The AML/CTF Act commenced operation on 12 December 2006 and together with Rules and Regulations, a regime was established for the purposes of combating money laundering and terrorism financing and to meet the global standards developed by Financial Action Task Force (FATF), the lead inter-governmental body that develops and promotes implementation of international anti-money laundering and counter-terrorism financing (AML/CTF) standards.
On 29 April 2016, the Attorney General’s report on Australia’s AML/CTF Act was tabled in Parliament and recommends reforms to the application and design of the AML/CTF regime to address current and future challenges.
Attorney General’s recommendations
Overall, the recommendations seek to simply, streamline and clarify the legal obligations under the AML/CTF regime and to strengthen the regime and its effectiveness whilst reducing the regulatory burdens for regulated businesses. Some of the recommendations include:
- Industry support for risk-based principles rather than prescriptive rules to guide regulated entities to efficiently use and allocate resources proportionate to the level of assessed risk. To have the AML/CTF regime adopt a technology neutral approach and anticipate future use of technology.
- Simplify the AML/CTF Act and Rules and provide more sector-specific guidance and assistance from AUSTRAC.
- Narrow the scope of the AML/CTF regime by assessing the ‘designated services’ and remove services which pose a low Money Laundering/Terrorism Financing (ML/TF) risk (ie services provided by cash in transit operators and services relating to issuing and cashing traveller’s cheque).
- Extend the scope of the AML/CTF regime by: monitoring new payment types and systems that pose a high ML/TF risk (ie digital wallets, digital currencies and Bitcoin); developing options for regulating non-financial business and professions (ie a range of services provided by lawyers, accountants, conveyancers, real estate agents, trust and company service providers); and identifying designated services which pose high ML/TF risks when provided by offshore service providers.
- Minimise the regulatory burden associated with customer due diligence (CDD) and simplify the CDD obligations under the AML/CTF regime, expand the application of simplified CDD procedures where there is a low ML/TF risk, and enhance the ability of businesses to rely on the CDD conducted by other regulated businesses.
- Simply and streamline reporting requirements to remove regulatory inefficiencies, provide greater clarity and align with the FATF standards.
- Improve information sharing of AUSTRAC information and strengthen enforcement measures.
The recommendations suggest fundamental changes to the AML/CTF regime and it is now up to the Government to consider these recommendations and to change the regime in consultation with industry.
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