Effective AML Compliance in Australia

Blog / Effective AML Compliance in Australia

Many nations have tightened AML rules in response to the enormous growth in money laundering and terror financing operations. One of the most commonly cited situations is the failure to comply with anti-money laundering legislation properly. Many well-known figures in the financial and crypto industries are being investigated for breaking anti-money laundering regulations. For example, Finance, one of the most popular cryptocurrency exchanges, was investigated for violating AML/CFT regulations. Deutsche Bank, on the other hand, has been on the watchlist for non-compliance over several years. In light of these circumstances, the Australian government appears to be active in implementing tighter anti-money laundering legislation in the country. Financial crooks will be stopped from accomplishing their criminal aims thanks to new legislation and changes.

What is AML Compliance?

AML compliance refers to the ongoing monitoring and background screening of clients in order to counteract crimes like as money laundering and terror financing. The screening is done against a number of worldwide watchlists, including sanctions and PEPs, to ensure that only legal clients are enrolled.

Structure Policies that Comply with AML/CFT Laws

The AML/CFT Act 2006 is Australia's principal legislation governing anti-money laundering and counter-terrorist financing. The Act regulates deposit-taking, payment processing, currency exchanges, and other services. These organizations must register with AUSTRAC and file Transaction Threshold Reports (TTR) and Suspicious Activity Reports (SAR). For effective AML compliance, Australian businesses must have a good reporting procedure. It would be much easier to report suspicious activities to AUSTRAC.

AUSTRAC (Australian Transaction Reports and Analysis Centre) is the government's regulator and financial intelligence organization. The authority's mission is to combat financial crime and to protect the financial industry, FinTechs, entertainment, and other businesses.

AUSTRAC recently launched a new investigation into the National Australia Bank (NAB) and the Commonwealth Bank of Australia (CBA) for AML non-compliance. As a result of the penalties placed on Papua New Guinea last month, one of the partners was scrutinized (PNG). Banks and other business organizations are now being encouraged to tighten their anti-money laundering procedures in order to comply with AUSTRAC's rules.

Customer Data Privacy Insurance

In 2019, the Customer Data Right (CDR) was enacted in Australia, affecting various industries, including financial services. The CDR has a significant impact on all companies that gather consumer data for whatever purpose, with banks and FinTechs being the most vulnerable. It allows consumers to select where their information is shared and is available at the federal, state, and territorial levels. As a result, consumer data privacy must be a key concern for every company in the nation. Not only would ensuring a safe AML monitoring system that can protect client data help businesses comply with anti-money laundering regulations, but it will also ensure that they follow CDR.

AML Screening Solution and Transaction Monitoring Employment

New AML regulations, known as Tranche 1.5, went into effect on June 18, 2021. Businesses in Australia can now use third-party identity verification solutions to fulfill KYC obligations under the new regulation. There is a greater possibility of enrolling confirmed end-users in the Australian corporate context and identifying high-risk entities before they become a business concern. The next step is transaction monitoring, which is a legal obligation for businesses. Suspicious activity linked to money laundering and other forms of financial crime must be recognized and reported as well. This approach must be based on the level of danger posed by each consumer. Following are the situations that are supposed to be monitored by the financial institutions:

  • Financial transactions involving large sums of money
  • Transactions with no clear goal
  • Transactions with a high level of complexity
  • A rise in the number of deposits in a short period of time

Monitoring Customers Against Sanctions Globally 

All consumers in Australia must also be checked against worldwide watchlists such as PEPs and sanctions, according to AML laws. The United Nations Security Council (UNSC) and the Australian government have collaborated and imposed sanctions that apply not just to corporations operating inside Australia's borders but also to those operating internationally. This comprehensive policy of Australia carries the country’s AML compliance to a higher level.

Enhanced Due Diligence During Onboarding 

Customer due diligence is required by state anti-money laundering legislation throughout the onboarding process. Before anybody may be onboarded, the checks must properly validate their identification. Furthermore, AUSTRAC requires continual surveillance in order to determine a risk level. Customers' risk ratings must be established, and client profiles must be updated on a regular basis.

Companies must conduct enhanced due diligence examinations on all high-risk entities after fulfilling the basic due diligence requirements and developing client profiles based on risk assessments. It is required to check them against worldwide watchlists. AML compliance is no more a simple task in Australia and other places around the world. This year's regulatory landscape has changed significantly. AUSTRAC has modified regulations, while the government has released new anti-money laundering measures known as Tranche 1.5, as well as supporting guidelines from AUSTRAC. Consequently, the Australian business community is now required to use a third-party AML service. Companies must examine AML/CFT regulations, data privacy, AUSTRAC laws, and a complete AML screening system to ensure successful compliance with all laws.

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