The Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) Act was introduced in 2006 in the hopes of tackling the increasing exposure Australia is facing with money laundering and terrorism financing.
Each year billions of dollars from the proceeds of fraud, illegal drugs and crime is laundered through everyday Australian businesses. The Act – puts in place practical measures to protect businesses and make it harder for criminals to profit from and fund illegal activity.
How does it work?
The Act requires businesses in specific sectors that provide designated services – to collect and verify information about their customers.
The strategy put in place to prevent money laundering and the financing of terrorism works by imposing several obligations on these businesses. These obligations include collecting and verifying certain know your customer (KYC) information about a customer’s identity, determining if their customers have exposure to politically exposed persons (PEP) or are considered high risk and on some occasions verifying their source of wealth and funds, before providing those services.
Which sectors does the AML/CTF Act apply to?
- Financial Service
- Money Remittance
- Payment Services
- Bullion Dealers
- Trust and Company Service Providers
- Virtual Asset Providers
The fundamental obligations under the AML/CTF Act are:
- Conducting a risk assessment
- Appointing an AML/CTF compliance officer
- Creating an employee due diligence program
- Creating a risk awareness training program
- Meeting AML/CFT reporting obligations
- Conducting ongoing customer due diligence and transaction monitoring
- Periodic independent reviews
If you provide one or more designated services described in the AML/CTF Act, you must enrol with AUSTRAC and comply with the obligations set out in the Act. You are also obliged to register with AUSTRAC if the service you provide includes remittance service or digital currency exchange service.
What other Compliance Requirements need to be met?
Businesses that are required to comply with the AML/CTF Act are also required to comply with the Privacy Act 1988 when handling personal information collected for the purposes of compliance with their AML/CTF Act obligations.
The Australian Transaction Reports and Analysis Centre (AUSTRAC) is the Australian Government agency responsible for ensuring compliance with the AML/CTF Act.
How to get help with AML/CTF compliance:
While the Act adds another layer for these businesses, these compliance and review requirements also have value for business risk management and professional reputation.
Despite their value, it can be challenging to find the time to meet these obligations, amongst many other demands. But we’re here to help. Get in touch with us today to discover how we can help support your AML/CTF compliance needs.