Anti-Money Laundering 101: What do Australian dealers in precious metals and stones need to know about the AML/CTF Amendment Act 2024 and how can they start to prepare to comply?

Introduction

In November 2024, the Australian Parliament enacted the Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2024 (AML/CTF Amendment Act), marking a significant expansion of the nation’s financial regulatory framework. This legislation extends AML/CTF obligations to include dealers in precious metals and stones, acknowledging the sector’s vulnerability to exploitation by financial criminals. As a dealer in precious metals and stones, understanding the implications of this amendment is crucial. This article provides an overview of the AML/CTF Amendment Act 2024, its specific impact on your industry, and practical steps to prepare for compliance.

What are the key provisions of the AML/CTF Amendment Act 2024?

• Expansion to High-Risk Professions: The Act broadened the AML/CTF regime to encompass services provided by dealers in precious metals and stones, among others. These sectors, often referred to as ‘tranche two’ entities, have now been recognised by the Australian Government as high-risk for money laundering activities

• Modernisation of Compliance Requirements: The Act aims to simplify and clarify AML/CTF obligations, making it easier for businesses to comply. This includes updating definitions and streamlining processes to reflect evolving business practices and technologies

• Enhanced Customer Due Diligence (CDD): The Act also established an improved, outcomes-based framework for CDD requirements, clarifying when enhanced CDD must be applied and streamlining circumstances for simplified CDD

• Implementation Timeline: New AML/CTF obligations for tranche two entities, including dealers in precious metals and stones, will commence on 1 July 2026. Entities can enroll with AUSTRAC from 31 March 2026

This phased approach allows time for affected sectors to understand and prepare for their new responsibilities. 

What are the implications of the AML/CTF Amendment Act for Trust and Company Service Providers?

With the inclusion of dealers in precious metals and stones under the AML/CTF regime, these businesses will need to adhere to specific obligations designed to prevent financial crime:

• AML/CTF Program Development: Firms are required to develop and maintain a tailored AML/CTF program that identifies, assesses, mitigates and manages risks associated with money laundering and terrorism financing

• Customer Due Diligence: Dealers in precious metals and stones must implement procedures to verify the identity of clients and beneficial owners, understand the nature and purpose of the business relationship, and conduct ongoing monitoring to detect suspicious activities

• Reporting Obligations: Suspicious matters, threshold transactions, and international funds transfer instructions must be reported to AUSTRAC within specified timeframes

• Record-Keeping: Detailed records of transactions, client identification, and due diligence processes must be maintained for a minimum period, as stipulated by the Act

Preparing for Compliance: Practical Steps for Dealers in Precious Metals and Stones

To align with the forthcoming AML/CTF obligations, dealers should consider the following proactive measures:

1. Educate and Train Staff: Ensure that all team members are aware of the new AML/CTF requirements and understand their roles in compliance. Regular training sessions can help staff identify red flags and understand reporting procedures

2. Conduct an ML/TF/PF Risk Assessment: Evaluate your firm’s services, client base, distribution channels and geographical exposure to identify areas susceptible to money laundering risks. This assessment will inform the development of your AML/CTF program

3. Develop an AML/CTF Program: Create a comprehensive program that outlines policies and procedures for customer due diligence, reporting, record-keeping, and ongoing compliance monitoring

4. Implement Robust CDD Processes: Establish procedures to verify client identities, understand the nature of their activities, and monitor transactions for inconsistencies or suspicious behaviour 

5. Establish Reporting Protocols: Define clear internal processes for escalating and reporting suspicious matters to AUSTRAC promptly

6. Maintain Accurate Records: Keep detailed records of all transactions, client interactions, and compliance activities to demonstrate adherence to AML/CTF obligations

7. Engage with Professional Bodies: Stay connected with industry associations and regulatory bodies for updates, guidance, and support in implementing AML/CTF measures.

Conclusion

The AML/CTF Amendment Act 2024 represents a significant shift in Australia’s approach to combating financial crime, bringing dealers in precious metals and stones squarely within its regulatory scope. By understanding the new obligations and taking proactive steps to develop and implement robust AML/CTF programs, dealers can not only ensure compliance but also contribute to the integrity and security of Australia’s financial system.

Early preparation is key. By acting now, firms can navigate the transition smoothly, uphold their professional responsibilities, and play a crucial role in the fight against money laundering and terrorism financing.