The long-awaited tranche 2 reforms are an important milestone in the country’s approach to compliance
The Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) Amendment Bill 2024 was finally passed by the Australian Parliament. The legislation represents substantial reforms to the AML/CTF regulatory regime and demonstrates a significant move in Australia’s efforts to combat financial crime.
Australia has lagged the world in AML/CTF legislation for decades – and it shows. According to the Australian Federal Police (AFP) billions of dollars are funneled through the country’s economy, with the real estate and gambling sectors leading the charge. The fact that the country’s AML regime was not aligned with international standards recommended by the global anti-money laundering watchdog, the Financial Action Task Force (FATF), was seen as a major reason for the scourge of financial crime in the country.
The reforms aim to:
- simplify and modernise the regime in line with international standards and best practices
- reduce complexity and regulatory burden
- make sure the regime responds to the constantly evolving threat environment
- harden Australian businesses and sectors against exploitation by serious organised criminals
- extend the regime to certain higher risk services provided by ‘tranche 2’ entities
What’s new here?
A few things that will make a big difference. Significantly, reporting obligations are increased for the ‘tranche 2 entities’. Real estate agents, lawyers, accountants and dealers who were not required to report suspicious transactions or conduct due diligence checks on customers will now have to. Anyone involved in activities like forming companies, buying and selling real estate, managing client assets – and more – will be required to comply with the AML/CTF Act in some form or other.
Australia is actually one of only five countries to exempt those sectors from anti-money laundering rules. This change means that AML/CTF obligations will increase the number of regulated entities under this legislation from around 17,000 to an estimated 130,000 businesses while modernising the AML regime.
The amendments also emphasise using advanced technology, such as digital verification tools, to strengthen Know Your Customer (KYC) procedures, make compliance more efficient and reduce fraud risks. The new laws also have larger fines for non-compliance and there is a larger focus on Proliferation Financing (PF) with businesses required to do heightened risk assessments to avoid the financing of weapons of mass destruction.
How to get ready
- Review your current risk assessments. Make sure they account for new threats, such as proliferation financing and align with the legislation’s requirements.
- Conduct training sessions to ensure your team understands the changes and their role in compliance.
- Make sure you have robust systems in place for submitting Suspicious Matter Reports (SMRs) and meeting the expanded reporting requirements.
- Upgrade KYC procedures because digital verification is now the gold standard. Evaluate your customer onboarding processes and invest in tech tools that streamline ID checks and ongoing monitoring.
- Think about your customers.
- Consider whether they could be high-risk for money laundering. Are they politically exposed persons (PEPs)? Are they from high-risk areas?
- What do you do for those customers that could be non-compliant? (The legislation is based on designated services.)
- Decide whether those customers are worth keeping.
- Understand what types of information you get on your customer and how you record that information
- Determine how you can monitor transactions.
How VinciWorks can help with AML compliance
VinciWorks is global leader in AML systems for some of the world’s leading law firms, accountants, real estate firms and other businesses. Its training courses are interactive and customisable for any business, any user, anywhere.
Founded by British-Australian lawyers, VinciWorks has decades of experience in end-to-end AML compliance, from policies to risk assessments, training and CDD.
Omnitrack, VinciWorks’ AML client onboarding solution provides an end-to-end AML solution with stress-free technology that adapts to your workflows.
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