AML/CTF Rules

"AML/CTF Rules are developed in consultation with industry, government agencies and other stakeholders. AUSTRAC will commence consultation with industry on the draft AML/CTF Rules before the end of 2024, to ensure they are fit-for-purpose and align with the evolving operating environment for regulated businesses. AUSTRAC intends to undertake 2 rounds of public consultation, and engagement with specific sectors, before the AML/CTF Rules are promulgated. AUSTRAC's engagement on the draft AML/CTF Rules will build upon the consultation process undertaken by the Attorney-General's Department on the proposed reforms, and allow industry to assist in developing obligations that are flexible, practical and calibrated towards a larger range of sectors and regulated entities."

Other highlights

1. In 2023-24 reporting entities submitted 381,758 Subject Matter Reports to AUSTRAC, which are available to law enforcement partners within 24 hours of receipt. AUSTRAC also disseminates potentially high-risk SMRs to law enforcement and government agencies upon identification of priority financial crime threats.

2. In another methodology, Australian entities are drawing on virtual assets to purchase real estate, both onshore and offshore, by converting it to fiat currency and transferring it to law firms, conveyancers and real estate agents. This carries the potential for criminal actors to exploit virtual asset channels to launder proceeds of crime into assets.

3. Crimes generating the highest value of illicit proceeds that require laundering are assessed to be drug offences (including cultivation, manufacture and trafficking), tax and revenue crimes, and defrauding government-funded programs.

4. Sector-specific products will be co-designed for new reporting entities, outlining their ML/TF and proliferation financing risks and how the AML/CTF obligations will apply in their unique operating environments.

5. One of AUSTRAC's primary goals is to ensure that new regulated small businesses can develop an effective AML/CTF program without incurring unreasonable costs. AUSTRAC is hiring dedicated staff to provide guidance on the ML/TF risks faced by new regulated sectors.

6. A key element of identifying and managing ML/TF risk is to be able to know your customer. Changes to customer due diligence obligations will require businesses to identify and verify the identity of their customer and improve their understanding of potential money laundering, terrorism financing and proliferation financing risks associated with each customer.

7. A new 'notice to produce' power, to allow AUSTRAC to request information or documents for the purpose of monitoring, investigating and enforcing compliance with the AML/CTF Act, AML/CTF Rules or regulations, and to support the AUSTRAC CEO to carry out FIU functions.

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Paddy Oliver is a solicitor and has advised on money laundering compliance since 2006. He founded AML Experts in 2016 to meet the money laundering compliance needs of Australian and New Zealand reporting entity clients.