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Australian remittance service businesses must use their registration or see it cancelled, the Australian Transaction Reports and Analysis Centre (AUSTRAC) has said, launching a voluntary deregistration drive.
More than 900 businesses are registered with AUSTRAC, but many could be inactive and therefore open to exploitation by criminals.
Issuing the warning, AUSTRAC CEO Brendan Thomas said dormant registrations could mislead the public and undermine the integrity of AUSTRAC’s registration system.
“We consider the remittance sector high risk, because of its exposure to cash and the fast, low-cost way funds can be transferred across borders,” Thomas added.
“We don’t want dormant businesses to maintain AUSTRAC registration, as registration suggests regulatory legitimacy and oversight but does not guarantee compliance.”
Remittance businesses must be registered with AUSTRAC to provide money transfer services legally, and they must comply with obligations under the Anti-Money Laundering and Counter Terrorism Financing Act, including maintaining up-to-date ownership and activity status.
Thomas said, “We’re urging inactive businesses to voluntarily de-register. If businesses don’t step off voluntarily, AUSTRAC will step in and cancel their registration.”
AUSTRAC’s voluntary deregistration drive follows a similar review of the digital currency exchange register, which saw 100 businesses slated for deregistration and 22 businesses withdrawing voluntarily.
Regulatory shift
AUSTRAC’s announcement is the latest move in its ambitious crackdown on financial crime risks, which is one of the agency’s strategic priorities for the year ahead.
As covered by Vixio, AUSTRAC’s Thomas spoke in July of a “regulatory shift” in which the agency moves “from regulation that primarily checks for compliance to one focussed on substantive risks and harms”.
The agency is moving to targeted risk-based supervision in advance of reforms to Australia’s anti-money laundering and counter terrorism financing (AML/CTF) regime.
In particular, it is focusing on cash, which, despite its declining use, remains a key vector of financial crime.
With more than A$100bn ($65bn) still in circulation and millions of high-value cash transactions reported annually, the agency is concerned about businesses that have not implemented adequate controls.
Cash is a challenge for law enforcement and regulators worldwide. Its transportation across borders is one of the oldest methods of money laundering and is still being used, as the criminal economy remains overwhelmingly a cash-based one because it leaves no audit trail.
As regimes around the world continue to be toughened, the risk is that the illicit economy’s reliance on cash could increase further.
By clamping down on remittance firms, AUSTRAC may push individuals to use less formal means of transferring money across borders.
Financial regulators and criminals remain locked in a permanent race to stay ahead of one another, each having to anticipate and constantly adjust to the other’s actions.
The centrality of cash to AML efforts is illustrated by Australia’s neighbour, New Zealand, which unveiled the next phase in its AML/CTF regime in July.
The proposed legislative package will strengthen enforcement powers for police and regulators, and introduce a financial sanctions supervisory regime. Among its key measures will be a cap on international cash transfers of NZ$5,000 ($2,980).
