Anti-Money Laundering and Counter-Terrorism Financing Rules Amendment Instrument 2021 (No 2)-Concluded matters [2022] AUSStaCSDLM 115 (23 November 2022)

• Chapter 2
• Concluded matters
• Anti-Money Laundering and Counter-Terrorism Financing Rules Amendment Instrument 2021 (No. 2)
• Overview
• Scrutiny issues
• Exemption from the operation of primary legislation9

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Chapter 2

Concluded matters

2.1 This Chapter details the committee's concluding comments on significant technical scrutiny issues in legislative instruments relating to the committee's principles in Senate standing order 23(3).

Anti-Money Laundering and Counter-Terrorism Financing Rules Amendment Instrument 2021 (No. 2)

FRL No.	F2021L01658[1]
Purpose	Amends the Anti-Money Laundering and Counter-Terrorism Financing Rules Instrument 2007 (No. 1) to specify the conditions that must be met so an issue of an interest in a litigation funding scheme is exempt from the operation of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 and to define the term litigation funding scheme.
Authorising legislation	Anti-Money Laundering and Counter-Terrorism Financing Act 2006
Portfolio	Attorney-General's
Disallowance	15 sitting days after tabling (tabled in the Senate on 8 February 2022) Notice of motion to disallow given on 7 September 2022

Overview

2.2 The Anti-Money Laundering and Counter-Terrorism Financing Rules Amendment Instrument 2021 (No. 2) (the instrument) specifies the conditions that must be met for the issue of an interest in a litigation funding scheme to be exempt from the operation of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (the Act).

2.3 The committee first sought advice about potential scrutiny concerns in the instrument in correspondence to the former Minister for Home Affairs (the former minister) on 10 February 2022.^[2] The former minister responded on 25 February 2022.^[3] The committee sought the former minister's further advice on 31 March 2022.^[4] The former minister responded on 22 April 2022.^[5] The committee sought the Attorney-General's advice in Delegated Legislation Monitor 5 of 2022.^[6] The Attorney-General responded to the committee's request for further information on 4 October 2022.^[7] The committee retained scrutiny concerns about the instrument and again requested the Attorney-General's advice in Delegated Legislation Monitor 7 of 2022.^[8]

Scrutiny issues

Exemption from the operation of primary legislation^[9]

2.4 Section 248 of the Act empowers the Chief Executive Officer of the Australian Transaction Reports and Analysis Centre (AUSTRAC) to make a written instrument which exempts individuals from provisions of the Act, either unconditionally or subject to specified conditions, the breach of which is subject to a civil penalty.

2.5 The committee noted the Attorney-General's advice that it is necessary to include the exemptions in delegated legislation due to the need for flexibility and urgency in the context of money laundering and counter-terrorism financing. However, the committee's longstanding view is that executive-made law should not ordinarily amend primary legislation, and where such provisions are included in delegated legislation, they should operate no longer than strictly necessary. These concerns are heightened where an instrument is exempt from sunsetting without a justification in its explanatory statement.

2.6 The committee therefore requested the Attorney-General's further advice as to whether the instrument can be amended to provide that the exemption to primary legislation inserted by the instrument cease within five years of their commencement.

Attorney-General's response^[10]

2.7 In his response of 18 November 2022, the Attorney-General agreed that, in light of the changing legal and regulatory position regarding litigation funders, the instrument could be amended to provide that the exemptions it inserts to primary legislation cease within five years of commencement.

2.8 The Attorney-General also reiterated his advice of 4 October 2022 that AUSTRAC would revisit the exemptions after Parliament's consideration of amendments to the Corporations Regulations 2001 to reflect a recent Federal Court decision in LCM Funding Pty Ltd v Stanwell Corporation Limited.^[11] The proposed amendments to the instrument would not be necessary if, in the course of such review, the AUSTRAC CEO determines it is instead appropriate to repeal the instrument.

Committee view

2.9 The committee welcomes the additional advice provided by the Attorney-General and his undertaking to amend the instrument to provide that the exemptions from primary legislation cease within five years of their commencement. The committee also notes the Attorney-General's advice that this amendment may not be necessary if the AUSTRAC CEO determines that it is appropriate to repeal the instrument, in light of Corporations Regulations amendments and the recent Federal Court decision noted above.

2.10 In light of the Attorney-General's further advice and undertaking to amend the instrument such that the exemptions to primary legislation cease within five years of their commencement, the committee concludes its examination of the instrument.

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[1] Accessible on the Federal Register of Legislation.

[2] See correspondence from the Senate Standing Committee for the Scrutiny of Delegated Legislation on 9 February 2022, pp. 9–11.

[3] See correspondence to the Senate Standing Committee for the Scrutiny of Delegated Legislation on 25 February 2022, pp. 1-4.

[4] See correspondence from the Senate Standing Committee for the Scrutiny of Delegated Legislation on 31 March 2022, pp. 12-13.

[5] See correspondence to the Senate Standing Committee for the Scrutiny of Delegated Legislation on 22 April 2022, pp. 6-7.

[6] Senate Standing Committee for the Scrutiny of Delegated Legislation, Delegated Legislation Monitor 5 of 2022 (7 September 2022) pp.43–45.

[7] This correspondence was tabled with this Monitor and will be accessible via the Index of Instruments page on the committee's website.

[8] Senate Standing Committee for the Scrutiny of Delegated Legislation, Delegated Legislation Monitor 7 of 2022 (26 October 2022) pp. 6-9.

[9] Senate standing order 23(3)(l).

[10] This correspondence was tabled with this Monitor and will be accessible via the Index of Instruments page on the committee's website.

[11] LCM Funding Pty Ltd v Stanwell Corporation Limited [2022] FCAFC 103. This decision overturned an earlier finding that litigation funding schemes are subject to the Managed Investment Schemes regime.