EXPLANATORY STATEMENT
Select Legislative Instrument 2007 No. 214
Subject - Financial Transaction Reports Act 1988
Financial Transaction Reports Amendment Regulations 2007
(No. 1)
Section 43 of the Financial Transaction Reports Act 1988 (the Act) provides that the Governor-General may make regulations, not inconsistent with the Act, prescribing all matters required or permitted by the Act to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to the Act.
The Act provides for the establishment of the Australian Transaction Reports and Analysis Centre (AUSTRAC) to monitor financial transactions. The Financial Transaction Reports Regulations 1990 (the Principal Regulations) set out various matters necessary to give effect to the Act.
The purpose of the Regulations is to remove one provision (regulation 11CA) that was inserted into the Principal Regulations by the Financial Transaction Reports Amendment Regulations 2006 (No. 1) as an interim measure pending the enactment of the Anti‑Money Laundering and Counter-Terrorism Financing Bill 2006. The Bill received Royal Assent on 12 December 2006.
Details of the Regulations are set out in the Attachment.
The Act specifies no conditions that need to be satisfied before the power to make the Regulations may be exercised.
The Regulations are a legislative instrument for the purposes of the Legislative Instruments Act 2003.
The Regulations commence on the day after they are registered on the Federal Register of Legislative Instruments.
The Minute recommends that Regulations be made in the attached form.
Authority: Section 43 of the Financial Transaction Reports Act 1988
ATTACHMENT
Details of the Financial Transaction Reports Amendment Regulations 2007
(No. 1)
Regulation 1 – Name of Regulations
This regulation provides that the title of the Regulations is the Financial Transaction Reports Amendment Regulations 2007 (No. 1)
Regulation 2 – Commencement
This regulation provides for the Regulations to commence on the day after they are registered. As the effect of the amendments is the removal of a regulation that has been made redundant by later legislation there is no issue about the retrospective commencement of the Regulations.
Regulation 3 – Amendment of Financial Transaction Reports Regulations 1990
This regulation provides that the Financial Transaction Reports Regulations 1990 (the Principal Regulations) are amended as set out in Schedule 1.
Schedule 1 – Amendments
The Financial Transaction Reports Act 1988 (the FTR Act) was due to be amended on 14 December 2006 by the Anti-Terrorism Act (No.2) 2005 (the AT 2 Act) to add sections 24E and 24F that set up a register of remittance services. However, the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (the AML/CTF Act) also included provisions setting up a register of remittance services outside the FTR Act thereby making proposed sections 24E and 24F of the FTR Act remittance services provisions redundant. The AML/CTF Act received Royal Assent on 12 December 2006 and section 3 of the AML/CTF Act commenced prior to 14 December 2006. The commencement of this section prior to
14 December 2006 meant that proposed sections 24E and 24F of the FTR Act did not ever commence.
Regulation 11CA of the Principal Regulations prescribed particulars which were to be provided by a cash dealer to be included in the register of remittance services. Regulation 11CA of the Principal Regulations was made by the Financial Transactions Reports Amendment Regulations 2006 (No.1). As the provisions to which regulation 11CA did not commence, regulation 11CA of the Principal Regulations is redundant and cannot have any operation.
Item [1] – Regulation 11CA
This item omits regulation 11CA from the Principal Regulations. Regulation 11CA of the Principal Regulations defines the ‘prescribed particulars’ that certain cash dealers are required to provide under paragraphs 24E(1)(a) and 24F(1)(b) of the FTR Act.
Sections 24E and 24F of the FTR Act were inserted by Schedule 9 to the AT 2 Act, but will never commence. As a consequence, regulation 11CA of the Principal Regulations is redundant and may be removed.
Overview
The Financial Transaction Reports Amendment Regulations 2007 (No. 1) were enacted to amend the Financial Transaction Reports Regulations 1990 in response to changes brought about by the Anti-Money Laundering and Counter-Terrorism Financing Act 2006. The Financial Transaction Reports Act 1988 established the Australian Transaction Reports and Analysis Centre (AUSTRAC) to monitor financial transactions. The Act allows for the creation of regulations to facilitate its implementation, and these regulations were amended to remove a provision that had been rendered redundant by the newer legislation. Specifically, the Financial Transaction Reports Amendment Regulations 2007 (No. 1) remove regulation 11CA from the Principal Regulations, which pertained to the registration of remittance services, as these provisions were superseded by the Anti-Money Laundering and Counter-Terrorism Financing Act 2006. The Regulations were made under the authority of section 43 of the Financial Transaction Reports Act 1988 and are a legislative instrument as defined by the Legislative Instruments Act 2003. They came into effect on the day following their registration on the Federal Register of Legislative Instruments, with no specific conditions required for their enactment.
Scope and Application
The Financial Transaction Reports Act 1988 (FTR Act) applies to individuals, entities, industries, and conduct involved in financial transactions within Australia. It establishes the Australian Transaction Reports and Analysis Centre (AUSTRAC) to monitor these transactions. The Act encompasses financial transactions conducted by financial institutions, including banks, credit unions, and other entities involved in monetary exchanges. Its geographic reach is national, applying across all states and territories of Australia, as well as to Australian entities operating overseas. The Act's application extends to transactions that could potentially be used for money laundering or financing terrorism, making it relevant to a broad spectrum of industries including banking, real estate, and professional services. The Financial Transaction Reports Amendment Regulations 2007 (No. 1) provide for the removal of certain redundant provisions from the Financial Transaction Reports Regulations 1990, ensuring the regulations remain current and relevant following the enactment of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006. These Regulations streamline and update the application of the FTR Act to reflect legislative changes and remove outdated or redundant requirements.
Key Provisions
The Financial Transaction Reports Amendment Regulations 2007 (No. 1) amend the Financial Transaction Reports Regulations 1990 (Principal Regulations) to remove regulation 11CA (Regulation 3). Regulation 11CA, which was added by the Financial Transaction Reports Amendment Regulations 2006 (No. 1), required cash dealers to provide particulars to be included in a register of remittance services. This requirement was made in anticipation of the Anti-Terrorism Act (No.2) 2005 (AT 2 Act) amending the Financial Transaction Reports Act 1988 (FTR Act) to include sections 24E and 24F, which were intended to establish a register of remittance services. However, these sections never came into effect because the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act) included provisions for a register of remittance services outside the FTR Act, rendering sections 24E and 24F redundant. As regulation 11CA refers to provisions that will never be enacted, it is itself redundant and has no legal effect (Schedule 1, Item [1]).
The Regulations impose no new obligations on entities or individuals beyond the existing requirements of the Financial Transaction Reports Act 1988 and the Financial Transaction Reports Regulations 1990. The removal of regulation 11CA means that cash dealers are no longer required to provide the specific particulars outlined in this regulation. Instead, they are subject to the general obligations and reporting requirements stipulated in the Principal Regulations, which include the obligation to report suspicious matters and the requirement to maintain records of financial transactions.
There are no specific offences, penalties, or civil/criminal consequences outlined in the Financial Transaction Reports Amendment Regulations 2007 (No. 1) itself. However, the Financial Transaction Reports Act 1988 does provide for offences and penalties for non-compliance with its reporting and record-keeping requirements. For example, failure to report a suspicious matter can result in a civil penalty of up to $21,000 for an individual and $105,000 for a body corporate, and in the case of serious or repeated non-compliance, criminal penalties may apply. The specific penalties for breaches of the FTR Act are detailed in the Act itself, and the removal of regulation 11CA does not alter these existing penalties.