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The Australian Transaction Reports and Analysis Centre (“AUSTRAC”) is cracking down on Reporting Entities that fail to adhere to their reporting obligations. As a Reporting Entity, there are various reporting requirements that must be addressed through robust systems and procedures. These must allow for the identification of reportable transactions and for reporting under the legislation. Reporting Entities need to understand and comply with their requirements or risk hefty fines or costly and lengthy court proceedings as AUSTRAC cracks down.

Key Points

  • Reporting Entities enrolled and/or registered with AUSTRAC must adhere to the various compliance requirements as set out in the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) (“AML/CTF Act”) and the Anti-Money Laundering and Counter-Terrorism Financing Rules Instrument 2007 (No. 1) (Cth) (“AML/CTF Rules”).
  • Reporting Entities must have adequate systems and processes in place that allow transactions with customers to be monitored and reported. This information should be included within an Anti-Money Laundering and Counter-Terrorism Financing (“AML/CTF”) Program. The AML/CTF Program must assist the Reporting Entity in identifying, mitigating and managing potential money laundering and terrorism financing risks. As part of these requirements, Reporting Entities must appropriately report International Funds Transfer Instructions (“IFTIs”), Suspicious Matters (“SMRs”) and Threshold Transaction Reports (“TTRs”), in line with the AML/CTF Act and AML/CTF Rules. Further, Reporting Entities must submit an Annual Compliance Report to AUSTRAC.
  • Reporting Entities that fail to report or those that lack a robust system of identifying, mitigating and managing potential money laundering and terrorism financing risks may have enforcement action taken against them by AUSTRAC. This could result in an injunction, fines or even criminal prosecution for offending parties.
  • Reporting Entities should make sure their AML/CTF systems are up to date and seek further advice if required to ensure they are complying with their AML/CTF compliance requirements.

What are Reporting Entities Required to do?

Reporting Entities must have in place a robust AML/CTF Program that outlines its obligations and responsibilities under the AML/CTF Act and Rules. Reporting Entities must have clear guidelines on what steps will be taken in order to identify, mitigate and manage potential money laundering and terrorism financing risks. As part of the AML/CTF Program, the Reporting Entity must include their processes and systems for complying with various reporting obligations. This includes the AML/CTF Program including the Reporting Entity’s procedures for complying with the following:

ReportProcedures for ComplianceTime Reporting Limits
SMRsThe AML/CTF Program must include a policy or indicators that allow employees to determine whether a matter is suspicious; allowing the employee to report the suspicious matter to the responsible person within the Reporting Entity for further assessment. The transaction must be assessed based on the Reporting Entities risk-based systems and controls, customer identification procedures and transaction monitoring program.24 hours if a suspicion is formed in regard to terrorism financing, or within 3 days if for any other suspicious matter.
TTRsThe AML/CTF Program must include clear instructions on how TTRs are to be reported to AUSTRAC and who is responsible within the Reporting Entity for lodging a report when a transfer involves physical or digital currency of AUD10,000 (or the foreign equivalent) or more.Within 10 business days of the transaction taking place for threshold transactions.
IFTIsThe Reporting Entity must have clear processed and procedures for reporting IFTIs. This will allow the Reporting Entities to lodge IFTI reports within the required timeframe when an IFTI is either received or sent.Within 10 business days of receiving or sending the instruction for IFTIs.
Annual Compliance ReportThis report must be completed in line with AUSTRAC regulations.Submitted to AUSTRAC within the lodgement period for a particular reporting period –generally by 31 March each year.

Failure to have adequate compliance arrangements in place may amount to AUSTRAC utilising their enforcement powers. The enforcement powers available include:

  • issuing an infringement notice;
  • enforceable undertakings;
  • civil penalty orders; and
  • remedial directions.

AUSTRAC’s enforcements powers are set out in Part 15 of the AML/CTF Act.

Background Information

Two examples of AUSTRAC utilising their enforcement powers against Reporting Entities that failed to comply with their obligations include:

  • a Reporting Entity being issued with a $252,000 infringement notice to for failing to report IFTIs in 2018 – 2019 (AUSTRAC’s Media Release); and
  • a Reporting Entity being investigated, with AUSTRAC applying to the Federal Court for civil penalty orders as a result of failure to report more than 19.5 million IFTIs (ABC News Release).

These enforcement actions show AUSTRAC’s increasing focus on reiterating Reporting Entities’ obligations under the AML/CTF Act and AML/CTF Rules and the repercussions of failing to comply.

AUSTRAC is responsible for protecting Australia from serious crime and terrorism. Reporting Entities must be aware of their compliance obligations in order to continue operating without AUSTRAC intervention. Compliance with the AML/CTF Act and AML/CTF Rules is not taken lightly, with AUSTRAC willing to utilise their enforcement powers in order to protect Australia.

To find out more please refer to AUSTRAC’s website.

How can Sophie Grace Assist?

Sophie Grace can assist with all aspects of AML/CTF including assisting an entity Register and/or Enrol with AUSTRAC.

If you are already registered or enrolled with AUSTRAC and require an AML/CTF Program, Sophie Grace can create a tailored AML/CTF Program specific to your entity. Alternatively, you can purchase our Template AML/CTF Program directly from our website shop. Please contact us for further information on which service would be right for you.

Sophie Grace can also assist with:

  • Ongoing AML/CTF compliance services – including assisting you to meet your compliance obligations and by providing training for your employees; and
  • Independent AML/CTF Compliance Reviews – conducting a compliance review of your AML/CTF Program and processes as required under the AML/CTF Act.

If you require further information or assistance in relation to your reporting responsibilities and compliance with the AML/CTF Act and AML/CTF Rules, please contact us.

Ivana Josic

Ivana is responsible for all Marketing activities for Sophie Grace and assists both the Compliance and Legal teams with a particular focus on Compliance services. Ivana focuses on website development, management and ensures clients receive the latest regulatory updates through Sophie Grace social media channels, the newsletter and website blog page. Ivana also assists the Compliance team with drafting and amending compliance documentation, preparing AFSL and ACL Applications and implementing ongoing compliance solutions.