2nd March, 2018 · Finance & Insurance Policy

Anti-money Laundering and Counter-terrorism

Issue

High-value dealers (HVDs) are businesses involved in the buying and selling of high-value goods which is recognised internationally as a major avenue for money laundering activity. Some high-value goods can also be purchased and sold to finance terrorism. High-value goods include jewellery, antiques and collectibles, fine art, yachts and luxury motor vehicles. More and more countries are regulating HVDs for AML/CTF purposes and the Government is examining options for a model to regulate HVDs in Australia. AADA considers that the Government’s AML/CTF objectives could be best and most efficiently achieved by simply legislating to prohibit cash vehicle sale transactions by dealers without subjecting dealers to a more complex AML/CTF regime.

Background

The Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF) provides the legislative framework under which businesses known as ‘reporting entities’ are regulated for AML/CTF purposes. These businesses are supervised for compliance with their AML/CTF obligations by the Australian Transaction Reports and Analysis Centre AUSTRAC. Obligations under the AML/CTF regime include registration with AUSTRAC, customer due diligence, implementation of ongoing customer due diligence procedures, implementation and maintenance of an AML/CTF program, lodgement of transaction reports and record keeping.

High-value dealers include motor vehicle dealers, jewellers, antique and fine art dealers, boat dealers, builders, bathroom and kitchen suppliers, and auctioneers and brokers. Regulation of HVDs that accept large sums of cash would potentially impose a significant regulatory burden on thousands of HVDs conducting business in Australia. These businesses and dealers would need to bear the initial costs associated with establishing and implementing AML/CTF systems and controls, and the ongoing associated costs.

Dealers should not be subject to additional regulatory obligations where fulfilling those obligations would not represent a material gain in the fight against ML/CT. Logically this means that additional regulation that does not generate new information and does not reduce risk should not be imposed on dealers. A statutory prohibition on the acceptance of cash for vehicle sales would be new, simple and effective in ensuring that each transaction is linked to an identifiable flow of funds through a financial institution (which is itself subject to AML/CTF regulation). Sales of parts and accessories, servicing and repair are relatively low value transactions and should not be a trigger for a AML/CTF regime.

Key Points

  • Dealers support the objectives of Australia’s AML/CTF regime.
  • Application of a full AML/CTF regime on the motor vehicle retailing industry is disproportionally burdensome response to a modest ML/TF risk.
  • AML/CTF objectives could be achieved by legislating to prohibit cash vehicle sale transactions by dealers.
  • Sales of parts and accessories, servicing and repair are relatively low value and low risk ML/CT transactions.

Status

AADA urges the Government not to impose a full AML/CTF regime on the motor vehicle retailing industry and its AML/CTF objectives could be achieved by prohibiting cash vehicle sale transactions.