The Australian Transaction Reports and Analysis Centre (AUSTRAC) is the domestic watchdog which polices Australia’s anti-money laundering and counter-terrorism measures, and acts as Australia’s Financial Intelligence Unit (FIU).
It is responsible for ensuring compliance with key legislation, particularly the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) and the Financial Transactions Reports Act 1988 (Cth).
In its capacity as FIU, AUSTRAC ensures that financial intelligence relating to serious criminal activity is disseminated as appropriate to state and federal law enforcement agencies and, if necessary, to foreign governments.
The intention is to ensure that perpetrators of activities including significant tax fraud and tax evasion, terrorism financing or general organised crime are successfully detected, prosecuted and punished. Of course, there are significant risks associated with sharing potentially sensitive information with foreign governments.
So what safeguards are in place to protect Australia’s national interests and citizens during this process?
Circumstances in which AUSTRAC information can be disseminated
In AUSTRAC’s policy on Communication of AUSTRAC Information to a Foreign Country, the AML/CTF Act sets out the circumstances in which the CEO of AUSTRAC is able to pass on information to foreign states.
Information is only eligible to be disseminated if a foreign government has requested it for purposes of:
- Gathering intelligence or pursuing an investigation in relation to offences including money laundering, terrorism financing or other serious crimes.
- Assessing or investigating compliance with regulatory obligations.
The AUSTRAC CEO can also volunteer information if it is likely to be of assistance to a foreign government in relation to a serious crime including money laundering or terrorism funding.
The safeguards governing information sharing
An important safeguard is set out in section 132 of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth).
Before any information is conveyed, the CEO must be satisfied that:
- The foreign government has provided required undertakings as set out in the legislation.
- It is appropriate to pass on the information in all the circumstances.
Generally, information is only passed on to members of the Egmont Group of Financial Intelligence Units, the international organisation aimed at facilitating cooperation between relevant agencies to combat terrorism financing and money-laundering internationally. If a foreign state is not a member of the Egmont Group, satisfactory circumstances for the exchange of information must exist.
In order to ensure that any information is appropriately passed on by AUSTRAC, the CEO must give specific consideration to the following:
- Australia’s international obligations to take steps to combat terrorism financing and money laundering, both domestically and internationally.
- The need for Australia to use information obtained by AUSTRAC in order to assist with international relations.
- Maintaining the integrity of financial systems.
- Reducing crime nationally and internationally.
- Meeting regulatory requirements without imposing unnecessary and unrealistic burdens on reporting entities.
- The merits of a risk-based approach.
- Ensuring economic efficiency.
- Maintaining privacy.
- Principles of competition.
In certain circumstances, AUSTRAC may elect not to release the requested information. These include situations where:
- The request is not sufficiently linked to the investigation of significant criminal activities.
- Australia’s national or security interests could be jeopardised.
- The release of the information could have a significant adverse impact on an Australian individual or business.
- Oher circumstances where the CEO of AUSTRAC considers it inappropriate to do so.
It should also be noted that AUSTRAC has equal rights to request information from international counterparts.
What are the required undertakings?
Even once these factors have been taken into account, before the CEO of AUSTRAC can provide any information to foreign governments, the intended recipient of the information must provide several undertakings via an Authorised and appropriate official:
- To maintain the confidentiality of the information.
- Agreeing that the use of the information will be appropriately controlled.
- Ensuring that the information is used only for the intended purpose.
The terms of any agreement to provide information are recorded in information exchange instruments, which may contain additional undertakings as agreed by the parties.
It is important to note that these instruments are agreed in good faith only and cannot be considered legally binding.
In order to effectively tackle the worldwide problems of money laundering, terrorism financing and financial crime, it can be both extremely helpful and necessary to pass information between international law enforcement agencies and governments. However, it is essential that Australia’s national, legal and ethical interests are protected at all times. This is why there are safeguards in place to regulate how and when information can be shared with foreign governments.