AML/CTF Consultation: Tranche 2 Expansion and Modernising the Regime

The Commonwealth Attorney-General’s Department has initiated the implementation of proposed reforms of Australia’s anti-money laundering and counter-terrorism financing (AML/CTF) regime to bring Australia's anti-money laundering laws in line with standards recommended by the Financial Action Task Force. These reforms have far-reaching implications for real estate and accounting professionals, as well as lawyers, who will be required to take a more active role in deterring money laundering and terrorist financing.

The reforms are likely to require accountants, real estate agents and other professionals to implement risk management programs and to conduct due diligence on clients. This will include verifying the identity of clients, assessing the risk of money laundering or terrorist financing, and monitoring transactions for suspicious activity. Failure to comply with these requirements may result in significant civil penalties.

The reforms also aim to:

• Modernise and clarify the regime in line with international standards and best practice.
• Reduce complexity and regulatory burden on industry.
• Ensure the regime remains fit for purpose, and.
• Harden Australian businesses and sectors against exploitation by serious organised criminals.

The Attorney-General's Department Consultation

On 2 May 2024, the Commonwealth Attorney-General's Department released the Second Consultation Paper (Consultation) on the implementation of proposed reforms to bring Australia's anti-money laundering and counter-terrorism financing laws in line with standards recommended by the Financial Action Task Force. These will be the most significant reforms to the AML/CTF Act since its introduction.

The Consultation includes five specific papers, namely:

• Paper 1: Further information for real estate professionals
• Paper 2: Further information for professional service providers
• Paper 3: Further information for dealers in precious metals and precious stones
• Paper 4: Further information for digital currency exchange providers (DCEPs), remittance service providers and financial institutions
• Paper 5: Broader reforms to simplify, clarify and modernise the regime (which will apply to current and new proposed reporting entities)

Papers 1-3 deal with the proposed new reporting entities. Papers 4 and 5 deal with proposed changes that will impact new and existing reporting entities.

Engagement with the Consultation presents an important opportunity to contribute to the proposed scope and changes to the AML/CTF Act. Submissions on the proposals raised in the Consultation paper close on 13 June 2024.

We can assist you to:

• Make submissions to government, including proposing pragmatic solutions.
• Participate in direct consultation with government or industry roundtables.
• Understand impacts in jurisdictions that have already implemented Tranche 2 reforms.
• Prepare your business for the upcoming challenges.
• Prepare policies, procedures and guidance for compliance.

You can subscribe for more updates on Tranche 2 from our risk advisory team here.

Useful links

FATF Guidance

• Risk-based Approach Guidance for the Real Estate Sector (2022)
• Risk-Based Approach for the Accounting Profession (2019)
• Risk-Based Approach Guidance for Legal Professionals (2019)
• Risk-Based Approach for Trust and Company Service Providers (2019)
• Risk-Based Approach for Dealers in Precious Metals and Stones (2008)
• https://www.fatf-gafi.org/en/publications/Mutualevaluations/Australia-fur-2024.html

Background Information

• Senate Inquiry Report: The adequacy and efficacy of Australia’s anti-money laundering and counterterrorism financing (AML/CTF) regime (2022)
• Attorney General’s Department: Report on the Statutory Review of the AML/CTF Act and associated Rules and Regulations (2016)
• Australia’s FATF Mutual Evaluation (2015)
• Australian Institute of Criminology - Estimating the costs of serious and organised crime in Australia (2020–21)
• Law Council of Australia: Vulnerabilities Analysis

Second Consultation

• Reforming Australia's anti-money laundering and counter-terrorism financing regime - Overview 
• Paper 1: Further information for real estate professionals 
• Paper 2: Further information for professional service providers
• Paper 3: Further information for dealers in precious metals and precious stones
• Paper 4: Further information for digital currency exchange providers (DCEPs), remittance service providers and financial institutions 
• Paper 5: Broader reforms to simplify, clarify and modernise the regime (which will apply to current and new proposed reporting entities)