AUSTRAC, the Federal Government’s financial intelligence and regulatory agency, has welcomed the Federal Court of Australia providing its judgment in the AUSTRAC and Tabcorp matter.

AUSTRAC CEO, Nicole Rose PSM, said that on 16 March 2017 the Federal Court found that Tabcorp had contravened the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act) on 108 separate occasions over a period of more than five years.

Ms Rose said that the record penalty of $45 million demonstrates that breaches of the AML/CTF Act will attract strong penalties and that Boards and senior management must take responsibility for managing their own money laundering and terrorism financing risks.

In finding that a $45 million penalty was appropriate, Justice Perram pointed to Australia’s substantial international obligations to prevent money laundering and terrorism financing. Parliament chose to meet those obligations by way of a risk management approach through the AML/CTF framework, recognising the role of industry to assess and manage its own risks.

Justice Perram said that Parliament had vested 'in industry a degree of trust for the operation of the AML/CTF risk management system. The Act deals severely with breaches of that trust'.

Tabcorp admitted that the deficiencies in its AML/CTF program were serious and related to core elements of its AML/CTF obligations. Justice Perram agreed and found that 'the state of affairs which prevailed … came about because of insufficient resourcing together with insufficient processes for consistent management oversight, assurance and operational execution. Management should have done more'.

The Court accepted that the section 81 contravention was not deliberate, but concluded ‘What one has here is a large corporation operating in an industry with known money-laundering risks. Serious management failures result in a deficient program which leads to actual difficulties’.

Justice Perram noted that 'the AML/CTF Act is aimed at precisely the kind of management practices that are now admitted'.

Justice Perram concluded that 'although the breach may appear dry in nature it went, in fact, to the heart of the operation of the Act. It had potential consequences for law enforcement agencies'.

The Court also found that Tabcorp had insufficient processes in place to ensure that suspicious matter reports were reliably issued. These failures were found to be serious contraventions. The Court also accepted that a substantial penalty was warranted for Tabcorp’s failure to identify a customer before paying out $100,000 in winnings.

Justice Perram accepted that Tab Limited’s failure to enrol on time arose from a misunderstanding, but concluded that 'the requirements of general deterrence necessitate the imposition of a substantial penalty so that it is known that even minor breaches of the Act have very serious consequences'.

Ms Rose added, 'AUSTRAC will continue to collaborate with industry to strengthen the financial sector against serious financial crime and reduce regulatory burden where possible, but we will continue to take strong action against those companies who break the law where appropriate'.

 

Media contact: Lancia Jordana

P: (02) 9950 0488  M: 0418 103 107

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