Date posted: 29/04/2021

Anti-money laundering regime in Australia

Understand the application of anti money laundering (AML) and counter terrorism financing (CTF) laws to members in Australia

In brief

  • Phase 1 of the anti-money laundering and counter-terrorism financing legislation has been implemented in Australia.
  • Phase 2, which would include accountants, is currently not implemented.
  • The Australian Transaction Reports and Analysis Centre (AUSTRAC) is the regulator and is responsible for supervising compliance with the requirements of AML in Australia.

Phase 1 of the anti-money laundering and counter-terrorism financing legislation has been implemented in Australia. This phase has been introduced via the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (the Act) and applies to designated services, which include financial services, bullion, gambling and digital currency exchange sectors.

In 2017, it was announced that the Act would be extended under Phase 2 to capture designated non-financial businesses and professions (DNFBPs) which includes accountants. It was expected the extension would be finalised by 2018, however no further progress has been made to date (January 2021). Phase 2 of the Act is part of Australia’s commitment as a member of the Financial Action Taskforce (FATF).

The Australian Transaction Reports and Analysis Centre (AUSTRAC) is the regulator and specialist financial intelligence unit. AUSTRAC is responsible for supervising compliance with the requirements of AML in Australia. AUSTRAC works with and supports advisors and has the ability to require a reporting entity to appoint an external auditor (although AUSTRAC must authorise an individual to be the external auditor for a particular audit).

Scope

A reporting entity is a business which provides designated services. The definition of a designated service is outlined in Tables 1 to 3 in Section 6 of the Act. Phase 1 of the regime is aimed at financial institutions. Accounting services aren’t generally considered a designated services.

Obligations

  • A new customer must be identified before providing a designated service. 
  • An AML/CTF program must be implemented which identifies, mitigates and manages the money laundering and/or terrorism financing risks. This usually includes: 
    • An assessment of the risks associated with the services being provided, taking account of the customers and their jurisdictions
    • An AML/CTF risk awareness training program 
    • An employee due diligence program 
    • Documentation of the AML/CTF program and approval by the CEO or Board
    • A nominated AML/CTF Compliance Officer
    • Regular independent reviews of the AML/CTF program by an independent external or internal party
    • Appropriate customer identification procedures. 
  • An annual Compliance Report must be submitted to the supervisor
  • Any suspicious matters must be reported to the supervisor.

Supervision

Australia has a single national regulator; the Australian Transaction Reports and Analysis Centre (AUSTRAC) who also performs the Police body role with suspicious matter reports.

Penalties

Failure to comply under the Act carry civil penalties of up to $4.2 million for an individual and $21 million for a reporting entity.

If you have any questions, get in touch with [email protected].

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