The Government is consulting on reforms to Australia’s anti-money laundering and counter-terrorism financing regime (AML/CTF). The reforms are to meet Australia’s obligations as a member of the Financial Action Taskforce (FATF). FATF leads global action to tackle money laundering, terrorist and proliferation financing. As a member, Australia has committed to meeting FATF’s recommendations to detect, deter and disrupt illicit funds linked to criminal activity.

The tranche II reforms seek to streamline obligations and capture some of the services offered by our members and other professional service providers. The round 1 consultation was completed in June 2023 with round 2 closing in June 2024. 

Our joint submission was informed by responses to a CA ANZ member survey, and we thank those members that took the time to complete the survey.

We reiterated our support for the implementation of tranche-two, critically, that in capturing professional service providers (PSPs), their existing statutory and professional obligations be acknowledged and, where these obligations meet AML/CTF requirements, not duplicated.

Our joint submission makes 10 central recommendations with key recommendations highlighted below:

Clarify which ‘person’ is the reporting entity

It is not clear under the AML/CTF Act and the enrolment guidelines who is the reporting entity where an accounting practice operates as a partnership firm with say two Certificate of Public Practice (CPP)/Public Practice Certificate (PPC) holders and a business name.

We suggest that the legislation be explicitly structure-agnostic, to enable firms to enrol with AUSTRAC (as firms do with other regulators such as the Tax Practitioners Board).

Replace the word ‘collect’ with ‘sight and record’

We understand that the intent of the word ‘collect’ in the legislation is for reporting entities to record the details required to identify a customer and record the key attributes of the documents and sources relied on to verify a customer’s identity. We are concerned this may be misunderstood as a requirement to take a copy of identity documents.

We seek for the language in the AML/CTF Act, Rules and guidance to be clear that the requirement is to sight and record key attributes of identity documents.

Remove ‘correspondence’ and ‘administrative’ address from Proposed designated service 8

For our members, it is common practice for their clients to utilise the member’s practice address as a central point for correspondence and administrative notices from government bodies. In this capacity, our members are acting simply as a conduit, to receive and pass on information with no control over how their clients respond to the correspondence or administrative notices.

We do not support including the provision of a ‘correspondence’ or ‘administrative’ address for a company, partnership of any other legal entity as a designated service.

Remove the requirement for an independent review

Currently, such reviews can be undertaken by anyone and the output, such as a report with findings and recommendations, is only provided to the reporting entity, not AUSTRAC. It will be more effective if AUSTRAC directed reviews based on risk, provide accreditation for persons seeking to undertake reviews and received and analysed review findings.

We seek for the independent review requirement to be removed.

No risk rating for pre-commencement customers

We consider the proposal to bring all existing clients into the regime, once in force, by reviewing their AML/CTF risk and applying a risk rating, is an unnecessary burden on new reporting entities. Retrospectively assessing risk will not detect, deter or disrupt criminal activity.

We do not support the proposal that new reporting entities should, over time, risk rate all pre-commencement customers.

Conclusion

We encouraged AUSTRAC and the Attorney General’s Department to establish an industry working group to support the design and implementation of the AML/CTF regime for tranche-two entities, which then continues to meet regularly to discuss challenges that arise, and potential solutions, for new reporting entities.

We look forward to working with our members to enable a smooth transition into Australia’s AML/CTF regime.