Sun. Apr 11th, 2021

Regulation HK

Financial Regulator

Australia Lags Regional Peers on DNFBP Regulation: Report

2 min read

Australia is sending a message to financial criminals around the world that its lawyers, accountants and property market are open for business.

Australia is sending a message to financial criminals around the world that its lawyers, accountants and property market are open for business, according to Nathan Lynch, APAC manager for Thomson Reuters Regulatory Intelligence.

About USD 2 trillion is laundered through Australia each year, legitimising profits from human trafficking, illicit drug dealing, arms smuggling, child exploitation, and political corruption, among other crimes.

According to Lynch, the AFP (Australian Federal Police) and AUSTRAC have been increasingly gathering evidence that lawyers, accountants and real estate agents  – the so-called gatekeeper professions – have been knowingly and actively involved in criminal activity in Australia.

Yet, Australia has for 15 years defied international obligations to extend AML/CTF regulations to cover DNFBPs (designated non-financial businesses and professions). The so-called ‘Tranche 2’ reforms have “languished” in Home Affairs since December 2017.

Australia is now one of only six FATF (Financial Action Task Force) member countries that fails on all three of the recommendations relating to DNFBPs, and has fallen behind New Zealand and Singapore in the global Corruption Perceptions Index.

Australia’s failure to pass its Tranche 2 legislation was expected to be discussed at the FATF’s February Plenary, however this year’s delegation was led by representatives from Home Affairs, Lynch writes. “AUSTRAC has been ordered to take a back seat while its political masters in the Department of Home Affairs drive the critical international relationship with the FATF.”

Lynch writes that AUSTRAC s being “muzzled” – despite having delivered taxpayers more than AUD 2 billion in penalties for AML breaches in three years, and having triggered a cultural and leadership overhaul across corporate Australia.

Meanwhile, New Zealand has forged ahead with its framework for identifying money laundering and regulating DNFBPs, having realised that financial crime was costing legitimate businesses far too much each year. “Within years New Zealand passed both tranches of its AML/CTF regime, leapfrogging Australian policymakers in the process,” Lynch says.

“As the FATF dithers and Australia’s ferocious watchdog remains mogged and muzzled, financial criminals the world over are getting a clear message. Australia’s lawyers, accountants and property market are open for business. Any business.”

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