Attorney-General Mark Dreyfus said Australia was one of 200 jurisdictions that do not regulate “two-tranche entities” – including lawyers, accountants, and real estate agents – and it placed the country at risk of being “grey listed” by the task force.

“The bill will modernise Australia’s AML/CTF systems to ensure it keeps pace with our global financial system – closing the gaps that increasingly sophisticated and professional criminal organisations can exploit,” Dreyfus said in a statement.

While the Law Council of Australia welcomed the proposal to amend the AML/CTF regime, president Greg McIntyre said the “complex” bill would need careful scrutiny “to determine whether the proposals represent an appropriate, targeted and efficient response”.

McIntyre said the legal profession is already one of the most extensively regulated professions, and dual regulation remains an ongoing issue, “not least because increases in regulatory costs inevitably put upward pressure on the costs of legal services”.

The proposals are estimated to cost affected businesses an additional $1.8 billion annually over 10 years, in addition to other regulatory costs, and may impact the majority of law firms.

“The Law Council is concerned about the impact increased regulatory costs will have on the viability of 93 per cent of Australia’s law practices, which are very small 1-4 partner law firms, especially those located in and supporting regional and remote communities.

“There is a careful balance to be struck,” McIntyre said.

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According to research released by the Australian Institute of Criminology (AIC) and the Australian Transaction Reports and Analysis Centre (AUSTRAC), organised crime groups that include two-tranche entities such as lawyers “are more likely to be involved in money laundering and with larger sums involved”.

These groups are responsible for more than twice as much crime-related harm as groups not involved in money laundering, and every year, it increases harm to the community by 50 per cent.

Dreyfus said the “billions of dollars” generated through illegal activities are then used to “fund further serious crimes”.

“The Law Council supports measures to disrupt money laundering and the atrocious crimes connected with it, including risk-based and outcomes-based approaches to further strengthening the legal profession’s resilience,” McIntyre said.

“However, careful scrutiny is also essential to ensuring the AML regime does not detract from the independent role of the legal profession in the administration of justice, or the centrality of trust and confidence to the client/practitioner relationship.”