AML/CTF compliance: Money laundering and terrorism financing affecting the everyday client
3 mins reading time
Recent changes to Anti-Money Laundering and Counter Terrorism Financing (AML/CTF) laws in Australia
Further to our earlier insight, the AML/CTF Bill was passed by both houses on 29 November 2024, and is set to capture Professional Services (including Lawyers and Accountants) for AML/CTF compliance – with some obligations due by March 2026 and others due by 1 July 2026.
As a client, you may experience different interactions with businesses that you have previously engaged with, and stricter onboarding or verification processes may be apparent. Clients must embrace and work with these entities to prevent Australia from becoming “grey-listed” and to help detect and disturb money laundering and terrorism financing.
What is money laundering and terrorism financing?
Money laundering is where large amounts of money are generated from criminal activity and made to appear to have come from a legitimate source. Terrorism financing is the act of providing financial support to terrorist or terrorists organisations to enable them to carry out terrorist acts or to benefit terrorists or terrorist organisations.
The Anti-Money Laundering and Counter Terrorism Financing Act (AML/CTF Act) is enforced by AUSTRAC to prevent this type of activity from occurring and to impose obligations on entities to assist in detecting this type of conducting and preventing entities from unknowingly assisting these criminals.
Why do AML/CTF laws apply to Professional Services?
Professional Services often maintain a close advisory relationship with their clients, offering guidance on both personal and business matters. However, this close involvement also exposes Professional Services to potential exploitation, especially when clients engage in activities that may violate tax laws, AML/CTF regulations, or other criminality. This means there’s a risk that Professional Services may unwittingly facilitate money laundering or terrorism financing.
By bringing Professional Services into the AML regulations, the government aims to:
- Equip businesses with tools to identify suspicious transactions.
- Help prevent the misuse of legitimate services for money laundering or terrorism financing.
- Ensure firms comply with global AML/CTF standards to prevent financial crime.
How do AML/CTF laws affect clients?
Under the AML/CTF Act, particular industry types, such as Professional Services may ask you to provide identification and verify that identification. This will be a mandatory requirement of these entities under the AML/CTF Act.
This means that, as a client, you will be required to undergo a more stringent identity check than you may have experienced previously with the same entity or entity type. However, by verifying your identity it will assist Australian businesses from unwittingly being misused for criminal activities.
You can confirm the information requests and the information that may be requested by the entity on the governing body, AUSTRAC’s website.
Given the sensitivity of the information being requested, you will need to satisfy yourself that the request has come from a legitimate source, and that you are expecting this entity to complete customer due diligence in accordance with the AML/CTF Act. If a request is unexpected, and/or you have not confirmed with the entity directly, you should not provide the requested information until you can satisfy that the request is for AML/CTF verification purposes from a trusted entity.
Communicating AML/CTF compliance requirements to clients
Our trade and compliance lawyers are well versed in AML/CTF compliance requirements and can provide advice on verification and communication strategies for clients and businesses alike. Reach out today to speak to a friendly team member on this topical issue.
The information contained in this article is general in nature and cannot be relied on as legal advice nor does it create an engagement. Please contact one of our lawyers listed above for advice about your specific situation.
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AML/CTF compliance: Money laundering and terrorism financing affecting the everyday client
Recent changes to Anti-Money Laundering and Counter Terrorism Financing (AML/CTF) laws in Australia
Further to our earlier insight, the AML/CTF Bill was passed by both houses on 29 November 2024, and is set to capture Professional Services (including Lawyers and Accountants) for AML/CTF compliance – with some obligations due by March 2026 and others due by 1 July 2026.
As a client, you may experience different interactions with businesses that you have previously engaged with, and stricter onboarding or verification processes may be apparent. Clients must embrace and work with these entities to prevent Australia from becoming “grey-listed” and to help detect and disturb money laundering and terrorism financing.
What is money laundering and terrorism financing?
Money laundering is where large amounts of money are generated from criminal activity and made to appear to have come from a legitimate source. Terrorism financing is the act of providing financial support to terrorist or terrorists organisations to enable them to carry out terrorist acts or to benefit terrorists or terrorist organisations.
The Anti-Money Laundering and Counter Terrorism Financing Act (AML/CTF Act) is enforced by AUSTRAC to prevent this type of activity from occurring and to impose obligations on entities to assist in detecting this type of conducting and preventing entities from unknowingly assisting these criminals.
Why do AML/CTF laws apply to Professional Services?
Professional Services often maintain a close advisory relationship with their clients, offering guidance on both personal and business matters. However, this close involvement also exposes Professional Services to potential exploitation, especially when clients engage in activities that may violate tax laws, AML/CTF regulations, or other criminality. This means there’s a risk that Professional Services may unwittingly facilitate money laundering or terrorism financing.
By bringing Professional Services into the AML regulations, the government aims to:
- Equip businesses with tools to identify suspicious transactions.
- Help prevent the misuse of legitimate services for money laundering or terrorism financing.
- Ensure firms comply with global AML/CTF standards to prevent financial crime.
How do AML/CTF laws affect clients?
Under the AML/CTF Act, particular industry types, such as Professional Services may ask you to provide identification and verify that identification. This will be a mandatory requirement of these entities under the AML/CTF Act.
This means that, as a client, you will be required to undergo a more stringent identity check than you may have experienced previously with the same entity or entity type. However, by verifying your identity it will assist Australian businesses from unwittingly being misused for criminal activities.
You can confirm the information requests and the information that may be requested by the entity on the governing body, AUSTRAC’s website.
Given the sensitivity of the information being requested, you will need to satisfy yourself that the request has come from a legitimate source, and that you are expecting this entity to complete customer due diligence in accordance with the AML/CTF Act. If a request is unexpected, and/or you have not confirmed with the entity directly, you should not provide the requested information until you can satisfy that the request is for AML/CTF verification purposes from a trusted entity.
Communicating AML/CTF compliance requirements to clients
Our trade and compliance lawyers are well versed in AML/CTF compliance requirements and can provide advice on verification and communication strategies for clients and businesses alike. Reach out today to speak to a friendly team member on this topical issue.