AML/CTF Changes and New Guidance: What You Need to Know

Kathryn Ginns - Source
Executive Director - Compliance

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On 11 September 2024, the Attorney-General introduced the Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) Amendment Bill 2024 to Parliament. This Bill outlines significant changes to the current AML/CTF regime, aiming to further strengthen efforts in preventing financial crime.

Here’s an overview of what to expect.

The Bill has 3 key objectives:

  • Expand the AML/CTF regime to additional high-risk services provided by tranche two entities;
  • Modernise the regulation of digital currency and of virtual asset and payments technology; and
  • Simplify and clarify the AML/CTF regime to increase flexibility, reduce regulatory impacts and support businesses to better prevent and detect financial crime.

 

Focusing on the third key objective, the Bill proposes significant updates to the AML/CTF program requirements for reporting entities.

Key changes include:

  • Comprehensive risk assessments for money-laundering and terrorism-financing (ML/TF) risks;
  • Proportionate risk mitigation measures;
  • A simplified reporting group concept for efficient risk management; defined roles for governing bodies and compliance officers; and
  • Streamlined obligations for Australian companies with foreign branches.

 

The Bill would also establish an improved, outcomes-based framework for the Customer Due Diligence (CDD) requirements under the AML/CTF Act. In particular, the measures in the Bill seek to:

  • Reframe and clarify the core requirements for reporting entities to carry out initial and ongoing CDD;
  • Clarify when enhanced CDD must be applied; and
  • Streamline the circumstances when simplified CDD may be applied.

 

Under the AML/CTF Act, reporting entities which look to refrain from undertaking certain CDD obligations, if they reasonably believe it could alert the customer to the existence of a criminal investigation, would need to apply for a ‘keep open notice’ exemption with AUSTRAC. A law enforcement agency would no longer need to seek the exemption from AUSTRAC under the proposed changes.

The Bill would reform the current prohibition against reporting entities ‘tipping off’ their customer about the formation of a suspicion relating to their behaviour. The new offence focuses on preventing the disclosure of information where it would, or could, reasonably prejudice an investigation.

If the Bill passes, these obligations will apply from 1 July 2026 for tranche two entities that provide new designated services. The other reforms would commence on 31 March 2026.

AUSTRAC will commence consultation on the draft AML/CTF Rules amendments before the end of 2024. For more information and updates on the AML/CTF Rules, visit the AUSTRAC website.

 

Changes to the AML/CTF Rules

The AML/CTF Rules serve as the detailed blueprint for the obligations outlined in the AML/CTF Act. AUSTRAC plans to open consultations on these rules before the end of 2024. The amendments will likely reflect the broader objectives of the Bill, ensuring that businesses can better navigate their compliance responsibilities.

 

New Guidance from AUSTRAC

To assist businesses in adapting to these changes, AUSTRAC has released new guidance materials, which cover:

 

  • Outsourcing AML/CTF Functions: AUSTRAC’s guidance will help businesses manage risks associated with outsourcing key AML/CTF functions, ensuring third-party providers meet regulatory standards.
  • Risk Assessments and Guidance Utilisation: AUSTRAC has updated information on how businesses can effectively use their guidance and feedback to assess and manage money laundering and terrorism financing (ML/TF) risks.
  • Sector-Specific Suspicious Activity Indicators: New lists of suspicious activity indicators, tailored to specific sectors, are now available to help businesses identify potential money laundering, terrorism financing, and other serious criminal activity.

 

AUSTRAC are seeking feedback on draft updates to guidance on using alternative identification procedures by 30 October 2024. The guidance is being updated to support financial inclusion outcomes and address industry feedback.

For consultation documents, a summary of the changes and how to make a submission, visit the consultation page.

 

AUSTRAC Webinars

In July, AUSTRAC hosted a series of industry sector-specific webinars highlighting the key findings from Australia’s National Risk Assessments (NRAs) on money laundering, terrorism financing and proliferation financing.

The NRAs provide detailed insights into the scale, sophistication and threats posed by these serious crimes, along with their impacts on Australia. They offer an in-depth look at the extent of these crimes and the channels and sectors that are at highest risk of exploitation. These assessments are invaluable for businesses and are intended to help you better understand your risks to strengthen your AML/CTF programs.

The recordings of each sector-specific webinar are available for viewing on the AUSTRAC YouTube channel.

 

What next? Navigate the new AML/CTF changes with ease

At Source, we offer a wide range of services to help businesses navigate their obligations. Our team can assist with:

  • Independent reviews of Part A of your AML/CTF programs.
  • Template AML/CTF programs.
  • Tailoring, reviewing, or updating your AML/CTF programs.
  • Facilitating ML/TF risk assessments
  • Providing ML/TF training
  • Offering expert compliance advice on AML/CTF compliance.
  • Screening customers using LexisNexis.
  • Sample checking customer KYC completed internally or by your external service provider.

 

If you’re seeking professional assistance with your AML/CTF requirements, contact us today to learn how we can support your business.

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