AML/CTF - All states

A Bill currently before Federal parliament expands the existing AML/CTF regime under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (the Act) to real estate professionals, dealers in precious metals and precious stones, and professional service providers, including lawyers, conveyancers, accountants, and trust and company service providers. These are all known as reporting entities. The Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2024 (Cth) will have a substantial impact on law firms and some preparation will be required before its commencement.

Commencement

The Bill's main provisions commence in March 2026.

Customer due diligence

Requirements for a reporting entity to identify their customer through initial Customer Due Diligence (CDD) include:

• if the customer is an individual, taking reasonable steps to establish they are who they claim to be, including if they are a politically exposed person;
• identifying the customer's ML/TF risk;
• collecting information about the customer appropriate to ML/TF risk; and
• verifying the customer information using independent and reliable data that is appropriate to ML/TF risk.

Ongoing CDD requirements require reporting entities to monitor their customers to appropriately identify, assess, manage, and mitigate the ML/TF risks they may reasonably face in providing services. This includes reviewing and updating customer information and monitoring for unusual transactions and behaviours that may give rise to a suspicious matter reporting (SMR) obligation. Reporting entities may apply simplified CDD, and must apply enhanced CDD, as part of initial and ongoing CDD in certain prescribed circumstances. Simplified CDD gives reporting entities more discretion, provided the customer's ML/TF risk is low and other requirements are met, to apply simplified initial and ongoing CDD. Reporting entities must apply enhanced CDD appropriate to customer risk in certain specified circumstances, or if the customer is high ML/TF risk. In these cases, reporting entities are required to collect and/or verify additional information relevant to mitigating the identified higher risk, and must be reasonably satisfied that they know and understand the identity of their customer. In enhanced CDD scenarios, ongoing CDD must also be adjusted to ensure it is appropriate to the ML/TF risk of the customer and meets specific requirements to be set out in the AML/CTF Rules.

Policies

Reporting entities must have internal policies for AML/CTF that meet the requirements of the Rules that need to cover:

• how the reporting entity will inform its governing body of the money laundering, terrorism financing, and proliferation financing risks faced by the reporting entity in its provision of designated services;
• designating an AML/CTF compliance officer;
• designating a senior manager responsible for approving any changes to the ML/TF risk assessment or AML/CTF policies;
• how the reporting entity will undertake due diligence on staff engaged by the reporting entity whose role in the reporting entity may allow them to facilitate serious financial crimes or whose role is relevant to AML/CTF compliance;
• how a reporting entity will provide risk awareness and management training to staff engaged by the reporting entity;
• how, and when, to conduct an independent review of its AML/CTF program; and
• any other matters provided for in the AML/CTF Rules.

Privilege

Section 242 of the Act already provides that it does not affect the law relating to legal professional privilege. The Bill provides stronger protections for the disclosure of information or documents that are subject to legal professional privilege to reflect the fact that lawyers are to be included in the regime.

Offence

The Bill creates a new offence intended to prevent the reporting entity disclosing information to their clients, such as the fact they have made a suspicious matter report, if it could reasonably prejudice an investigation.

Act repealed

The Bill also repeals the Financial Transaction Reports Act 1988 (FTR Act).

Guidance

The Law Council of Australia has issued Guidance for the profession on these changes.

Publication updates

By Lawyers publications will be amended as required to account for these changes. Specific amendments are likely to include First steps in all commentaries, the Conveyancing and Property guides in each jurisdiction, and the Practice Management guide. In the interim, this overview of the Bill's impact is being added to the Looking to the Future summary of forthcoming significant amendments in the Reference Materials folder of all By Lawyers publications.