As criminals use more sophisticated tools to conduct their activities, it is more important than ever that governments can ‘follow the money’ to counter those activities. But there is concern that Australia’s current anti-money laundering / counter-terrorism financing (AML/CTF) regime is not up to task, in part because it does not include professionals including lawyers and accountants. One of the ongoing challenges is balancing the objective of combating money laundering and terrorism financing against the need to protect individuals’ rights.
The Commonwealth Government has introduced the Anti-Money Laundering and Counter-Terrorism Financial Bill 2024 (Cth) (the Bill) into Parliament. While the Bill has not yet been passed into law, it is likely to come into effect by 1 July 2026 for those professionals.
What does the Bill provide?
- Australia’s AML/CTF regime will be extended to professional advisers, such as lawyers, who provide designated services. For example, the regime will be extended to entities which assist a person to buy, sell, or transfer an asset such as real property, or act as an officeholder, partner, trustee, or equivalent.
- Concerns have already been raised by parties such as the NSW Law Society about whether the Bill undermines legal professional privilege (- in addition to impeding a person’s right to avoid self-incrimination or interfering with a lawyer’s obligation of confidence). Experience from jurisdictions such as New Zealand which have earlier introduced an AML/CTF regime embracing lawyers, demonstrate that lawyers will be required to carefully consider:
- What communications are privileged; and
- To what extent, if at all, can information be reported without breaching confidence.
- An entity subject to the AML/CTF regime (a reporting entity) must have an AML/CTF program. An AML/CTF program will consist of a risk assessment (- which identifies and assesses AML/CTF risks on an ongoing basis) and policies (- procedures, processes, systems, and controls which manage and mitigate AML/CTF risks). An AML/CTF compliance officer must be appointed to oversee a reporting entity’s AML/CTF program.
- One issue which an AML/CTF program must address is customer due diligence. The reporting entity must first establish on reasonable grounds the identity of the customer (- and anyone for whom the customer is receiving the designated service) and the nature and purpose of the business relationship. The reporting entity must also undertake ongoing customer due diligence, by having in place a system which can identify unusual transactions and behaviours (- such as those which have no apparent economic purpose).
- The offence of tipping off will be simplified, and now arises if the reporting entity discloses the fact that it has been required to provide a report to Commonwealth Government entities where doing so ‘… would or could reasonably be expected to prejudice an investigation‘.
This article was written by Nicholas Matkovich, Partner and Vignesh Iyer, Senior Associate.
