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Australia, like most countries, has money laundering legislation and a
regulator to go with it. AUSTRAC (Australian Transaction Reports and
Analysis Centre) administers the
Financial Transaction Reports Act 1988 (FTR Act). They also now administer
the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF
Act). Similar legislation has been enacted in many other countries.
A lot of the new AML/CTF laws around the world are a result of the Financial
Action Task Force (FATF). Created in
1989, it "is an inter-governmental body whose purpose is the development
and promotion of national and international policies to combat money
laundering and terrorist financing". Note that Australia's FTR Act came
into being before FATF, and for a while Australia's AUSTRAC was "state
of the art" in anti-money laundering in the world. It was admired for
its data collection and matching system but in recent years had fallen
behind.
One of FATF's self appointed roles is to report on the robustness of a
country's money laundering systems and its noting that Australia's system had
weaknesses is what prompted the Government to instigate a review of the FTR
Act, resulting in the new AML/CTF Act. I suspect that FATF's assessments of
other countries' system also resulted in similar changes to their
legislation.
So if you are looking for someone to blame for new "know your
customer" rules, FATF is up there. But you also have to blame 911,
because this also revitalised FATF as Governments
looked for expertise on how to tighten up on money flows. While I certainly
think that there is a need to close off terrorism's money supply, I cannot
help but think that Governments' new found interest in "fixing"
their systems was more about the AML part rather than the CTF part. In other
words, use terrorism to tighten up on tax evasion, and don't worry about
privacy while you do it.
In Australia the old (although it is still in force) FTR Act basically had
two key reporting mechanisms in respect of bullion: cash transactions report
and suspicious transactions report. The first had to be filled out for any
transaction involving more than $10,000 cash. Note that this $10,000 level
has not changed in my understanding since the Act came into being in 1988.
Funny how Government's never index anything to inflation, except maybe fines!
The second one had/has to be filled out if the business suspected the
transaction was for or involved a criminal purpose. There is not real guidance
given on this but in practise the rule is if in
doubt, fill one out. This is because it acts sort of like a get out of jail
card - if the transaction ended up being criminal and you hadn't filled out a
suspect transaction report, the police may consider you in on the transaction
(especially if is was really sus).
Filling one out is then just a real cover your arse
exercise.
The AML/CTF Act has given this reporting a makeover. Of particular interest
to buyers of physical precious metal should be the changes to the cash
transactions report. I understand this will now be called the transactions
report, ie the word "cash" is dropped. I
also understand that this means that anything that is a designated service (check out the link for a big list of what this
covers, bullion gets its own special table #2) over $1,000 has to be
reported. This is a big change because prior to this, only cash transactions
above $10,000 had to be reported.
My advice to anyone who wishes to accumulate physical metal and as a result
values their privacy should do so before the end of this year when the new
report comes into play. I don't condone criminal activity, but I also believe
that if you are buying physical precious metal you rightly don't want any
records that you have done so as this opens you up for theft (either from
your fellow man - eg criminal breaks into coin
dealer and steals customer list - or from the Government itself at some
future time when fiat currencies collapse). The ability to buy small amounts
of metal from your local coin/bullion dealer in cash was the only way to do
this and it looks like this door will soon close.
UPDATE 11 August - it appears that advice from AUSTRAC was wrong, we have
alternative adivce that only cash transactions of
bullion above $10,000 will need to be reported. It is also possible that the
limit above which identification is required will be above $1,000, but not
sure what it will be at this stage. Will keep you informed.
Bron Suchecki
Goldchat.blogspot.com
Bron Suchecki has worked in the precious metals
markets since 1994, when he joined the Perth Mint as an Administration
Officer in their Sydney retail outlet. In 1998 he moved to Perth to work in
the then fledgling Depository division. He has held a number of roles since
then in the treasury, risk and governance areas of the Mint.
All posts are Bron's personal opinion and not
endorsed by the Perth Mint in any way.
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