The 2023 budget has allocated funds for action on Anti‐Money Laundering and Counter‐Terrorism Financing (AML) laws, including a beneficial ownership register to “record who ultimately owns, controls, and receives benefits from a company or legal vehicle operating in Australia”.
There is some unfortunate background to this.
The 2022 Bill
As I reported earlier, the Anti-Money Laundering and Counter-Terrorism Financing Amendment (Increased Financial Transparency) Bill of February 2022 was an understandable but ludicrous attempt to force the government to belatedly attend to Australia’s anti-money laundering and other such obligations. Australia has become an international recalcitrant in that field, over some years of inaction. See Australia on a slide? – Murrays Legal
The 2022 Bill was in response to a 2016 recommendation to introduce certain law to counter money laundering and terrorist financing – “The Minister must, before 30 September 2022, cause to be introduced into the Parliament a Bill for an Act to …” amend the Anti‐ Money Laundering/Counter‐Terrorism Financing Act 2006 (Cth) (AML/CTF Act). It was even referred to the Senate Selection of Bills Committee, which itself deferred consideration of the Bill to its then next meeting. See Australia’s response to money laundering and terrorist financing – a Bill for a Bill – Murrays Legal
While it was a spurious bill to start with, it does provide an outline of some of the laws that may now be proposed.
Lawyers, real estate agents etc
It would have required the government to establish a public register of the ultimate beneficial ownership (UBO) of companies and of other legal persons and legal arrangements as the Minister considered appropriate, such as foundations and trusts. Significantly, it would also have required compliance by “Designated Non-Financial Business and Professions” being certain types of non-financial businesses identified as being susceptible to AML/CTF issues, including lawyers, conveyancers, accountants, high-value dealers, real estate agents, and trust and company service providers.
The 2023 budget
Now, in the federal budget announced on 9 May 2023, moneys have been allocated for AML and related measures: see Budget Paper No 2. Budget Paper No. 2: Budget Measures
The government says it will provide $14.3 million over 4 years from 2023–24 to
“support policy and legislative reforms to harden Australia against illicit financing and evaluation (sic) of Australia’s anti-money laundering framework”.
That funding includes $8.6 million over 3 years from 2023–24 to the Australian Transaction Reports and Analysis Centre (AUSTRAC) to
“develop and consult stakeholders (sic) on legislative reforms to modernise Australia’s anti-money laundering and counter-terrorism financing regime and support preparation for, and participation in, the evaluation of Australia’s regime against global standards by the Financial Action Task Force”.
What this seems to be saying is that the government has committed funds to evaluate Australia’s anti-money laundering framework and make policy and legislative changes to improve it, in light of standards set by the Financial Action Task Force (FATF), of which Australia is a member.
An evaluation of Australia’s framework has been made and is on the record, internationally. FATF is the global money laundering and terrorist financing watchdog, which monitors and reports on countries’ attention to its recommendations on AML and related laws. See Australia (fatf-gafi.org)
FATF reports that Australia is compliant with 12 of FATF’s recommendations, largely compliant with another 12 recommendations, but it remains only partially compliant with 10 recommendations and is non-compliant with another 10.
As a result, Australia has been placed in “an enhanced follow-up process” by FATF and it “must report back regularly about the progress it has made in addressing the technical compliance deficiencies …”. While Australia “has a mature regime for combating money laundering and terrorist financing, … certain key areas remain unaddressed”. The effectiveness of Australia’s actions to combat money laundering and terrorist financing will be assessed in a forthcoming 5th round of mutual evaluations by FATF.
The funding for AUSTRAC, and Attorney-General’s, seems to be to have them prepare Australia’s laws for that further evaluation by FATF.
As well, the Budget allocates $1.9 million over two years from 2023–24 to establish a public registry of “beneficial ownership of companies and other legal vehicles, including trusts”. This related to the 2022 Bill.
It refers to a 2022 Treasury consultation on the design features for the first phase of a publicly available beneficial ownership register.
“Making this available on a public register is intended to increase transparency and discourage the use of complex structures that avoid legal requirements and obscure tax liabilities”.
Treasury explains that implementation of a beneficial ownership register would broadly align Australia with international approaches to transparency of beneficial ownership information. It acknowledges that
“Australia is not ranked highly against international benchmarks for the collection and disclosure of beneficial ownership information, including those set out by the [FATF] [and that] Australia’s ranking in the [OECD] Global Forum on Transparency and Exchange of Information could also be improved”. Country monitoring – OECD.
In future phases, the government says it intends to consult on approaches to disclosure of beneficial ownership held through other legal vehicles, such as trusts, and the centralisation of information in a single public registry.
Trust law and corporate insolvency
Meanwhile the Parliamentary Joint Committee’s Corporate Insolvency Inquiry has taken submissions on the reform of the intersection of trust law and corporate insolvency, including as to the creation of a trusts register. It is due to report by 30 May 2023. That topic has also been the subject of a consultation by Treasury, in 2021, with no response to date. Clarifying the treatment of trusts under insolvency law | Treasury.gov.au