Small businesses may begin to feel the effects of Anti-Money Laundering/Counter-Terrorism Financing Act (AML/CTF), which came into effect on 12 December 2007.
The first tranche of the AML/CTF Act has come into full effect, which requires banks and other financial institutions to comply with the new laws.
It is expected that the second tranche of the legislation will come into effect by mid-2008, which will impose an obligation on small businesses, professionals and retailers to report suspicious transactions to the Australian Transaction Reports and Analsysis Centre (AUSTRAC).
Businesses and professionals affected include:
Jewellers;
Real estate agents;
Lawyers;
Accountants;
Financial advisors;
Property dealers;
Brokers; and
Car dealers.
Privacy advocates call for halt to turning small businesses into spies
The AML/CTF legislation has created widespread controversy, including calls from advocates and interest groups to scrap the legislation. The Australian Privacy Foundation for instance, believes the legislation places an obligation on small businesses to monitor their customers in a similar way to "spying".
In a letter dated 13 December 2007 sent to the Federal Minister for Finance and Deregulation, consumer representative for CHOICE Jan Whitaker and Australian Privacy Foundation representative Nigel Waters, called for a halt to the second tranche of the legislation. (see http://www.privacy.org.au/Papers/AML-CTF-Tanner-071213.pdf)
According to Ms Whitaker and Mr Waters, the AML-CTF Act is "bad legislation" in its enacted components, and "even worse" should the second tranche be passed.
"This is really the Financial Privacy Invasion Act in its current form," the letter stated.
Laws raise concerns about "amateur" profiling and data tracking
The main concern highlighted was the risk of the legislation tempting small businesses in reporting activity based on "amateur" profiling such as on ethnicity.
Another concern was that suspicious transactions reporting would lead to a black hole of citizen reporting, with no recourse to the Privacy Act to destroy and incorrect data held by AUSTRAC.
"It's there forever with no ability for a citizen to 'prove their innocence'," the letter stated. "This data is available for additional profiling not only by the traditional law enforcement agencies charged with protecting the financial interests of the country, but also Child Support Agency, Centrelink, ASIC and many more."
In this context, Ms Whitaker and Mr Waters waned the Act would lead to a new wave of "crime on speculation" instead of probable cause.
Calls to delay the legislation but reduce red tape for small business
Ms Whitaker and Mr Waters called for the new Rudd Government to:
Delay indefinitely the presentation of the second tranche, which they believe "extends" the onerous compliance obligations to thousands of small businesses, should the legislation pass.
Review the "onerous" nature of the existing legislation, which they claim exceeds the requirements of the FATF 40 recommendations.
"Reduce the regulation of our financial institutions, cut the current red tape, and certainly stop from adding any more that would impose on small businesses as a result of the second tranche," the letter stated.