In a joint address to the National Press Club, Mark Dreyfus said drug traffickers and terrorists were exploiting real estate, banks and casinos to profit from their crimes.

“It is a disturbing but inescapable fact that Australia is at serious risk of exploitation by criminals seeking to launder illicit funds,” he said on Tuesday.

“While other countries strengthened their defences against the proceeds of criminal and corrupt business practices over the last decade, the former government left the door wide open for illicit funds to flood into Australia.”

Mr Dreyfus made the speech alongside Brendan Thomas, the chief executive of anti-money laundering regulator AUSTRAC.

The address coincided with the release of AUSTRAC’s national risk assessments.

The attorney-general said a failure to update money-laundering defences could lead to economic and reputational consequences for the country.

“Money laundering enables crime by allowing criminals to profit from their offending, this is profit that can then be reinvested to finance future crime,” he said.

“These criminals are constantly looking for new ways to exploit our systems.

“No legitimate business wants to assist the laundering of money from these crimes.”

Risk assessments reveal bad actors use established, legal channels including cash, luxury goods, domestic banks, real estate and casinos to launder their funds in Australia, Mr Dreyfus said.

There are a variety of vulnerabilities that detract from the effectiveness of Australia’s existing laws to prevent these financial crimes.

Reforms to sector were more than a decade overdue, he said.

“We need to stop the drug traffickers, terrorists and criminals who harm our children,” he said.

“We need to be vigilant against money laundering and terrorism financing risks and ensure that everyone does their part to stop these criminals from exploiting our economy to launder the proceeds of their crimes.”