Explanatory Memorandum
(Circulated by authority of the Attorney-General, the Hon Mark Dreyfus KC MP)SCHEDULE 11 - REPEAL OF THE FINANCIAL TRANSACTION REPORTS ACT 1988
Part 1—Repeals
Financial Transaction Reports Act 1988
Item 1 – The whole of the Act
947. This Item repeals the whole of the FTR Act.
948. The 2016 Statutory Review recommended the FTR Act should be repealed, and AML/CTF obligations should be consolidated under the AML/CTF Act to establish a single regime. The 2016 Statutory Review noted that the operation of the FTR Act alongside the AML/CTF Act creates overlap and confusion for government, industry and the public, without any demonstrable benefit. Repeal of the FTR Act would also allow for more efficient use and application of AUSTRAC resources, enabling greater focus on a single AML/CTF system.
949. Repealing the FTR Act would also have the effect of deregulating the remaining cash dealers that have obligations under the FTR Act, including motor vehicle dealers, sellers of traveller's cheques and offshore online remitters. These remaining cash dealers provide low risk services that no longer reflect the current state of sectors prone to money laundering and terrorism financing as multiple decades have passed since the FTR Act came into effect. This deregulation excludes solicitors that offer a proposed designated service to be captured under Schedule 3 of the Bill.
Part 2—Consequential amendments
Division 1—Amendment of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006
Anti-Money Laundering and Counter-Terrorism Financing Act 2006
Item 2 – Section 5 (paragraph (g) of the definition of AUSTRAC entrusted person )
950. This Item makes a minor consequential amendment to paragraph (g) of the existing definition of 'AUSTRAC entrusted person' in section 5 the AML/CTF Act to omit 'repealed section 40A of the', and substitute it with 'section 40A of the repealed'.
Item 3 – Section 5 (note to the definition of AUSTRAC entrusted person )
951. This Item inserts 'repealed' before 'Financial' in the existing note to the definition of 'AUSTRAC entrusted person' in section 5 of the AML/CTF Act. This note refers to the FTR Act which is being repealed. The reason for adopting this amendment, as opposed to repealing the note entirely, is because this section will continue in operation. It is critical to maintain the note as a reference point confirming that the former office of the Director of AUSTRAC was established under the FTR Act.
Item 4 – Section 5 (paragraph (d) of the definition of AUSTRAC information )
952. This Item inserts ', as in force immediately before its repeal' after '1988' in paragraph (d) of the existing definition of 'AUSTRAC information' in section 5 of the AML/CTF Act. This paragraph refers to the FTR Act which is being repealed. The reason for adopting this amendment, as opposed to repealing the paragraph entirely, is because this section will continue in operation. It is critical to maintain the paragraph as a reference point to when FTR Act information was considered to be AUSTRAC information.
Item 5 – Subsection 49(1)
953. This Item inserts 'of this Act, or a reporting entity communicated information to the AUSTRAC CEO under subsection 16(1) or (1A) of the repealed Financial Transaction Reports Act 1988' after 'CEO under section 41, 43 or 45' in subsection 49(1) of the AML/CTF Act. The reason for adopting this amendment is because investigating officers are intended to continue to have the ability to provide notices for further information on reports made under section 16 of the FTR Act. For example, AUSTRAC may wish to provide a notice to a bank for further information on a section 16 report submitted by a motor vehicle dealer prior to repeal of the FTR Act.
Item 6 – Subparagraph 49(1)(i)(ii)
954. This Item will insert 'of this Act, or subsection 16(1) or (1A) of the repealed Financial Transaction Reports Act 1988' after '45' in subparagraph 49(1)(i)(ii) of the AML/CTF Act for similar reasoning as for Item 5 of this Schedule (see above).
Item 7 – Subsection 50A(3)
955. This Item will insert 'repealed' before 'Financial' in subsection 50A(3) of the AML/CTF Act. This subsection refers to the FTR Act which is being repealed. The reason for adopting this amendment, as opposed to repealing the subsection entirely, is because this section will continue in operation. It is critical to maintain the subsection as a reference point to the exception that existed pre-repeal of the FTR Act.
Item 8 – At the end of Division 3 of Part 10
956. This Item inserts a new section 114B in the AML/CTF Act, which provides for the retention of records made or obtained by reporting entities under the FTR Act repealed by Item 1 of this Schedule.
957. Currently, cash dealers are required to retain records, including information relevant to suspect transaction reports for 7 years under the FTR Act. This Item ensures that cash dealers will still be required to retain these records for a total of 7 years after the FTR Act is repealed by Item 1 of this Schedule. This will allow AUSTRAC and other law enforcement agencies to continue to provide section 16(4) notices to request further information on suspect transaction reports from these entities.
958. FTR Act reporting entities would be required to continue to retain records for 7 years from repeal of the FTR Act. Reporting entities that stopped providing designated services prior to the repeal of the FTR Act would still be required to retain records for 7 years after the reporting entity stopped providing any designated services to the customer.
