Tranche Two Reforms and Consultation
In mid-2007, the Government commenced the consultation process for stage two of it proposed AML/CTF reforms.
These reforms are expected to extend Australia's AML/CTF regime to cover key professions which are referred to in the Financial Action Task Forces's AML/CTF standards but which were not covered by stage one reforms. This includes the legal profession.
Provided they are consistent with existing professional obligations and not unduly onerous or impractical, the Law Council does not object to reforms which are aimed at reducing the risk that legal practitioners might be unwittingly used to facilitate money laundering.
However, the Law Council opposes in principle reforms which go further and require legal practitioners to secretly inform on their clients to regulatory agencies.
The Law Council believes that if a suspicious transaction reporting obligation was imposed on legal practitioners, it would infringe upon client confidentiality and damage the important relationship of trust between lawyer and client. This relationship of trust, and the free flow of information it facilitates, is central to the effective administration of justice.
In mid-July 2007, the Attorney-General's Department released for comment some draft tables of "designated services" which will be covered by the stage two reforms.
While stage two reforms are intended to be directed at the legal profession, they are not intended to target the provision of all legal services.
In September 2007, the Law Council made a submission on the draft tables, which noted that the designated services were so broadly drafted that they extended beyond the activities required to be covered by the FATF standards.
A copy of the Law Council submission is available below.
In March 2008, the Law Council met with AUSTRAC and the Attorney-General's Department. A range of tranche two issues specific to the legal profession were discussed including:
Ensuring that only legal services covered in the FATF standards are included in AML/CTF legislation;
Integration of any AML/CTF obligations with existing regulation of the profession;
The inconsistency of suspicious matter reporting with the obligation of lawyer/client confidentiality; and
Exemptions for in-house lawyers.
Recognising the stress placed on business by the global financial crisis, in late 2008 the Government decided to suspend progress on tranche two reforms for a period.
In the interim, In meetings and correspondence wit the Attorney-General's Department and the Minister for Home Affairs the Law Council has continue to reiterate its position.