Commonwealth of Australia Explanatory Memoranda

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ANTI-MONEY LAUNDERING AND COUNTER-TERRORISM FINANCING AMENDMENT BILL 2007

                       2004-2005-2006-2007




THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA




                             SENATE




ANTI-MONEY LAUNDERING AND COUNTER-TERRORISM
        FINANCING AMENDMENT BILL 2007




    SUPPLEMENTARY EXPLANATORY MEMORANDUM

                               AND

  CORRECTION TO THE EXPLANATORY MEMORANDUM




  (Circulated by authority of the Minister for Justice and Customs,
              Senator the Honourable David Johnston)
     SUPPLEMENTARY EXPLANATORY MEMORANDUM AND
     CORRECTION TO THE EXPLANATORY MEMORANDUM
    ANTI-MONEY LAUNDERING AND COUNTER-TERRORISM
           FINANCING AMENDMENT BILL 2007

GENERAL OUTLINE

The Government amendments to the Anti-Money Laundering and Counter-Terrorism
Financing Bill 2006 contain amendments to the Anti-Money Laundering and Counter-
Terrorism Financing Act 2006 (AML/CTF Act) and the Financial Transaction
Reports Act 1988 (FTR Act).

The amendments to the AML/CTF Act are to allow the Australian Secret Intelligence
Service (ASIS) to communicate AUSTRAC information to foreign intelligence
agencies.

The amendments to the FTR Act remove an unintended consequence of previous
amendments to the FTR Act that unintentionally prevent prosecutions under
section 31 of the FTR Act of any structuring offences that involve transactions under
the AML/CTF Act.

This Explanatory Memorandum also contains additional information on clause 2 of
the Bill and items 59-61 of Schedule 1 of the Bill.

FINANCIAL IMPACT STATEMENT

There are no anticipated financial impacts from these amendments.
NOTES ON CLAUSES

Item 1

This item amends the commencement table in clause 2 of the Bill in relation to
item 57A of the Bill. Item 57A amends the definition of `non-reportable cash
transaction' in the Financial Transaction Reports Act 1988 (FTR Act) and is inserted
by item 4 of the amendments to the Bill. Item 1 provides that clause 57A is to be
taken to have commenced on 13 December 2006 which is the day on which the earlier
amendment to the definition came into effect. The earlier amendment was made by
item 56 of the Anti-Money Laundering and Counter-Terrorism Financing
(Transitional Provisions and Consequential Amendments) Act 2006 (AML/CTF
Consequential Amendments Act). See explanatory memorandum on item 57A as to
justification for this retrospective commencement.


Item 2

This item is consequential on the insertion of clause 133A into the Anti-Money
Laundering and Counter-Terrorism Financing Act 2006 (the AML/CTF Act) by
item 3 of the amendments to the Bill. Item 2 ensures that disclosure under
section 133A is an exception to the prohibition against disclosure of AUSTRAC
information under subsection 127(2) of the AML/CTF Act.


Item 3

Item 3 inserts item 40A into the Bill. Item 40A in turn inserts clause 133A (When
the Director-General of ASIS may communicate AUSTRAC information to a
foreign intelligence agency) into the AML/CTF Act. Clause 133A mirrors Section
133 of the AML/CTF Act. Sub-clause 133A(1) authorises the Director-General of
ASIS to communicate AUSTRAC information to a foreign intelligence agency if the
Director-General is satisfied that the foreign intelligence agency has given appropriate
undertakings regarding confidentiality and use of the information.
Sub-clause 133A(2) enables the Director-General of ASIS to authorise an ASIS
official to access AUSTRAC information and communicate it to a foreign intelligence
agency on the Director-General's behalf.

Item 4

This item inserts item 57A into the Bill. Item 57A amends paragraph (c) of the
definition of `non-reportable cash transaction' in section 3(1) of the FTR Act. This
amendment overcomes an unintended consequence resulting from the earlier
amendment of the definition by item 56 of the AML/CTF Consequential Amendments
Act. Item 56 amended the definition of `non-reportable cash transaction' by
inserting paragraph (c) with the intention that future prosecutions for structuring
transactions to avoid the provisions of the FTR Act be taken under the FTR Act and
that future prosecutions for structuring transactions to avoid the provisions of the
AML/CTF Act be taken under the AML/CTF Act. It does this by excluding
prosecution under the FTR Act of cash transactions which would be designated
service transactions under the AML/CTF Act. However the offence under the
AML/CTF Act will not itself be fully operational until December 2008. This
amendment will remove any restriction on prosecution of structuring conduct under
FTR Act in the meantime. It does this by limiting designated service transactions to
those which occur after the commencement of the reporting obligations in Division 3
of Part 3 of the AML/CTF Act.

Item 1 gives the amendment at item 4 retrospective effect. This is justifiable because
the offence of structuring was a pre-existing offence in the FTR Act and it was always
intended that such conduct remain illegal. The restriction on prosecutions under the
FTR Act for structuring to avoid reporting requirements was an unintended effect of
item 56 of the AML/CTF Consequential Amendments Act and item 1 will ensure that
the amendment made by item 4 will remove any gap in time in the ability to prosecute
such conduct under the FTR Act. The period of retrospectivity will only be for the
period 13 December 2006 (when item 56 of the AML/CTF Consequential Act which
created the unintended effect came into force) and the date of commencement of this
Bill.

Correction to the Explanatory Memorandum to the Bill

Clause 2

After the final paragraph on clause 2 add the following paragraph:

Items 59 to 61 inclusive of Schedule 1 of the Bill which are referred to in item 7 of
the table are expressed to commence on 13 December 2006 because that is the date on
which all other references in the Financial Transaction Reports Act 1988 to the
former title of Director of AUSTRAC were amended to the current title of
AUSTRAC CEO. Items 59 to 61 inclusive are technical amendments which do not
make any change in the substantive law.

Items 59, 60 and 61 Paragraph 28(1)(a) and subsections 29(1) and 30(1)
                    AUSTRAC CEO

At the end of the paragraph add the following sentence:

Items 59, 60 and 61 commence on 13 December 2006 (see the explanatory
memorandum on clause 2).