent move by 11 of the world's largest banks to
actively prevent the use of their worldwide opera-
tions for criminal purposes will put even more pres-
sure on the non-financial sector to facilitate the
laundering of criminal proceeds.2
Countries without anti-money laundering legisla-
tion offer the launderer the opportunity to operate
through either the financial or the non-financial
sector. Such countries exert an almost gravitational
pull on dirty money, only to send it on its way into
the global financial system without a hint of the
grubby state in which it arrived.
Globalisation of financial markets and conse-
quently the globalisation of financial crime implies
that a universal approach should be taken to prevent
money laundering or the money to be laundered will
flow quickly to the weakest point in the international
system. For many FATF member countries which
have set up legislation and procedures to protect
their financial sector there still remains a point of
entry or a weak link in their systems, and that is the
non-financial sector.
UPDATES AND EXTENSIONS TO
LEGISLATION
An increasing number of countries are taking ser-
iously the threat that the move to the non-financial
sector poses, particularly at the layering stage.
Laundering schemes could not achieve the layers of
complexity observed without the aid of experienced
accountants and lawyers.
Europe
To combat the shift in money laundering activity to
the non-financial sector there is currently a proposal
before the European Parliament for an amendment
to Council Directive 91/308/EEC of 10th June,
1991 on 'The prevention of the use of the financial
system for the purpose of money laundering'.
Details of the process leading to the decision to
proceed with this proposal can be found in Stefanou
and Xanthaki.3 This proposal, put forward on 14th
July, 1999, relates to the extension of the current
Directive to non-financial activities and professions,
which are vulnerable to money laundering. Require-
ments for client identification, record keeping and
the reporting of suspicious transactions would be
extended to include real estate agents, notaries,
independent legal professionals when they are
involved in financial transactions, casinos, external
accountants and external auditors. These changes
were identified as one of the top priorities of the
Action Plan for Financial Services endorsed at the
Cologne European Council in June 1999. These
new guidelines would meet the need for extended
legislation called for by the FATF in their 1997-98
Annual Report. The Commission proposes that
member states should bring into force all the
Journal of Money Laundering Control
Vol.
5,
No
1,
2001,
pp 16-24
© Henry Stewart Publications
ISSN 1363-5201
Page 16
To continue reading
Request your trial