On May 2, AST AG issued material on proposals for AML/CFT reforms.
AST AG released detailed AML/CFT reform proposals in second stage consultation papers outlined below, after it considered feedback from its first round of consultation.
In addition, said it seeks feedback from all stakeholders, including both current and proposed new reporting entities, to ensure that the reforms improve current regime.
It also published a link to a survey in which feedback/views may be provided.
It issued Reforming Australia’s anti-money laundering and counter-terrorism financing regime - overview, which provides an outline of second series of consultation papers.
In addition, it issued Reforming Australia’s anti-money laundering and counter-terrorism financing regime paper 1: further information for real estate professionals.
It also issued Reforming Australia’s anti-money laundering and counter-terrorism financing regime paper 2: further information for professional service providers.
Plus, Reforming Australia’s anti-money laundering and counter-terrorism financing regime paper 3: further information for dealers in precious metals and precious stones.
It also issued consultation paper Reforming Australia’s anti-money laundering and counter-terrorism financing regime paper 4: further information for digital currency exchange providers (DCEPs), remittance service providers and financial institutions.
Plus, Reforming Australia’s anti-money laundering and counter-terrorism financing regime paper 5: broader reforms to simplify, clarify and modernise the regime.
Paper 1
Paper 1 contains information for real estate professionals who are proposed to be brought under the AML/CFT regime; AST AG stated high-value goods, including real estate, have been identified as a significant money laundering channel in Australia.
AST AG said criminals buy real estate as a way of laundering or concealing illicit funds as it allows for the movement of a large amount of funds in a single transaction.
Asset confiscation cases show breadth of criminal investment, scale of criminal wealth that can be laundered/invested this way; criminals can purchase property using large sums of illicit cash, renovate property to improve value, sell the property for a gain.
Laundering illicit funds via real estate sector not only allows criminals to conceal and enjoy profits from their crimes, but also poses a risk property prices may be artificially inflated creating hardship for genuine property buyers seeking affordable housing.
Paper 2
Paper 2 contains information for professional service providers are proposed to be brought under AML/CFT regime; legal practitioners, accountants, conveyancers, and trust and company service providers provide services that can be exploited.
Specifically, to disguise ownership, conceal the origins and purposes of financial transactions, facilitate tax evasion and, ultimately, launder the proceeds of crime.
Operating via or behind a professional adviser can provide a veneer of legitimacy.
Explained that these practitioners can be used to create complex structures that create distance between criminals and their illicit wealth, and obscure property ownership.
This can provide ideal opportunities for laundering large volumes of illicit funds.
Paper 3
Paper 3 additionally contains information for dealers in precious metals as well as precious stones who are proposed to be brought under the AML/CFT regime.
Precious metals and stones can provide an effective channel to legitimize criminal proceeds, including by storing value, transferring value, and lifestyle consumption.
Currently only bullion dealers are covered by regime; precious metals and stones are highly valuable; their trade is often conducted in cash; they can be held anonymously.
This can make ownership untraceable; individual items may be small and easily transportable, offering criminals the opportunity to transfer value within or alternatively between countries in a manner which minimizes the chance of detection.
Jewelry transactions and prices can be hard to establish; particularly vulnerable to under/overvaluation which can disguise amount of criminal proceeds being laundered.
Paper 4
Paper 4 is aimed at DCEPs, remittance service providers and financial institutions.
The emergence of new payment services and innovative tech has led to challenges in understanding of how the current obligations in the AML CFT Act 2006 apply.
Without reform, the AML/CFT regime will not reflect modern business practices.
Plus, risks becoming overly burdensome, vulnerable to exploitation by criminal actors.
Paper presents options for expanding range of digital currency-related services that are regulated and streamlining framework for regulating x-border transfers of value.
It also details proposed approaches to improving and expanding the travel rule.
In addition, proposed approaches to simplifying reporting obligations on international funds transfer instructions (IFTIs); AST AG proposes that the IFTI and travel rule reporting obligations will not apply to proposed newly regulated tranche two sectors.
These obligations relate to transactions conducted by the financial sector.
Paper 5
Paper 5 contains information on the proposed measures to simplify the AML/CFT regime which will apply to current as well as new proposed reporting entities.
Australia’s AML/CFT regime can be unduly complex and poorly understood, which can lead to inadequate money-laundering and terrorism financing prevention practices.
The paper details AST AG's proposed measures to simplify and clarify the regime.
Presents proposals to replace current prescriptive AML/CFT program and customer due diligence (CDD) requirements with clear, risk-based and outcomes-focused obligations.
Outlines reforms to ensure appropriate information sharing and risk management.
Effectiveness
The comment period for this consultation closes at 5pm AEST on Jun. 13, 2024.
In addition, it reminded round 1 of consultation identified broad support for reforms.
Submissions on round 1 reflected diversity in affected sectors; stakeholders supported proposals to clarify AML/CFT obligations, remove ambiguity from current provisions.
In addition, it said current reporting entities supported changes in order to simplify customer due diligence obligations and AML/CFT program requirements in particular.
In May 2024, AST AUSTRAC issued blog by new CEO Brendan Thomas, see #210647.
