The Attorney General’s Department has made recommendations that the scope of Australia’s AML/CTF legislation be increased; meaning thousands of mid-size businesses could be subject to regulation by AUSTRAC.

What’s happening?

In April 2016, a Report was issued by the Attorney General’s Department on a Statutory Review of the Anti-Money Laundering and Counter Terrorism Financing Act 2006 (AML/CTF Act).  The recommendations, which generally seek to strengthen but also simplify the legislation, include the following:

• Options should be identified for regulating lawyers, accountants, conveyancers, real estate agents, high value dealers and trust and company service providers. High value dealers would include motor vehicle and motor cycle dealers and potentially art dealers and auction houses, and
• A cost benefit analysis of the above options should be conducted.

It has been recommended that the above process should occur in consultation between AUSTRAC and the Attorney General’s Department in conjunction with industry.  Currently, the AML/CTF Act and AUSTRAC regulate providers of financial, bullion and gambling services (Reporting Entities).

The Government has not announced its response to the recommendations, but it appears likely that there will be legislative change, including regulation of law firms, accounting firms, real estate agents, motor dealers and other high value dealers.

What’s the issue?

Businesses covered by the AML/CTF Act (namely those providing financial, bullion and gambling services) have important compliance obligations, including:

• A documented risk based AML/CTF program
• Regularly conducted money laundering and terrorist financing (ML/TF) risk assessments that are recorded and supported by a documented risk assessment procedure
• Provision of a periodic compliance report to AUSTRAC

Businesses that have not adequately assessed their money laundering and terrorist financing risks and implemented an adequate risk-based AML/CTF program face the threat of significant penalties and reputational damage.  The maximum penalty for an individual contravention is $18 million for a company and $2.7 million for company directors.

What should you do?

Until the Government announces its response to the Report, businesses that may be impacted by regulatory change should enhance their awareness and preparation for a potential increase in compliance obligations and cost, which could potentially impact results in the financial year ending 30 June 2017. 

Any new Reporting Entities will need to ensure they are compliant with the AML/CTF Act within a certain time.  A critical task is expected to be that these newly regulated businesses can demonstrate that they have designed, implemented, documented and maintained an AML/CTF program that is based on regular assessment of its ML/TF risks. Under the current regime, it is imperative that existing Reporting Entities regularly conduct risk assessments that adequately consider the follow categories of risk:

• Environmental risk
• Customer risk
• Product risk
• Channel risk
• Business risk

Grant Thornton assists businesses to achieve and maintain compliance by providing a holistic AML/CTF framework.  We take a collaborative approach to the assistance we provide to our clients, not just from a compliance perspective. We provide globally recognised AML/CTF subject matter experts to deliver the following services:

• ML/FT risk assessments
• AML/CTF training
• Implementation reviews & remediation
• AML/CTF programs
• Gap assessments
• Independent reviews