Extension of Australia’s AML/CTF Regime to “Tranche-Two” Entities
By: Jim Bulling and Anthony Shorten
On 11 September 2024, the Attorney-General introduced the Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2024 (Cth) to the Federal Parliament, following two periods of consultation undertaken by the Department of the Attorney-General, and AUSTRAC over 2023 and 2024.
For background, in 2015 the Financial Action Task Force (FATF), which is the global financial watchdog, found Australia had failed to comply with a number of critical standards relating to Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) regimes. In particular, Australia had failed to extend regulation under its AML/CTF regime to a number of “tranche-two” entities. This created a regulatory ‘gap’, and a Money Laundering National Risk Assessment conducted by AUSTRAC noted that criminals are increasingly exploiting these unregulated sectors to conceal illicit wealth and launder money.
As such, this Bill has three main objectives:
- Extend Australia’s AML/CTF regime to “tranche-two” entities, such as lawyers, accountants, trust and company service providers, real estate professionals, and dealers in precious metals and stones, from 31 March 2026.
- Modernise the regulation of virtual assets and payments technology. This Bill proposes to extend AML/CTF laws to all ‘virtual assets’, and will extend to providing financial services ancillary to the offer or sale of virtual assets;
- Simplify and clarify the regime, increase flexibility, reduce regulatory impacts, and support businesses to prevent and detect financial crime.
Examples of this include:
- Removing the requirement for reporting entities’ AML/CTF programs to have two parts; and
- Including an express obligation to carry out a risk assessment and detailing what factors an entity must have regard to when conducting such an assessment.
K&L Gates has many years of experience advising financial services entities on complying with AML/CTF obligations and is well placed to advise “tranche-two” entities in connection with the preparation of AML/CTF programs and interacting with AUSTRAC.