With less than a week to go until some of the most significant changes to Australia’s Anti-Money Laundering and Counter-Terrorism Financing regime (AML/CTF regime) take effect, is your business ready?
The AML/CTF regime has been updated to close regulatory gaps, strengthen Australia’s defences against financial crime and align us with international standards set by the Financial Action Task Force (FATF).
If you are a current reporting entity, it is crucial to act now and prepare your business for the impending deadline as the changes to your AML/CTF obligations start from 31 March 2026, except for threshold transaction reporting and suspicious matter reporting which will remain the same until 2029.
Furthermore, if you operate a business in one of the newly identified sectors (Tranche 2 entities), enrolments open on 31 March 2026, with AML/CTF obligations commencing 1 July 2026, making the present an ideal time to start planning and avoid any rushed compliance towards July.
Regardless of when these amendments start to apply to you, it is essential to understand the six key obligations that a business must fulfill, alongside the continual assessment of the risk of potential money laundering or terrorism financing in general when providing a designated service to a customer.
These six key obligations are:
- Register with AUSTRAC: Regulated businesses must enrol with AUSTRAC if they provide a designated service.
- Develop and maintain an AML/CTF Program: Regulated businesses must identify the AML/CTF risks they face, develop and maintain a relevant AML/CTF program, which includes recording and securely storing all AML/CTF activity.
- Customer due diligence (CDD): Regulated businesses must verify the identity and understand the risk profiles of their customers prior to providing service. This is referred to as ‘know your customer (KYC) information’ e.g. via verified copies of documents or credit-reporting body reports.
- Ongoing due diligence: Regulated businesses must conduct ongoing customer due diligence throughout the lifetime of a business relationship.
- Reporting: Regulated businesses must report to AUSTRAC all ‘suspicious matters’, cash transactions of A$10,000 or more, international transfers, information about carrying/shipping physical currency, instructions for the transfer of value sent into or out of Australia and annual compliance reports.
- Record keeping: Regulated entities must make, retain and make available (upon request) records that can assist with a financial crime investigation or that are relevant to their compliance with the AML/CTF regime for seven years.
Whilst a strengthened AML/CTF regime delivers numerous benefits to government administration, including the ability to provide relevant government bodies and regulators increased transparency of potential risks posed by individuals or companies, a better protected financial system, and an enhanced capability to safeguard customer funds from financial crime and unlawful activities, it will cause numerous repercussions for businesses.
The need for reporting entities to adhere to a more extensive set of rules and regulations when managing customer data and financial transactions will undoubtedly create an increased administrative and compliance burden, and that in turn will ultimately be reflected in increased costs to the end consumer of the professional services concerned.
Furthermore, these new reporting obligations may also create ethical dilemmas, as lawyers and accountants try to resolve the tension between their reporting obligations on the one hand, and their obligation of confidentiality and fidelity to their clients.
Given the number of reporting entities is expected to increase from 17,000 to 90,000 the potential impact of Tranche 2 will be significant for the both the business and wider community.
With less than a full week to go, if you have a business that needs to comply with the AML/CTF regime, the time to ensure your processes and team are prepared is now.
If you have any queries or would like some assistance, please reach out to our team, we’d be more than happy to help!