The black economy is becoming a larger focus to the Australian Government and there are implications to clubs’ and hotels’ AML/CTF compliance and obligations. The Black Economy Taskforce, consisting of government agencies, including AUSTRAC, and private and community representatives, was formed in December 2016 to develop a whole-of-government strategy to tackle the black economy in Australia.
In 2012, ABS estimated that the Black economy has increased to 1.5% from 1.3% in 2001 of the GDP (approx. $25 billion per annum today). With the difficultly of measuring the black economy, other research has suggested that it could be larger. The Black economy or the cash economy is the operation of businesses and transactions outside of the tax and regulatory system, inclusive of legal and illegal activity, such as money laundering activities. It causes an uneven and unfair advantage to those that participate in the black economy and punish those who are compliant, a loss of revenue to fund government services, such as welfare, and deterioration of trust in the regulatory system. If the black economy is not addressed, an endless cycle of participation in the black economy can occur and higher tax burdens for those who remain in the formal economy.
In March, The Black Economy Taskforce released an Interim Report to address the Black economy in Australia (the report can be found here). The full report will be released in October 2017.
The Interim Report highlighted that the impacts and drivers of the black economy is multifaceted and not solely a tax matter, including policy and regulatory settings, roles of cash in payment systems, verification of business and individual identities, and links within the illegal activities like money laundering.
A policy option for consideration include*:
- Possible cash payment limit across the economy – examination of an economy-wide cash payment limit (possibly $10,000)
Other issues that the Black Economy Taskforce will address in the full report include*:
- Social norms, including attitudes, assumptions and beliefs regarding the black economy
- Relaunch and rebrand of reporting services where members of the public can report information on suspected misconduct or breaches of relevant legislation
- Sectorial and targeted strategies, with mention to unlicensed offshore wagering
- Creating an institutional legacy with recommendations for changes to agencies’ responsibilities, establishment of new bodies and evaluation and review of mechanisms
*all recommendations, policies for consideration, and other issues to be address are found in the Interim Report
You may be asking yourself, how is this relevant to my venue?
As a part of most venues with gaming machines’ obligations to anti-money laundering and counter terrorism financing, suspicious matter reports are to be lodged if a suspicion is formed on reasonable grounds regarding:
- A person is not the person they claim to be
- Possessing relevant information to investigate or prosecute a person for tax evasion or offence
- Possessing relevant information to assist in enforcing the Proceeds of Crime Act 2002 and state or territory law that corresponds to the Act
- Provision of a designated service that is preparatory to committed an offence regarding money laundering and counter finance or relevant to an investigation and prosecution for money laundering and terrorism financing
Further venues should also be compliant in terms of their processes for Know Your Customers and Enhanced Customer Due Diligence procedures to identify ML/CT activity, which could be relevant to the black economy.
Given the intricacies of the black economy with money laundering and a whole-of-government approach and effort to tackle the black economy and the recommendation to create an institutional legacy, AML/CTF compliance may become a larger focus.
Venues should be keeping their eye on any suspicious matters in relation to AML/CTF, inclusive of tax evasion and the black economy, and address their AML/CTF obligations day to day, rather than a back of mind, out of sight, burden on their day to day operations and venue compliance. A holistic organisational culture aligned with AML/CTF principles is ideal to ensure a AML/CTF obligations are adhered. For more information contact us on (07) 3878 9355 or at info@dws.net.au.
