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Cash transaction limits in AUS kick off debate

The news that Australia is to be the latest country to limit, in some circumstances, cash transactions above a certain financial limit has raised some questions. WMLR takes a critical look at some comments.

One correspondent writes "It would be beneficial if we can also apply this policy holistically (to apply certain thresholds for cash transactions) to reduce money laundering risks given that no economic reasons for people to opt for large cash transactions over doing fund transfers"

Reply: this analysis is simplistic: there are many good (practical not economic) reasons why, in some areas, people continue to use cash and, if governments try to prevent that, we will simply see the development of cash-substitutes.

Often, governments are less concerned with money laundering per se than they are with tax evasion and the money laundering related to that.

There have been, in various places, attempts to make holding substantial sums in cash criminal offences. There are around the world laws that require those holding large cash deposits to explain their provenance or face forfeiture. They work, sometimes in unfortunate ways but mostly successfully.

One problem that proposed laws face is that the definition of "large" is ever diminished. AUD10,000 was a reasonable amount for Cash Transaction Reporting in the mid 1990s. Today, it's not very much. It is only the advent of technology that changes the balance of convenience in favour of bank transfers.

Another correspondent asks if this means that all cash transactions will now automatically be considered suspicious and therefore subject to SAR/STR reporting. What, he asks, is the effect on "tranche two" businesses?

Answer: In reply to the first part of the question, the answer is "not exactly." It already triggers a CTR, so where's the difference, in pragmatic terms? Because of that, the expanded range of reporting entities is not affected by this.

The only aspect that causes additional work is that it moves the reporting perimeter so that an attempt to pay in cash might be suspicious. And that it, of course, now complicates the question of structuring: if someone buys a car for AUD15,000 and pays a deposit of, say, AUD6,000 and then pays the balance in two further instalments of AUD4,500, then that is a CTR issue. If the car dealer is suspicious as to any aspect of the transaction or buyer, he must make an STR. That's the same for any financial services business. However, under the new law, if it passes as outlined, the making and taking of those payments will be criminal offences. Are they the basis for money laundering offences? That depends on the definitions of predicate offences and whether Australia applies a list approach, an all-crimes approach or a hybrid (which, by use of a catch-all, becomes, in effect, an all-crimes approach). Are they money laundering offences? They would be money laundering offences only if the legislation is amended to specifically provide for that, but there is no need: handling proceeds where there is cause for suspicion is already covered and if there is no cause for suspicion then it might be a predicate offence but not money laundering per se. However, it must be noted that subsequent handling those funds (which are now proceeds) would turn it into money laundering.


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