AML/CTF Bill

Written By giulia dondoli

On 29 November, the Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2024 (AML/CTF Bill) passed both houses – the Senate and the House of Representatives. Once the AML/CTF Bill obtains Royal Assent, it will become law and it will amend the AML/CTF Act 2006.  

The AML/CTF Bill aims to:

  • expands the AML/CTF regime to certain high-risk services provided by lawyers, accountants, trust and company service providers, real estate professionals, and dealers in precious metals and stones – also known as ‘tranche two’ entities.

  • improves the effectiveness of the AML/CTF regime by making it simpler and clearer for businesses to comply with their obligations.

  • modernises the regime to reflect changing business structures, technologies and illicit financing methodologies.

This post highlights some key amendments that will be relevant to you and your business.

Law Practitioners and Designated Services

AML/CTF compliance will apply to you while carrying out designated services, which are as follows:

  • assisting a person in the planning or execution of a transaction, or otherwise acting for or on behalf of a person in a transaction:

    • to sell, buy or otherwise transfer real estate

    • to sell, buy or otherwise transfer a body corporate or legal arrangement

    • in relation to receiving, holding and controlling (including disbursing) or managing a person’s money, accounts, securities and securities accounts, virtual assets, or other property

    • for equity or debt financing relating to a body corporate or a legal arrangement

  • selling or transferring a shelf company

  • assisting a person to plan or execute, or otherwise acting on behalf of a person in, the creation or restructuring of a body corporate or a legal arrangement

  • acting as, or arranging for another person to act as a:

    • director or secretary of a company

    • power of attorney of a body corporate or legal arrangement

    • partner of a partnership

    • trustees of an express trust

    • nominee shareholder of a body corporate or legal arrangement

  • providing a registered office address or principal place of business address of a body corporate or legal arrangement

You will be a reporting entity only if you provide any of the above services. For example, general advice on matters such as directors’ duties or employment law would not be captured, and if you only provide such services, you would not be considered a reporting entity.

Legal Privilege

You may face challenges in relation to legal privilege and suspicious matter reporting. Legal professional privilege is currently protected by section 242 of the AML/CTF Act, which states that the AML/CTF Act does not affect the law relating to legal professional privilege. The AML/CTF Bill inserts a provision establishing that nothing in the AML/CTF Act affects the right of a person to refuse to give information (including by answering a question) or produce a document if the information or document would be privileged from being given on the ground of legal professional privilege.

Risk Assessment

The AML/CTF Bill establishes a clear requirement for you to conduct a risk assessment.  For the risk assessment, you will need to consider risks relating to money laundering, terrorism financing and proliferation financing (ML/TF/PF), in particular relating to:

  • nature, size and complexity of your business;

  • kinds of designated services provided;

  • kinds of customers;

  • delivery channels;

  • jurisdictional exposure; and

  • information communicated either directly or indirectly by AUSTRAC.

You will need to document your risk assessment in writing.

AML/CTF Policies

Once assessed your risks, you must develop and maintain policies, procedures, systems and controls (AML/CTF policies). These AML/CTF policies should be documented in writing, and they should appropriately manage and mitigate your ML/TF/PF risks. Together, your risk assessment and your AML/CTF policies form your AML/CTF program.

Governance

The AML/CTF Bill includes an explicit requirement for you to establish the role of AML/CTF compliance officer, who must:

  • be a person employed or otherwise engaged by you at a management level;

  • have sufficient authority, independence and access to resources and information to ensure they can perform the functions of an AML/CTF compliance officer effectively;

  • reside in Australia (if you provide your services through a permanent establishment in Australia); and

  • be a fit and proper person.

What’s Next

These changes will enter into force in 2026 and AUSTRAC is working to develop updated AML/CTF Rules based on the AML/CTF Bill.

Don’t wait until 2026 to start making changes. Assess your business’s current AML/CTF framework and identify gaps now. Contact us today for expert assistance with risk assessments, AML/CTF policies, and training to ensure your business is ready for the new requirements.

 

giulia dondoli
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