Attorney General’s report on the Anti-Money Laundering and Counter-Terrorism Regime

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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:

  1. 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.
  2. Simplify the AML/CTF Act and Rules and provide more sector-specific guidance and assistance from AUSTRAC.
  3. 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).
  4. 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.
  5. 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.
  6. Simply and streamline reporting requirements to remove regulatory inefficiencies, provide greater clarity and align with the FATF standards.
  7. Improve information sharing of AUSTRAC information and strengthen enforcement measures.

What’s next?

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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