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AUSTRAC’s Latest Enforcement Against Financial Crime

AUSTRAC has strengthened its collaboration with the United Kingdom (“UK”) in the fight against money laundering, terrorism financing, and other serious financial crimes. In February 2023, AUSTRAC signed Memoranda of Understanding (“MOU”) with the UK’s Financial Conduct Authority (“FCA”) and His Majesty’s Revenue and Customs (“HMRC”) to enhance information sharing, cooperation and facilitate enhanced supervision of businesses across both Australia and the UK.

This partnership reflects the commitment of both countries to working together in addressing the global threat of money laundering and terrorism financing. The agreements facilitate enhanced engagement on regulatory matters and the exchange of regulatory information, promoting a shared understanding of emerging trends and risks.

Enforcement Action: PayPal

In a good example of global businesses which are the subject of AUSTRAC supervision and enforcement, AUSTRAC accepted an Enforceable Undertaking (“EU”) from PayPal Australia Pty Ltd (“PayPal”), addressing concerns about PayPal’s reporting of international funds transfer instructions (“IFTIs”). The EU ensures PayPal’s compliance with Australia’s rigorous anti-money laundering and counter-terrorism financing (“AML/CTF”) laws.

The EU originated from an enforcement investigation regarding PayPal’s reporting of IFTIs. In response to AUSTRAC’s concerns, PayPal voluntarily offered the EU as a means to address the issues raised.

PayPal has already taken significant measures, including an independent audit, to strengthen its AML/CTF program. The company has also committed to providing AUSTRAC with independent assurance of the effectiveness and sustainability of these improvements as they become part of their regular operations.

Nicole Rose, the CEO of AUSTRAC, emphasised the importance of Reporting Entities having robust systems in place to fulfil their AML/CTF obligations and contribute to safeguarding Australia’s financial system from criminal exploitation.

Further details about the EU can be found on the AUSTRAC website.

AUSTRAC’s regulatory approach

AUSTRAC employs a range of regulatory tools and powers to ensure compliance with the AML/CTF laws. Its approach is tailored to the risk level associated with the various reporting entities it regulates, including educational initiatives and collaboration with regulatory interventions and enforcement.

AUSTRAC Enforcement

In addition to EUs, AUSTRAC possesses other enforcement powers, including:

  • issuing infringement notices (penalties for non-compliance);
  • remedial directions (requiring reporting entities to take specific actions in order to achieve compliance); and
  • seeking injunctions and/or civil penalty orders in the Federal Court.

Details of the consequences of not complying are available on the AUSTRAC website.

Background

The Australian Transaction Reports and Analysis Centre (“AUSTRAC”) plays a crucial role in supervising regulated businesses and generating financial intelligence to safeguard the community and financial systems from organised crime. The MOUs with the FCA and HMRC build upon AUSTRAC’s previous MOU with the Great Britain Gambling Commission and complement the financial intelligence-focused MOU with the UK National Crime Agency.

Further Reading

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