The Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act) received Royal Assent on 12 December 2006.
The AML/CTF Act forms part of a legislative package that will implement the first tranche of reforms to Australia's AML/CTF regulatory regime.
Background
The reforms are a major step towards:
- enabling Australia's financial sector to maintain international business relationships
- preventing and detecting money laundering and terrorism financing by meeting the needs of law enforcement agencies for targeted information about possible criminal activity and
- bringing Australia into line with international standards, including standards set by the Financial Action Task Force (FATF).
About the AML/CTF Act
The AML/CTF Act covers the financial sector, gambling sector, bullion dealers and other professionals or businesses ('reporting entities') that provide particular 'designated services'.
The AML/CTF Act will be implemented in stages. The commencement dates of some obligations are a day, 6 months, 12 months and 24 months after Royal Assent. This will allow industry to develop necessary systems in the most cost efficient way.
The AML/CTF Act imposes a number of obligations on reporting entities when they provide designated services. These obligations, and the dates on which they come into effect, include:
- customer identification and verification of identity - 12 months after Royal Assent
- record-keeping - in various stages, a day, 6 months and 12 months after Royal Assent and
- establishing and maintaining an AML/CTF program - 12 months after Royal Assent
- ongoing customer due diligence and reporting (suspicious matters, threshold transactions and international funds transfer instructions) - 24 months after Royal Assent\
The AML/CTF Act will implement a risk-based approach to regulation. Reporting entities will determine the way in which they meet their obligations based on their assessment of the risk of whether providing a designated service to a customer may facilitate money laundering or terrorism financing.
Under the AML/CTF Act, AUSTRAC will continue its role as Australia's financial intelligence unit. Importantly, AUSTRAC will have an expanded role as the national AML/CTF regulator with supervisory, monitoring and enforcement functions over a diverse range of business sectors.
Background to the AML/CTF review
Background information on the AML/CTF reform process.
Expansion of designated services (second tranche of the AML/CTF Act)
Draft legislative provisions which will amend the AML/CTF Act to implement the second tranche of reforms were publicly released in August 2007. These draft legislative provisions will amend section 6 of the AML/CTF Act to specify what new 'designated services' will trigger obligations under the AML/CTF Act.
Sectors which will be affected by the second tranche legislation are:
- real estate agents in relation to buying and selling of real estate
- dealers in precious metals and stones engaged in transactions above a designated threshold
- lawyers, notaries, other independent legal professionals and accountants when preparing for or carrying out certain transactions
- trust and company service providers when they prepare for or carry out for a client the transactions listed in the Glossary to the FATF recommendations.
Update on the second tranche of AML/CTF reforms
The active participation of industry in the early consultations has provided the Australian Government with valuable information which will help to shape the second tranche of AML/CTF reforms. The government is committed to developing a workable legislative framework for the second tranche of AML/CTF reforms that strikes a balance between efficient conduct of business and effective regulation to combat money laundering and terrorism financing.
The government is acutely aware of the challenges faced by Australian businesses as they seek to deal with the current global economic downturn. It is essential that the government takes the current economic circumstances into account when considering the timetable for the implementation of the second tranche of reforms.
The government proposes to reconsider the implementation process for the second tranche of reforms in December 2009. The implementation process will include further consultation with the representatives of affected businesses.
Draft second tranche designated services tables (PDF, 31KB)
The Attorney-General's Department received a number of submissions from stakeholders in response to the draft legislative provisions.
AML/CTF Regulations
On 30 January 2008, the Anti-Money Laundering and Counter-Terrorism Financing Regulations 2008 were registered. These Regulations amend the AML/CTF Act, resolving an unintended exemption in the Act by ensuring that managed investment schemes are captured in the legislation.
