AUSTRAC is the Australian government agency responsible for combating criminal abuse of the financial system, including anti-money laundering and counter-terrorism financing (AML/CTF). If you don’t meet your obligations under AML/CTF law, you may be subject to enforcement actions and penalties from AUSTRAC. We explore the consequences of not complying as outlined by AUSTRAC.
What enforcement actions can AUSTRAC take?
Enforcement actions available to AUSTRAC include civil penalty orders, enforceable undertakings, infringement notices and remedial directions.
Civil penalty orders
A civil penalty order is a court-ordered fine which can be up to 20,000 penalty units, or up to 100,000 penalty units for a body corporate.
The value of a penalty unit is set by the date you broke the law. For offences committed on or after 1 July 2020, the penalty unit amount is $222. The current maximum penalties (as of February 2021) are therefore:
- $22,200,000 for a body corporate.
An enforceable undertaking is a written commitment to take – or not take – specific actions. These undertakings can be made public, and breaches of the agreed terms are treated seriously by the courts.
AUSTRAC can issue infringement notices for breaching specific parts of the AML/CTF Act regarding:
- Know your customer (KYC) procedures.
- Enrolling and registering with AUSTRAC.
- Reporting to AUSTRAC and keeping records.
A remedial direction is a written instruction to take specific compliance actions. It can be issued to prevent previous breaches from occurring again, and to require the submission of reports to AUSTRAC. The direction can be made public.
Besides enforcement actions, AUSTRAC can also issue written notices requiring you to appoint an external auditor or undertake a money laundering/terrorism financing (ML/TF) risk assessment.
Written notice to appoint an external auditor
AUSTRAC can require you to appoint an external auditor if it suspects you are not taking appropriate actions to manage ML/TF risks, or that you have not complied with the relevant laws. A copy of the audit report must be provided to AUSTRAC.
Written notice to carry out an ML/TF risk assessment
This may be required if AUSTRAC is not satisfied that you have carried out an adequate and current ML/TF risk assessment. A report detailing the results of the assessment must be prepared and submitted to AUSTRAC.
AUSTRAC can also take registration actions against remittance service providers and digital currency exchange providers.
The registration of a provider can be refused, cancelled or suspended if AUSTRAC believes that the provider poses significant ML/TF risks, or other serious crime risks.
Can I appeal an AUSTRAC decision?
You have the right to ask for a review of certain decisions made by AUSTRAC, but strict time limits apply. In most cases, a request for review must be made in writing within 30 days of being told of the decision. The exception is applying to have a suspension decision reviewed, where the time limit is 14 days.
There are significant consequences to not complying with AUSTRAC requirements under the relevant AML/CTF laws.
AUSTRAC has the power to take enforcement actions which include imposing substantial monetary penalties and compelling compliance actions. It can also require you to appoint an external auditor or undertake an ML/TF risk assessment, and it can suspend the registration of remittance service and digital currency exchange providers which pose risks of crime facilitation.