From: The Australian June 14, 2011 12:00AM

http://www.theaustralian.com.au/business/big-banks-furious-at-launder-levy-costs/story-e6frg8zx-1226074620508

BANKS and stockbrokers have slammed government proposals to impose a new levy for anti-money laundering and counter-terrorism financing, declaring they have already spent more than $1 billion to report suspicious financial transactions.

The proposed laws impose a new multi-million-dollar annual levy on banks and other businesses that report suspicious financial transactions.

This has infuriated banks and stockbrokers.

The Australian Financial Markets Association complains details in the bills introduced to parliament on May 12 show that its members will be forced to overpay for the levy in order to cross-subsidise small businesses.

That is because the government argues the anti-money laundering regulator, the Australian Transaction Reports and Analysis Centre, has to dedicate more resources to supervising big businesses rather than small ones. Consequently, domestic and foreign banks will be contributing about $11.5 million of the $29.6m levy.

"It is unfortunate that large entities are expected to contribute a disproportionate amount simply because they are large organisations," AFMA says.

"New costs and charges that are imposed on business will affect how those businesses view the competitive environment and the relative attractiveness of doing business in Australia compared with other jurisdictions."

The complaint is revealed in a submission to a Senate inquiry into the proposed laws.

Anti-money laundering and counter-terrorism financing laws introduced four years ago require banks, foreign exchange dealers and financial services firms -- known as "reporting entities" -- to report anomalies in behaviour that could suggest involvement in criminal money laundering or the financing of terrorism.

Firms are required to verify the identity of customers before conducting business with them.

But the AFMA argues that, as a result, its members are now providing intelligence gathering to the government for free.

Information from the anti-money laundering law has been used by the Australian Taxation Office in data-matching exercises that have helped it crack down on offshore accounts in tax havens and other serious cases of non-compliance with tax laws.

AFMA is also critical of the Labor and Liberal governments for failing to introduce the "tranche two" anti-money laundering and counter-terrorism reforms that were originally supposed to capture accountants as well as lawyers, jewellers and real estate agents.

Last year, the government deferred the second tranche of laws until mid-2011 to allow companies more time to recover from the global financial crisis.