On 20 April 2023, the Attorney General released proposed reforms to Australia’s Anti-money Laundering and Counter-terrorism Financing Act 2006 (Cth) (AML/CTF Act). The reform package accepts all recommendations made by the Senate Legal and Constitutional Affairs Reference Committee Inquiry into the Adequacy and Efficacy of Australia’s Anti-money Laundering and Counter-terrorism Financing Regime including, importantly, extending the AML/CTF Act to “tranche two entities”.
The Attorney General’s accompanying media release was scathing of the former Government failing to reform the AML/CTF Act to respond to the changing threat environment and evolving international standards. However, the deficiencies in the AML/CTF Act have been known since at least 2015 following a poor mutual evaluation outcome for Australia by the Financial Action Task Force and both sides of Government have dragged their feet in progressing reforms.
With Australia due for another mutual evaluation by the Financial Action Task Force in 2024 or 2025, it is no surprise that the reform package is back on the legislative agenda lest Australia receives another poor result.
The reforms include proposals to extend the operation of the AML/CTF Act to lawyers, accountants, trust and company service providers, real estate agents and dealers in precious metals and stones. For lawyers, this will include requirements to conduct customer due diligence and transaction monitoring in certain “high risk” scenarios such as holding client money on trust. Legal industry groups have already raised concerns around how this will impact ethical duties and professional standards.
Consultation closes on 16 June 2023 and a second consultation paper is expected.
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