Anti-Money Laundering and Counter-Terrorism Financing Act 2006
The Federal Attorney-General’s Department (AGD) is responsible for the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 which currently regulates the financial, gambling and bullion sectors.
The extension of the anti-money laundering and counter-terrorism financing (AML/CTF) regime to lawyers, accountants, real estate agents, and other ‘gatekeepers’ to the financial system (Tranche 2), has been considered by the Federal Government since 2007.
During 2023 and 2024, the Federal Government has undertaken consultations on Tranche 2 and has indicated its intent to introduce the Tranche 2 reforms in order to align with Australia’s obligations to the Financial Action Taskforce (FATF), the global money laundering and terrorist financing watchdog. If Australia falls behind global standards, it is at risk of being “grey-listed” by the FATF, resulting in increased monitoring and economic repercussions.
As part of the anticipated reforms, the reviewed AML/CTF regime and its associated obligations will be extended to the legal profession. There is currently no indication of when the reforms will be implemented.
The Tranche 2 Consultations in 2023 and 2024 indicated that the AGD intends to amend the AML/CTF legislation to include eight new designated services:
- Buying, selling, and transfer of property
- Buying/selling legal entities
- Receiving/holding/controlling/disbursing funds/property (includes trust accounts), securities, and digital assets
- Raising contributions for companies, trusts, and similar entities
- Creating companies, partnerships, trusts
- Acting as director/partner/trustee, etc.
- Acting as nominee shareholder (or arranging another to act)
- Providing registered office or principal place address
Law Society of Western Australia and Law Council of Australia advocacy efforts
The Law Society is assisting the Law Council of Australia to represent the interests of the national profession in relation to the proposed legislative reform. This includes having representatives on the Law Council of Australia’s dedicated AML/CTF Working Group and consulting with the profession and Law Society Committees to inform law reform submissions to the Law Council of Australia.
Submissions have been made about risk-based and evidence-based policy development, the maintenance of legal professional privilege, compliance measures that are proportionate and balanced, and ensuring adequate time once legislation is passed for the legal profession to prepare and implement necessary actions.
The Federal Government has taken on board much of the profession’s feedback and as a result, it is expected that the proposed reforms will be less burdensome than initially anticipated. The Law Council’s submission to the most recent round of consultation, to which the Society contributed, can be read here.
The Society supports the profession in readiness for the reforms by providing access to resources and guidance developed by the Law Council of Australia to assist the profession prepare, and respond. The Society is also delivering Continuing Professional Development sessions, to build the understanding and capability of the legal profession to ensure the integrity of their practices.
How to Prepare for the AML/CTF Regime
AUSTRAC Reporting Obligations
Lawyers and firms should familiarise themselves with their current AUSTRAC reporting obligations.
Law Council of Australia Resources
The Law Council of Australia has released Guidance for the legal profession on steps it can take now to mitigate the risk of exposure to money laundering and terrorism financing. The primary audience is solicitors whose legal practices are associated with transactional work, including the holding, investment, and disposal of clients’ funds, because these are the main areas of risk.
It is important to note that the Guidance does not reflect practitioners’ obligations under any AML/CTF statutory regime.
The Guidance can be accessed below:
- Overview
- Guidance Note No. 1 – Why Should I Care About Money Laundering and Terrorism Financing?
- Guidance Note No. 2 – What Does the Criminal Law Currently Provide, and What Are My Cash Reporting Obligations?
- Guidance Note No. 3 – What Are My Professional Obligations?
- Guidance Note No. 4 – What Does Money Laundering Look Like?
- Guidance Note No. 5 – What Does Terrorism Financing Look Like?
- Guidance Note No. 6 – How Do I Identify and Assess My Risk?
- Guidance Note No. 7 – How Do I Mitigate and Manage My Risk?
- Guidance Note No. 8 – How Do I Undertake Client Due Diligence?
- Guidance Note No. 9 – How Do I Ascertain Source of Funds?
- Guidance Note No. 10 – How Do I Check Whether Someone is a PEP?
- Guidance Note No. 11 – Ceasing or Declining to Act
- Workshop Notes for Identifying and Assessing Risk – Example
- Workshop Notes – Case Studies
- Red Flags List for Legal Practitioners
Law Society CPD Seminars
Introduction to Anti-Money Laundering
Watch the webinar recorded by the Australian Capital Territory Law Society which provides an overview of the AML/CTF regime and the proposed Tranche 2 reforms.
Risk and Vulnerabilities of the Legal Profession
In late 2023, the Law Council of Australia commissioned an independent expert to analyse the vulnerabilities of the Australian legal profession. The report of the analysis is available to read here.
On 9 July 2024, AUSTRAC released a National Risk Assessment which provides information on Australia’s threat environment and the methods that criminals use to launder proceeds of crime or fund extremist violence.
