What is anti-money laundering?Anti-Money Laundering Compliance and Advice

Money laundering is the process of “cleaning” illegally obtained profits so that they appear legitimate. Anti-money laundering refers to the policies and legislation aimed at detecting proceeds of crime and preventing money laundering by imposing obligations on financial institutions. Failure to meet these obligations can result in civil, and in some cases, criminal penalties.

The purpose of anti-money laundering legislation is ultimately the repression and deterrence of crime through the targeting of assets.

Australia’s anti-money laundering regime

Australia’s anti-money laundering laws create a complicated regulatory compliance regime, which is primarily governed by the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act). Other important legislative instruments governing this area include:

  • The Anti-Money Laundering and Counter-Terrorism Financing Act 2006 Rules, which supplement the AML/CTF Act by providing more detailed information.
  • The Financial Transaction Reports Act (FTR Act) which contains obligations for some specific business entities and professions.
  • The Industry Contribution Act which regulates the annual industry contribution levy that certain reporting entities must pay to cover AUSTRAC’s operating costs.

 

Key obligations under the AML/CTF Act

The AML/CTF Act applies to “designated services” provided by financial institutions, bullion dealers, digital currency exchanges, the gambling industry, and remittance service providers. Entities providing a designated service under the AML/CTF Act are “reporting entities” and must:

  • Enrol with AUSTRAC, Australia’s AML/CTF regulatory body.
  • Conduct customer identification, verification, ongoing due diligence and transaction monitoring.
  • Report suspicious matters, threshold transactions and international funds transfers.
  • Conduct money laundering and terrorism financing risk assessments.
  • Develop and maintain an AML/CTF program.
  • Conduct AML/CTF training for employees.
  • Make and retain records for seven years.

 

Australian Transaction Reports and Analysis Centre (AUSTRAC)

AUSTRAC is the Australian regulatory body which monitors compliance with anti-money laundering legislation. It is Australia’s financial intelligence unit, collecting transaction reports from financial entities to identify and analyse suspicious financial activity.

These reports assist AUSTRAC in identifying money laundering activities and methods. AUSTRAC then works with state and federal police in prosecuting financial crime in Australia and overseas.

 

Frequently Asked Questions

What are the penalties for failure to comply with Australia’s AML/CTF laws?

If you fail to comply with your obligations under AML/CTF law, AUSTRAC can enforce your compliance or seek a penalty. Enforcement actions AUSTRAC can take include:

  • Civil penalty orders (court-ordered fines).
  • Enforceable undertakings – a commitment to take or not take specific actions.
  • Infringement notices – which can be made public.
  • Remedial directions – instruction to take specific action.
  • Appointment of an external auditor to review AML/CTF compliance.
  • Refusing, cancelling or suspending registration.

What is the Financial Action Task Force (FATF)?

The FATF is an international body established to develop and promote national and international policies to combat money laundering and terrorist financing. Australia has been a member since 1990. The FATF Recommendations provide the international standard for money laundering and terrorist financing counter-measures.

Though their recommendations are not binding under international law, they are endorsed by international organisations including the G20, United Nations, World Bank, and the International Monetary Fund. Australia’s AML/CTF Act was informed by these recommendations.

What is the connection between anti-money laundering and terrorism financing?

Those who engage in acts of terror, whether they are large state-like organisations or individual actors, require funds to support those activities. Obtaining such funds can involve obscuring the source of legal funds or relying on profits generated by illegal activities. Anti-money laundering legislation specifically targets these assets, as a means of suppressing the crime of terrorism.

How can we help?

We provide expert advice and representation to domestic and international companies to aid compliance with Australia’s anti-money laundering laws.

Contact us if you require assistance.

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