Australia’s Attorney-General has released a Consultation Paper on proposed reforms of Australia’s anti-money laundering and counter-terrorism financing (AML/CTF) regime.
Part 1 of the consultation paper proposes reforms that will simplify and modernise the operation of the regime.
Part 2 of the consultation paper proposes extending the AML/CTF regime to certain professions, including lawyers, accountants, trust and company service providers, real estate agents and dealers in precious metals and stones (also known as tranche-two entities).
The Consultation Paper includes case studies illustrating how these professions can wittingly and unwittingly be used to launder money.
The proposals incorporate the recommendations of the 2016 Report on the Statutory Review of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 and the 2022 Report of the Senate Legal and Constitutional Affairs References Committee Inquiry into the adequacy and efficacy of Australia’s anti-money laundering and counter-terrorism financing regime.
To simplify obligations it is proposed to combine the current Part A and Part B programs into a single requirement to develop, implement and maintain an AML/CTF program that is effective in identifying, mitigating and managing a regulated business’ money laundering and terrorism financing risk. Existing exemptions for those businesses that are only required to have a ‘special AML/CTF program’ would be maintained.
The complex obligations that apply to foreign branches and subsidiaries operating in Australia would also be simplified.
In addition to these matters, the paper proposes reforms to modernise aspects of the regime to ensure provisions are fit for purpose, consistent with international standards and reduce the operational burden for industry and AUSTRAC. This includes:
• lowering the reporting thresholds for the gambling sector
• amending the tipping-off offence
• extending the regulation of digital currency exchanges
• modernising the travel rule
• providing a statutory exemption for assisting an investigation of a serious offence
• amending revised obligations during COVID-19 pandemic, and
• repealing the Financial Transaction Report Act 1988.
Tranche 2 entities and beneficial ownership register
The paper states that professional advisers can be used to create complex structures that create distance between criminals and their illicit wealth, and facilitate obscuring property ownership, providing opportunities for laundering large volumes of illicit funds.
The reforms proposed in the paper relating to money laundering risks in tranche-two entities complement the Government’s commitment to implement a beneficial ownership register for companies and other legal entities discussed in Treasury’s ‘Multinational tax integrity: Public Beneficial Ownership Register Consultation Paper’, Consultations (7 November 2022).
The beneficial ownership register is designed to limit complex structures that can be used to evade tax and fund crime.
A second consultation paper will be released later this year.
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Author: David Jacobson
Principal, Bright Corporate Law
About David Jacobson
The information contained in this article is not legal advice. It is not to be relied upon as a full statement of the law. You should seek professional advice for your specific needs and circumstances before acting or relying on any of the content.
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