Section 17 of Doing Business in Australia
Anti-money Laundering and Counter-terrorism Financing legislation
The Anti-money Laundering and Counter-terrorism Financing Act 2006 (Cth) (AML/CTF Act) and its associated regulations and rules seek to reduce the risk that transactions involve money laundering or financing of terrorism. The AML/ CTF Act is administered by the Australian Transaction Reports and Analysis Centre (AUSTRAC).
The AML/CTF Act applies to those entities that provide “designated services”, which includes a wide range of activities including the provision of most financial services. The legislation imposes obligations on those entities, “reporting entities”, including to adopt and maintain their own anti- money laundering and counter-terrorism financing programs. Generally, a program is divided into two parts:
- Part A (general), the purpose of which is to identify, mitigate and manage the risk that the services provided by the reporting entity involve money laundering or financing of terrorism; and
- Part B (customer identification), the purpose of which is to set out customer identification and verification procedures. Reporting entities are required to collect and verify information relating to the identity of customers, customer’s beneficial owner(s) and customers who are identified as politically exposed persons.
A reporting entity may use an external provider to assist to satisfy its know-your-customer obligations, however it should ensure obligations under the privacy law are complied with (see section 18 - Guide to Privacy and Data Protection, Direct Marketing, Spam and Do Not Call). In both parts, the emphasis is on putting in place appropriate risk-based systems or controls, depending on the nature, size and complexity of the business.
Reporting entities are also required to report certain transactions to AUSTRAC, perform ongoing customer due diligence, keep accurate records, and lodge annual compliance reports.
The compliance report relates to a reporting entity’s compliance with its obligations under the AML/CTF Act. In 2016, the AML/CTF Act and associated rules and regulations were subject to a statutory review in which 84 recommendations were made to streamline and strengthen Australia’s AML/CTF regime. The implementation of recommendations was broken down into two phases. A number of phase one high priority initiatives were implemented during 2017. Notably, this included the expansion of the AML/CTF Act application to also cover digital currency exchange providers. Phase two initiatives will constitute more significant reforms and will be developed in the longer term.
Penalties for non-compliance with the AML/CTF Act can be substantial, including penalties of up to AU$22 million.
Corrupt practices legislation
In Australia, providing, offering or promising to provide a benefit to another person where:
- the benefit is not legitimately due to the person; and
- the person provides the benefit with the intention of influencing a public official in order to obtain or retain business or a business advantage not legitimately due, is prohibited.
Giving or offering a benefit as an inducement or reward for doing or not doing something or for showing or not showing favour or disfavour to any person in relation to business affairs is also prohibited.
This guide is current as of April 2021.