Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2026
Mrs McINTOSH (Lindsay) (17:06): Overall, the coalition supports the Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2026. We certainly support its most fundamental objectives, because Australia's laws must keep pace with the rapidly changing nature of financial crime. The dynamics of money laundering, scams, organised crime and terrorism financing are constantly evolving and, as part of that, criminal organisations readily and regularly adapt.
They exploit new technologies, new payment systems, new financial products and new weaknesses in our regulatory framework, and, when those weaknesses emerge, governments and parliaments have an obligation to respond. That is especially important when we are dealing with technologies which allow money to move quickly, anonymously and through channels that are difficult for law enforcement agencies to trace.
Rightly and justifiably, the content of this bill seeks to address some of those emerging threats. Its most significant measure creates a new framework allowing the use of particularly high-risk financial mechanisms to be restricted or prohibited where they present an unacceptable risk of serious harm. It also updates Australia's terrorism financing laws to take account of offences relating to the financing of state sponsors of terrorism and makes a number of technical amendments to the broader anti-money-laundering and counterterrorism financing regime.
These are important and worthwhile objectives. However, as is so often the case when parliament considers legislation giving substantial new regulatory powers to government, supporting the objective does not mean we should be giving the government a blank cheque. The powers in this bill are significant.
They have potentially very substantial consequences for businesses, financial institutions and consumers. Accordingly, they need to be carefully designed, appropriately targeted and accompanied by proper safeguards. That is why the coalition believed this bill warranted proper parliamentary scrutiny and supported its referral to the Parliamentary Joint Committee on Intelligence and Security.
The subsequent PJCIS inquiry demonstrated the value of that approach. The committee heard from government agencies, industry, consumer representatives and other stakeholders, and that process identified both a genuine need for reform and a number of more specific ways in which the bill could and should be improved. At the core of this bill is the challenge posed by high-risk financial mechanisms.
One of the clearest examples is cryptocurrency ATMs. The growth of these machines in Australia has been extraordinary. According to material considered in developing these reforms, Australia has gone from having just 23 cryptocurrency ATMs in 2019 to more than 2,000 today.
AUSTRAC has also explored and identified a range of deeply concerning patterns in the way some of these machines are being used. The evidence is that a very high proportion of frequent cryptocurrency ATM transactions are associated with scams or money mule activity. At the same time, Australian financial institutions are confronting money mule activity on an enormous scale more generally.
To be more specific about that, banks across the country have collectively reported that they are now having to close tens of thousands of mule accounts annually. Behind these transactions, of course, are many everyday Australians who are losing their savings to scammers. There are organised criminal groups laundering the proceeds of crime and networks moving money for illicit purposes.
Potentially there are funds being moved in support of terrorism and other threats to our national security. The PJCIS ultimately concluded that there is a genuine gap in the existing law. AUSTRAC has powers directed towards individual reporting entities, but the existing framework is less capable of responding when the risk arises from a particular product, technology, service or delivery channel across an entire sector.
That is the gap that schedule 1 seeks to fill. Under the bill as introduced, the AUSTRAC CEO would be empowered through legislative instrument to restrict or prohibit a reporting entity from using a particular product, service, delivery channel or other mechanism to provide a designated service. The proposed power is broad and sweeping—in our view, too broad and sweeping, but I will return to that point shortly.
The new power could restrict the volume or value of funds transferred, regulate the method by which funds or virtual assets are transferred, and could restrict particular destinations. It could also impose other requirements designed to mitigate an identified risk. The general intention behind all of that is understandable.
If a new technology or financial product suddenly becomes a preferred vehicle for organised crime, governments should not necessarily have to wait years for the legislative framework to catch up. There needs to be an ability to respond, and to respond speedily. However, that brings us directly to the question of accountability, because the broader and more flexible a power becomes, the more important the safeguards surrounding that power become as well.
The bill, as introduced, would vest a significant power directly in the AUSTRAC CEO. The relevant threshold requires satisfaction that the high-risk mechanism has caused, will cause or is likely to cause significant harm to the Australian financial system or the Australian community, and that restricting or prohibiting it is necessary in the public interest. Those are substantial concepts.
However, terms such as 'significant harm' and 'public interest' necessarily leave considerable room for discretion. There are also provisions allowing the normal consultation process to be bypassed in exceptional or urgent circumstances. Even more significantly, a failure to comply with the consultation requirement would not itself invalidate the resulting legislative instrument.
That combination worried us from the outset, and it rightly attracted scrutiny from many external stakeholders as well. The coalition strongly supports giving our law enforcement and financial intelligence agencies the tools they need to discharge their responsibilities effectively. AUSTRAC undertakes enormously important work.
However, strong powers and strong accountability should not constitute competing objectives here. Indeed, properly designed accountability mechanisms would actually strengthen the legitimacy and durability of these powers. That is why one of the principal issues the coalition wanted to examine through the PJCIS process was whether a power of this magnitude should sit with the AUSTRAC CEO at all, or whether ultimate responsibility should rest with an elected minister who is directly answerable to this parliament.
The committee reached the same clear conclusion as our original one. Its first recommendation is that the bill be amended so that the proposed high-risk mechanism power is exercised by the responsible minister, acting on the advice of the AUSTRAC CEO. That represents a sensible improvement.
AUSTRAC would continue to provide the specialist intelligence, expertise and risk assessment, but the final decision to impose potentially far-reaching restrictions on an entire financial mechanism would be made by a minister accountable to the parliament and, ultimately, the Australian people. The committee also considered the consultation framework. Ordinarily, the bill requires at least 30 days of consultation with those reasonably likely to be affected, together with any relevant Commonwealth, state or territory regulator.
