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Lawmakers in Australia have passed a landmark anti-money laundering (AML) bill that will bring a range of "high-risk" professions into the country’s AML regime for the first time.
On Friday (November 29), lawmakers in both houses of parliament passed the Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) Amendment Bill 2024.
The bill extends Australia’s AML regime to so-called “tranche two” entities, including lawyers, accountants, trust and company service providers, real estate professionals, and dealers in precious metals and stones.
These entities will now be subject to AML program and reporting requirements for the first time, and must be prepared to comply by July 2026.
The bill also simplifies and clarifies many of the provisions of its predecessor, the Anti-Money Laundering and Counter-Terrorism Financing Act 2006.
This includes new amendments that are designed to modernise Australia’s AML rules to reflect changes in business structures, technology and illicit financing methodologies.
For example, as covered by Vixio, the bill introduces new customer due diligence (CDD) requirements based around the concept of “beneficial ownership”.
CDD is a foundational element of the new AML/CTF regime, requiring reporting entities to identify and verify the identity of their customers and certain persons associated with their customers.
Under the new rules, a “beneficial owner” is any individual who controls the customer (directly or indirectly), or who owns 25 percent or more of the customer (directly or indirectly).
Lawmakers hope that these new amendments will make it easier for regulated firms to understand their obligations and to maintain compliance.
Finally, the bill grants new powers to the Australian Transaction Reports and Analysis Centre (AUSTRAC) to require the disclosure of information and conduct examinations.
Brendan Thomas, CEO of AUSTRAC, welcomed the passing of the bill, noting that it will help to minimise the compliance burden for currently regulated firms.
“The historic passing of this bill will strengthen the integrity of the regime, enhance our compliance internationally and protect Australians by disrupting financial crime,” he said.
“The measures will assist industry and AUSTRAC to better identify and mitigate the significant risks of money laundering and terrorism financing and improve the level of financial intelligence collection.”
Fear of FATF grey-listing recedes
Among lawmakers, a key motivation for passing the bill was the threat of grey-listing by the Financial Action Task Force (FATF).
Since 2015, Australia has failed to comply with 16 out of 40 FATF Recommendations. In subsequent assessments, it was re-rated as “compliant” or “largely compliant” across many of these recommendations.
However, as recently as March 2024, Australia was rated “non-compliant” across four FATF Recommendations.
Three of these relate to supervision of tranche-two entities, and one relates to transparency and beneficial ownership of legal arrangements.
Attorney-general Mark Dreyfus had warned since 2022, when the current Labor government came to power, that Australia is in danger of being grey-listed if it continues to perform poorly in FATF assessments.
Grey-listing means that a jurisdiction has been placed under increased monitoring by FATF due to deficiencies in its AML/CTF framework.
It also means that the jurisdiction has committed to resolve those deficiencies within agreed timeframes.
Following the passage of the bill, Dreyfus said that grey-listing would have resulted in "significant harm” to Australian businesses and the national economy.
He, therefore, said the passage of the bill was necessary, particularly in light of AUSTRAC’s 2024 National Risk Assessment, which found that criminals are increasingly exploiting non-financial businesses to conceal wealth and launder money.
“Money laundering is not a victimless crime,” said Dreyfus. “Allowing money laundering and terrorism financing to flow through the Australian economy unchecked supports the ongoing funding of terrorism, people smuggling, drug trafficking, cybercrime and child sex abuse.
“Money laundering also forces Australians trying to buy their family home to compete with criminals washing dirty cash through real estate.”
Liberal Party opposes 'red tape' AML rules
Dreyfus also criticised the Liberal Party for voting against the bill, accusing Liberal MPs of “standing on the side of terrorists and criminals”.
Shadow attorney-general Michaelia Cash had led an outspoken resistance to the bill by the Liberal Party.
In an op-ed published in October, she said that bringing tranche-two entities into the AML framework would likely amount to A$13.9bn ($9bn) in compliance costs for small businesses.
“The Albanese Labor government's assault on the small businesses of Australia has been both disturbing and relentless,” she said.
“A new red tape tax on Australian business is the last thing our economy needs. In particular, it is too high a price for small businesses to pay.”
Dreyfus responded to the op-ed directly during parliamentary debate one week later, describing Cash’s position as “not acceptable” given the threat of grey-listing.
“We cannot have Australia grey-listed by FATF at the next mutual evaluation, which is going to take place over the next year,” he said. “That would have dire economic consequences for Australia.”
He also pointed out that Australia was, until now, one of only five jurisdictions that do not apply AML regulations to tranche-two entities — the others being China, the US, Haiti and Madagascar.
