Small business calls for exemption on new $500 AUSTRAC fee to start July 1, says compliance should be enough

Tens of thousands of businesses are set to be hit with a $500 fee from July 1 for complying with the Federal Government’s anti-money laundering service AUSTRAC, with business groups slamming the fee, saying they shouldn’t be charged for actually complying with new regulation.

But the Government has defended the charge, which was introduced in the 2010 budget, saying the levy is required in order to recover funds for the system which aims to stamp out money laundering, organised crime and drug importation.

The fees are designed for every international fund transfer instruction report, which cover money travelling overseas, along with threshold transaction reports, which cover transactions worth over $10,000.

Various business groups including the Australian Bankers Association, the Australian Financial Markets Association and the Association of Superannuation Funds have all attacked the Government this morning, saying such a move would be like individuals paying the police for doing their jobs.

CPA Australia business policy advisor Gavan Ord says while the fee will only affect financial institutions from July 1, the second batch of legislation will introduce the levy to hundreds of industries including real estate, law and retail.

“At the moment, the levy will hit everyone in finance from the big four banks down to individual financial planners, even those working in the suburbs. But in the future the Government has said it will extend that law to accountants, real estate agents, jewellers, and so on… tens of thousands of businesses.”

The CPA is calling for an exemption for small business.

“Our preference is that the government at least has some exemption for small business. The best possible outcome in this area is that the Government funds AUSTRAC’s own behaviour in this area rather than imposing a fee on business.”

The proposal states that businesses be charged a $500 fee for registering reports with AUSTRAC, along with an ongoing transaction cost of $1 for every report on an eligible transaction that they lodge. There are also separate fees based on the volume of reports, along with the value of the transactions in those reports.

Businesses liable for these costs are those registered under the Government’s Anti-Money Laundering and Counter-Terrorism Financing Act 2006.

Home affairs minister Brendan O’Conner told The Australian this morning the fee is needed in order to stop various crimes including drug importation and people smuggling. The Government expects to save $90 million through the use of the fee.

“This intelligence has a broad public benefit, and is funded from our taxes,” he said. “Law enforcement agencies use this intelligence to protect businesses and keep the public safe.”

The minister is currently on leave, but the acting minister, the attorney-general, was contacted this morning. No comment was available before publication.

But CPA Australia isn’t impressed. Ord says with the July 1 deadline looming, time is running out for any changes to be made, and SMEs will be slugged with hundreds of dollars in new fees after complying with the law.

“To us, the issue is the principle behind it. We’re paying $500 to help recover the cost of an administration, but you don’t see individuals paying the police to do their jobs.”

“Our preference is that the Government at least has an exemption for small business. A revenue level of about $2 million for small business sounds about right, and it just goes back to the issue of cost recovery.”

Ord points out plenty of businesses have spent millions in training staff to identify money laundering, along with fraud, and they shouldn’t be slugged with new fees after having complied.

The Australian Bankers’ Association, the Institute of Chartered Accountants and even the Australian Privacy Foundation have spoken out against the fee. ABA director Tony Burke told The Australian this morning the Government’s objective is to recover costs, instead of providing a benefit.

“As the paper currently stands, the potential cost of compliance would be high,” he said. “Charge-backs to internal groups and agencies would add significant overheads in tracking costs and reconciling payments.”