AS financial institutions prepare to pay upwards of $100 million to comply with new anti-money laundering and terror financing regulations, the head of the agency charged with detecting illegal transactions conceded authorities had no idea how much terror funding occurs in Australia.
AusTrac chief executive Neil Jensen said while authorities could estimate the amount of money laundering that took place annually, identifying terror funding was like searching for a "needle in a hayfield".
Mr Jensen's comments came as the director of the Australian Bankers Association, Tony Burke, put the cost to industry of complying with the reporting requirements at "upwards of $100 million", plus continuing annual costs.
In December last year, the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 came into force. The legislation, which is being introduced in two tranches, requires brokers, funds managers, financial planners, banks, bullion dealers and casinos to report transactions above $10,000.
The second tranche affects mainly accountants, jewellers, real estate agents and certain law firms.
A 2004 estimate put the amount of money being laundered in Australia at about $4.5billion, Mr Jensen said.
However, he said most terror financing concerned amounts of money too small to be detected.
Nevertheless, he defended the regime, saying it provided an important deterrent to terrorists. "The social and economic costs of terrorism financing far, far outweigh anything that we're doing to try to stop it," Mr Jensen told The Australian.
He said similar legislation was in place in other parts of the world, meaning Australia would be vulnerable if it did not follow suit. "We're part of a global program with global standards. If we don't meet the standards, we can be severely criticised."
Mr Burke said complying with the new rules - breaches of which can attract fines of up to $11 million for organisations and $2.2 million for individuals - had been "a huge undertaking".
"The impact on the institutions has been very significant both in terms of their policy development activity and now in respect of implementation," he said.
Mr Burke dismissed the argument that by meeting the requirements, banks would be ahead because they would have more information on their own clients. He said there were no significant commercial benefits for the banks.
Australian National University terrorism expert Clive Williams said he knew of no estimate that put a dollar value on terror financing in Australia.
http://www.theaustralian.news.com.au/story/0,25197,23082230-2702,00.html
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