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An in-depth read on the compliance requirements for money services businesses across the region

6. Australia

Current Compliance Landscape

Australia is under international pressure to reform its system after sliding down the International Corruption Index for four consecutive years. RBA owned firms such as Securency and Note Printing Australia were found to be bribing public officials in Saddam Hussein’s Iraq and other countries such as Malaysia, Indonesia, and Vietnam to secure bank note printing contracts between 1998 to 2011. RBA had to sell off its shares in Securency in 2013 after the scandal was uncovered. It raised substantial concerns across all political parties in Australia, hence strengthening national resolve to reform AML/CFT laws to root out corruption.

Besides regulators such as ASIC, RBA, and AUSTRAC, Australia formed the in 2003 to handle corruption-related crimes. Experts believe that a simplified AML/CFT system will improve intelligence and the overall effectiveness against corruption.

In March 2016, AML/CFT reforms, which were to be implemented in two phases, were proposed to cut red tape and reduce duplication. This would be helpful to money changers as it would enable them to expend less energy on paperwork.

As a warning against future violations of AML/ CFT laws, AUSTRAC released details of a money changing business who was convicted of money laundering for a European drug syndicate. Law enforcement agencies confiscated AUD$294,500 in cash and assets before jailing the two operators to 14 years each under the Criminal Code Act 1995. AUSTRAC also suspended the license of a money changer for not reporting $9 million worth of offshore transfers related to terrorist group, Islamic State.

In 2015, FATF announced that Australia “has strong legal, law enforcement and operational measures for combating money laundering and terrorism financing”, but noted that AUSTRAC had insufficient visibility into TF and ML risk especially when it comes to lawyers, real estate agents and accountants in general.

Australia Law Highlights

First, we look at Section 4:

A reporting entity is a financial institution, or other person, who provides designated services. (Designated services are listed in section 6.)

In other words, AML/CFT rules covers Australian money changers.

Next, we look at Section 43:

Reports of threshold transactions

(1) This section applies to a reporting entity if:
- (a) the reporting entity commences to provide, or provides, a designated service to a customer; and
- (b) the provision of the service involves a threshold transaction.

(2) The reporting entity must, within 10 business days after the day on which the transaction takes place, give the AUSTRAC CEO a report of the transaction.
(4) Subsection (2) is a civil penalty provision.

In other words, Australian money changers must send in regular reports to AUSTRAC or face civil penalty provisions. So what exactly is a civil penalty provision?

Next, we look at Section 47:

(2) A reporting entity must, within the lodgment period for a reporting period, give the AUSTRAC CEO a report relating to the reporting entity’s compliance with this Act, the regulations and the AML/CFT Rules during the reporting period.
(4) Subsection (2) is a civil penalty provision.

In other words, Australian money changers must send in regular reports to AUSTRAC or face civil penalty provisions. So what exactly is a civil penalty provision?

For that, we turn to Section 175:

Civil penalty orders
(1) If the Federal Court is satisfied that a person has contravened a civil penalty provision, the Federal Court may order the person to pay the Commonwealth a pecuniary penalty.
(2) An order under subsection (1) is to be known as a civil penalty order.
Maximum pecuniary penalty
(4) The pecuniary penalty payable by a body corporate must not exceed 100,000 penalty units.
(5) The pecuniary penalty payable by a person other than a body corporate must not exceed 20,000 penalty units.

AUSTRAC provided us with the estimate of 100,000 penalty units to be AUD$11 million and 20,000 penalty units to be AUD$2.2 million. While this is a major sum involved, there are criminal liabilities for money changers as well.

Both the FTR and the AML/CFT Acts make reference to each other. AUSTRAC is the designated body to handle suspicious transaction in both laws.

Section 6A provides for the criminal punishment
Application of the Criminal Code Chapter 2 of the Criminal Code (except Part 2.5) applies to all offences against this Act

A reliant and efficient compliance screening software, complete with reporting capabilities, would be greatly beneficial for Australian money changers seeking to better comply with these laws.

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