Overview
Following the recent enactment of the Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2024 (Cth) (AML/CTF Amendment Act), AUSTRAC has initiated a review of the existing AML/CTF Rules to ensure they align with the updated legislative framework. This initiative aims to enhance regulatory clarity, streamline compliance requirements, and provide greater flexibility for reporting entities in meeting their obligations.
To facilitate industry engagement, AUSTRAC has released the first Exposure Draft, outlining proposed amendments to the AML/CTF Rules (New Rules). The agency has invited industry stakeholders to provide feedback on these proposals, with consultation open until 14 February 2025.
Key Proposed Amendments
The first Exposure Draft introduces several key changes to the AML/CTF Rules, covering the following areas:
AML/CTF Programmes: Enhancements to risk-based approaches, ensuring that compliance measures are proportionate to the risks faced by different reporting entities.
Reporting Groups: Clarifications on obligations for businesses operating under a group structure, with a focus on streamlining internal compliance frameworks.
Customer Due Diligence (CDD): Adjustments to identity verification procedures, beneficial ownership checks, and ongoing monitoring requirements to reduce undue compliance burdens while maintaining robust risk controls.
Travel Rule: Updates to information-sharing requirements for cross-border transactions, aligning with global Financial Action Task Force (FATF) standards.
Compliance Reporting: Modifications to periodic reporting obligations, aimed at improving transparency and efficiency in regulatory submissions.
Keep Open Notices: Guidance on how reporting entities should handle transactions and accounts subject to law enforcement investigations.
Correspondent Banking Relationships: Strengthened due diligence requirements for correspondent banking, ensuring that Australian financial institutions mitigate risks associated with high-risk jurisdictions.
Implications for Businesses
The proposed amendments signal a shift towards a more flexible and risk-based approach to AML/CTF compliance. Businesses subject to AUSTRAC’s regulatory oversight will need to assess the impact of these changes on their existing compliance frameworks and internal controls.
For financial institutions, fintech companies, and other regulated entities, the New Rules may offer opportunities to streamline compliance processes while ensuring adherence to regulatory expectations. However, firms must also be prepared to adjust their AML/CTF policies, systems, and reporting mechanisms to align with the revised requirements.
Industry Consultation
AUSTRAC has emphasised the importance of industry feedback in shaping the final version of the New Rules. Stakeholders are encouraged to review the Exposure Draft and provide submissions before the 14 February 2025 deadline.
Given the potential operational and compliance implications, businesses should engage with legal and regulatory experts to navigate these changes effectively. Industry associations and compliance professionals may also play a crucial role in advocating for practical and proportionate regulatory outcomes.
Following the consultation period, AUSTRAC will review industry feedback and refine the New Rules before finalising them for implementation. Businesses should stay informed about developments and prepare for any required adjustments to their compliance frameworks.
For further details or to participate in the consultation, visit the AUSTRAC website.