On 28 November 2024, the Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2024 (Amended AML/CTF Act) was passed, with amendments. This varies the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth). It received royal assent on 10 December 2024. These amendments substantially come into effect for existing reporting entities on 31 March 2026 and for Tranche II reporting entities on 1 July 2026, although, for existing reporting entities, welcome changes to the ‘tipping off’ prohibition come into effect from 31 March 2025. The key objectives of the Amended AML/CTF Act are to:
Expand the AML/CTF regime to additional high-risk services provided by Tranche II entities (namely, lawyers, accountants, trust and company service providers, real estate professionals, and dealers of precious stones and metals).
Extend regulation under the AML/CTF regime for virtual asset and value transfer (payments) services (including payment intermediaries).
Simplify and clarify the AML/CTF regime to increase flexibility, reduce regulatory impacts and support businesses to better prevent and detect financial crime.
Broaden AUSTRAC’s information gathering powers.
These reforms are supported by a new AML/CTF Rules framework. Amendments to the Anti-Money Laundering and Counter-Terrorism Rules Instrument 2007 (No. 1) (Cth) (Current Rules), as amended, will become ‘Exemption Rules’ and new ‘General Rules’ will be established by the introduction of the Anti-Money Laundering and Counter-Terrorism Financing Rules 2024. The General Rules will be developed in consultation with industry.
AUSTRAC released the First Exposure Draft of the General Rules for consultation on 11 December 2024, addressing topics including, amongst others, AML/CTF Programs, Customer Due Diligence, AML/CTF Compliance Officers and ‘Transfer of Value’. The consultation period ends on 14 February 2025. Following this, a second Exposure Draft of the General Rules will be released. This draft will address the amendments adopted from the first round of consultation, as well as Enrolment and Registration Details, and Reportable Details for Threshold Transaction Reports and Suspicious Matter Reports.
AUSTRAC has acknowledged in the Consultation Paper that the Current Rules are overly prescriptive. The Amended AML/CTF Act will establish a more outcomes-based system of compliance, outlining the outcome to be achieved while affording flexibility to meet this outcome. Reforms to the current rules will facilitate this outcomes-based system by removing unnecessarily prescriptive steps.
The key reforms to Australia’s AML/CTF regime introduced through the Amended AML/CTF Act are as follows.
Risk assessments: an express requirement to have an ML/TF risk assessment that must flow through to AML/CTF policies and procedures.
AML/CTF Program: reporting entities are no longer required to have standalone program designated to include Part A and Part B; rather, the AML/CTF Program will be comprised of the ML/TF risk assessment and AML/CTF policies and procedures.
Proliferation financing risk: proliferation financing risk is an additional risk to be considered by reporting entities, as part of their AML/CTF Programs.
Enhanced AML/CTF governance requirements: governing bodies are required to own the ML/TF risk assessment and focus on strategic oversight; procedural changes must be approved by a senior manager; there are additional requirements for AML/CTF compliance officers; and there are specific triggers to review ML/TF risk assessments and AML/CTF Programs.
Changes to group risk management: replacing designated business groups with the concept of a reporting group and the introduction of a lead reporting entity.
Simplifying customer due diligence: the framework focuses on outcomes-based initial customer due diligence, more targeted ongoing customer due diligence, and clarifying when enhanced customer due diligence must and simplified customer due diligence may apply.
Tipping off: changes to tipping off to facilitate greater information sharing to manage financial crime risks.
Changes to value transfer services including remittance and virtual assets: introducing new designated services (including for value transfer and virtual asset-related services) and changes to reporting obligations including for international value transfer reporting (formerly IFTI reporting) and travel rule requirements.
Information gathering powers: to enhance AUSTRAC’s ability to monitor compliance with the Amended AML/CTF Act, Exemption Rules, General Rules or the regulations, the reforms have:
introduced examination powers (similar to compulsory ASIC examinations)
expanded the class of persons who can be issued a notice under s167 of the Amended AML/CTF Act to include any person AUSTRAC reasonably believes has knowledge or information relevant to compliance with the Amended AML/CTF Act or the regulations.
Introduction of Tranche II entities: extending the AML/CTF regime to Tranche II entities such as real estate professionals, professional service providers (e.g. lawyers and accountants), and dealers in precious metals and stones that accept payment in cash of A$10,000 (or foreign equivalent).
The ‘General Rules’ will support the Amended AML/CTF Act by specifying:
Triggers for updating ML/TF risk assessments in response to independent evaluations.
Inclusions required for AML/CTF policies e.g. internal reporting, personnel due diligence, training, independent evaluations, reporting.
Governance requirements relating to senior management approvals and fit and proper person requirements for AML/CTF compliance officers.
Customer due diligence requirements including initial customer due diligence, exemptions, simplified and enhanced due diligence, deemed compliance, nested service relationships, reliance and keep open notices.
Considerations for correspondent banking relationships.
Requirements for transfer of value designated services including definitions of ordering and beneficiary institutions, obligations and exemptions.
Details required to satisfy reporting obligations.
Record keeping requirements.
Secrecy and access.
The discharge of duties for Reporting Groups.
At the inaugural AML/CTF Adviser Forum, held in November 2024, AUSTRAC identified the following areas of focus:
Records – the importance of the record keeping of reporting entities, to be able to produce clear evidence to AUSTRAC to demonstrate compliance with AML/CTF obligations.
Alignment – the importance of AML/CTF Programs aligning with the entity’s policies, procedures, implementation records and with the ML/TF risks faced by that reporting entity.
Reporting – reports to AUSTRAC should be clear, concise, complete and timely to ensure AUSTRAC and partner agencies have quality information to investigate potential crimes.
Assurance – robust assurance processes should be in place to show that a reporting entity’s AML/CTF Program, policies and procedures are effectively mitigating its ML/TF risks.
This area will continue evolve as AUSTRAC consults with industry into next year, and as new classes of entities need to come to terms with the reporting regime.