Commonwealth of Australia Explanatory Memoranda

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COMBATING THE FINANCING OF PEOPLE SMUGGLING AND OTHER MEASURES BILL 2011

                                 2010 - 2011







               THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA







                                   SENATE




  COMBATING THE FINANCING OF PEOPLE SMUGGLING AND OTHER MEASURES BILL 2011





                    SUPPLEMENTARY EXPLANATORY MEMORANDUM



             Amendments to be moved on behalf of the Government



            (Circulated by authority of the Minister for Justice,
                     the Honourable Brendan O'Connor MP)










GENERAL OUTLINE

The Combating the Financing of People Smuggling and Other Measures Bill
2011 amends the Anti-Money Laundering and Counter Terrorism Financing Act
2006 (AML/CTF Act), the Financial Transaction Reports Act 1988 and the
Privacy Act 1988.

The primary purpose of the Bill is to reduce the risk of money transfers by
remittance dealers being used to fund people smuggling ventures and other
serious crimes by introducing a more comprehensive anti-money laundering
and counter-terrorism financing regulatory regime for the remittance
sector.  The measures in the Bill will improve intelligence and protect
against criminal infiltration of the remittance sector which is recognised
both internationally by Australian law enforcement agencies as posing a
high money laundering and terrorism financing risk.

The Bill will also expand the list of designated agencies with which the
Australian Transaction reports and Analysis Centre (AUSTRAC) can share
financial intelligence, enable reporting entities to use credit reporting
data to verify the identity of their customers, and allow the AUSTRAC CEO
to grant exemptions from obligations in the FTR Act.

These Government amendments insert new subsections 49(1A) and 49(1B) into
the AML/CTF Act to incorporate changes to the expanded information
gathering power introduced in the Bill and address recommendations made by
the Senate Scrutiny of Bills Committee in its report on the Bill.

The amendments introduce controls over the information gathering power
currently in the Bill.  Firstly, the ability to seek further information
from a reporting entity or any other person is subject to the decision
maker holding a reasonable belief that the person has knowledge, control or
possession of the information or document.  Secondly, it introduces a
requirement that a person from whom information is sought (other than a
person who is the reporting entity who made the initial report to AUSTRAC)
must be given 14 days to comply with the notice to produce, unless it is
necessary and reasonable in the circumstances to impose a shorter period.

FINANCIAL IMPACT

The proposed amendment in the Bill has no financial impact on Government
revenue.
NOTES ON AMENDMENTS

Proposed subsections 49(1A) and 49(1B)

In response to the inquiry of the Senate Scrutiny of Bills Committee, this
amendment inserts new subsections 49(1A) and 49(1B) after section 49(1) of
the AML/CTF Act.

Section 49 of the AML/CTF Act empowers the AUSTRAC CEO to request further
information from a reporting entity when the reporting entity has
communicated information to the AUSTRAC CEO about a suspicious matter
(section 41), a threshold transaction (section 43), or an international
funds transfer instruction (section 45).  Request for further information
must be by written notice.

Items 16-18 of the Bill amend subsection 49(1) and paragraphs 49(1)(h) and
(i) to enable the AUSTRAC CEO to request further information from a
reporting entity or any other person.  The proposed amendments introduce
some controls around this extended information gathering power.

Subsection 49(1A) provides that a notice requesting further information or
documents may only be issued if there are reasonable grounds to believe
that the recipient has knowledge of the information, or possession or
control of the document sought.  This government amendment will ensure that
a person is not subject to this coercive power without proper justification
and is in keeping with broad government policy and the recommendation of
the Senate Scrutiny of Bills Committee.

In addition to the safeguard offered by subsection 49(1A), paragraph
49(1B)(a) also introduces a minimum 14 day compliance period, providing the
recipient is not the reporting entity who initially communicated the
suspicious matter, threshold transaction or international funds transfer
report to AUSTRAC.  The distinction between the treatment of reporting
entities and other persons is appropriate because the reporting entity that
made the initial report would already be aware of the matter (having
brought it to the attention of AUSTRAC) and information sought would be
more readily accessible due to the record keeping obligations they have as
a reporting entity.  In contrast, where a notice to produce is issued to
another person they are likely to need more time to comply with the notice,
and 14 days is generally considered as the minimum time in which a response
can reasonably be expected.

However, the ability to require a shorter timeframe under paragraph
49(1B)(b) recognises that AUSTRAC and law enforcement will often require
prompt responses so that they can effectively carry out investigations.
Instances where it may be necessary and reasonable for a section 49 notice
to require a person to provide further information in less than 14 days
would include situations where there was imminent harm to the person, for
example terrorism or kidnapping investigations.