The Australian government has abandoned the ambition of
remaining at the forefront of international anti-money-laundering policies. The
minister for justice and customs, Chris Ellison, made the admission in a keynote
speech to representatives of financial institutions at a KPMG-sponsored briefing
in Sydney three weeks ago.

Australia, which was one of the first members of the
international Financial Action Taskforce on money laundering, established in
1989 to set up international standards for anti-money-laundering laws, failed an
assessment by FATF in October last year on whether its anti-money-laundering regime
was sufficiently robust.

The government is facing another assessment in October this
year and according to an insider, Ellison is “clearly feeling the pressure”.
Since the speech, given at the KPMG offices in Sydney on 21 February, Ellison
has already indicated the government has taken opposition from the financial
sector to proposed stringent anti-money-laundering rules and requirements on
board, with Ellison stating he had recommended parts of the legislation be
rewritten and parts be redrafted to make it more “risk-based”.

Under the amended proposal, financial institutions such as
banks, financial planners, credit unions and equity brokers, would not be
required to make the same identity checks on every product, with new
requirements varying according to the degree of risk attached to a particular
product. Financial services companies have steadfastly argued the non-amended
proposed legislation would be too cumbersome for them and too costly.

Ellison was invited to deliver the keynote address at the
second of three “Anti-Money-Laundering Morning Briefing Sessions” before an
audience of 100 compliance officers from banks, fund managers, life insurers and
other financial institutions.

Our source, who was present at the meeting, says, “I found
it quite surprising [Ellison making the admission]. Australia is one of the
founding members of FATF.”

The international Financial Action Taskforce on money
laundering was originally set up by the Group of Seven nations from G7 member
states, the European Commission and eight other countries, such as Australia. It
now includes 31 countries and territories, and two regional bodies.