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Australia not doing enough to counter money laundering, report finds

Australia is not doing enough to counter money laundering and tax avoidance, according to the 2020 Financial Secrecy Index.

Australia not doing enough to counter money laundering, report finds
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  • Maja Garaca Djurdjevic
  • February 20, 2020
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Although it is not traditionally regarded as a secrecy jurisdiction, Australia is ranked in 48th position in the 2020 Financial Secrecy Index out of a total 133 countries.

It accounts for less than 1 per cent of the global market for offshore financial services, making it a tiny player compared with other secrecy jurisdictions.

However, the Tax Justice Network's index suggested that Australia is not doing enough to stop illicit funds finding a safe heaven, taking a particular aim at its anti-money laundering laws.

In 2007, the federal government released draft legislation to extend anti-money laundering provisions to real estate agents in relation to the buying and selling of property, dealers in precious metals and stones, lawyers, accountants, notaries and company service providers. But this legislation was never implemented.

The government consulted on including these additional professionals and businesses in its anti-money laundering regime again at the start of 2017.

However, despite strong support for the measures from bodies concerned about money laundering and tax evasion, and little opposition from the businesses themselves, no public progress has been made on the issue.

Earlier this year, one of Australia’s big four banks came under focus for failing to detect money laundering.

In November, government financial intelligence agency AUSTRAC revealed that Westpac facilitated 23 transactions that allegedly breached anti-money laundering and counter-terrorism finance laws. The bank now faces the possibility of being fined over $1 billion.

In an effort to get on top of money laundering, the Tax Justice Network's report called for Australia to establish a beneficial ownership register, which it consulted on in 2017 but failed to implement.

The report also suggested that Australia needs to make publicly available country-by-country reports that disclose the amount a company pays in each jurisdiction it operates in. These are currently kept secret, which the Tax Justice Network opined is a shortfall.

“None of the information is made publicly available, which is a major shortcoming given that civil society plays an important part in scrutinising corporate tax behaviour,” it said.

Finally, the report urged the government to direct its attention to the introduction of a Director Identification Number, which would help reveal people who are acting as fronts for shell companies on a professional basis and help combat ‘phoenixing’ activities by companies.

A bill was placed into Parliament to implement this measure before the 2019 federal election, but lapsed once the election was called and has not been brought back to Parliament yet.

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