Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2026
Mr MONCRIEFF (Hughes) (10:51): Australians rightly expect to have confidence in the financial sector. While we used to think about terrorism, foreign interference, organised crime, money laundering, people smuggling and espionage as diverse and separate threats, this is no longer the case. More and more, our security agencies are warning of the convergence, coexistence and overlapping trends in Australia's threat landscape.
Australia's national security architecture has historically been segmented into distinct categories. The Australian Security Intelligence Organisation handles counterespionage and counterterrorism. The Australian Federal Police tackles transnational organised crime.
AUSTRAC monitors financial compliance and the Australian Border Force guards our physical points of entry. In the modern world, we can no longer continue to combat complex threats through siloed agencies. Today, our security agencies, including ASIO, the AFP and the Australian Criminal Intelligence Commission, warn of unprecedented convergence.
Organised crime networks act not only to profit from illicit substances or extortion. They can also carry out services desired by hostile foreign intelligence services. Foreign powers can use criminal networks to conduct politically motivated arson, track down dissidents and execute acts of violent intimidation.
Conversely, terrorist cells and extremists can utilise the infrastructure and supply chains of organised crime, including illegal firearm networks, identity fraudsters and untraceable financial channels to plan and enact their aims. Consider the real manifestations of this risk in recent years. The appalling attack on the Adass Israel Synagogue was not an isolated act of hate.
It highlighted how radicalised individuals and malevolent actors seek out untraceable financial services to carry out targeted violence against the Australian Jewish community. Likewise, the discovery of weapons, improvised explosives and tactical gear in the Dural caravan incident demonstrated how illicit arms dealing, financing and extremism can merge into public safety threats on the outskirts of Sydney.
The surge in the illicit tobacco market has fuelled shocking violence in recent weeks and months, prompting strong enforcement action to crush the organised criminals involved. Money is the fuel that powers the transactions behind all these incidents. Anonymous cash is critical to these operations.
Illicit enterprise cannot function without the ability to move cash into untraceable digital value. Money laundering is the functional engine of violence and subversion in Australia. The Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2026 delivers on the reforms announced by the Minister for Home Affairs at the National Press Club last October to crack down on money laundering through high risk mechanisms, particularly crypto ATMs.
When crypto is purchased using cash through crypto ATMs, our agencies have limited capacity to trace those transactions, even though there may be limited identification to some extent. Criminal syndicates know this. They exploit the gap between cash and digital ledgers to wash illicit money with alarming efficiency.
Australia is currently ranked third in the world for the number of crypto ATMs. A mere six years ago, there were 23 crypto ATMs operating in Australia. Today there are around 90 times that number.
Over 2,000 crypto ATMs are now spread across the country in shopping centres, convenience stores and servos. There are around 150,000 transactions facilitated by crypto ATMs, at a value of around $275 million, and 99 per cent of these transactions are deposits, putting cash into the machine in exchange for digital cryptocurrencies. This is a massive vulnerability across our payments system.
Not all these transactions are problematic or reflect illegal behaviour. Cryptocurrencies are here to stay, and many people use them as a legitimate investment instrument. But crypto ATMs are a covert and convenient means for avoiding detection by security, intelligence and law enforcement agencies.
We know that AUSTRAC data shows that these machines are overwhelmingly used by scammers, money mules and syndicates funnelling money offshore. In some cases, they are coercing vulnerable Australians, typically seniors, into feeding their savings through these channels under the influence of deceptive investment scams. This bill introduces targeted amendments to the Anti-Money Laundering and Counter-Terrorism Financing Act 2006.
It equips our authorities with the modern statutory tools needed to combat modern financial crime. The bill establishes a high-risk mechanism framework, granting authorities the power to restrict or prohibit the use of high-risk products, services, delivery channels and things that criminal actors exploit to harm our financial system and our community. This bill empowers AUSTRAC, enabling the AUSTRAC CEO to issue general sector-wide restrictions or prohibitions on these high-risk mechanisms, subject to clear public interest conditions.
It modernises counterterrorism-financing definitions by amending section 5 of the act to explicitly reference new offences introduced into the Criminal Code Act 1995 for financing a state sponsor of terrorism, and it enhances operational clarity, improving provisions introduced under our previous landmark reforms. In October last year, the Minister for Home Affairs announced that the government would introduce legislation to give AUSTRAC the statutory power to restrict or prohibit high-risk products, services and delivery channels.
This bill fulfils that promise. Under schedule 1 of the bill, a high-risk mechanism is defined as any high risk product, service or delivery channel used by reporting entities to provide designated services. This squarely encompasses cryptocurrency ATMs.
To ensure that this broad regulatory authority is exercised with the appropriate procedural fairness and transparency, the bill establishes a structured decision-making framework. When considering whether a restriction or prohibition is necessary in the public interest, the AUSTRAC CEO must take into account specific statutory matters. These include the nature and effect of the harm being caused to the financial system or the Australian community; the effect the proposed restriction will have in mitigating or eliminating that harm; whether there are legitimate alternative channels to provide the service safely; and any additional matters prescribed by regulations.
