By Dr Doron Goldbarsht and Stuart Clark AM -
Snapshot
- By learning from similar jurisdictions that have implemented Financial Action Task Force recommendations for the legal profession, Australia can develop a tailored anti-money laundering model.
- Designing an anti-money laundering model specific to Australia will enhance confidence in the financial system, improve security, achieve a favourable Financial Action Task Force rating and protect legal professional privilege.
- Addressing the task force’s concerns is inevitable. Our proposed model aims to strike a balance by incorporating lawyers into the anti-money laundering regime while upholding legal principles.
The increasing involvement of lawyers in money laundering (‘ML’) activities has raised significant concerns (D Goldbarsht, ‘Reverse engineering legal professional privilege in a globalising world – the Australian case’ 23(3) Journal of Money Laundering Control 677, 678). One of the key recommendations from the Financial Action Task Force (‘FATF’), the organisation that set the global standard in anti-money laundering (‘AML’), is that it urged all countries to ensure that lawyers thoroughly identify, assess and mitigate ML risks. This includes documenting their assessments, maintaining their currency, and establishing appropriate mechanisms to share risk assessment information with competent authorities and self-regulatory bodies.
However, aspects of this recommendation pose challenges due to conflicts with legal professional privilege, a fundamental right that is crucial in upholding justice. Despite these challenges, over 200 jurisdictions worldwide have implemented new or amended regulatory frameworks to include lawyers, aligning themselves, in some manner, with FATF standards. Australia currently finds itself among a small group of five nations – China, the United States, Haiti and Madagascar – that has yet to regulate lawyers in line with FATF’s standard.
Recent events suggest this may soon change. In March 2022, the Senate Legal and Constitutional Affairs Committee recommended extending the AML regime to include the legal profession. This commitment to strengthen Australia’s AML framework was further emphasised in the 2023 Budget where the Australian Government allocated $14.3 million over four years to support policy development and legislative reforms aimed at bolstering the country’s defences against illicit financing. Notably, $8.6 million over three years has been dedicated to AUSTRAC, the financial intelligence agency, to enable it to drive change. This funding will facilitate the development of regulation and consultation with stakeholders to bring Australia’s AML regime into line with contemporary standards.
