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Tougher AML Laws Considered for Australian Gatekeeper Professions

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Australia’s Albanese government has announced it is now reviewing the findings from the Senate’s inquiry into the adequacy and efficacy of Australia’s anti-money laundering and counter-terrorism financing (AML/CTF) regime. As part of the inquiry, participating firms were presented with a series of questions relating to the potential risks, costs, or other unintended consequences of updated AML/CTF regulations relating to designated non-financial businesses and professions (DNFBPs). 

Often called the “gatekeeper professions,” DNFBPs include lawyers, accountants, and real estate agents. In 2020, Nicole Rose, CEO of the Australian Transaction Reports and Analysis Centre (AUSTRAC), called for gatekeeper reform, saying individuals in particular roles could knowingly or “unwittingly” help their clients wash dirty money by allowing them to buy assets.

Senate Committee Recommendations

Following the Senate’s inquiry, a Senate Committee Report was published in March 2022, examining Australia’s failure to expand the scope of AML measures to cover DNFBPs. While the report acknowledged that the so-called “tranche 2” reforms might duplicate existing DNFBP regulatory obligations and practices, it ultimately recommended that Australia accelerate consultation on its timely implementation

Additionally, the committee outlined the following recommendations for the government:

  • Ensure broad consultations are held with relevant stakeholders. These discussions should consider the impact of regulatory burden on small businesses and the efficiencies that could be gained from technological innovation. 
  • Seek advice on whether to amend section 242 of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 to ensure the proper operation of legal professional privilege. 
  • Create a beneficial ownership register – the Treasury published a consultation paper relating to the first phase of this initiative in November 2022. 

While no legislation has been finalized, the government announced a new public consultation on April 20, which proposes reforms that will simplify and modernize the country’s AML/CTF regime while also extending it to cover certain high-risk professions, including:

  • Lawyers
  • Accountants
  • Trust and company service providers
  • Real estate agents 
  • Dealers in precious metals and stones

Submissions and feedback should be submitted here before the closing date of June 16, 2023. 

AML/CTF Gatekeeper Reforms

In its current form, Australia’s AML/CFT regime applies to casinos, bullion dealers, and solicitors that deal with cash transactions of over $10,000 under the Financial Transaction Reports Act 1988 (FTR Act). While Australia committed to extending these laws to DNFBPs in its AML/CTF Increased Transparency Bill, the reforms have remained dormant for over a decade. Shifts in political priorities, the 2008 financial crisis, and opposition from DNFBP representatives have all been cited as reasons for the delay.

However, according to our 2023 global compliance survey, the regulation of DNFBPs is a top concern, with 47 percent of Australian firms saying it is one of the areas of AML regulations most in need of strengthening.  

Key Takeaways

In Australia’s last Enhanced Follow-up Report in 2018, the Financial Action Task Force (FATF) noted that the country had failed to implement nearly one-third of its recommendations and called for urgent action to bring Australia’s AML/CTF regime up to speed. According to a spokesman for Attorney-General Mark Dreyfus, “The government is committed to continually reviewing Australia’s AML/CTF regime to ensure that it remains effective and complies with international standards as set by the FATF.” 

Since Australia’s next evaluation from the global watchdog is due in 2025, compliance staff should be alert to additional consultation periods or regulatory updates that may impact the country’s next assessment. 

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Uncover the core compliance responsibilities that arise from Australia’s AML/CTF regime and how fintechs should respond using a risk-based approach.

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Originally published 20 April 2023, updated 21 April 2023

Disclaimer: This is for general information only. The information presented does not constitute legal advice. ComplyAdvantage accepts no responsibility for any information contained herein and disclaims and excludes any liability in respect of the contents or for action taken based on this information.

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