Money laundering, terrorism financing and proliferation financing definitions
Read our definitions of money laundering, terrorism financing and proliferation financing.
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Money laundering
Money laundering has a specific meaning under section 5 of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (the Act). It means conduct that amounts to an offence against Division 400 of the Criminal Code Act 1995, or a corresponding offence against a state, territory or foreign law.
In general, it can occur when a person deals with money or property and any of the following apply:
- the money or property has been wholly or partly derived from crime
- the money or property is used in crime
- the value of the money or property is grossly out of proportion to the person’s income and expenditure over a reasonable period and the person can't demonstrate that it didn't come from unlawful activity (known as ‘unexplained wealth’).
Money laundering typically involves hiding, disguising or legitimising the true origin and ownership of money or property used in or derived from crime.
It’s a key enabler of serious crimes such as:
- child exploitation
- drug and sex trafficking
- scams
- fraud
- terrorism
- the proliferation of weapons of mass destruction.
Terrorism financing
The financing of terrorism (terrorism financing) has a specific meaning under section 5 of the Act.
It includes conduct that amounts to an offence against any of the following:
- section 102.6 (getting funds to, from or for a terrorist organisation) or Division 103 (financing terrorism) of the Criminal Code Act 1995
- section 20 or 21 of the Charter of the United Nations Act 1945 (dealing with frozen assets, or making an asset available to a person, prescribed under targeted financial sanctions)
- a corresponding offence against a state, territory or foreign law.
Criminal actors use a wide variety of methods to fund terrorist activities that pose a threat to national and international security. The funds that facilitate terrorist activity can come from both legitimate and criminal sources.
Examples include funding:
- the purchase of weapons, vehicles and explosives for a terrorist organisation
- activities to prepare for a terrorist act
- to generally support any terrorist organisation.
The Commonwealth government provides a list of organisations currently listed as terrorist organisations under the Criminal Code.
The Department of Foreign Affairs and Trade also has a Consolidated List of all persons and entities listed under Australian sanctions laws, including those relating to terrorism.
Proliferation financing
Proliferation financing has a specific meaning under section 5 of the Act.
It includes conduct that amounts to any of the following:
- an offence against the Charter of the United Nations Act 1945 or regulations made under that Act, that is prescribed by regulations made under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006
- an offence against the Autonomous Sanctions Act 2011 or a contravention of regulations made under that Act that is any of the following:
- involves sanctions addressing the proliferation of weapons of mass destruction
- is prescribed by regulations made under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006
- the provision of assets (including funds) or financial services, or other dealings with assets that contravene a law of the Commonwealth that both:
- implements international agreements, treaties or conventions relating to the proliferation of weapons of mass destruction
- is prescribed by regulations made under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006
- a corresponding offence under state, territory or foreign law
- any other offence prescribed by regulations made under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006.
This guidance will be updated when additional offences are prescribed under the Anti-Money Laundering and Counter-terrorism Financing Act 2006.
Proliferation financing enables the spread of weapons of mass destruction.
It helps provide the assets, services and transactions required to obtain nuclear, chemical or biological weapons or materials related to these weapons.
For further information, see our Proliferation financing in Australia national risk assessment 2022.
This guidance sets out how we interpret the Act, along with associated Rules and regulations. Australian courts are ultimately responsible for interpreting these laws and determining if any provisions of these laws are contravened.
The examples and scenarios in this guidance are meant to help explain our interpretation of these laws. They’re not exhaustive or meant to cover every possible scenario.
This guidance provides general information and isn't a substitute for legal advice. This guidance avoids legal language wherever possible and it might include generalisations about the application of the law. Some provisions of the law referred to have exceptions or important qualifications. In most cases your particular circumstances must be taken into account when determining how the law applies to you.