The start of the new financial year on July 1 was a special date for Australian laws against money laundering and terrorist financing.

For years, anti-money laundering (AML) and counter-terrorism financing (CTF) rules have applied to banks, casinos and gold bullion dealers. Now, for the first time, they also apply to accountants, lawyers and real estate agents.

These reforms mark a sea change in the relationship between regulated businesses and their customers.

But although such laws are now ubiquitous around the world, their effectiveness remains bitterly contested.

Keeping tabs on criminals

If you open a bank account, your bank is already obliged to know who you are and how you make money. This is referred to as customer due diligence. If your activities give rise to a suspicion you might be handling proceeds of crime, the bank must report you to the government by filing a report to the regulator, AUSTRAC.

These rules help the government enlist the human, financial and analytical resources of the private sector to detect proceeds of crime. Put less charitably, they require regulated businesses to snoop on their customers and dob them in.

This regulation might sound like a dull affair, but the stakes are very high.

Getting it right can help put major organised crime figures behind bars, as demonstrated by the Australian Federal Police’s Taskforce Avarus, which targeted professional money launderers. One criminal gang in Sydney was laundering A$1 million every hour on some days, the federal police said.

Failing to comply with the law can cost dearly. In 2018,........

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