Modernising Australias anti-money laundering and counter-terrorism financing regime

Overview

On 20 April 2023 the Attorney-General announced public consultation on proposed reforms of Australia’s anti-money laundering and counter-terrorism financing (AML/CTF) regime.

The Australian Government is committed to protecting the integrity of the Australian financial system and improving Australia’s AML/CTF regime to ensure it is fit-for-purpose, responds to the evolving threat environment, and meets international standards set by the Financial Action Task Force (FATF), the global financial crime watchdog and standard-setter.

The Australian Institute of Criminology estimates that serious and organised crime costs the Australian community up to A$60.1 billion in 2020-21, with illicit financing at the centre of most crime types.1 It directly impacts the safety and wellbeing of Australian communities, and exploits and distorts legitimate markets and economic activity. The AML/CTF regime is a central part of Australia’s efforts to prevent criminals from enjoying the profits of their illegal activity and stopping funds from falling into the hands of terrorist organisations.

No legitimate business wants to wittingly, or unwittingly, assist the laundering of money that aids the commissioning of serious crimes including terrorism, child abuse and the illicit drug trade. The purpose of the AML/CTF regime is to assist businesses to identify these risks in the course of providing their services. In doing so, the AML/CTF regime sets out a range of measures to protect regulated entities that are at the front line in preventing serious financial crimes. These obligations build resilience against misuse by criminals within regulated sectors and require the reporting of certain transactions to government for use as financial intelligence to combat money laundering, terrorism financing and other serious financial crime. These reports are vital in understanding and stopping the flow of illicit funds into, out of and within Australia.

Part 1 of this consultation paper proposes reforms that will simplify and modernise the operation of the regime. The need to streamline obligations has long been called for by industry and was recommended by the 2016 Report on the Statutory Review of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (the 2016 Statutory Review). The 2016 Statutory Review found that the regime is overly complex and impedes the ability of regulated entities to understand and comply with their AML/CTF obligations. In particular, the scale, structure and density of the Anti-Money Laundering and Counter-Terrorism Financing Rules Instrument 2007 (No. 1) (the Rules) was considered to be a significant issue, rendering the Rules hard to follow and largely inaccessible particularly for small business. The feedback from industry indicated that there is a pressing need to simplify the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (the Act) and Rules, and streamline AML/CTF obligations.

Part 2 of this consultation paper proposes extending the AML/CTF regime to certain high-risk 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). Out of more than 200 jurisdictions, Australia is now one of only 5 jurisdictions in the FATF Global Network, alongside China, Haiti, Madagascar and the United States, that do not regulate tranche-two entities.2

Why we are consulting

The AML/CTF regime represents a significant partnership between government and industry.

The Australian Government is committed to consulting with industry in the consideration of the reforms proposed in this paper. Consultation will occur throughout 2023. This paper will be the first step in the development of reforms to the Act. A second consultation paper, informed by industry submissions on this paper, will be released later this year. The department will also conduct roundtable discussions with key stakeholders. Engagement with industry will be undertaken on sectoral-specific issues as required.

The department invites public submissions on the proposals discussed in this consultation paper. While questions are included in the paper to guide consultations these are not intended to limit responses.

Submissions and feedback can be submitted here, using the ‘Have your say’ link at the bottom of this page. The closing date for submissions is 16 June 2023.

All submissions and the names of persons or organisations that make a submission will be treated as public, and may be published on the department’s website, unless you request that your submission be kept confidential, or if we consider (for any reason) that it should not be made public. Any submission provided on a confidential basis remains subject to the Freedom of Information Act 1982.

The department retains discretion about publishing and sharing submissions. Submissions provided without a confidentiality request may be published on the department’s website. We may also redact parts of published submissions if appropriate.

Please provide your response and any attachments online by following the ‘Have your say’ link at the bottom of this page. If you have challenges providing your submission online, you can email it to economiccrime@ag.gov.au.

1Smith R & Hickman A, Estimating the costs of serious and organised crime in Australia, 2020-2021. Statistical Report no. 38, Australian Institute of Criminology, 2022.

2Financial Action Task Force, ‘Consolidate table of assessment ratings’, Consolidated assessment ratings (Web Page, 03 April 2023).