Overview of the AML/CTF Amendment Act 2024

The Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) Amendment Act 2024 received Royal Assent on 10 December 2024, having passed both houses of Parliament at the end of November.

This amending Act represents a significant expansion to the application of the AML/CTF Act to additional sectors and proposes reforms for existing reporting entities. The AML/CTF Amendment Act 2024 aims to enhance Australia’s ability to deter, detect and disrupt money laundering and terrorism financing activities and bring Australian law in line with international standards.

Key changes from the reform  

One of the most notable changes is the inclusion of high-risk services provided by designated non-financial businesses and professions (DNFBPs) or ‘Tranche 2’ entities under the AML/CTF Act. The sectors included are:

  • Lawyers 
  • Accountants 
  • Real estate professionals
  • Trust and company service providers
  • Dealers in precious metals and stones.

When enacted, from 1 July 2026, these additional entities will need to assess and manage risks of money laundering, terrorism financing, and proliferation financing by developing appropriate AML/CTF policies within their organisation. The new Act also provides the Australian Transaction Reports and Analysis Centre (AUSTRAC) with additional powers to bolster its regulatory role and capability in ensuring compliance. 

Simplifying AML/CTF requirements

The reforms aim to simplify and clarify the AML/CTF requirements by including prescriptive details to the current risk-based requirements, making it easier for businesses to understand and comply with regulations.

Key areas of significant change include amendments to the definition of an AML Program, changes to the documentation of AML/CTF risk assessments, and changes to Customer Due Diligence (CDD) requirements. The amendment allows businesses to tailor their AML/CTF programs to their specific risk profiles, making it easier to understand and comply with the requirements. 

The amendments include but are not limited to, changes to the concept of a designated business group, tipping off offence, gambling threshold for performing CDD, and updating the definitions and scope of regulated activities to cover new sectors and digital assets. The changes to the AML/CTF legislation aim to ensure the AML/CTF framework remains relevant and effective with focused outcomes in the face of evolving financial crime threats.

The reforms also streamline the compliance process by consolidating and simplifying the legislative framework. A number of exemptions have been moved from the AML/CTF Rules to the Act, making it easier for businesses to navigate their obligations.

The aim of these changes is to make the AML/CTF regime more intuitive and manageable for businesses while still maintaining robust protections against money laundering and terrorism financing activities.

Enhanced regulatory powers 

The reforms have also significantly enhanced AUSTRAC's regulatory powers. These new powers are designed to ensure stricter compliance with the AML/CTF regime, which is designed to deter, detect, and disrupt financial crimes.

AUSTRAC now has the authority to issue civil penal orders to entities that fail to comply with their AML/CTF obligations meaning businesses can face substantial fines if they do not adhere to the required standards.

In addition to civil penalties, AUSTRAC can also issue enforceable undertakings, which are legally binding agreements between AUSTRAC and the non-compliant entity. In these undertakings, the entity agrees to take specific actions to rectify its compliance issues. This could include implementing new policies, conducting additional training, or making structural changes to its AML/CTF programs. 

AUSTRAC also has the power to issue infringement notices, similar to fines, but for minor breaches of the AML/CTF Act. These notices serve as a warning and a prompt for entities to correct their compliance practices without the need for more severe penalties. 

Lastly, AUSTRAC can issue remedial directions to entities to take specific actions to remedy their non-compliance. This could involve revising their risk assessments, enhancing their transaction monitoring systems, or improving their customer due diligence processes. 

Spotlight on proliferation funding

Proliferation financing involves the use of financial systems to support the development and spread of weapons of mass destruction (WMD). Proliferation financiers often employ tactics similar to those used by terrorist financiers and money launderers, frequently involving cross-border elements. These tactics include establishing front companies, concealing beneficial ownership, and routing transactions through third countries.

Under the reforms, Tranche 2 entities must aim to clarify proliferation financing threats within their specific frameworks and conduct thorough risk assessments tailored to their size and scope, integrating these risks into their existing AML and CTF frameworks. Monitoring trade-related transactions for proliferation financing and targeted financial sanctions is crucial. Effective monitoring can be achieved by identifying transfers to and from high-risk jurisdictions, sanctioned entities, and sensitive sectors and by improving screening processes to detect red flags like dual-use goods and specific shipping details. 

What Tranche 2 entities need to know 

The new AML/CTF obligations mean significant changes to Tranche 2 entities' operations. Given the Act's Royal Assent, here are some key dates to consider.

Date of commencement: 31 March 2026. 

  • Schedule 1 - AML/CTF programs and business groups with two or more businesses 
  • Schedule 2 - Customer due diligence 
  • Schedule 3 - Regulating additional high-risk services 
  • Schedule 5 - Tipping off offence and disclosure of AUSTRAC information to foreign countries or agencies Part 1—Main amendments 
  • Schedule 6 - Services relating to virtual assets Part 1—Main amendments 
  • Schedule 8 - Transfers of value and international value transfer services
  • Schedule 10 - Exemptions.

Date of commencement: 1 July 2026. 

  • Schedule 4 - Legal professional privilege 
  • Schedule 7 - Definition of bearer negotiable instrument.

How BDO can help 

BDO is a trusted adviser to clients across a broad range of services and provides forensic services support, including preventative financial crime risk management. BDO’s forensic services team conduct AML/CTF independent reviews and financial crime risk assessments for highly regulated institutions to ensure they comply with their independent review requirements under the AML/CTF Act. If you would like to learn more about our services, contact us today.

 

This publication has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only.  

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