Check the Balance: Is the Doctrine of Separation of Powers Sufficient in the Context of Intergovernmental Organisations? A Case Study of Australia’s AML/CTF Financing Framework
| Author | Doron Goldbarsht,Hannah Harris |
| DOI | http://doi.org/10.1177/0067205X221126558 |
| Published date | 01 December 2022 |
| Date | 01 December 2022 |
| Subject Matter | ARTICLES |
Article
Federal Law Review
2022, Vol. 50(4) 527–557
© The Author(s) 2022
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DOI: 10.1177/0067205X221126558
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Check the Balance: Is the Doctrine of
Separation of Powers Sufficient in the
Context of Intergovernmental
Organisations? A Case Study of
Australia’s AML/CTF Financing
Framework
Doron Goldbarsht*and Hannah Harris**
Abstract
This article demonstrates the pressing need to rethink the doctrine of separation of powers in
Australia in light of the increasing influence of intergovernmental organisations such as the Financial
Action Task Force (‘FATF’), which are shaping domestic lawmaking. The article documents the
influence of the FATF on Australia’s anti-money laundering and counter-terrorism financing
framework, showing how FATF ‘recommendations’are in fact decrees that Australia and other
nation states integrate into their domestic legal systems —even when the legislative branch of
government does not support such actions. The article suggests that Australia should consider
implementing a fourth arm of government —an integrity arm —to strengthen the nation against
the influence of intergovernmental organisations.
Received 22 February 2021
I Introduction
International efforts to strengthen anti-money laundering (‘AML’) and counter-terrorist financing
(‘CTF’) legal regimes have been the subject of various international treaties for almost three
decades. Certain aspects of these treaties have also been taken up by the United Nations Security
Council (‘UNSC’), which has adopted several binding resolutions dealing with this matter under
Chapter VII of the Charter of the United Nation s (‘UN Charter’). These traditional multilateral
approaches have been complemented by non-conventional mechanisms, in particular the Financial
Action Task Force (‘FATF’) and its recommendations. The FATF recommendations do not con-
stitute traditional formal sources of law, as recognised by, inter alia, Article 38 of the Statute of the
*Senior Lecturer at Macquarie Law School. The author may be contacted at doron.goldbarsht@mq.edu.au.
**Lecturer at Macquarie Law School. The author may be contacted at Hannah.Harris@mq.edu.au. The authors wish to
thank Ms Vrinda Jain for excellent research assistance.
International Court of Justice (‘ICJ Statute’).
1
In spite of this lack of normative character in the
traditional (international) legal sense, the FATF recommendations have achieved remarkable levels
of implementation by states. In many cases, the recommendations have resulted in states introducing
significant legislative reform at the domestic level. Yet, the arguably innovative form of inter-
national standard-setting and enforcement employed by the FATF has not been without
controversy.
2
This article deals with the controversy from a unique angle. It uses the case study of Australia’s
AML and CTF framework to demonstrate the need to rethink the doctrine of separation of powers,
considering the globalisation of regulation and the increasing power of intergovernmental orga-
nisations. The article shows that the FATF, an intergovernmental organisation unconstrained by
democratic accountability or legal process, is driving domestic legislation and law enforcement
efforts in the AML/CTF space.
With the rise of globalisation, states increasingly find it necessary to rely on transnational non-
binding regulations to deal with matters that were previously domestic in nature.
3
While inter-
governmentalism can enable positive regulatory outcomes by providing collaborative solutions to
global challenges, states often have no alternative but to comply. In certain circumstances, the
‘voluntary’nature of intergovernmental regulation is, in reality, mandatory. While political sci-
entists observed its emergence in the 1970s, today intergovernmentalism is rapidly becoming the
most widespread and effective mode of international governance.
4
Compliance with these non-
1. The traditional approach to analysis of international governance in the realm of international law commonly takes Article
38(1) of the Statuteof the International Court of Justice (‘ICJStatute’) as a starting point. This article identifiesthree main
sources of international law: (a) treaties between states; (b) customary international law derived from the practiceof states
and (c) general principles of law recognised by civilised nations. In addition, Article 38(1) refers to judicial decisions and
the ‘teachings of the most highly qualified publicists’as subsidiary means for the determination of rules of international
law. Strictly speaking, the ICJ Statute, as an international treaty, is only binding for those states that have ratified it.
However, because 193 states have ratified the ICJ Statute as an annex to the Charter of the United Nations (‘UN Charter ’),
Article 38 is generally considered to provide an authoritative list of sources of international law. At the same time, it has
been questioned whether this list continues to provide an adequate reflection of applicable norms and standards in
contemporary international governance. For example, this traditional framework does not account for resolutions of the
UNSC, which, although related to an international treaty (the UN Charter), constitute administrative acts by an organ of an
international organisation. As such, these resolutions do not readily fall within the ambit of Article 38 of the ICJ Statute.
Yet, Article 25 of the UN Charter stipulates that UNSC resolutions are binding by requiring the members of the United
Nations ‘to accept and carry out the decisions of the Security Council in accordance with the present Charter’. Indeed,
resolutions of the UNSC, particularly those adopted under Chapter VII of the UN Charter, play a significant role in
contemporary international governance. See Doron Goldbarsht and Christopher Michaelson, ‘International Legal and
Quasi-Legal Approaches to Combatting Money Laundering: An Australian Perspective on Norm-Development’in Petrus
C van Duyne et al (eds), The Many Faces of Crime for Profit and Waysof Tackling It (Wolf Legal Publishers, 2017) 197;
see generally Alan Boyle and Christine Chinkin, The Making of International Law (Oxford University Press, 2007).
2. Ben Hayes, for example, has called the FATF a ‘powerful yet unaccountable global standard-setting body [which] is
helping repressive civil society regulations to spread and flourish across the globe’: Ben Hayes, ‘From Countering
Financial Crime to Criminalizing Civil Society: How the FATF Overstepped the Mark’,Open Society Foundations (Web
Page, 8 May 2013) <https://www.opensocietyfoundations.org/voices/countering-financial-crime-criminalizing-civil-
society-how-fatf-overstepped-mark>.
3. Benedict Kingsbury,Nico Krisch and Richard B Stewart, ‘The Emergence of Global Administrative Law’(2005) 68(3–4)
Law and Contemporary Problems 15; For the influence of international norms on national administrative law,see Daphne
Barak-Erez and Oren Perez, ‘Whose Administrative Law Is It Anyway? How Global Norms Reshape the Administrative
State’(2013) 46(3) Cornell International Law Journal 456.
4. Anne-Marie Slaughter, ‘The Real New World Order’(1997) 76(5) Foreign Affairs 183, 184–5.
528 Federal Law Review 50(4)
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