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2019-2022
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
SENATE
ANTI-MONEY LAUNDERING AND COUNTER-TERRORISM FINANCING
AMENDMENT (INCREASED FINANCIAL TRANSPARENCY) BILL 2022
EXPLANATORY MEMORANDUM
(Circulated by authority of Senator McKim)
ANTI-MONEY LAUNDERING AND COUNTER-TERRORISM
FINANCING AMENDMENT (INCREASED FINANCIAL
TRANSPARENCY) BILL 2022
OUTLINE
This Bill would require the government to introduce legislation into the Parliament by
30 September 2022 to:
• amend the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (the
Act) to include designated services provided by lawyers, conveyancers, accountants,
high-value dealers, real estate agents, and trust and company service providers; and
• establish a public register of the ultimate beneficial ownership (UBO) of companies
and foreign companies registered in Australia, and of other legal persons and legal
arrangements as the Minister considers appropriate, which may include foundations
and trusts.
The subsequent passage of that legislation would improve Australia's compliance with the
recommendations of the Financial Action Task Force (FATF) that establish the International
Standards on Combating Money Laundering and the Financing of Terrorism & Proliferation.
In particular, it would support Australia's compliance with:
• Recommendations 22 and 23 regarding the application of customer due diligence,
record-keeping and reporting requirements to designated non-financial businesses and
professions (DNFBPs); and
• Recommendations 24 and 25 regarding the transparency and beneficial ownership of
legal persons and arrangements.
This would reduce the risk of the Australian financial system being used for money
laundering and terrorist financing and assist in achieving the FATF's aim of protecting the
international financial system from misuse.
Expanded designated services
6. The current non-regulation of certain DNFBPs under the Act generates a significant
gap in Australia's anti-money laundering and counter-terrorism financing (AML/CTF)
regulatory regime that provides opportunities for criminals to misuse DNFBP services to
launder illicit funds.
7. The extension of the AML/CTF regulatory regime to the remaining DNFBPs would
deliver substantial benefits:
• a current regulatory 'blind spot' would be removed and a broader range of
information would be collected and reported to the Australian Transaction Reports
and Analysis Centre (AUSTRAC), and shared with law enforcement;
• suspicions about transactions would be reported earlier in the transaction chain than
occurs currently, providing earlier opportunities for law enforcement to disrupt
criminal activity, and
• more accurate information about the beneficial ownership of funds and assets would
be collected when complex legal structures are first established.
Ultimate beneficial ownership register
8. Company structures, including foundations and trusts, can be used to disguise the
identity of those involved in illicit activities, including tax evasion, money laundering,
bribery, corruption, and terrorism financing. This is achieved through mechanisms such as
the use of shell companies, the use of complex ownership and control structures, the use of
bearer shares and share warrants and of nominee shareholders where the nominator is not
disclosed.
9. The exploitation of these vehicles results in gains for criminals and financial losses to
the Australian economy. It may also affect public confidence and the perceived legitimacy
and validity of business and company regulatory processes and requirements. It also risks
confidence in the tax system.
10. Establishing a public UBO register is consistent with the interpretative note to
Recommendation 24 of the FATF's International Standards on Combating Money
Laundering and the Financing of Terrorism & Proliferation, and would improve
transparency around who owns, controls and benefits from companies. This will assist with
preventing the misuse of companies for illicit activities.
NOTES ON CLAUSES
Clause 1: Short Title
1. Clause 1 is a formal provision specifying the short title of the Bill.
Clause 2: Commencement
2. Clause 2 specifies that the Bill commences the day after the Bill receives the Royal
Assent.
Clause 3 - Schedules
4. Each Act specified in a Schedule to this Act is amended or repealed as is set out in the
applicable items in the Schedule. Any other item in a Schedule to this Act has effect
according to its terms.
Schedule 1--Amendments
Anti-Money Laundering and Counter-Terrorism Financing Act 2006
Item 1 - After Section 249
11. This item inserts the requirement for the Minister to introduce into the Parliament by
30 September 2022 legislation to expand designated services included in the Act, and to
establish a public UBO register.
12. The designated services specified in the proposed new section 249A of the Act are
consistent with the DNFBPs identified in Recommendation 4.6 of the 2016 report on the
statutory review of the Act.1
13. The proposed new subparagraph 249B(a)(i) requires legislation providing for a UBO
register to apply to each company and foreign company registered under the Corporations
Act 2001.
14. The proposed new subparagraph 249B(a)(ii) requires legislation providing for a UBO
register to also apply to other legal persons and legal arrangements as the Minister considers
appropriate, which may include foundations and trusts.
15. The proposed new paragraph 249B(b) requires the UBO register to be publicly
available.
1
Attorney-General's Department, Report on the statutory review of the Anti-Money Laundering and Counter-
Terrorism Financing Act 2006 and associated Rules and Regulations, April 2016.
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Anti-Money Laundering and Counter-Terrorism Financing Amendment (Increased
Financial Transparency) Bill 2022
This Bill is compatible with the human rights and freedoms recognised or declared in the
international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny)
Act 2011.
Overview of the Bill
This Bill would require the government to introduce legislation into the Parliament by
30 September 2022 to:
• amend the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (the
Act) to include designated services provided by lawyers, conveyancers, accountants,
high-value dealers, real estate agents, and trust and company service providers; and
• establish a public register of the ultimate beneficial ownership (UBO) of companies
and foreign companies registered in Australia, and of other legal persons and legal
arrangements as the Minister considers appropriate, which may include foundations
and trusts.
Human rights implications
Article 17 of the International Covenant on Civil and Political Rights states that no one shall
be subject to arbitrary or unlawful interference with their privacy or correspondence.
The common law right of legal professional privilege is regarded as a fundamental human
right derived from the right to privacy and the right to protection from the State.
Designating services provided by lawyers engages this human right.
However, legal professional privilege does not apply to communications made in furtherance
of an offence or an action that would render a person liable for a civil penalty.
The legislation that this Bill instructs the government to introduce should be drafted to ensure
that the proper application of legal professional privilege remains in place, particularly in
relation to AML/CTF reporting requirements.
Conclusion
The Bill is compatible with human rights because to the extent that it may limit human rights,
those limitations are reasonable, necessary and proportionate.
Senator McKim