Australia: Lawyers Should be Treated like Banks, Bookmakers and Bullion Dealers
| Pages | 255-258 |
| Published date | 01 January 1998 |
| Date | 01 January 1998 |
| DOI | https://doi.org/10.1108/eb027147 |
| Author | John Cotton |
| Subject Matter | Accounting & finance |
Journal of Money Laundering Control — Vol. 1 No. 3
COUNTRY PROFILES
Australia: Lawyers Should be Treated like Banks,
Bookmakers and Bullion Dealers
John Cotton
PROPOSED CHANGES TO THE
AUSTRALIAN FINANCIAL REPORTING
LEGISLATION
In 1993, the operation of Australia's financial
reporting legislation was reviewed by a Senate
Committee ('the Committee').1 It proposed
various changes to the Financial Transactions
Reports Act 1988 (FTRA), most of which were
accepted in the Government Response in 1995.2
One of the few points of disagreement was
whether the reporting requirements of the FTRA
should be extended to cover solicitors.
In 1991 the National Crime Authority (NCA)
had suggested including solicitors among the cash
dealers covered by the FTRA, on the grounds that
more money was going through solicitors' trust
accounts than was being handled by some existing
categories of cash dealer.3 In 1993 the NCA made
a submission in similar terms to the Committee
and was supported by the Australian Transactions
and Reporting Analysis Centre (AUSTRAC).
Unexpectedly the Committee recommended
against including solicitors,4 but the government in
its Response disagreed. It proposed including sol-
icitors as cash dealers, but only on the basis that
they should report significant transactions. The
threshold for significant transactions is set at
$10,000, although it is proposed that this should be
indexed in future to keep up with inflation.
However, unlike other cash dealers, solicitors
would not be required to report suspect trans-
actions or international telegraphic funds transfers.
The reasons for this compromise are muddled,
which is not surprising, because the underlying
legal issues are surprisingly complex.
PRACTICAL ARGUMENT FOR
EXTENSION
The existing definition of cash dealer covers a dis-
parate group of people, including futures brokers,
trustees of unit trusts, insurance intermediaries,
casino operators, bookmakers and many others.
They have in common the fact that they handle
numerous cash transactions. This raises the obvi-
ous question: if bookmakers, for example, have to
report cash transactions, why should not solicitors
have the same obligation? It can be answered on
two levels, practical and legal.
In practical terms, the trust accounts of Aus-
tralian solicitors deal with as much cash as book-
makers, particularly through real estate
transactions. Such cash is included in the amounts
reported through the banks, but no details are
given of the client, resulting in the loss of the
money trail. On this practical level, solicitors
should be covered. They already have some report-
ing obligations to their state professional bodies.
The NCA told the Committee that these could
easily be adapted to comply with the FTRA.5
LEGAL ARGUMENTS AGAINST
EXTENSION
The proposed extension raises questions which are
legal, not just because lawyers are involved, but
because the law treats lawyers in a special way. It
recognises legal professional privilege, which
applies only to lawyers, and the duty of confi-
dentiality which lawyers, like other professionals,
owe to their clients. Legal professional privilege
('the privilege') and the duty of confidentiality are
quite separate concepts, but they have often been
muddled in the debate about the FTRA.
The duty of confidentiality prevents the dis-
closure of information, but is subject to the excep-
tion that it can usually be overridden by
compulsion of law. The privilege is an exception
to the exception. It allows lawyers to refuse to
disclose information which could otherwise be
required from them by third parties by compulsion
of law.
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