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The Australian government has launched a second public consultation on the country’s anti-money laundering and counter terrorism financing (AML/CTF) regime, following legislation passed last year.
The second round of consultation opened on Monday (May 19) and will continue until June 27, 2025. The first round of consultation began in late 2024.
The Australian Transaction Reports and Analysis Centre (AUSTRAC) has updated the draft AML/CTF Rules to address the feedback it received in the first round of consultation.
Australia’s parliament passed the Anti-Money Laundering and Counter-Terrorism Financing Amendment Act in late 2024, overhauling the country’s AML/CTF regime.
The legislation introduced new risk assessment obligations and stressed their importance in maintaining a financial crime prevention framework.
AUSTRAC’s latest consultation is part of the process of creating a new regulatory framework to give effect to the updated AML/CTF Act.
As covered by Vixio, under the new legislation, AML reporting entities will be subject to customer due diligence (CDD) requirements that go above and beyond previous measures, requiring reporting entities to identify and verify the identity of their customers and certain persons associated with their customers.
In addition, enhanced customer due diligence is required if certain conditions are met.
These include high ML/TF risk — for example, where a designated service is provided to a customer or beneficial owner who is a politically exposed person or a reporting entity wants to transact with a party in a prescribed foreign country (currently Iran and North Korea).
The act also introduced the concept of the “beneficial owner” into Australia’s AML framework for the first time. A beneficial owner is any individual who directly or indirectly owns or controls 25 percent or more of an entity such as a company, trust or partnership.
All reporting entities must identify the beneficial owners of their customers and assess the money laundering/terrorism financing risk they pose.
When the act comes into force in March 2026, new services and entities will come under the regulatory authority of AUSTRAC, which has been given much stronger investigative powers.
Strengthened powers
The regulator’s beefed up powers include a new examination power, enabling it to seek information and documents and to require a person to appear before an examiner.
It also has a new information gathering power, enabling it proactively to seek information and documents from businesses, even in the absence of a suspicious transaction or report.
Australia’s new AML/CTF regime has also abrogated the privilege against self-incrimination, so that individuals may be required to provide documents or answers to AUSTRAC, even if doing so may incriminate them.
There are also significant penalties for non-compliance with the regulator’s new examination powers, including up to two years of imprisonment or 100 penalty units (currently $33,000) for intentional or reckless non-compliance.
Growing trend
Australia’s enhanced AML/CTF regime comes amid a growing international trend for tougher financial law enforcement and accountability, and already seems to be having significant effects.
In February, AUSTRAC said its “blitz” against non-compliant reporting entities had claimed nine firms, and that more than 50 others were in its crosshairs.
It noted that nine organisations have had their registrations cancelled or suspended, or their renewals refused, due to AML non-compliance.
The sanctioned firms were all remittance operators or digital currency exchanges, and the actions against them all took place in late 2024.