There is good reason to retain an emergency capacity where circumstances demand immediate action. Nobody wants government rendered powerless while criminals exploit an obvious and rapidly developing vulnerability or loophole. But emergency flexibility should not become an excuse for inadequate scrutiny.
The PJCIS therefore recommended greater transparency around consultation. Under its recommendation, details of submissions, meetings and other consultation, and AUSTRAC's response to recommendations received through that process would be published. That means parliament, affected businesses and the public would have a clearer picture of the evidence behind these decisions and the competing considerations that were taken into account.
Again, that is a practical safeguard rather than an impediment to effective regulation. The committee also identified the need for greater clarity around terminology within the broader AML/CTF framework, and that is important. Businesses cannot comply with laws they cannot reasonably understand.
Poorly defined obligations create costs, uncertainty and, ultimately, weaker compliance. The committee therefore recommended additional clarity around issues including the scope of professional services, the definition of senior managers, technology-neutral requirements concerning the passing on of information and further examples of the types of high-risk mechanisms intended to be captured.
Those recommendations reflect evidence heard from stakeholders about potential unworkability and unintended consequences. The objective must be a framework that is tough on criminal exploitation without imposing unnecessary or poorly targeted burdens upon legitimate businesses. In short, a well-designed AML/CTF regime concentrates regulatory effort where the risks are greatest, and a badly designed regime can drown legitimate business in compliance while sophisticated criminals simply adapt their practices.
The parliament should always be striving for the former. Another significant issue raised through the inquiry was the proposed commencement date of the changes encompassed in the bill. Affected industries are already dealing with considerable change arising from previous reforms to Australia's anti-money-laundering framework.
Many entities need to build new systems, train staff, establish compliance arrangements and fundamentally change from their business processes. Those things are already proving challenging. The coalition therefore listened carefully to stakeholders who argue that additional implementation time was necessary, and the PJCIS agreed.
It recommended that commencement of the new or amended obligations rising from this legislation be delayed until 1 July 2027, giving affected entities a more reasonable opportunity to establish systems and the actions needed to comply. That does not weaken the legislation; it helps ensure the legislation actually works. There is little value in creating obligations on paper if regulated entities are simply not given a realistic opportunity to implement them properly.
At the same time, the committee was very clear that the government should not use the implementation timetable as an excuse for inaction where an immediate threat is already apparent. That is particularly relevant to cryptocurrency ATMs. The committee specifically recommended that, pending passage of this legislation, the minister and AUSTRAC consider as a priority the merits of restricting or prohibiting cryptocurrency ATMs.
That reflects the seriousness of the evidence put before the inquiry and the potential need for further scrutiny and discussion about whether such bans would have any merit. Schedule 2 of the bill is also important. It updates the definition of 'terrorism financing' to encompass offences relating to financing a state sponsor of terrorism and state terrorist acts.
It also provides a mechanism for relevant sanctions offences under the Charter of the United Nations Act and Autonomous Sanctions Act to be incorporated into the framework. Those amendments are consistent with the need for Australia's financial intelligence regime to evolve alongside our national security laws. Schedule 3 then makes a series of more technical changes.
These include alterations to customer due diligence, politically exposed persons, legal professional privilege, international value transfers, registration requirements and information-gathering arrangements. Many of these changes arise from practical issues identified as earlier reforms have been implemented. Where those amendments simply compliance, clarify obligations and remove unintended regulatory burdens while maintaining the integrity of the system, they are welcome.
The broader principle underlying all of this is straightforward—Australia must have an anti-money-laundering and counterterrorism financing regime capable of dealing with the financial system we have today, not Australia's financial system of decades ago. Organised crime groups and scammers are more technologically sophisticated than they have ever been before, and those engaged in terrorism financing are constantly—and often successfully—searching for new methods of moving money outside conventional channels.
In our response to this, as lawmakers, we need to establish powers that are sufficiently strong to confront the threat but also well-enough structured to avoid unnecessary consequences. It would be remiss of us as a parliament not to continue asking searching and difficult questions about how those powers are exercised. That is why the PJCIS process has been worthwhile.
The committee did not conclude that this bill should be abandoned, quite the opposite in fact. It concluded that there is a real problem here that requires legislative action, and it therefore recommended that the bill be passed. However, it also identified concrete ways to improve it, and the coalition welcomes that approach.
We have engaged constructively with the government about the changes that should be made, and we welcome the recognition that the concerns raised through the committee process are legitimate and ought to be addressed. The coalition will always support serious, genuine and practical measures to crack down on money laundering, to disrupt organised crime, to stop scammers exploiting Australians and to prevent money being moved in support of terrorism, but it will also continue to insist that such laws are properly designed, proportionate and subject to appropriate ministerial and parliamentary accountability.
A very important part of making strong national security legislation is to make it endure. The coalition does support the objectives of this bill. We support its passage, subject to the improvements identified through the parliamentary scrutiny process, and we'll work constructively.
As part of that, we will allow passage of the bill through this House in the first instance; however, we will then move or support amendments designed to reflect the key PJCIS recommendations, namely the referral of the proposed new AUSTRAC CEO powers back to the minister and the deferral of the start date of some key measures to 1 July 2027. For all those reasons, I commend the bill to the House, and I look forward to the necessary revisions being made to it in the Senate.