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InfoTrack publishes guide for compliance with AML/CTF

InfoTrack publishes the definitive guide for compliance with AML/CTF Tranche 2 for ‘gatekeeper’ professionals

For the first time, lawyers, accountants, conveyancers and real estate agents will be subject to the full brunt of the regulator’s enforcement powers when Tranche 2 of the Anti-Money Laundering and Counter Terrorism Funding (AML/CTF) Act comes into effect.

In a determined bid to assist ‘gate-keeper professionals’ comply with Tranche 2 of the AML/CTF Act, technology company InfoTrack has released a ‘how-to-comply’ guide to enable a relatively stress free and efficient transition to the impending regime.

According to InfoTrack chief executive, John Ahern, “If the New Zealand experience is anything to go by, ‘gatekeeper’ professionals in Australia need to prepare now for the introduction of Tranche 2. Following the introduction in New Zealand of Tranche 2 legislation in December 2017, lawyers and conveyancers have only a six-month transition period to comply with the Act from 1 July 2018,” Mr Ahern added.

The just published how-to-comply guide addresses a broad range of compliance obligations including the impact on time and resources, the uncertainty and lack of knowledge surrounding the AML/CTF Act and what ‘gatekeeper’ professionals need to do now. It also identifies potential new business opportunities for savvy professionals.

Importantly, it explores one of the key concerns for lawyers, accountants and real estate agents who previously have not had to deal with the implications of their role in identifying who are ultimate beneficiaries, politically exposed persons and the like in complicated company structures that are the hallmark of AML/CTF criminal activities.

In the past, ‘privilege’ has protected lawyers. However, this will (may?) no longer be the case when Tranche 2 is implemented. If a lawyer suspects a client or potential client is or is about to engage in fraudulent AML/CTF activity, he or she will be required by law to report their suspicions to AUSTRAC.

“There will be no recourse for individuals and organisations perceived to be complicit in criminal AML/CTF activities. If they haven’t done enough to genuinely know their customer and who that customer is associated they will bear the full brunt of AUSTRAC’s enforcement powers. However, it is unlikely that a regulated entity will fall foul of the regulator for failing to spot a money launderer, so long as they've done sufficient work to identify the risk and manage it.

“Businesses that don’t build and embed sophisticated and streamlined search technologies and processes into their DNA will struggle to manage, monitor and assess increased information which will inevitably slow down the business, reduce productivity and increase costs.

“They will need to really know their clients. The risk of not doing so will be all encompassing. Failure to comply will result in hefty fines, loss in shareholder
value, overwhelming damage to reputation and employee morale and - in worst case scenarios – imprisonment. Today there is zero tolerance for organisations even suspected of supporting criminal AML/CTF activities. Banks and business networks are increasingly detaching themselves from high risk businesses resulting in lost business opportunities for entities perceived not to have embedded a culture of compliance in their organisation,” Mr. Ahern concluded.

The guide can be downloaded at

AML/CTF Legislation – Tranche 1
The Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act) was established to stop money laundering and terrorism financing. Currently, only Tranche 1 of the Act has been implemented which extends obligations to those who work in financial businesses, including the financial sector, gambling sector, bullion dealers and remittance service providers. This group includes around 14,000 entities.

National occurrences involving big Australian companies such as the Commonwealth Bank and Tabcorp, have highlighted the need for greater AML/CTF due diligence and increased the pressure for wider reaching regulations across the Australian business landscape. Knowing your customer has never been so prevalent in today’s world of commerce.

The AML/CTF Act is part of a legislative package meant to align Australia with international best practice to deter money laundering and terrorism financing. However, it has been criticised internationally, most notably by the Financial Action Task Force (FATF), the intergovernmental body responsible for setting standards to target money laundering, terrorism financing and other related threats and the effective implementation of those standards.

In 2015, FATF reviewed Australia’s AML/CTF regime and found many areas that were not compliant with their recommendations, particularly in prosecution and investigation of money laundering. Their biggest criticism was around the fact that Tranche 2 had not yet been implemented, meaning most of the non-designated, non-financial professions who deal with large value transactions still aren’t subject to the regime.

The pressure is on to implement Tranche 2
Not surprisingly there is now increasing pressure on the government to implement Tranche 2 of the AML/CTF Act which would extend the regulations to cover more than 100,000 entities including designated non-financial businesses who have similar vulnerabilities such as the real estate industry, high-value item dealers (jewellery, fine art and precious stones), lawyers, accountants and trust services. It is widely anticipated that this legislation will be introduced in 2018.

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