Overview of targeted financial sanctions obligations in the AML/CTF Act

You must develop and maintain anti-money laundering and counter-terrorism financing (AML/CTF) policies to meet your TFS obligations under the Act. 

Your AML/CTF policies must set out how you will make sure you:

• don't make any assets available to or for the benefit of a person designated for TFS
• don’t use or deal with, or allow or facilitate someone to use or deal with, any assets directly or indirectly controlled by a person designated for TFS. 

You must establish on reasonable grounds if any of the following are designated for TFS before you start to provide a designated service to a customer:

• your customer
• any beneficial owner of the customer (except in limited circumstances)
• any person on whose behalf the customer is receiving the designated service
• any person acting on behalf of the customer.

You must also:

• check whether any of those listed above become designated for TFS during your business relationship
• monitor your customers for potential breaches of sanctions laws.

The proliferation financing in Australia national risk assessment 2022 includes information about sanctions and some of the ways criminals may try to evade them using Australian businesses. You can also learn about unusual transactions and behaviours that may indicate criminal activity, including breaches of sanctions laws.

How to establish if a person is designated for targeted financial sanctions

You can use DFAT’s consolidated list to search for all persons and entities designated for TFS under Australian sanctions laws. 

Sanctions change often, so always check for the most recently published list. Sign up to the DFAT mailing list to receive updates on changes to the consolidated list. 

An individual may have variations in the spelling of their name; particularly non-English names translated into English. You may need to check alternative spellings and use fuzzy searching.

Other checks you can do

Consider doing more thorough checks if there’s a higher risk of your business providing services to a person designated for TFS. For example, when dealing with:

• international customers
• persons located in countries that are known intermediaries for sanctioned countries and entities
• entities with complex structures and foreign beneficial owners. This can make it difficult to identify the destination or recipient of designated services.

It may be appropriate to screen low-risk customers against the consolidated list as part of delayed initial CDD.

Further information

You can ask the Australian Federal Police for help to determine if an asset is owned or controlled by a designated person or entity. 

What to do if a person is designated for targeted financial sanctions

If a person is designated for TFS, the assets they own or control must be frozen. This means you can’t deal with their assets without a sanctions permit. You also must not make any assets available to them, or allow or facilitate others to make assets available to them, without a sanctions permit. 

It may not be appropriate to continue your business relationship with the customer. You must not return to the customer any assets you hold without a sanctions permit.

If you are, or think you may be holding an asset that’s frozen, we expect you to:

1. contact the Australian Sanctions Office.
2. report this to the Australian Federal Police as soon as practicable. 

If you suspect on reasonable grounds that you’ve information relevant to a contravention of Australia’s sanctions laws, you must file a suspicious matter report (SMR) with us. 

Learn more about TFS on the Department of Foreign Affairs and Trade website. It also has information on dealing with assets owned or controlled by designated persons and entities. 

The role of AUSTRAC, DFAT and the AFP

As a reporting entity you should understand the different roles played by AUSTRAC, DFAT and the AFP in relation to Australian sanctions laws. This will help you to engage with the right agency if you need to.

Our role

We:

• supervise your AML/CTF policies and CDD obligations aimed at preventing contraventions of Australian sanction laws
• develop actionable financial intelligence based on information you report, for example through suspicious matter reports, for dissemination to relevant law enforcement and national security agencies.

DFAT’s role

The Australian Sanctions Office at DFAT is Australia's sanctions regulator. 

DFAT:

• publishes the Consolidated List of persons and entities subject to targeted financial sanctions and/or travel bans under Australian law which you’ll use to carry out CDD
• receives applications for sanctions permits and supports the Minister for Foreign Affairs' consideration of these applications
• supports the Minister for Foreign Affairs' consideration of designations for Australian autonomous sanctions and counter-terrorism sanctions
• communicates with the UN Security Council (UNSC) about UNSC designations and, where required, sanctions permits for UNSC sanctions
• issues notices to gather information for the purpose of determining whether Australian sanction laws are being complied with.

AFP’s role

The AFP:

• receives information from reporting entities and other people about assets required to be frozen under Australian sanction laws
• investigates possible criminal offences against Australian sanction laws.

Related pages

• Initial customer due diligence
• Anti-money laundering and counter-terrorism financing policies.