Australia: Taking Stock of the Financial Reporting Legislation — Senate Committee Review and Government Response
| Pages | 181-184 |
| Date | 01 February 1997 |
| DOI | https://doi.org/10.1108/eb027136 |
| Published date | 01 February 1997 |
| Author | John Cotton |
| Subject Matter | Accounting & finance |
Journal of Money Laundering Control — Vol. 1 No. 2
Australia: Taking Stock of the Financial Reporting
Legislation — Senate Committee Review and
Government Response
John Cotton
In 1993, the operation of Australia's financial
reporting legislation was reviewed by a Senate
Committee ('the Committee').1 Most of the Com-
mittee's recommendations were accepted in the
Government Response,2 but the changes have yet
to be enacted. This note discusses the existing
regime and some of the proposed changes.
Australia considers itself to be an active partici-
pant in the fight against international crime, par-
ticularly money laundering. It was one of the 26
countries which set up the Financial Action Task
Force ('the FATF') in 1989 and 'leads the way in
the implementation' of the FATF's 40 recommen-
dations.3 This is particularly true of Australia's
financial reporting legislation, described by the
FATF as a 'learning laboratory for the rest of the
world'.4
Although Australia has learnt much from the
US,
its approach to modern law enforcement has
been even more influenced by a series of reports
from Royal Commissions between 1979 and 1984.5
The conclusions in these reports were similar, but
best expressed in the Costigan Report. This
emphasised financial methods of investigation and
also favoured attacking the financial structures of
criminals by confiscation of their assets and
through use of taxation powers.6
LEGISLATIVE STRUCTURE
The resulting legislative structure is centred on
two Federal statutes, the Proceeds of Crime Act
1987 and the Financial Transactions Reports Act
1988.
The Proceeds of Crime Act is outside the
scope of this note, but is important because it
makes money laundering an offence in Australia
and gives wide powers to freeze assets and confis-
cate them upon conviction.7 The States and Terri-
tories have corresponding legislation of varying
effect: for example, under the Drug Trafficking
(Civil Proceedings) Act 1990 in New South Wales,
confiscation can occur even without a conviction.
The Financial Transactions Reports Act 1988
('the FTRA') satisfies the need, expressed in the
Costigan Report, for financial information to
investigate and trace the proceeds of
crime.
It owes
much to the 1970 Bank Secrecy Act in the United
States, but is said to be Australia's 'own indigenous
solution — a comprehensive monitoring program
authorised by law'.8 It is comprehensive because
the FTRA requires the automatic reporting of all
significant cash transactions and all international
funds transfers, as well as the reporting of any
suspect transactions.
The FTRA imposes requirements designed to
prevent accounts being opened in false names.
Procedures for the authentication of new bank
accounts are a necessary part of the fight against
money laundering and most of the FATF mem-
bers have some requirements.9 In Australia, the
procedures have been a particular source of com-
plaints by the banks.
The FTRA also imposes numerous other
requirements. Some of these have led to unex-
pected publicity, such as the requirement that cash
exceeding $5,000 must be declared if taken out of
Australia.10 However, this note concentrates on the
reporting requirements.
REPORTING REQUIREMENTS
The FTRA is administered by the Australian
Transactions and Reporting Analysis Centre,
known as AUSTRAC. All significant cash trans-
actions, namely those exceeding $10,000, must be
reported to AUSTRAC by a cash dealer. This term
includes not only banks and other financial institu-
tions,
but also less obvious agents of law enforce-
ment, such as bullion dealers, casino operators and
bookmakers. Since late 1992, cash dealers have also
been required to report to AUSTRAC all inter-
national telegraphic funds transfers. The cash deal-
ers have been able to adapt their automatic systems
for reporting significant cash transactions to cope
Page 181
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