Australia is expected to reveal the details of its updated Tranche 2 anti-money laundering (AML) and counter-terrorism financing (CTF) laws towards the end of the month. Arctic Intelligence has explained what this could mean for Australia.
The new details, anticipated in response to the Senate AML/CTF enquiry’s recommendations, will offer insights into the government’s stance on the new laws, a beneficial ownership register, and a schedule for consulting with AML/CTF ‘gatekeeper’ professions.
At present, the AML and CTF regime in Australia covers casinos, bullion dealers, and solicitors that handle cash transactions exceeding $10,000. However, a significant compliance gap is believed to be presented by lawyers, accountants, and real estate agents who have been excluded thus far, but are likely to fall within the scope of the upcoming AML/CTF laws.
Arctic Intelligence explained that Australia is one of only three developed countries, along with the US and Canada, that lacks AML laws covering these critical industries. These sectors are termed as Designated Non-Financial Business and Professions (DNFBPs). The real estate sector, in particular, is viewed as a significant vulnerability in their AML system.
In 2020, the Australian Transaction Reports and Analysis Centre (AUSTRAC) estimated that Chinese entities laundered over $1bn through Australian real estate alone. Adding to this concern, the Australian Federal Police revealed to the Senate Committee that of the $187m in criminal assets seized in 2021, a staggering $116m was held in real estate.
Australia’s slow progression on the second tranche of its AML legislation has raised alarm bells over potential sanctions from the global Financial Action Task Force (FATF). Furthermore, a move towards a stronger alliance with the UK to combat money laundering, terrorism financing, and other severe crimes has prompted Australia to address this legislative loophole.
It is expected that the government will consult on the proposed changes via the Attorney General’s Department (AGD) for 12 to 18 months before introducing a Bill into federal parliament, Arctic Intelligence said. This timeline will allow for the new legislation to be in place ahead of the anticipated FATF evaluation visit in 2026.
Previously, Australia was set to be one of the initial countries to undergo a fifth round on-site mutual evaluation by the FATF, commencing in 2024. However, this has now been postponed, a move also affecting Spain and Norway. The absence of measures to address its AML/CTF regime has led AUSTRAC CEO Nicole Rose to caution that Australia risks being added to the FATF greylist.
The FATF’s 2015 evaluation of Australia described it as having a ‘mature regime for combating money laundering and terrorist financing, but that certain key areas remain unaddressed’. Now, Australian lawmakers have the opportunity to rectify these issues and ensure their AML/CTF house is in order ahead of the forthcoming FATF evaluation.
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