959. New subsection 114B(4) also provides that if the reporting entity is part of a designated business group, record-keeping obligations may be undertaken by any other member of the group. Subsection 114B(4) will be repealed on 1 March 2026, to align with the changes to the concept of a 'designated business group'.
960. After 1 March 2026, new section 236B will enable reporting entities that are part of the new 'reporting group' concept to continue record keeping obligations to this effect. This is set out in Item 50 of Schedule 1 of this Bill.
Item 9 – Paragraph 121(2)(a)
961. This Item will insert 'repealed' before 'Financial' in paragraph 121(2)(a) of the AML/CTF Act. This paragraph refers to the FTR Act which is being repealed. The reason for adopting this amendment, as opposed to repealing the paragraph entirely, is because this section will continue in operation. It is critical to maintain the paragraph as a reference point to when accessing, authorising access, making a record of, disclosing or using AUSTRAC information for the purposes of the FTR Act was an exemption to the section 121 offence.
Item 10 – Subsection 123(10)
962. This Item will insert 'repealed' before 'Financial' in subsection 123(10) of the AML/CTF Act. This subsection refers to the FTR Act which is being repealed.
Item 11 – At the end of subparagraph 124(1)(a)(i)
963. This Item will add 'of this Act or subsection 16(1) or (1A) of the repealed Financial Transaction Reports Act 1988' at the end of subparagraph 124(1)(a)(i) of the AML/CTF Act.
Item 12 – Subparagraph 124(1)(a)(iv)
964. This Item will omit 'section 41; and' and substitute it with 'section 41 of this Act or subsection 16(1) or (1A) of the repealed Financial Transaction Reports Act 1988;' in subparagraph 124(1)(a)(iv) of the AML/CTF Act.
Item 13 – At the end of paragraph 124(1)(a)
965. This Item will add '(v) information given under subsection 16(4) of the repealed Financial Transaction Reports Act 1988; and' at the end of paragraph 124(1)(a) of the AML/CTF Act.
Item 14 – Subparagraph 124(1)(b)(i)
966. This Item will insert 'of this Act or subsection 16(1) or (1A) of the repealed Financial Transaction Reports Act 1988' after 'subsection 41(2)' in subparagraph 124(1)(b)(i) of the AML/CTF Act.
Item 15 – Subparagraph 124(1)(b)(ii)
967. This Item will insert 'of this Act or subsection 16(1) or (1A) of the repealed Financial Transaction Reports Act 1988' after 'subsection 41(2)' in subparagraph 124(1)(b)(ii) of the AML/CTF Act.
Item 16 – Subparagraph 124(1)(b)(iii)
968. This Item will insert 'of this Act or subsection 16(1) or (1A) of the repealed Financial Transaction Reports Act 1988' after 'subsection 41(2)' in subparagraph 124(1)(b)(iii) of the AML/CTF Act.
Item 17 – Subparagraph 124(1)(b)(iv)
969. This Item will insert 'of this Act or subsection 16(1) or (1A) of the repealed Financial Transaction Reports Act 1988' after 'section 41' in subparagraph 124(1)(b)(iv) of the AML/CTF Act.
Item 18 – At the end of subparagraph 124(1)(b)(v)
970. This Item will add 'of this Act or subsection 16(1) or (1A) of the repealed Financial Transaction Reports Act 1988' at the end of subparagraph 124(1)(b)(v) of the AML/CTF Act.
Item 19 – Paragraph 124(2)(b)
971. This Item will insert 'repealed' before 'Financial' in paragraph 124(2)(b) of the AML/CTF Act. This paragraph refers to the FTR Act which is being repealed. The reason for adopting this amendment, as opposed to repealing the paragraph entirely, is because this section will continue in operation. It is critical to maintain the paragraph as a reference point to when criminal proceedings for an offence against sections 29 or 30 under the FTR Act were exceptions to subsection 124(1).
Item 20 – Paragraph 126(3A)(c)
972. This Item will insert 'repealed' before 'Financial' in paragraph 124(2)(b) of the AML/CTF Act. This paragraph refers to the FTR Act which is being repealed. The reason for adopting this amendment, as opposed to repealing the paragraph entirely, is because this section will continue in operation. It is critical to maintain the paragraph as a reference point to when AUSTRAC information obtained under section 16 of the FTR Act was an exception to subsection 126(3) of the AML/CTF Act.
Item 21 – Section 134
973. This Item will insert 'repealed' before 'Financial' in section 134 of the AML/CTF Act. This section refers to the FTR Act which is being repealed.
Item 22 – Paragraph 175(3)(g)
974. This Item will insert 'repealed' before 'Financial' in paragraph 175(3)(g) of the AML/CTF Act. This paragraph refers to the FTR Act which is being repealed. The reason for adopting this amendment, as opposed to repealing the paragraph entirely, is because this section will continue in operation. It is critical to maintain the paragraph as a reference point to when the Federal Court was obliged to consider proceedings under the FTR Act in determining a pecuniary penalty under section 175 of the AML/CTF Act.
