On Thursday 11 May 2023, the Anti-Money Laundering and Countering Financing of Terrorism (Definitions) Amendment Regulations 2023 (Regulations) will come into force. The Regulations do only one thing: activate the prohibition in section 67A of the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (AML/CFT Act) on cash transactions of $10,000 or more for specified types of high-value goods.
Who needs to read it? And why?
The Regulations, and the prohibition they activate, will be relevant to anybody who, in trade, undertakes the relevant types of transaction. Those will include motor vehicle dealers, ship brokers, jewellers, and precious metal dealers who buy or sell for cash. For those who are currently “high-value dealers” (a category of reporting entity) under the AML/CFT Act, this will change their obligations into an outright prohibition in relation to the relevant transactions.
What does it cover?
Section 67A of the AML/CFT Act prohibits any person who is in trade from buying or selling certain specified articles, by way of a cash transaction or a series of related cash transactions, if the total value of that transaction or those transactions is equal to or above the applicable threshold value. The Regulations set this threshold at $10,000.
The specified articles are:
- gold, silver, or other precious metals;
- diamonds, sapphires, or other precious stones;
- motor vehicles (within the meaning of section 6(1) of the Motor Vehicle Sales Act 2003); and
- ships (within the meaning of section 2(1) of the Maritime Transport Act 1994).
Breaching this prohibition can be a civil liability act (bringing a fine of up to $200,000 for an individual or $2 million for a body corporate or partnership) or an offence (bringing either or both of up to 2 years imprisonment or a fine of up to $300,000 for an individual or a fine of up to $5 million for a body corporate or partnership).
The framing of this prohibition closely resembles that of the high-value dealer concept, covering persons in trade buying or selling certain articles for cash equal to or above a threshold. In particular:
- the threshold prescribed will be the same for both, at $10,000; and
- the list of articles in the prohibition covers about half of those in the high-value dealer definition.
The effect of the prohibition, then, is to take $10,000+ cash purchases and sales of these articles, which currently trigger AML/CFT obligations as a high-value dealer when done in the ordinary course of business, and prohibit them entirely.
Notably, the high-value dealer list of articles has not been amended. If prohibited transactions were carried out, they would still trigger high-value dealer obligations.
The prohibition was introduced as part of the Criminal Activity Intervention Legislation Act 2023, which was aimed at disrupting the criminal activities of gangs, most relevantly their laundering of illicit funds through cash transactions.
It is not clear from the Supplementary Analysis Report exactly why this particular option (all persons in trade, and a sub-set of high-value dealer articles that appear to be "items which are known to be purchased by gangs”) was chosen – although all of the listed options had their own limitations and practical difficulties.
Additionally, the list continues a series on anomalies in the high-value dealer definition. For instance, cash transactions around motor vehicles attract the prohibition, but those around trailers (which are carved out of the definition of a motor vehicle) do not. In the other direction, although in conventional terminology ships and boats are not synonymous, the definition of “ship” referred to here is “every description of boat or craft used in navigation”.
If you have any questions in relation to this new prohibition, or the AML/CFT Act more generally, please contact one of our experts.
This article was co-authored by Sam Short, a Senior Solicitor in our Financial Services team.
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