Australia: Recent Amendments to the Financial Reporting Legislation
| Published date | 01 April 1998 |
| Date | 01 April 1998 |
| DOI | https://doi.org/10.1108/eb027182 |
| Pages | 159-162 |
| Author | John Cotton |
| Subject Matter | Accounting & finance |
Journal of Money Laundering Control —
Vol.
2 No. 2
Country Profiles
Australia: Recent Amendments to the Financial
Reporting Legislation
John Cotton
In 1993 the operation of Australia's financial
reporting legislation was reviewed by a Senate
Committee ('the Committee').1 The Committee
recommended numerous changes to the Financial
Transaction Reports Act 1988 ('the FTRA'), upon
which the reporting regime is based. The federal
parliament has now passed the Financial Trans-
action Reports Amendment Act 1997 ('the amend-
ing Act') with the principal purpose of
implementing the Committee's recommendations.
Out of the Committee's 23 recommendations,
11 did not require amendment to the FTRA. This
was either because the Committee was happy with
the existing provisions or because the particular
recommendation could be implemented by admin-
istrative action alone.2 The other 12 recommenda-
tions involved changes to the FTRA. Out of these,
the amending Act makes the recommended
changes in only four cases.
The other changes in the amending Act emanate
from the government alone. Most of them are of
a
housekeeping nature, but they also include perhaps
the most important change made by the amending
Act. This extends the operation of the FTRA to
solicitors, a change which was made contrary to
the Committee's recommendations.
This note examines the effect of the changes and
the extent to which they have strengthened the
operation of the FTRA. The substantive changes
will be discussed first before dealing briefly with
those of
a
housekeeping nature.
REPORTING BY SOLICITORS
The amending Act establishes a regime of report-
ing of significant transactions by solicitors. Diffi-
cult legal issues are raised by the question of
whether or not solicitors should be obliged to
report cash transactions which they undertake for
their clients through their trust accounts.3
One view is that suspect transaction reporting by
solicitors would conflict with legal professional
privilege, but the real issue is more likely to be the
duty of confidentiality, which is owed by solicitors
in much the same way as by bankers and other
professionals. It then becomes a policy question
whether solicitors, like bankers, should have that
duty abrogated by statute to satisfy the needs of
law enforcement.
The government has decided that the evidence
of abuse of solicitors' trust accounts is clear
enough to justify partial abrogation of the duty of
confidentiality. Such evidence is to be found in
reports by the Costigan Royal Commission4 and
the National Crime Authority.5 The Attorney-
General cited both of these reports in his Second
Reading Speech,6 as well as referring to submis-
sions made to the Committee. Surprisingly, a
majority of the Committee took a different view of
the evidence and recommended against extending
the FTRA to cover solicitors.
The amending Act adopts a compromise sug-
gested by the dissenting member of the Commit-
tee.7
Specific provisions are included for solicitors,
instead of just including them as cash dealers. To
avoid perceived problems with legal professional
privilege, solicitors are not required to report sus-
pect transactions, but only significant cash trans-
actions, namely those exceeding $10,000. They are
also not required to report international fund
transfer transactions or to comply with the account
identification requirements.
Even the Attorney-General admitted that the
obligations placed on solicitors are 'not onerous'.8
The exclusion of international fund transfer and
suspect transaction reporting seems to remove
much of the value of extending the FTRA to sol-
icitors. It is hard to see the reason for excluding
international fund transfer transactions, particularly
when the Attorney-General referred specifically to
Page 159
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