Item 23 - Subsection 184(4) (before paragraph (g) of the definition of designated infringement notice provision)
975. This Item will insert subsection (fl) before paragraph 184(4)(g) of the definition of 'designated infringement notice provision' of the AML/CTF Act. This amendment ensures that the new subsection 114B(2), which deals with retaining certain records made or obtained under the FTR Act, is included under the definition of a 'designated infringement notice provision'.
Item 24 – Subsection 209(1)
976. This Item will insert 'repealed' before 'Financial' in subsection 209(1) of the AML/CTF Act. This subsection refers to the FTR Act which is being repealed.
Item 25 – Subsection 211(3)
977. This Item will insert 'repealed' before 'Financial' in subsection 211(3) of the AML/CTF Act. This subsection refers to the FTR Act which is being repealed.
Division 2 – Amendments of other Acts
Australian Securities and Investments Commission Act 2001
Item 26 – Section 243D
978. This Item will repeal section 243D of the Australian Securities and Investments Commission Act 2001.
Commonwealth Electoral Act 1918 (Electoral Act)
Item 27 – Subsection 90B(4) (table item 5)
979. This Item will repeal subsection 90B(4) (table item 5) of the Electoral Act, which refers to a prescribed person or organisation that verifies, or contributes to the verification of, the identity of persons for the purposes of the FTR Act.
Item 28 – Paragraph 90B(9)(b)
980. This Item will make a minor consequential amendment to paragraph 90B(9)(b) of the Electoral Act to omit '5'. The reference to '5' relates to subsection 90B(4) (table item 5), which is being repealed by Item 27 of this Schedule (see above).
Item 29 – Subsection 91A(2C)
981. This Item will repeal subsection 91A(2C) of the Electoral Act which refers to subsection 90B(4) (table item 5), which is being repealed by Item 27 of this Schedule (see above).
Item 30 – Subsection 91B(3)
982. This Item will make a minor consequential amendment to subsection 91B(3) of the Electoral Act to omit '5'. The reference to '5' relates to subsection 90B(4) (table item 5), which is being repealed by Item 27 of this Schedule (see above).
Criminal Code Act 1995
Item 31 – Paragraphs 400.9(2)(a) and (d) of the Criminal Code
983. This Item will insert 'repealed' before 'Financial' in paragraphs 400.9(2)(a) and (d) of the Criminal Code. These paragraphs refer to the FTR Act which is being repealed. The reason for adopting these amendments, as opposed to repealing both paragraphs entirely, is because this subsection will continue in operation. It is critical to maintain the paragraphs as reference points to when the specific considerations under the FTR Act were taken to form reasonable suspicions that money or other property were proceeds of indictable crimes.
Freedom of Information Act 1982
Item 32 – Subparagraph 7(2G)(a)(i)
984. This Item will insert 'repealed' before 'Financial' of subparagraph 7(2G)(a)(i) of the FOI Act. This subparagraph refers to the FTR Act which is being repealed. Adopting this amendment, as opposed to repealing the entire subparagraph, is to maintain the FOI Act exemption for documents under 'section 16' of the FTR Act.
Proceeds of Crime Act 2002
Item 33 – Subsection 29(3)
985. This Item will insert 'repealed' before 'Financial' of subsection 29(3) of the POCA. This subsection of the POCA refers to the FTR Act which is being repealed. The reason for adopting this amendment, as opposed to, repealing the entire reference to the FTR Act is because this section will continue in operation. It is critical to maintain the subsection as a reference point to when sections 15, 24, 29 or 31 of the FTR Act previously were legitimate offences to which a restraining order related.
Item 34 – Section 338 (paragraphs (c), (d) and (e) of the definition of serious offence )
986. This Item will insert 'repealed' before 'Financial' of section 338 (paragraphs (c) to (e) of the definition of serious offence) of the POCA. This subsection refers to the FTR Act which is being repealed. The reason for adopting this amendment, as opposed to, repealing the entire reference to the FTR Act is because this section will continue in operation. It is critical to maintain the paragraphs as reference points to when the specified sections of the FTR Act previously were legitimate serious offences.
Surveillance Devices Act 2004 (SD Act)
Item 35 – Subsection 6(1) (paragraph (c) of the definition of relevant offence )
987. This Item will insert 'repealed' before 'Financial' of subsection 6(1) (paragraph (c) of the definition of relevant offence) of the SD Act. This subsection refers to the FTR Act which is being repealed. The reason for adopting this amendment, as opposed to, repealing the entire reference to the FTR Act is because this definition will continue in operation. It is critical to maintain the paragraph as a reference point to when 'an offence against section 15' of the FTR Act previously was a legitimate relevant offence.
Part 3 – Transitional provisions
Item 36 – Reports of suspect transactions
988. This Item will continue application of section 16 of the FTR Act post-repeal to protect information that may be used in investigations to ensure potentially suspicious customers are not informed that a suspicion has been formed. Protecting the communication of information of a kind referred to in paragraphs (5A)(a), (b) or (c) or (5AA)(a) or (b) of section 16 of the FTR Act will mitigate the risk of prejudicing an investigation.