Organised crime groups are turning to the professions to exploit specialist knowledge and skills
The Law Council of Australia has released a report revealing that the Australian legal profession is proactively working to mitigate the risks associated with money laundering.
The Law Council explained that money laundering and terrorism financing are serious crimes with devastating consequences. The Australian Criminal Intelligence Commission reported that serious and organised crime groups increasingly turn to the professions to exploit specialist knowledge and skills to launder profits within complex and globalised financial systems.
The Law Council recently commissioned independent expert Russ + Associates to analyse the vulnerabilities of the Australian legal profession to money laundering and terrorism financing risk.
The report titled Vulnerabilities Analysis—Money Laundering and Terrorism Financing: The Australian Legal Profession highlighted that lawyers have taken additional steps to mitigate risks despite existing regulations and professional requirements. These measures include limited acceptance of cash, especially from overseas sources, refraining from holding assets for clients, and ensuring compliance with all reporting obligations.
"To our knowledge, the examination of vulnerabilities Russ + Associates were engaged to undertake is a world first. We believe this highlights the commitment the Australian legal profession brings to understanding and minimising AML/CTF risks and provides a strong evidence base upon which effective decisions and changes can be made," said Luke Murphy, president of the Law Council of Australia.
While vulnerabilities were identified, such as lawyers not consistently probing clients about the source of wealth and challenges in confirming fund provenance, the report emphasises the manageability of these risks through enhanced training, education, collaboration with the banking sector for improved transparency, and the adoption of technology like electronic conveyancing.
"Knowing where vulnerabilities exist, we can be even more vigilant in addressing them through training and education; working with the banking sector to improve transparency; harmonising practices, regulations and requirements; and increasing use of technology such as electronic conveyancing," Murphy said.
Murphy noted that 92% of the Australian legal profession operates through practices with fewer than four principals. Concerns about time and money compliance costs could cast doubt on these firms' viability in extending the anti-money laundering and counter-terrorism financing regime.
"What that may mean for our community is that when someone needs legal services, they will either not be available or will be more expensive. It is likely to hit hardest in rural and regional communities where there may already be a shortage of legal professionals," Murphy said.
The Law Council expressed reservations about extending the AML/CTF regime, cautioning against disproportionate reforms that might impact client legal privilege and access to justice. Nonetheless, the Council highlighted that the Russ + Associates report provides a clear road map for addressing areas of vulnerability in the profession.