AUSTRAC has announced its regulatory priorities for 2024, detailing its plans to build resilience in the sectors it regulates against money laundering, terrorism financing and other serious crime.
In addition to its enduring priorities, AUSTRAC will focus on ensuring legislative compliance amongst several sectors including digital currency exchanges, payment platforms, bullion, and non-bank lenders and financiers. It will also focus on addressing serious and systemic deficiencies, making continuous improvements, and leveraging partnerships.
Enduring priorities
In 2024 AUSTRAC’s regulatory work will continue to focus on four enduring priorities.
Mitigating ML/TF risks
AUSTRAC’s 2024 focus involves educating businesses on money laundering and terrorism financing (ML/TF) risks and evaluating their risk assessments.
AML/CTF program compliance
Reporting entities must maintain effective AML/CTF programs, outlining compliance with the AML/CTF Act and Rules and managing risks associated with their services.
Reporting excellence
Accurate and timely reporting, including international funds transfer instructions (IFTI), threshold transaction reports (TTR) and suspicious matter reports (SMR), is crucial for AUSTRAC’s intelligence activities and collaborative efforts.
High-risk sectors
AUSTRAC continues to target banking, gambling, and remittance sectors, addressing significant criminal threats and vulnerabilities in their operations.
Increased regulatory focus
In addition to its enduring priorities, in 2024 AUSTRAC will increase its regulatory activities in the following sectors:
- Digital currency exchanges (DCEs)
- Payment platforms
- Bullion
- Non-bank lenders and financiers.
This is a result of:
- Rapid and significant growth in these sectors.
- Concerns about AML/CTF compliance and significant variation in compliance levels between reporting entities in these sectors.
- AUSTRAC intelligence and partner agency concerns.
Serious and systemic deficiencies
In recent years AUSTRAC’s supervision and enforcement activities have identified serious and systemic AML/CTF compliance failures in the following areas, which will continue to be a focus for AUSTRAC’s regulatory work in 2024.
Board and executive accountability
Ensuring a robust culture of Anti-Money Laundering/Counter-Terrorism Financing (AML/CTF) compliance and risk management is critical. AUSTRAC emphasises the importance of engaged board members and senior management, effective governance arrangements, staff accountability, risk escalation frameworks, and clear resourcing to prevent compliance failures. The enforcement focus includes addressing inadequate compliance cultures that hinder the development of effective frameworks and processes.
Transaction monitoring programs (TMP)
Reporting entities are required to establish and maintain effective TMPs to identify suspicious customer transactions. A non-compliant TMP poses risks such as regulatory penalties, reputational damage, and the loss of vital financial intelligence. AUSTRAC emphasises the necessity of TMPs based on current ML/TF risk assessments, capable of identifying a broad range of suspected crime types. The TMP should cover complex transactions, unusual patterns, and transactions lacking apparent economic purpose, with adequate coverage across all services and channels.
Outsourcing AML/CTF functions
Reporting entities are legally accountable for AML/CTF obligations when outsourcing functions. AUSTRAC highlights concerns about generic AML/CTF programs and insufficiently tailored global programs. Prior to outsourcing, entities must align with their risk appetite, conduct due diligence on providers, and ensure tailored services meet compliance needs. Ongoing governance, independent reviews, and engagement are crucial to verifying third-party compliance and adapting to changes in ML/TF risk exposure and risk appetite.
Continuous improvement
The Australian Government has restated its dedication to enhancing the AML/CTF framework in Australia through proposed legislative reforms announced in April 2023. The proposed reforms aim to make the regime more suitable for its intended purpose, align it with international standards, and streamline regulations to ease the burden on industries.
In collaboration with the Attorney-General’s Department, AUSTRAC plans to support these reforms throughout 2024 by providing substantial guidance and practical education to businesses.
Partnerships
AUSTRAC’s regulatory work thrives on strong partnerships with law enforcement, government regulators, and international partner agencies.
AUSTRAC’s Fintel Alliance helps to pool resources and knowledge from industry, government, and international partners.
Key takeaways
AUSTRAC’s 2024 regulatory priorities aim to strengthen sector resilience against money laundering, terrorism financing and other serious crime. With a focus on enduring priorities, increased regulatory activities in specific sectors, and addressing serious and systemic deficiencies, AUSTRAC seeks to enhance compliance and mitigate risks. The agency also emphasises continuous improvement and leveraging strategic partnerships to achieve its aims.
