The establishment of an inquiry into the adequacy and efficacy of Australia’s Anti-Money Laundering/Counter-Terrorism Financing (AML/CTF) regime (Inquiry) is significant. Reporting entities will need to monitor the Inquiry closely, as will entities who are ‘at risk’ of falling within the ambit of Australia’s money laundering legislation (e.g. those who may be implicated by Tranche 2 reforms which may impact accountants, real estate agents and other gatekeeper professions).
The Senate Legal and Constitutional Affairs References Committee (Committee) is accepting written submissions until 27 August 2021 (and will publish a schedule of hearings in due course). Ordinarily, oral hearings would be held after the deadline for written submissions. The Committee is due to publish its report on 2 December 2021 (although there is the option for the Committee to delay this if it considers that more time is needed).
The functions and key powers of Senate committees are below.
Role of Senate committees
Senate committees investigate matters of public policy and scrutinise proposed legislation, government expenditure and administration. They fall into two categories – select and standing. The Committee tasked with the Inquiry is a standing committee. Each standing committee in fact comprises a pair of committees: a ‘legislation’ committee and a ‘references’ committee. The former conducts budget estimates hearings and reviews proposed legislation. The latter has references for ad hoc inquiries sent to it by the Senate as a whole (as occurred with the present Inquiry).
The Committee conducting the Inquiry is chaired by Labor Senator Kim Carr, with Liberal Senator Sarah Henderson as deputy chair. Labor and the Greens have a majority of votes on the Committee. In that context, there is a prospect that the actions (or perceived inaction) of the current government and its agencies will be the subject of significant scrutiny.
The Committee has issued a call for submissions by 27 August 2021. The Senate has given the Committee a deadline of 2 December 2021 to issue its report.
Witnesses and documents
The Committee decides whom to invite to appear as a witness at an oral hearing. In theory, Senate committees possess a full suite of coercive inquiry powers, and can compel the production of documents and the appearance of witnesses, pursuant to Standing Order 25(14).
Documents submitted, and evidence given, are covered by parliamentary privilege under the Parliamentary Privileges Act 1987 (Cth), meaning that they cannot, for most purposes, be admitted in evidence before a court or tribunal.
The Senate has adopted a number of procedures for the protection of witnesses, which are mainly contained in Senate Privilege Resolution 1. Witnesses are normally invited to appear, and are summonsed only when a committee makes a deliberate decision that a summons is necessary. A witness may object to answering any questions, and should state the grounds for the objection. The Committee will determine whether or not it will insist on an answer, having regard to the ground which is claimed.
In theory, the Committee could compel a witness to give evidence (or compel the production of a document) that was covered by client legal privilege.
In practice, however, when Senate committees deal with the private sector, they generally proceed without the use of coercive powers.
Hearings and publication of submissions
Committee hearings can be held in private session (in camera), though ordinarily they are open to the public and are broadcast live on the internet. Usually, also, written submissions are published on the committee’s website.
The chair will control the initial drafting of the report, though other members will be able to provide input. If Committee members disagree about the report’s contents, those in the minority may draft minority report(s), which are published alongside that of the majority.
Given the increased focus on financial crime in Australia, and the broad terms of reference of the Inquiry, we will closely follow the direction that the Committee process takes. The Committee’s report may well provide the impetus for legislative and other changes in this important policy domain.
In parallel, AUSTRAC’s continued engagement with its reporting entity population, and the publication of numerous guidance documents, is a reflection of the regulator’s increasing intent to meaningfully engage with reporting entities. It is likely that this aspect of AUSTRAC’s role will be considered by the Inquiry.
We would be pleased to assist you to understand your AML/CTF obligations and, as appropriate, to engage with the Committee over the course of the Inquiry.