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Glossary

The evolving AML/CTF reforms introduce key terms shaping the compliance landscape. Concepts like Customer Due Diligence (CDD), Beneficial Ownership, and a Risk-Based Approach define how organisations identify and manage financial crime risks. New categories such as Tranche-Two Entities and Obliged Entities expand accountability, while Suspicious Matter Reports (SMRs) ensure transparency in detecting illicit activity. Understanding this glossary is essential for aligning governance, risk, and compliance frameworks with the upcoming regulatory changes.

Key Definitions under the AML/CTF Rules 2025

Reporting and AUSTRAC Terms

AUSTRAC

The Australian Transaction Reports and Analysis Centre. AUSTRAC is Australia’s financial intelligence unit and regulator for AML/CTF compliance.

Annual Compliance Report

A yearly report submitted to AUSTRAC (by 31 March) outlining how your business is meeting its AML/CTF obligations, including training, risk assessments, governance and reporting.

Suspicious Matter Report (SMR)

A report submitted to AUSTRAC when you suspect a customer is engaged in money laundering, terrorism financing, tax evasion or other offences.

Threshold Transaction Report (TTR)

A report submitted to AUSTRAC when cash transactions are AUD 10,000 or more (or equivalent).

Tipping Off

When a staff member warns a customer that they are the subject of a suspicious matter report or investigation. Tipping off is prohibited.

Customer-Related Terms

Customer Due Diligence (CDD)

The process of identifying and verifying customers, understanding their purpose in using your services, and monitoring them over time. Includes simplified, standard and enhanced forms.

Beneficial Owner

The individual(s) who ultimately own or control a customer, even if they are not named directly on official documents. For example, the person behind a trust or shell company.

Politically Exposed Person (PEP)

An individual in a prominent public role (or their close associate or family member). Examples include senior politicians, judges, senior defence officials, and executives of state-owned enterprises.

Enhanced Due Diligence (EDD)

Extra checks required for higher-risk clients or situations, such as PEPs, complex structures or unusual transactions.

Simplified Due Diligence (SDD)

Reduced checks that can be applied only in clearly low-risk circumstances, with justification documented.

Program and Governance Terms

AML/CTF Program

The written framework a business must maintain to comply with AML/CTF obligations. It includes risk assessments, governance, staff training, reporting procedures and independent reviews.

Independent Review

An external evaluation of your AML/CTF program. Reviews test whether your program is effective, highlight gaps, and recommend improvements.

Senior Manager / Governing Body

The person or group of people who make decisions about the business and are accountable for AML/CTF compliance (e.g., partners in a law firm, directors of a company).

Record Keeping

The requirement to retain AML/CTF records—such as CDD, transaction monitoring, risk assessments and reporting—for at least seven years.

Entity and Group Terms

Reporting Entity

 A business that provides one or more designated services, making it subject to AML/CTF obligations.

Designated Service

 A service that falls within the AML/CTF Act. Examples include real estate settlement, establishing companies, managing trust accounts, dealing in precious metals, or providing remittance services.

Reporting Groups

Structures (business groups or elected groups) that allow multiple entities to share one AML/CTF program, led by a designated lead entity.

Business Group

A group of companies with common ownership or control that can operate under a single AML/CTF program, led by one entity.

Elected Group

Independent businesses (such as franchisees) that agree to form a group for compliance purposes, operating under a single program led by a nominated entity.

Lead Entity

The nominated member of a reporting group responsible for overseeing the group’s AML/CTF program. The lead must be Australian-based, independent, and have authority and capacity to ensure group compliance.

Transactions and Value Terms

Identifiers

Official numbers used to identify entities in reporting, such as ABN (Australian Business Number), ACN (Australian Company Number), ARBN (Australian Registered Body Number) or ARSN (Australian Registered Scheme Number).

Transfer of Value

Any transfer of money, assets or commodities. Includes cash, electronic funds transfers, securities, cryptocurrency, and high-value items like gold.

Virtual Asset Service Provider (VASP)

A business that exchanges, transfers, or holds virtual assets (cryptocurrency, tokens, digital wallets) on behalf of others.