Transforming Australia’s AML / CTF laws

Today Parliament has passed Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2024 (Cth) (Bill). The Bill amends the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) (Act), making the most transformational changes since the Act commenced in 2006.

The amendments under the Bill impact both existing and new reporting entities, and have three key objectives:

1. To extend the Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) regime to certain higher-risk services (designated services) provided by real estate professionals, professional service providers including lawyers, accountants and trust and company service providers, and dealers in precious stones and metals (Tranche 2 entities).
2. To improve the effectiveness of the AML/CTF regime by making it simpler and clearer for businesses to comply with their obligations.
3. To modernise the regime to reflect changing business structures, technologies and illicit financing methodologies.

• New entities
• Changes to the AML/CTF Act
• The AML/CTF Rules
• What other steps can be taken to prepare

New entities

The amendments are likely to result in approximately 90,000 new reporting entities. New reporting entities that provide designated services will need to enrol with the Australian Transaction Reports and Analysis Centre (AUSTRAC) by 31 March 2026 and comply with the Act by 1 July 2026. These designated services are seen to be the highest risk of money laundering for these sectors and include, for example, acting as an agent on the buying and selling of real estate.

Changes to the AML/CTF Act

The changes for existing reporting entities are vast and will significantly impact business processes. Some of the material changes include (we have paraphrased these for brevity):

• Oversight and Governance: Governing bodies (e.g. Boards and senior management) will be required to take reasonable steps to ensure the business is appropriately identifying, assessing, managing and mitigating money laundering, proliferation financing and terrorism financing risks.
• Risk Assessment: The existing requirement will be clarified to expressly oblige reporting entities to undertake and update their money laundering, proliferation financing and terrorism financing risk assessments.
• Customer Due Diligence (CDD): There will be substantially redesigned obligations for initial customer due diligence (before designated services are provided), as well as for ongoing due diligence during the course of a business relationship.
• Value Transfers: Amending the approach to reporting of value transfers presently reported to AUSTRAC as international funds transfer instructions.
• Information Sharing and Tipping Off: Changes to the tipping off offence are proposed to facilitate better information sharing to manage financial crime risks, unless disclosure would or could reasonably be expected to prejudice a law enforcement investigation.
• Reporting Group: The current concept of a 'designated business group' will be replaced with a 'reporting group' concept, imposing obligations and expanded liability on the 'lead entity' of a reporting group.

The AML/CTF Rules

The Commonwealth Attorney General's Department has stated that consultation on the Anti-Money Laundering and Counter-Terrorism Financing Rules Instrument 2007 (No. 1) (Cth) (Rules) will be released prior to the end of the year. AUSTRAC as regulator is the Rules making body.

The Rules will provide further detail and substance as to how the Act will operate in practice. New and existing reporting entities should:

1. Consider how the Rules will apply to their business.
2. Engage with industry bodies and other trade associations to best understand how the Rules may impact their sector.
3. Engage with the consultation process with AUSTRAC to provide feedback on the application and practicality with respect to their business.

What other steps can be taken to prepare

Given the large volume of change in the Bill, new and existing reporting entities can begin preparing by:

1. Designated Services - Reviewing which new designated services may apply to their business.
2. Risk Assessment - Conducting a risk assessment of their money laundering, proliferation financing and terrorism financing risk.
3. Training - Undertaking training with respect to the changes to be implemented under the Bill.
4. Certification - Considering the level of training and certification of their current or proposed AML/CTF Compliance Officer.
5. Policies - Assessing how their AML/CTF Policies will be drafted and amended in compliance with the Act and Rules (once amended).

To stay up to date with these changes, subscribe to our Tranche 2 and AML/CTF Reforms.