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New laws are being enacted by the federal parliament that
will extend the obligation to report transactions suggestive
of
money laundering beyond financial institutions to a range
of professionals including lawyers, accountants and real estate
agents, meaning professionals could face prison time for failing to
undertake due diligence checks and bring suspicious transactions to
the attention of law enforcement agencies.
Australia: an
easy target for money laundering
Foreign criminal groups have long seen Australia as a soft
target for their
money laundering operations, injecting funds derived from
criminal activity into businesses, luxury items and real estate in
our nation – transactions which are often overseen and even
facilitated by professionals.
This activity is believed to have contributed to high property
values across the nation, making it even more difficult for
everyday Australians to get into the property market.
The government’s proposal seeks to deter so called
‘tranche-two entities’ such as lawyers, real estate agents,
accountants and other professionals from turning a blind eye to
suspicious transactions, potentially making them accountable for
enabling
conduct that amounts to money laundering.
Concerning
Numbers
The Australian Transaction Reports and Analysis Centre, or
AUSTRAC, estimates that, in 2020 alone, $1 billion derived from
criminal activity was laundered through the Australian real estate
market by entities linked to China.
According to Federal Attorney General Mark Dreyfus, the new laws
will reduce such activity by requiring tranche-two entities to
conduct a list of checks and report conduct they view as indicative
of money laundering.
Australian regulators assert that the issue of laundering money
through investments in our nation is not limited to China, but the
conduct also derives from Russia, as well as several Eastern
European and South-East Asian countries, the latter including
Cambodia and Vietnam.
These funds are said to be acquired through a broad range of
criminal activities including human trafficking and the manufacture
and
supply of illegal drugs.
Government
claims new laws are in line with other nations
For decades, Australia has been behind many countries in terms
of anti money laundering laws – being one of only five
jurisdictions in over 200 that do not impose assessment and
reporting obligations on tranche-two entities.
Under the new laws, however, members of professions that fall
within the scope of mandatory anti money laundering reporting
obligations will need to comply with the requirements or face hefty
fines and even prison sentences.
The Attorney General says he is confident the laws will close a
regulatory gap and bring Australia closer to its international
obligations regarding money laundering and counter terrorism.
Lawyers voice
concerns
The duty to report a client to law enforcement agencies over
suspicions the person may be engaging in criminal conduct runs
contrary to both a lawyer’s
duty of confidentiality and potentially the duty to act in their
best interests .
In relation to the former, a lawyer is only permitted to
disclose information obtained from a client in the courts of
providing legal services in extremely limited circumstances. As to
the latter, it is easy to see how it can be against a client’s
interests to be reported to authorities and criminally
prosecuted.
The new laws represent a clear curtailing of a lawyer’s
ethical duties and protections afforded to clients, essentially
requiring lawyers to inform on their clients, which can erode trust
in legal professionals and result in clients being less than candid
and forthright in their dealings with lawyers.
Such laws can be seen as just another move towards state control
at the expense of individual liberties, potentially making it more
difficult for clients to have their legal interests protected,
while at the same time potentially driving a wedge between clients
and their lawyers who, under the new laws, would be required in
circumstances to make enquiries relating to the dealings of their
clients which have the potential to erode trust.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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