The framework also mandates a minimum 30-day consultation period with affected parties, industry bodies and state and federal agencies before any final order is enacted. Of course, there may be urgent circumstances where immediate risk mitigation is paramount, but this provision helps ensure that these powers are exercised with appropriate prudence and care. This power is intended to support a flexible, risk based response to emerging and evolving money-laundering and counterterrorism-financing risks while still allowing legitimate entities the freedom to innovate.
It's not intended to restrict or prohibit a delivery channel merely because it involves digital assets, speculative activity or financial risk. We aren't interested in stifling technological innovation or dictating how Australians choose to invest. This legislation is about dismantling the regulatory gaps in which organised criminals thrive.
Schedule 2 addresses another critical pillar of our national security architecture: stopping the flow of funds to terror. It amends the definition of 'financing of terrorism' in section 5 of the act, which aligns our anti-money-laundering laws with the new offences introduced under the Criminal Code Amendment (State Sponsors of Terrorism) Act 2025. The nature of state sponsored terrorism and foreign aggression is ever evolving.
When state actors or state financed entities engage in acts of terror and subversion, our financial regulatory framework must have the legal coverage to identify, freeze and interdict any financial pipelines supporting those actions. Australia's terrorism-financing legislation has been built around the threats we faced in the early 2000s. At the turn of the century, Australia grappled with threats from non-state actors such as al-Qaeda and Daesh operating in small, decentralised cells.
Traditional counterterrorism-financing mechanisms focused on detecting small cash transfers through illicit hawala networks to purchase equipment or fund travel expenses. Over time, Australia's threat landscape has shifted and reflects a heightened presence of state sponsored terrorism. Under our 2025 reforms to the Australian Criminal Code, we established a legislative framework that allows the Governor-General, on the advice of the Federal Police and the Minister for Foreign Affairs, to officially list foreign state entities as state sponsors of terrorism, including actors such as the Islamic Revolutionary Guard Corps.
These amendments have made it a severe criminal offence to interact with or finance these state entities. However, the AML/CTF Act's core regulatory terms had not yet been updated to match this new framework. Schedule 2 of this bill fixes the compliance mismatch that AUSTRAC and reporting entities faced, where an act that might constitute financing a state sponsored terror activity under the Criminal Code did not automatically trigger the statutory supervisory, reporting and asset-freezing powers that exist under the AML/CTF regime.
By updating the definition in the AML/CTF Act, schedule 2 grants AUSTRAC and reporting entities such as banks, remittance providers, digital asset exchanges and gatekeeper professions the statutory authority to target state sponsored financial channels. State backed proxies rely on local financial nodes to pay for their operations. Denying these actors access to Australia's banking system raises their costs and the risks for any intelligence operations that these actors may wish to conduct on Australian soil.
It also represents an important step in protecting diaspora communities. State sponsored terror frequently uses hired proxies to intimidate, track and attack political dissidents, human rights advocates and religious minorities. Cutting off financial flows hampers these transnational campaigns of repression.
Aligning our counterterrorism-financing definitions with those of international partners, including our Five Eyes allies and the Financial Action Task Force, also ensures smoother tracking and intelligence sharing when state actors attempt to engage in cross-border money-laundering schemes. In a world where criminals can exploit gaps in communication between the countries in which they operate, these provisions ensure closer collaboration to achieve our shared aims and manage shared threats.
They complement our government's efforts to ensure a comprehensive alignment across the regulatory space, including our Criminal Code, sanction regimes and anti-money-laundering and counterterrorism-financing enforcement mechanisms. Schedule 3 of the bill clarifies the operation of these provisions. Following the passage of our major AML/CTF reforms in 2024, our government has worked closely with reporting entities to get the implementation right.
This bill provides regulatory certainty regarding several technical points, lowering compliance costs for honest businesses while ensuring that our enforcement agencies have clear and unambiguous laws with which to hold bad actors to account. National security does not begin or end at our coastlines. Crime and terror do not respect borders.
In the 21st century, national security cannot be separated from financial security. The threats we face in the form of organised crime, foreign interference, state sponsored terrorism and violent extremism are bound together by intricate networks of anonymous finance. The Albanese Labor government recognises that the first and principal responsibility of government is the security of our citizens.
This bill is a decisive step forward in defending Australia's sovereignty, the integrity of our payment system and public safety. This is a government that is not allowing the organised crime networks to determine our health policy, and this is a government that is taking seriously enforcement action against organised crime. No longer can we afford to view financial crime in isolation from the major risks we face.
The modern security environment calls on us to treat money laundering as the engine driving transnational crime, foreign interference, state sponsored terror and organised crime. We are taking the necessary steps to protect Australians and strengthen our financial system. By targeting money laundering, closing the crypto ATM loophole, modernising our terrorism financing laws and giving AUSTRAC the powers it needs, this bill advances the security and social cohesion of our community.
Our message to organised crime syndicates and foreign hostile actors is clear: Australia is closed to illicit enterprise and will deploy the full suite of our regulatory apparatus and security agencies to combat illicit enterprise. I commend this bill to the House.