Your guide to the 2006 Anti-Money Laundering and Counter-terrorism Financing Act
Money laundering is the process of transferring illegitimate funds through a legitimate business or activity to conceal their origin. This makes it more difficult for authorities to track down the source of the money and identify the criminals involved. People who finance terrorist organisations can use similar methods – by funnelling money through legal activities, they attempt to conceal where it is going and who is supplying it.
The Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) Act was introduced back in 2006 to prevent this type of financial crime. The Act requires businesses in certain sectors – including banking, real estate, accounting and gambling – to collect and verify specific information about their customers.
Affected sectors and businesses
The Act targets the financial sector and other businesses that involve large transfers of cash – the gambling sector, remittance or money-transfer services, real estate agents, accountants, bullion dealers and more. A list of designated services – including taking deposits, payroll services and currency exchange – is included in the Act, and any business that provides one or more of these services must comply with the regulations. Some financial institutions are also required to report transactions over a certain threshold, along with any suspicious activity.
What does compliance look like?
Businesses in the financial sector and those providing any of the services listed in the Act must register with AUSTRAC (Australian Transaction Records and Analysis Centre), the government agency responsible for deterring financial crime. Once your business is registered, you are a ‘reporting entity’ and need to keep up with your obligations under the Act.
- Developing a written AML/CTF program to manage compliance
- Collecting and verifying key client details before providing services – often referred to as ‘know your customer’ (KYC) information. This can mean taking verified copies of documents or using a credit-reporting body (CRB) to find and verify details.
- Reporting certain types of transaction – those over a certain monetary threshold, international transfers, information about carrying or shipping physical currency and any suspicious transactions or interactions
- Keeping and securely storing records showing your AML/CTF activity
- Submitting compliance reports if requested
- Paying an industry levy if your business earns over a certain threshold
AML/CTF and the Privacy Act
Because AML/CTF legislation involves the handling of clients’ personal information, businesses also need to comply with the Privacy Act while collecting and storing KYC data. This applies to any business registered with AUSTRAC as a reporting entity – even small businesses that are usually exempt from meeting the Privacy Act in other business areas.
About First AML
First AML streamlines the entire anti-money laundering onboarding and compliance process. Backed by real expertise, its cloud-based KYC Passport allows complex entities to share their verification across multiple companies and geographies, at their discretion.
Making an otherwise complex and manual onboarding process simple for clients and cost effective and compliant for businesses, First AML delivers efficiency and time savings, protecting reputations, and enabling companies to be on the right side of history in the face of global threats.