Two valuable objectives of the AML/CTF Act are addressed when implementing an AML/CTF program:

• to identify, mitigate and manage the risk that your business will be used by criminals to launder money or finance terrorism
• to ensure that your business is meeting one of its regulatory obligations by the implementation of an AML/CTF program.

An AML/CTF program that fails to achieve these objectives will make a business more vulnerable to being used for ML/TF purposes and place it at risk of not meeting its legal obligations.

Generally AUSTRAC expects a reporting entity to develop and maintain logical, comprehensive and systematic methods to address the components of its program, and that such methods and the entity's approach to ML/TF risks are understood, implemented and maintained to an appropriate extent, within their organisation.

In identifying its ML/TF risk, a reporting entity must consider the risk posed by:

• its customer types, including any politically exposed persons
• the types of designated services it provides
• the methods by which it delivers designated services
• the foreign jurisdictions with which it deals.

The risk-based approach provides flexibility for reporting entities to adopt ML/TF risk management practices that are appropriate to the nature, size and complexity of their business. The risk-based approach also places responsibility onto reporting entities to undertake robust risk assessments covering the factors set out above. It is important when undertaking risk assessments that reporting entities document the methodology used and any findings in line with the record keeping obligations under section 116 of the AML/CTF Act.