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, Binance, 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 for 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. A checklist to improve AML compliance program for Australian companies can be listed with the following points:
- AML Screening Solution and Transaction Monitoring
- Global Controls
- Enhanced Due Diligence During Onboarding
- Ongoing Monitoring
The FATF Mutual Evaluation Report (MER) of Australia in 2015 was a comprehensive assessment of the country's anti-money laundering (AML) and countering the financing of terrorism (CFT) regimes conducted by the Financial Action Task Force (FATF). The report evaluated Australia's compliance with the FATF's 40 Recommendations, which set out the global standards for AML and CFT.
The purpose of the MER was to assess the effectiveness of Australia's AML and CFT measures and to identify any areas for improvement. The report found that Australia had a strong AML/CFT framework in place, with well-developed legal and regulatory frameworks and a strong commitment to implementation and enforcement. However, it also identified a number of areas where improvements could be made, including the need for stronger risk management systems, more effective measures to combat the financing of terrorism, and better coordination between the various agencies responsible for enforcing the country's AML/CFT regimes.
The FATF MER of Australia in 2015 was an important benchmark for the country's AML/CFT efforts and provided a roadmap for future improvements in these areas. It also helped to raise awareness of the importance of AML/CFT measures among government agencies, financial institutions, and other relevant stakeholders in Australia.
AML/CFT in Australia
Regulations
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 Rights and Privacy
In 2019, the Customer Data Right (CDR) was enacted in Australia, affecting various industries, including financial services. The CDR has significant power over all companies to gather consumer data for combatting financial crime, especially on 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 Checklist
AML Screening and Transaction Monitoring
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 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
Global Controls
AML controls are an important aspect of global financial regulation. In Australia, these controls are enforced through laws that require all consumers to be screened against various global watchlists, such as those maintained by the United Nations Security Council (UNSC) and other international organizations. These watchlists contain information on individuals and entities that are subject to sanctions or have been designated as politically exposed persons (PEPs).
In order to ensure that the country's AML compliance is at a high level, the Australian government has collaborated with the UNSC to impose sanctions that apply not only to corporations operating within Australia's borders but also to those operating internationally. This comprehensive approach ensures that the country's AML controls are effective and can help to prevent money laundering and other financial crimes. Additionally, by extending the reach of its AML controls to cover international corporations, Australia is able to play a leadership role in the global fight against financial crime.
Enhanced Due Diligence During Onboarding
Customer due diligence (CDD) is required by the state's 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 the risk levels. Customers' risk ratings must be established, and client profiles must be updated on a regular basis.
Companies must conduct enhanced due diligence (EDD) examinations on all high-risk individuals after fulfilling the basic due diligence requirements and developing client profiles based on these 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 in the country. 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 free to use a third-party AML service.
Ongoing Monitoring
Ongoing monitoring is one of the crucial aspects of AML laws in Australia. These laws require financial institutions and other regulated entities to regularly monitor and report suspicious transactions, which helps to identify and prevent money laundering and other financial crimes. Ongoing monitoring is important because it allows companies to identify and mitigate any potential risks posed by their customers and transactions in a timely manner. This helps to ensure that AML laws are effectively enforced and that the financial system remains free from criminal activities.
Companies must have the right systems, processes, and procedures in place to carry out ongoing monitoring, which is a constant process that requires careful attention to detail and a commitment to ensuring that AML laws are being followed.
In Australia, AML regulations are enforced by a number of government agencies, including AUSTRAC. Companies must take their AML responsibilities seriously and must ensure that they have the right systems, processes, and procedures in place to carry out ongoing monitoring effectively. This helps to ensure that the financial system remains free from criminal activities and helps to keep companies in compliance with AML regulations.
