With many more of our members in Australia expected to become AML/CTF reporting entities (RE's) from 1 July 2026, our feedback reflected the expectation that the Rules will clarify how our members can comply with the primary legislation.

Terms used

Terms such as ‘governing body, board and senior management’ are not applicable to our smaller practices. The consultation paper clearly explains that these roles, and that of compliance officer, may be held by a single person. We have suggested that a note to that effect be entered in the Rules at each instance of these terms and explained in detail in the core and sector guides when developed.

Independent evaluations

This is a requirement for all RE's, including sole practitioners, micro and small RE's to engage an independent evaluator, at least once every three years, to assess the effectiveness of their AML/CTF program.

We raised that this requirement will create unnecessary friction with the approaches to risk mitigation already required of professional accountants with reference to the Accounting Professional & Ethical Standards Board (APESB) standard APES 320 Quality Management for Firms that provide Non-Assurance Services (APES 320). We noted that this sets out the existing mandatory obligations on our members to establish and maintain a System of Quality Management to provide it with reasonable confidence that the Firm and its Personnel are complying with APESB Professional Standards and applicable legal and regulatory requirements.

We are also concerned that this requirement will create an acute shortage of appropriately skilled and experienced evaluators. Especially evaluators who understand the new REs' business and their ML/TF risks. An exponential increase in demand for evaluators may give rise to a risk that unskilled and inexperienced people will take advantage of an RE’s obligation to complete an independent evaluation. As these evaluators are not regulated, therefore require no formal qualifications, and their report is not submitted to AUSTRAC, RE's cannot rely on the conclusion of the evaluator or that any recommendations for change are compliant with the AML/CTF regime.

We view this requirement as a compliance activity for compliance’s sake and an unnecessary cost for smaller RE's. We proposed several alternatives with a preference that, for smaller RE's, the annual Compliance Report be considered sufficient.

Compliance Report

Every reporting entity must submit a Compliance Report to AUSTRAC in the first quarter of a new calendar year for the previous calendar year. AUSTRAC provides a preview of the questions in the report at the close of the calendar year. For example, for the 2024 year, AUSTRAC issued preview questions on 5 December 2024.

With a view that many of our members close down their practice for a period over December-January, we sought consideration of extending the lodgment period out to April and issuing the Preview Questions as early as practicable.

We also suggested using technology to enable REs to skip questions relative to a prior answer. For example, referencing AUSTRAC’s Preview Questions for the 2024 compliance report, where it asks if you outsource any functions and the RE selects ‘None’, the RE should be moved to the next set of questions on its AML/CTF program. Similarly, where an RE identifies as a sole practitioner, partnership, micro or small business, moving to an alternate version of the form that replaces irrelevant terms in questions such as 'Did you report internally to the Board or Senior Management…’, with questions and terms relevant to how smaller businesses operate.

Feedback on specific Rules

In addition to providing responses to the questions raised in the consultation paper, we provided a table with feedback on specific rules. For example, Rule 14, which is intended to clarify the requirement to provide ongoing training for employees. The Rule does not indicate how often or the form the training can take. We suggested that the Rule refer to, and be linked to, AUSTRAC’s guidance on its website ‘Employee AML/CTF risk awareness training’.

Thank you to our members who contributed to this feedback and we look forward to continuing to work together for round 2 of the new Rules and as core and sector guides are developed.