AML in Australia

Australia, recognized as one of the largest and most advanced economies worldwide, hosts a vast array of financial institutions. These institutions must familiarize themselves with the Australian legal framework, which aims to safeguard the country’s financial system from the threats of money laundering and terrorist financing.

The foundation of Australia’s anti-money laundering regime lies in the Anti-Money Laundering and Counter-Terrorism Financing Act, which was enacted in 2006. This Act encompasses a designated set of services, such as deposit-taking, payroll, and currency exchange, which are considered high-risk due to their susceptibility to money laundering activities. High-risk businesses offering these services are obligated to implement various customer controls as part of their anti-money laundering obligations. Furthermore, these businesses are required to register with AUSTRAC (Australian Transaction Reports and Analysis Centre) and adhere to the regulatory guidelines set by the authority.

The legislation imposes several reporting obligations on financial institutions, including the submission of Threshold Transaction Reports (TTR) and Suspicious Activity Reports (SAR). These reports play a crucial role in detecting and combating potential instances of money laundering or suspicious activities within the financial system.

The Australian government established the Australian Transaction Reports and Analysis Centre (AUSTRAC) with the aim of combating financial crime. AUSTRAC plays a crucial role in coordinating the efforts of financial entities to take decisive actions against various forms of financial crimes. Its primary focus is to ensure that all financial institutions operate in accordance with Australia’s anti-money laundering (AML) regulations as well as the guidelines provided by the Financial Action Task Force (FATF). By working closely with financial corporations, AUSTRAC aims to uphold the integrity of the financial system and combat illicit activities.

Businesses operating in Australia are obligated to gather customer information and verify its accuracy in compliance with the Privacy Act of 1988. In 2019, Australia introduced the Customer Data Right, which will be progressively implemented across various sectors, with the banking sector being the initial focus.

Under Australia’s Anti-Money Laundering and Counter-Terrorism Financing (AML/CFT) Act, businesses are required to monitor customer accounts for any suspicious activity that may indicate potential money laundering. The monitoring programs should be tailored to the risk levels associated with each customer and business. If any suspicious transactions are detected, companies are responsible for preparing a Suspicious Transaction Report.

To ensure compliance, businesses in Australia must adhere to financial sanctions imposed by the United Nations Security Council (UNSC) and the Australian Government. This involves screening payments against a list of names and entities provided by the Department of Foreign Affairs and Trade (DFAT). The DFAT list consolidates both Australian DFAT sanctions and UNSC Sanctions.

The AML policy in Australia mandates that companies conduct Customer Due Diligence (CDD) checks when onboarding new customers. These checks enable businesses to assess the risk level of customers during the onboarding process. Ongoing monitoring procedures are implemented to detect any changes in customer risk levels over time.