Date posted: 16/09/2021 4 min read

How well do you know your clients?

Verifying the identity of a prospective client reduces the risk of you and your business being used for the purposes of money laundering or terrorism financing.

In brief

  • A recent Senate Committee inquiry recently sought to assess the effectiveness of the AML/CTF regime
  • Included in this inquiry was determining whether accountants should now be captured by the regime
  • CA ANZ continues to advocate for obligations that are proportionate to the risk within a practice

In Australia, a Senate Committee recently sought to assess the effectiveness of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF) and considered how the obligations under the Act could be expanded to accountants in public practice.

Chartered Accountants ANZ has provided feedback to the senate committee in a written submission. 

AML/CFT in Australia

The Australian Government continues to reform Australia’s anti-money laundering and counter-terrorism financing (AML/CTF) regime. The aim of these reforms is to ensure that Australia meets its commitment to keep pace with the channels used to engage in criminal activity. Currently, reporting entities under the Act need to undertake due diligence to verify the identity of clients, have a program in place to identify risks, and report risks identified to the relevant authorities.

In what is referred to as Tranche 1, the Australian Government introduced the Anti-Money Laundering/Counter-Terrorism Financing Act 2006 (The Act), which captures certain business activities in the financial, bullion dealing, and gambling sectors. The AML/CTF regime imposes regulatory obligations on these reporting entities which include customer and beneficial ownership due diligence, record keeping, and transaction reporting. 

As criminals become more sophisticated, the Financial Action Task Force (FATF) adjusts the international AML/CTF standards to ensure they remain effective in identifying and preventing illegal activities. Under its commitment to meet international standards, Australia is considering reforms in what is referred to as Tranche 2. These reforms will seek to strengthen the regime to meet the current FATF standards and prevent systemic or large-scale AML/CTF breaches.

Senate Committee

The Senate Committee sought comments on how an expansion to other sectors could be captured in Tranche 2. Specifically, the regulatory impact, costs, and benefits if the regime were to designate non-financial businesses and professions (DNFBPs or ‘gatekeeper professions’) as reporting entities. This would include accountants and/or certain activities undertaken by accountants, as well as other professions such as lawyers and real estate agents.

Find out more

New Zealand Regime

Phase 2 came into effect in New Zealand in 2018. During the consultation period, CA ANZ engaged with the relevant regulators to help ensure the obligations impressed upon our members were proportional to the risks of a potential client having criminal intentions. The scope of the regime has extended to members in public practice that undertake certain activities. Those members must complete a risk assessment, implement an AML/CFT programme, and designate an employee to administer and manage the programme.

What does this mean for you?

AML/CTF regimes around the world seek to identify and take action against persons that misuse the financial system to launder money or finance terrorism. We acknowledge our members’ role in preventing abuse of the financial system and support, in principle, the inclusion of DNFBPs in the Australian regime.

The expansion to non-financial businesses has been under consideration since 2017 and we will continue to advocate for obligations that are proportionate to the risk within a practice.

Previous submission on AML/CTF Extensions

CA ANZ feedback to the model for regulation under Australia’s anti-money laundering and counter-terrorism financing regime

View submission

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