Penalties for non-enrollment with AUSTRAC to begin on November 9: What you need to know

On October 24, 2023, the Australian Transaction Reports and Analysis Centre (AUSTRAC) reminded reporting entities to enroll with the regulator before November 9 to avoid receiving a financial penalty. For each day a firm remains unenrolled after this date, it may be liable for a fine of up to 60 penalty units, with each unit costing $313.  

If a business remains unenrolled for a year, AUSTRAC says they will face fines of up to $1,370,940 or $6,854,700 for corporate groups. 

Which entities need to register?

Entities operating in the financial, gambling, and bullion sectors are required by AUSTRAC to enroll as designated services. If a business offers more than one designated service and has a connection to Australia, AUSTRAC regards it as a reporting entity and imposes anti-money laundering and counter-terrorism financing (AML/CTF) obligations. While a full list of designated services can be found in Section 6 of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act), examples include:

• Account and deposit-taking services.
• Remittance services (money transfers).
• Digital currency exchanges.
• Foreign currency exchanges.
• Investments or securities.
• Buying and selling bullion.
• Gaming machines (such as poker machines).
• Betting accounts and services.

Amendments to the AML/CTF Act 2006

The new way penalty units are accrued is a result of recent changes to Section 51B of the AML/CTF Act. These changes were set in motion after the Crimes and Other Legislation Amendment (Omnibus) Bill 2023 was passed by both houses of Parliament in September 2023. 

The amendments, effective from November 9, have been introduced to strengthen and clarify the civil penalty provisions for entities required to enroll with AUSTRAC within 28 days of commencing to provide a designated service. The amendments specifically state that a separate non-compliance penalty will be issued each day an entity fails to apply for enrolment rather than imposing a single penalty. 

The amendments also clarify that if an entity provides a designated service without applying to enroll within 28 days, they will be obligated to register even after the 28 days have ended until the person either enrolls or ceases to be a reporting entity. This will help AUSTRAC enforce compliance by issuing an infringement notice for each non-compliance in the preceding 12 months where a person or entity fails to enroll after the enrolment deadline while continuing to provide a designated service. 

In addition to non-enrollment penalties, other amendments to the AML/CTF Act include:

• Authorization for the AUSTRAC CEO to use a computer program, including automated programs, to control and automatically execute actions, make decisions, or exercise powers under the AML/CTF Act or the Anti-Money Laundering and Counter-Terrorism Financing Rules Instrument 2007 (No. 1) (AML/CTF Rules). 
• Clarification around the existing secrecy and access framework to ensure sensitive AUSTRAC information cannot be inappropriately disclosed in court or tribunal proceedings.

Key takeaways

Designated services in Australia should use this time to ensure their AUSTRAC online account is up-to-date and reflective of the services they offer. Some helpful links may include:

• Manage an AUSTRAC online account.
• Update details.
• Update annual earnings.
• Renew registration.
• Adding a new business to an account.