Year

2012

Degree Name

Doctor of Philosophy

Department

Faculty of Law

Comments

Australia is one of the countries that have been active in criminalising money laundering (ML) activities, particularly when it passed the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act), and when it established AUSTRAC (the Australian Transaction Reports and Analysis Centre) as the financial intelligence unit (FIU) and the regulator of the Australian AML system in 1989. The Financial Action Task Force (FATF) evaluated the Australian AML system in October 2005 (before passage of the AML Act in 2006) and found a considerable number of shortcomings, one of those being that Australia was partially compliant (PC) with a number of important aspects in regard to its AML regime. This includes AUSTRAC‘s inability to enforce compliance. It noted that even where AUSTRAC had limited powers to enforce compliance these have been utilised very infrequently. This thesis assesses the operational capacity of AUSTRAC‘s enforcement mechanism in regard to non-compliance with reporting obligations.

This thesis contextualises the actual review process of activities that have been undertaken in Australia (after issuing the AML/CTF Act of 2006) to enhance the ability of AUSTRAC to apply the most effective enforcement powers regarding compliance with reporting obligations. These activities failed to address a number of major shortcomings that have, nevertheless, been explored by FATF in its mutual evaluation reports. This thesis further argues that, while the Australian AML system has shortcomings, there exist a number of factors (some more amenable to change than others) that will make it more difficult for Australia to comply with existing and future FATF Recommendations if the scenario remains largely the same. These factors include: the struggle of various entities‘ to understand and apply the risk based approach (RBA), the limitations of the AML training programs for reporting entities, and the disconnection in the relationship between AUSTRAC and its partner agencies.

This thesis will consider the benefits that AUSTRAC enforcement mechanism could gain — in terms of increasing its level of effectiveness — from examining the enforcement mechanisms of other countries‘ FIUs as well as the enforcement mechanisms of other Australian regulatory agencies in regard to non-compliance behaviour.

Finally, this thesis suggests that while a number of recommendations and practical solutions for AUSTRAC, its partner agencies and reporting entities can be reliable options to achieve increased effectiveness for the Australian AML system, any such initiative is more likely to deliver sustainable positive outcomes when it contributes to enhancing this system in general and the AUSTRAC enforcement mechanism in particular.

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