THE HON MARK DREYFUS KC MP
ATTORNEY-GENERAL
CABINET SECRETARY
MEMBER FOR ISAACS
NATIONAL PRESS CLUB OF AUSTRALIA
Australia’s Money Laundering and Terrorism Financing National Risk Assessments
9 JULY 2024
Good afternoon everyone.
I begin by acknowledging the traditional owners of the land on which we meet, the Ngunnawal people, and pay my respects to their Elders, past and present.
I would also like to acknowledge Aboriginal and Torres Strait Islander people here today.
I am proud to be here today with AUSTRAC CEO Brendan Thomas to launch AUSTRAC’s new National Risk Assessments.
I acknowledge the Secretary of the Attorney-General’s Department Katherine Jones PSM, the heads of National Intelligence Community agencies in my portfolio – Australian Federal Police Commissioner Reece Kershaw APM and Australian Criminal Intelligence Commission Chief Executive Officer Heather Cook – the Commonwealth Director of Public Prosecutions Raelene Sharp KC, as well as the Director-General of the Australian Security Intelligence Organisation Mike Burgess, and other distinguished guests.
Introduction
It is a disturbing but inescapable fact that Australia is at serious risk of exploitation by criminals seeking to launder illicit funds.
Each year billions of dollars are generated from illegal activities such as drug trafficking, tax evasion, people smuggling, cybercrime and arms trafficking.
And we know that the proceeds from these crimes are used to fund further serious crimes such as terrorism, child abuse and human trafficking.
Today’s release of AUSTRAC’s two new National Risk Assessments is vitally important.
The National Risk Assessment on terrorism financing and the National Risk Assessment on money laundering are detailed assessments of the risks, threats, vulnerabilities and consequences of these crimes in Australia.
We have strong and committed agencies, including AUSTRAC, taking up the fight against money laundering and terrorism financing.
In recent years AUSTRAC’s work has led to severe penalties on businesses which failed to ensure their services were not used for money laundering or to finance terrorism. These record-breaking penalties are a clear warning to businesses that the Australian Government take breaches of our money laundering legal framework seriously.
Penalties are just one important element of this system. We must use all the tools available to us to combat the serious and harmful impacts of money laundering and the criminal activities it funds.
AUSTRAC also provides vital help to our law enforcement and intelligence agencies including the Australian Federal Police and the Australian Criminal Intelligence Commission which are dedicated to targeting money laundering and organised crime groups.
This cooperation has had considerable success in recent years.
Over the past four years the Commonwealth Director of Public Prosecutions secured more than 240 convictions for money laundering offences.
Just last year the AFP-led Criminal Assets Confiscation Taskforce restrained criminal assets worth over $352 million – a staggering $214 million more than the previous year. Real estate accounted 65 per cent of those assets. This is a concerning statistic, but it’s not surprising. We know the laundering of large and illicit sums through real estate – both residential and commercial – is an established money laundering method in Australia.
Catching and prosecuting these criminals is important. So is holding businesses to account when they are asleep at the wheel. But it is a far better outcome for us all if we can protect everyone in our community and prevent these crimes from occurring in the first place.
The need for reform
The anti-money laundering and counter-terrorism financing regime is one of our best tools to protect businesses and individuals from criminal exploitation, and stop funds flowing to terrorist organisations and other criminal enterprises – strengthening our economy in the process.
It has long concerned me that the former Coalition Government failed to keep our laws up to date. As a result, Australia is falling short of meeting the standards required to combat criminal abuse of our financial system, and is at increased risk of becoming a haven for money laundering.
It’s now almost a decade since Australia was found to have significant deficiencies in our ability to combat money laundering and counter terrorism financing.
In 2015, the Financial Action Task Force, the global financial watchdog, found that Australia had failed to comply with a number of critical standards. In particular, Australia’s failure to extend our anti-money laundering and counter-terrorism financing regime to ‘tranche-two’ entities including lawyers, accountants and real estate agents was singled out.
This was followed by the former government’s own review in 2016 that again found there were ‘a number of deficiencies’ in Australia’s regime.
This is the same government that was in power when it was revealed in 2017 Westpac had breached anti-money laundering laws more than 23 million times. And yet, the former government still failed to act.
Despite these clear warnings that our economy is at risk of being exploited by criminal gangs and terrorists, the former government dragged its heels and failed to do anything of substance for the entire nine years it was in office.
As I have stressed, money laundering underpins and enables many other forms of criminal activity. The former government allowed Australia to become vulnerable – a playground for organised crime.
As a result of its failure to act, the former government has now put Australia at risk of being ‘grey listed’ by the Financial Action Task Force for failing to meet minimum global standards. This could have serious economic and reputational consequences.
