WHAT ARE THE
Money laundering and terrorism financing laws in Australia?
In Australia, money laundering is a serious offence and is regulated primarily under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act) and its associated regulations. The AML/CTF Act aims to prevent money laundering (ML) and terrorism financing (TF) by establishing a comprehensive framework for enterprise-wide ML/TF risk assessments, reporting, record-keeping, and customer identification.
WHAT ARE THE
Key obligations reporting entities have under Australian laws?
The key obligations under the AML/CTF Act include:
- Customer Due Diligence (CDD) - Regulated entities must establish and maintain procedures to verify the identity of their customers. This includes collecting and verifying information such as name, address, and date of birth. Enhanced due diligence measures are also required for higher-risk customers, such as politically exposed persons (PEPs).
- Ongoing Customer Due Diligence - Regulated entities must conduct ongoing monitoring of their customer relationships to ensure the information remains up to date and to identify any suspicious activities. This involves regularly reviewing and updating customer records and conducting periodic risk assessments.
- Reporting Suspicious Matters - Regulated entities are obligated to report any suspicious transactions or activities that may be related to money laundering or terrorism financing. They must have procedures in place to identify and report such matters to the financial intelligence agency in Australia, which is AUSTRAC (Australian Transaction Reports and Analysis Centre).
- Threshold Transaction Reporting - Regulated entities are required to report certain cash transactions and electronic funds transfers that exceed specified thresholds. This includes cash transactions of AUD 10,000 or more, as well as international funds transfers of AUD 10,000 or more.
- Record-Keeping - Regulated entities must maintain adequate records of customer identification, transaction details, and CDD measures. These records should be kept for a minimum period as specified by the AML/CTF Act.
- Compliance Program - Regulated entities must establish and maintain a documented AML/CTF compliance program tailored to their business size and risk profile. This program should include policies, procedures, and internal controls to ensure compliance with the AML/CTF Act.
- Training and Awareness - Regulated entities are required to provide ongoing AML/CTF training to their employees. This training should cover relevant laws, regulations, and internal policies, enabling staff to recognize and report suspicious activities effectively.
- Appointment of an AML/CTF Compliance Officer - Regulated entities must appoint an AML/CTF compliance officer responsible for overseeing the implementation and maintenance of the AML/CTF compliance program. This officer acts as a point of contact for AUSTRAC and ensures ongoing compliance with AML/CTF obligations.
WHO ARE THE
ML/TF regulators in Australia and what functions do they perform?
The Australian Transaction Reports and Analysis Centre (AUSTRAC) is Australia's financial intelligence agency and is responsible for regulating and monitoring financial transactions to detect and prevent money laundering and terrorism financing. It is a government agency under the purview of the Attorney-General's Department.
AUSTRAC has various powers and functions at its disposal that are designed to encourage or enforce compliance with the AML/CTF Act, these include:
- Regulatory supervision - includes the authority to supervise and regulate reporting entities to ensure their compliance with the AML/CTF Act and associated regulations. This includes conducting inspections, audits, and assessments of reporting entities' anti-money laundering and counter-terrorism financing programs.
- Registration and reporting - includes being responsible for the registration of reporting entities covered by the AML/CTF Act. Reporting entities must register with AUSTRAC and fulfil reporting obligations, such as submitting suspicious matter reports, threshold transaction reports, international funds transfer instruction (IFTI) reports and annual compliance reports.
- Intelligence and analysis - includes collecting, analysing and disseminating financial intelligence related to money laundering, terrorism financing, and other serious financial crimes.
- Compliance and enforcement - includes various ways to enforce compliance with the AML/CTF Act, such as issuing infringement notices, accepting enforceable undertakings, mandating independent reviews, imposing civil penalties, and seeking criminal prosecution for serious breaches of the legislation.
- Education, training and guidance - includes providing industry outreach and support to reporting entities to assist them in understanding and fulfilling their obligations under the AML/CTF Act. It publishes guidance materials, conducts training programs, and offers assistance through its website and helpdesk.
- Information sharing - includes participating in global initiatives to combat money laundering and terrorism financing and exchanges information and cooperates with other financial intelligence units worldwide to enhance the effectiveness of the global anti-money laundering regime.
WHAT ARE THE
Industry sectors subject to ML/TF regulations?
In Australia, the main industry sectors that are regulated include:
Australia has been heavily criticised to regulate the following industry sectors which are under review and reforms are expected to happen to bring these sectors in line with the international community.
Click on each industry to learn more:
WHAT ARE THE
Penalties for non-compliance with AML/CTF laws?
Under the AML/CTF Act, the penalties for non-compliance can vary depending on the severity of the offence and the specific provisions violated. The types of penalties that can apply include:
- Civil penalties - Individuals or organisations found to be in breach of the AML/CTF Act may be subject to civil penalties. The maximum civil penalty for individuals is AUD$420,000 per offence, while for corporations, it can be up to AUD$2.1 million per offence.
- Criminal Offences - in serious cases of non-compliance with money laundering and terrorism financing laws can be considered a criminal offence, leading to criminal charges and potential imprisonment. The severity of the penalties can vary based on the offence and may include fines and imprisonment terms.
AUSTRAC also has various enforcement powers, described above that it can apply.
WHAT ARE THE
Largest fines for non-compliance with AML/CTF laws?
AUSTRAC has shown that it is willing to take action for non-compliance with AML/CTF laws and has used its enforcement powers extensively across different regulated entities operating in different industry sectors including:
Financial Services:
- AUSTRAC accepts an enforceable undertaking from the Bank of Queensland (31 May 2023)
- AUSTRAC accepts an enforceable undertaking from Paypal (17 March 2023)
- AUSTRAC accepts an enforceable undertaking from ING (24 November 2022)
- AUSTRAC accepts an enforceable undertaking from National Australia Bank (7 May 2022)
- AUSTRAC orders audit of three Bell Financial Group Entity's compliance with financial crime laws (17 February 2022)
- AUSTRAC issues remedial action to Australian Military Bank (4 May 2021)
- Westpac ordered to pay AUD$1.3 billion penalty (21 October 2021)
- AUSTRAC issues infringement notice to State Street for IFTI reporting breaches (16 Sept 2020)
- AUSTRAC and Commonwealth Bank of Australia (CBA) agree AUD$700m penalty (4 June 2018)
Gaming:
- AUSTRAC and Crown Resorts agree to AUD$450m penalty (30 May 2023)
- AUSTRAC commences federal court proceedings against Skycity Adelaide (7 December 2022)
- AUSTRAC commences federal court proceedings against Star Entertainment Group entities (30 November 2022)
- AUSTRAC orders audit of Sportsbet’s and Bet365’s compliance with financial crime laws (3 November 2022)
- AUSTRAC commences investigation into the Entain Group (12 September 2022)
- Record civil penalty ordered against Tabcorp (16 March 2017)
Bullion Dealers:
- AUSTRAC orders an audit of Gold Corporation’s (Perth Mint) compliance with financial crime laws (30 August 2022).