President's Message: Anti-Money Laundering Reform – Effect on Barristers

17/09/2024

Last week, the Commonwealth Government introduced proposed legislation as part of the AML/CTF 'Tranche 2' reforms, expanding and extending the AML/CTF regime to the legal profession.

The NSW Bar Association has opposed the application of reforms to barristers in submissions to the Commonwealth Attorney-General’s Department, on the basis that it constitutes a disproportionate burden on barristers as sole practitioners and unnecessary over-regulation, given that instructing solicitors will be subject to the new AML/CTF requirements. 

If enacted, the amendments will subject those providing certain designated professional services to the existing AML/CTF regime. The description of the designated services has the potential to capture barristers who provide advice, or act for a client, in: transactions to buy or sell real estate; transactions to buy or sell a body corporate or other legal arrangement; transactions for equity or debt financing relating to a body corporate or other legal arrangement, and the creation or restructuring of a body corporate or other legal arrangement.

Subject to some limited exceptions, barristers who assist in the organisation, planning, or execution of these transactions, or otherwise act for or on behalf of a person in these transactions, will need to comply with onerous obligations which include:

• having an 'AML/CTF program' in place, comprising a 'ML/TF risk assessment' and 'AML/CTF policies';

• undertaking customer due diligence;

• registering with AUSTRAC;

• reporting obligations, including obligations to provide suspicious matter reports to AUSTRAC in certain circumstances; and

• record keeping requirements (including retaining any document received from or on behalf of the customer for 7 years). 

As presently drafted, the legislation may capture certain advice work provided by barristers; including advising on certain settlements in the course of litigation. These changes could significantly affect how barristers perform their work, the cost of providing certain services, and our professional obligations.

The Association has established a working group to consider the impact of these changes on the NSW Bar, if enacted, and to support barristers in achieving compliance with the new laws. We are also working with the Law Council of Australia and the Australian Bar Association to advocate for an exemption for barristers where they are briefed by solicitors who have AML/CTF obligations with respect to the same clients. Subjecting both solicitors and barristers to these obligations is unnecessary overregulation and is apt to increase costs for legal services provided by the Bar and impede access to justice.

In recognition of the risk of legal practitioners being unwittingly misused by financial criminals, the Law Council of Australia has published National Legal Profession AML/CTF Guidance.

The Bill and its Explanatory Memorandum can be read here. The Bill provides that, if passed, the regulatory obligations on Tranche 2 reporting entities will commence on 1 July 2026.

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