Explanatory Memorandum
(Circulated by authority of the Attorney-General, the Hon Mark Dreyfus KC MP)SCHEDULE 12 - TRANSITIONAL ARRANGEMENTS
Item 1 – Transitional rules
989. This Item would allow the Minister administering the AML/CTF Act, to make transitional rules by legislative instrument to be made relating to any of the amendments or repeals made by this Bill. Given the breadth and complexity of the reforms, this is necessary to address any unforeseen matters arising following from the commencement of obligations.
990. The policy intention is to allow for minor or technical adjustments to measures that may be unforeseen or arise during implementation, and to ensure the reforms work effectively in practice, once implementation has commenced. The reforms are substantial and impact sectors that already face complex and rapidly evolving changes across a range of regulatory regimes. It is expected that industry may need time to understand and meet their new obligations through the staged roll out of the reforms, potentially delaying the identification of implementation issues.
991. The ability to modify measures will offer flexibility, improve administrative efficiency and allow the Government to respond to changing circumstances without placing unnecessary burden on parliamentary processes.
992. The 4-year time period corresponds with the anticipated duration of fully implementing all reform measures. Given the significant nature of the reforms and staged rollout, this period would give industry sufficient time to understand and comply with the new obligations, and raise unforeseen issues with the Government. The modification power will allow for adjustments based on ongoing industry consultations, ensuring that the reform measures and the AML/CTF regime overall remains effective and suitable for the regulated population.
993. For example, transitional rules will be required to consider commencement timeframes for the new IVTS reporting framework to allow sufficient time for reporting entities and AUSTRAC to update or implement required systems changes. The existing IFTI reporting framework would be retained in operation under transitional rules in the meantime. Transitional rules would be required as the existing IFTI reporting regime builds on the existing EFTI framework (for banks) and designated remittance arrangements (for remitters), both of which would be repealed and replaced by the Bill.
994. Subitem (3) of this Item would establish appropriate legislative safeguards to ensure that the transitional rules are applied correctly and within reason. These safeguards prevent any rules from creating criminal offences or civil penalties, granting powers of arrest, detention, search, or seizure, imposing taxes, determining allocations from the Consolidated Revenue Fund, or making direct amendments to the text of this Bill.
995. To ensure appropriate scrutiny and oversight, any rule made by the Minister under this Item is a legislative instrument that would be subject to the disallowance process by Parliament. This would provide the Parliament with oversight and control of any delegated legislation made under this Item.