The Labor party is considering more stringent anti-money laundering and counter-terrorism financing (AML/CTF) laws, including extending protections against dirty cash to so-called ‘gatekeepers’ of the financial services and general corporate industries, including, the real estate, accounting, trust/company service provider and legal professions. Australia is one of just three major developed countries that have not subjected gatekeepers to the remit of its AML/CTF law, which has led to calls for progress on the reforms.

The real estate sector, in particular, has been identified as a significant arena for reform. It is widely considered that proceeds of crime from overseas entities is laundered through the purchase of Australian real estate.

What may the reforms entail?

The ‘Tranche 2’ reforms have been in the works for quite some time. Gatekeepers covered by the considered reforms will likely need to:

• identify and manage their money-laundering and terrorism-financing risk through risk-based procedures and controls;
• establish, maintain and carry out procedures for customer due diligence (including, where applicable, establishing the identity of beneficial owners of non-individual entities, such as companies and trusts);
• report suspicious matters to AUSTRAC on an ongoing basis;
• keep records of its compliance; and
• conduct introductory and ongoing training.

Issues for professional privilege

Lobby groups have fiercely opposed the ‘Tranche 2’ reforms in Australia for quite some time. Legal professional privilege is a cornerstone of the legal profession, and lawmakers will need to tread carefully to avoid its abrogation through statute. To this end, the Australian government may follow its United Kingdom counterparts and the Financial Action Taskforce’s (FATF) in introducing legislation that exempts lawyers from reporting under ‘privileged circumstances’.

Next steps

The Australian Financial Review reports that the government is expected to settle its position on the Senate committee’s recommendations this month.

The above post is merely general commentary and is not legal advice.