Cash transaction limit bill introduced

John Kavanagh Finance regulation

The government is pressing ahead with the ban on cash transactions of $10,000 or more, despite plenty of criticism.

The new law, Currency (Restrictions on the Use of Cash) Bill 2019, comes in response to a recommendation of the Black Economy Taskforce that the government take action to tackle tax evasion and other criminal activities by limiting the use of cash.

The key measure of the bill is the introduction of offences for entities that make or accept cash payments of $10,000 or more. The payment can be a single payment or a series of payments relating to one supply.

The offences extend to some conduct that applies outside Australia, so that “entities that are closely linked to Australia cannot escape the application of the cash payment limit in relation to supplies occurring in Australia by arranging for payment to take place outside Australia.”

The limit is to apply from the beginning of next year.

CPA Australia said in a submission that there was no strong evidence to justify an “extraordinary penalty” for the use of legal tender. Penalties include fines of up to $25,200 and jail terms of up to two years.

CPA Australia said there already sufficient checks and balances in the system to deal with criminal activity.

Others argued that it was a breach of civil liberty and an invasion of privacy.

The Australian Chamber of Commerce and Industry said cash was not the cause of black economy activity. It also said the government should not be undermining the value of cash.

The explanatory memorandum accompanying the bill says the measure “ensures that entities cannot make large payments in cash so as to avoid creating records of the payment and facilitating their participation in the black economy and undertaking relate illicit activities.”

The limit will not apply to transactions where an authorised deposit-taking institution accepts deposits or pays out withdrawals.

The information memorandum says: “Exempting those entities will be necessary for the public to have a legitimate way of moving large amounts of cash into and out of the financial system.”

Foreign currency exchange services regulated under the Anti-Money Laundering and Counter-Terrorism Financing Act will also be exempt.

ADIs and currency exchanges will continue to submit threshold reports when they engage in transactions involving an amount of $10,000 or more.

The bill makes provisions for the Treasurer to specify specific transactions that will not be covered by the limit.

If an offence is committed by an unincorporated association or body, the offence is taken to have been committed by each member of its committee of management. Similarly, each of the partners in a partnership will be liable and the trustee or trustees or a trust will be liable.

If the offence is committed by a superannuation fund the offence is taken to have been committed by the trustee or trustees of the fund. If a super fund does not have a trustee, the offence is taken to have been committed by the entity that manages the fund.

The new offences only apply to making and accepting payments in excess of the cash payment limit. Nothing in the bill makes it an offence to be in possession of cash of any amount.