Anti-money laundering, counter-terrorism financing reform

17 March 2010

During the year, to meet international obligations, the Commonwealth Attorney-General’s Department is reconsidering the extension of anti-money laundering/counter-terrorism financing legislation (AML/CTF) to the legal profession.

This legislation has already been applied to the financial services industry in Australia which has brought about obligations on businesses, including:

  • undertaking customer due diligence (identification of clients, verification of identity and ongoing monitoring of transactions);
  • confidential reporting to AUSTRAC of suspicious client matters, threshold transactions and international funds transfer instructions;
  • record-keeping relating to transactions and identification procedures; and
  • establishing and maintaining an AML/CTF compliance program.

Solicitors in the UK have also been subject to AML/CTF obligations for several years and the Law Society for England and Wales surveyed its members to determine compliance costs. While response rates have been low, they have indicated that UK firms:

  • have spent between £4,000 and £1.5 million developing their AML systems;
  • spend between £1,000 and £800,000 on salaries for staff dedicated to AML compliance;
  • have spent up to £250,000 setting up consumer due diligence systems;
  • spend up to £100,000 a year on staff training;
  • experienced loss of fees for time spent considering and making disclosures up to £300,000 a year; and
  • spent between £26,800 and £1,035,000 a year on quantifiable AML-related costs.

The Law Council of Australia (LCA) is leading advocacy on the issue on behalf of all its constituent bodies, including the Queensland Law Society, and has said it is opposed to reforms inconsistent with existing professional obligations or that require legal practitioners to secretly inform on their clients to regulatory agencies.

Shortly, the Australian Institute of Criminology will be conducting a survey of legal practices via the LCA’s constituent bodies in Victoria, New South Wales, Queensland and the ACT to help inform policy-making in relation to the reforms to the AML/CTF legislative regime that may extend to include certain transactions in the legal profession.

For more information: UK Law Society paper on costs and benefits of AML compliance, the Federal Attorney-General’s Department AML page, and the Law Council of Australia’s AML page.