Australian economy faces ‘severe consequences’ unless crime cash curbed, official warns

A key player in the fight against transnational crime says lawyers, real estate agents and others who have resisted reporting dodgy transactions need to be brought into account.

A key government official in charge of stopping money laundering by international crime gangs has warned Australia will suffer “severe economic consequences” unless it forces lawyers, accountants and real estate agents to report suspicious transactions.

Alex Engel, an assistant secretary at the Attorney-General’s Department, said Australia needed to have new laws in place before the country’s compliance with global standards is tested, which is due between 2025 and 2027.

Mr Engel is the head of the department’s transnational crime branch, which he said was responsible for “money, guns, drugs and bikies”.

Under anti-money laundering and counter terror finance laws, banks, casinos, gold bullion dealers and crypto exchanges have to report suspicious transactions to Australia’s financial intelligence agency, AUSTRAC.

However, Australia is one of just five countries in the world that have not brought in so-called “tranche 2” reforms forcing lawyers, accountants, real estate agents and other professionals to report the same types of transactions.

According to Attorney-General Mark Dreyfus, the others are China, Haiti, Madagascar and the United States.

Attorney-General Mark Dreyfus. Picture: Martin Ollman

Speaking at an Association of Certified Anti-Money Laundering Specialists conference in Sydney this week, Mr Engel said that “in those five countries that haven’t done it, we’re not in good company”.

He warned that the international body that sets global standards, the Paris-based Financial Action Task Force, would take action if Australia failed to bring in tranche 2.

“We obviously don’t want to make Australia a target for laundering illicit funds, so significant regulatory gaps and vulnerabilities will impact our reputation and will have severe economic consequences, largely from the FATF itself, depending if we’re marked down, but [it] also affects our economic and business environment and investment,” he said.

The reforms have been strenuously opposed by the Law Council of Australia, which says they are “inconsistent with fundamental common law doctrines and principles that underpin the professional obligations and functions of lawyers in Australia”.

However, there are signs the profession may be wavering, with representatives of AUSTRAC telling estimates hearings last month that they had “very productive discussions with representatives of the Law Council” about bringing lawyers into the fold.

Mr Engel told the conference the government planned to take a “phased approach” to introducing new laws so that industry was not confronted with a wall of new rules.

However, he warned that the upcoming international evaluation to be conducted by the FATF set a “backstop” by when the new laws needed to be in place.

Alex Engel, deputy secretary Attorney-General's Department, responsible for transnational crime branch. Picture: Supplied

Australia passed its last evaluation, in 2015, but the review found significant reform was needed to improve regulation.

In the run-up to the evaluation, the then-head of the FATF, Australian Roger Wilkins, warned that tranche 2 reforms were “a fairly clear thing Australia is required to do under the recommendations and hasn’t done”.

However, progress stalled under the previous Coalition government.

“To be gentle with our last review, I would say that we didn’t exactly pass with flying colours, so there’s some things we have to do from that stage,” Mr Engel told the ACAMS conference.

“But the standards have been lifted since then.”

He said the government was also considering reducing the threshold at which gambling businesses have to report cash transactions from $10,000 to about $4000.

“We are doing that because we see that as a high-risk sector,” he said.

Rules covering reporting by crypto exchanges are also set to be tightened because cryptocurrencies such as bitcoin are frequently used to move “ill-gotten gains from fraud or scams,” he said.

The Albanese government on Friday appointed Air Vice-Marshal Darren Goldie as the country’s first national cybersecurity coordinator following a series of data breaches at companies including Optus and Medibank that exposed the personal data of thousands of Australians, potentially making them more vulnerable to fraud and scams.