Australia was a founding member of the Financial Action Task Force in 1989, but is now one of just a handful of countries that are rated non compliant because of our failure to regulate tranche two entities.
In a separate report released today, the Financial Action Task Force has again singled out Australia for our continued non-compliance with global standards.
While other countries strengthened their defences against the proceeds of criminal and corrupt business practices over the last decade, the former government left the door wide open for illicit funds to flood into Australia.
The Albanese Government has no tolerance for corruption or illicit financing of any kind. We are committed to strengthening the system to prevent perpetrators financing serious crimes like drug trafficking, child abuse, terrorism and organised crime.
We are committed to regulating tranche two entities to prevent further abuse of our financial system.
We are also committed to simplifying the regime to make it easier for business.
We want to modernise the Anti-Money Laundering and Counter-Terrorism Financing Act to ensure it keeps pace with the increasingly digital, instant nature of our global financial system – closing the gaps that we know increasingly sophisticated, professional criminal organisations can exploit.
We demonstrated our commitment to this task in this year’s Budget, $166.4 million to implement these overdue reforms. This investment will enable AUSTRAC to implement the new simplified and expanded regime. This includes delivering comprehensive education and guidance to support tranche two businesses.
We are consulting closely with all interested stakeholders on these reforms. Last month, the Attorney General’s Department concluded a second round of public consultation. 128 submissions were received, and 43 targeted meetings with industry and government stakeholders have been held.
I thank the many industry representatives who have welcomed these reforms. We will continue to work with all stakeholders to ensure that the reforms are fit for purpose, and that businesses are supported and equipped to detect and prevent criminals from misusing their services.
Let me be very clear.
Opposing these reforms means aiding and abetting the criminal abuse of our financial system by drug traffickers, people smugglers, terrorists and those who exploit and abuse children.
Money laundering is not a victimless crime.
We have to act. We cannot afford further delay.
Money laundering allows criminals to profit from their offending. This is profit that can be reinvested to finance future crime. And so the criminal enterprise cycle continues.
These criminals are constantly looking for new ways to exploit our systems and launder the proceeds of their crime through Australian real estate and our economy more generally.
Opposing these reforms enables criminals to continue to engage in drug trafficking, terrorism and child exploitation and to profit from those serious crimes.
No legitimate business wants any part in this.
Risk assessments and criminal activity
The critical need for these reforms is reinforced by the Risk Assessments being released today.
The money laundering National Risk Assessment shows that criminals continue to exploit established and legal channels – such as cash, luxury goods, real estate, domestic banks, casinos and remittance services – to launder funds in Australia.
The Risk Assessments also flag a variety of high and very high vulnerabilities that threaten the effectiveness of Australia’s existing anti-money laundering and counter-terrorism financing regime.
Brendan will speak on why the insights and risk assessments provided by AUSTRAC should be heeded by industry and used to inform their identification and management of money laundering and terrorism financing risks.
Importantly, they also send a clear signal about high risk industries and the threats and vulnerabilities which need urgent attention.
These crimes are occurring across Australia and there are particular vulnerabilities in the industries included in the second tranche of our reforms. I’ll mention a few examples.
In the legal industry there was a recent major crime investigation by the Queensland Crime and Corruption Commission into a Gold Coast law firm. Four people were convicted of money laundering, fraud, and drug offences for possessing and supplying cocaine. A court found that the law firm was knowingly paid using the proceeds of drug trafficking.
In the real estate industry there was an investigation by the Australian Federal Police and Victoria Police into an organised crime syndicate that resulted in 52 people being charged with money laundering, proceeds of crime and other offences. Assets worth over $47 million were seized, including 60 properties and income generated from rental properties.
In a separate investigation, the Australian Federal Police seized more than 3,000 acres of Tasmanian farmland that was purchased by Chinese nationals using the proceeds of crime.
In the accounting industry AUSTRAC’s risk assessment highlights a recent example where an accountant provided advice and assistance to a criminal syndicate on how to avoid bank triggers and alerts for funds entering the Australian financial system from overseas institutions. Accountants located offshore were also used to establish companies in their local jurisdictions, including shell companies, to obscure the source of the funds transferred into Australia.
Conclusion
I want to thank Brendan and everyone at AUSTRAC for their continued work in safeguarding Australia from money laundering, terrorism financing and other serious crimes.
I thank AUSTRAC’s partners in law enforcement and intelligence agencies, and at the Office of the Director of Public Prosecutions.
We are a decade overdue on essential reform to combat money laundering in Australia. It is now critical that we act.
We need to stop the drug traffickers, terrorists and criminals who harm our children. We need to be vigilant against money laundering and terrorism financing risks and ensure that everyone does their part to stop these criminals from exploiting our economy to launder the proceeds of their crimes.
It is time to give criminals a run for their money.
ENDS
