New anti-money laundering laws could mean prison for professionals

Sydney Criminal Lawyers


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Professionals could face jail time if they fail to undertake due diligence checks or report suspicious transactions.
Australia Criminal Law
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New laws are being enacted by the federal parliament that will extend the obligation to report transactions suggestive of  money laundering beyond financial institutions to a range of professionals including lawyers, accountants and real estate agents, meaning professionals could face prison time for failing to undertake due diligence checks and bring suspicious transactions to the attention of law enforcement agencies.

Australia: an easy target for money laundering

Foreign criminal groups have long seen Australia as a soft target for their  money laundering operations, injecting funds derived from criminal activity into businesses, luxury items and real estate in our nation – transactions which are often overseen and even facilitated by professionals.

This activity is believed to have contributed to high property values across the nation, making it even more difficult for everyday Australians to get into the property market.

The government's proposal seeks to deter so called 'tranche-two entities' such as lawyers, real estate agents, accountants and other professionals from turning a blind eye to suspicious transactions, potentially making them accountable for enabling  conduct that amounts to money laundering.

Concerning Numbers

The Australian Transaction Reports and Analysis Centre, or AUSTRAC, estimates that, in 2020 alone, $1 billion derived from criminal activity was laundered through the Australian real estate market by entities linked to China.

According to Federal Attorney General Mark Dreyfus, the new laws will reduce such activity by requiring tranche-two entities to conduct a list of checks and report conduct they view as indicative of money laundering.

Australian regulators assert that the issue of laundering money through investments in our nation is not limited to China, but the conduct also derives from Russia, as well as several Eastern European and South-East Asian countries, the latter including Cambodia and Vietnam.

These funds are said to be acquired through a broad range of criminal activities including human trafficking and the manufacture and  supply of illegal drugs.

Government claims new laws are in line with other nations

For decades, Australia has been behind many countries in terms of anti money laundering laws – being one of only five jurisdictions in over 200 that do not impose assessment and reporting obligations on tranche-two entities.

Under the new laws, however, members of professions that fall within the scope of mandatory anti money laundering reporting obligations will need to comply with the requirements or face hefty fines and even prison sentences.

The Attorney General says he is confident the laws will close a regulatory gap and bring Australia closer to its international obligations regarding money laundering and counter terrorism.

Lawyers voice concerns

The duty to report a client to law enforcement agencies over suspicions the person may be engaging in criminal conduct runs contrary to both a lawyer's  duty of confidentiality and potentially the duty to act in their best interests  .

In relation to the former, a lawyer is only permitted to disclose information obtained from a client in the courts of providing legal services in extremely limited circumstances. As to the latter, it is easy to see how it can be against a client's interests to be reported to authorities and criminally prosecuted.

The new laws represent a clear curtailing of a lawyer's ethical duties and protections afforded to clients, essentially requiring lawyers to inform on their clients, which can erode trust in legal professionals and result in clients being less than candid and forthright in their dealings with lawyers.

Such laws can be seen as just another move towards state control at the expense of individual liberties, potentially making it more difficult for clients to have their legal interests protected, while at the same time potentially driving a wedge between clients and their lawyers who, under the new laws, would be required in circumstances to make enquiries relating to the dealings of their clients which have the potential to erode trust.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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