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The Federal Government is currently engaged in reforming Australia's Anti-Money Laundering/Counter Terrorism Financing (AML/CTF) regime.
The main thrust of the reforms is to impose customer due diligence, reporting, record keeping and training obligations on entities that provide services which may facilitate money laundering.
Tranche one of the reforms aims to target the financial sector and has been largely implemented through the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 with the final set of obligations under that Act commencing on 12 December 2008. The Law Council expressed concern to the Government that because of the broad drafting of the legislation some services provided by lawyers may have been covered by Tranche one. Consequently, the Government made an Exemption Rule covering lawyers in relation to "designated remittance services" and is considering a rule defining an "exempt legal practitioner service" to exclude any other inadvertent coverage of lawyers in tranche one.
Tranche two of the reforms aims to target a range of other sectors including lawyers. Tranche two legislation is currently under development by the Government which has committed to consultation with the Law Council in relation to the legislation.
From the outset of these reforms the Law Council has been proactively engaged in lobbying the Government to ensure that any obligations imposed on legal practitioners are consistent with existing professional obligations and not unduly onerous.
The Law Council has submitted that the reforms should be precisely targeted so that they only capture the provision of services which are preparatory to or give effect to transactions through which money may be laundered. The reforms should not target legal services in general, nor low risk services or customers.
The Law Council has also consistently submitted that legal practitioners must not be subject to a suspicious transaction reporting obligation that would require them to inform on their clients to regulatory agencies. The Law Council has argued that a suspicious transaction reporting obligation would infringe upon client confidentiality and damage the important relationship of trust between lawyer and client.
The Law Council will continue to consult with government as it progresses with the reforms.
