Related Websites:

Anti-money laundering and counter terrorism financing

Australia has a robust regime to detect and deter money laundering and terrorism financing. The legal framework comprises the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act), which establishes obligations that are supervised and regulated by the Australian Transaction Reports and Analysis Centre (AUSTRAC).

The Attorney-General’s Department is the policy agency responsible for the AML/CTF Act.  AUSTRAC administers the Act and is Australia’s Financial Intelligence Unit and anti-money laundering regulator.

Background

The AML/CTF Act was developed in close consultation with industry stakeholders from 2004 to 2006. The previous Government decided to implement Australia’s AML/CTF reform in two tranches. The first tranche regulates financial and gambling sectors, while the second tranche will extend this regulation to non-financial business and professions such as lawyers, accountants, jewellers and real estate agents. This decision to create two tranches was taken due to the affected sector’s lack of familiarity with AML/CTF regulation.

Domestic Regulation

Australia has a robust regime to detect and deter money laundering and terrorism financing. The legal framework comprises the AML/CTF Act, which establishes obligations that are supervised and regulated by the Australian Transaction Reports and Analysis Centre (AUSTRAC).

The AML/CTF Act represents the first tranche of AML/CTF reforms, and largely replaced the Financial Transaction Reports Act 1988 (FTR Act). The AML/CTF Act brings Australia into line with international standards, including those set by the Financial Action Task Force.

The AML/CTF Act establishes obligations for any entity that provides services designated under the Act.  In broad terms, the AML/CTF Act applies to services provided by financial institutions, gambling service providers, bullion dealers and remittance dealers.

The AML/CTF Act imposes four key obligations on regulated businesses to detect and deter money laundering, and to provide financial intelligence to revenue and law enforcement agencies:

• customer due diligence: identifying and verifying customer’s  identity, and ongoing monitoring of transactions
• reporting: notifying authorities of suspicious matters, threshold transactions and international funds transfer instructions
• record keeping: businesses are required to keep records of transactions, customer identification, electronic funds transfer instructions and details of AML/CTF programs
• establishing and maintaining an AML/CTF program for their business:  these programs will help identify, mitigate and manage the ML/TF risks a business faces.

The AML/CTF Act implements a risk-based approach to regulation. Businesses will determine how they meet their obligations by assessing the risk that providing a designated service to a customer will facilitate money laundering or terrorism financing.

The AML/CTF Act sets out general principles and obligations. Details of how these obligations are to be carried out are set out in subordinate legislative Instruments known as the AML/CTF Rules.

All relevant Rules and Regulations are available on AUSTRAC’s website.

AUSTRAC

• supervising compliance with the requirements of the AML/CTF and FTR Acts, and
• collecting and analysing the financial intelligence obtained through the reporting obligations, and disseminating that intelligence to law enforcement, national security, revenue and regulatory agencies as well as international counterparts for investigation.

Further information is available at Austrac’s website.

International Obligations

The Financial Action Task Force (FATF) assesses its members’ AML/CTF compliance and rates members against its international standards. The FATF has issued 40 Recommendations to guide international action against money laundering, and 9 Special Recommendations on Terrorist Financing. These recommendations set the international standard for AML/CTF regimes. Australia is a founding member of the FATF, and the Attorney-General’s Department is the head of delegation for Australia at all FATF meetings.

Australia was assessed in 2005 and found to be compliant or largely complaint with 26 of the 49 Recommendations. This assessment pre-dated the introduction of the AML/CTF Act, which was a major step in bringing Australia into line with international best practice. Australia is scheduled for its next mutual evaluation in 2013.

Australia is also a member and permanent co-chair of the Asia-Pacific Group (APG) on Money Laundering. The APG is a FATF-style regional body housed by the AFP in Sydney. The AFP Commissioner is the permanent co-chair, while AUSTRAC is the head of delegation for Australia at all APG meetings.

Further information is available at the Financial Action Task Force’s website.