Financial services wrap: November 2024 – January 2025

NSW Supreme Court dismissed major claim against W&I insurers

On 4 February 2025, the NSW Supreme Court dismissed a claim against various W&I insurers, regarding alleged breaches of warranties in a share sale agreement for the purchase of a property services business valued over $1 billion. The Court held that the relevant accounting issues alleged were either not established, or where a breach had been established, the damages would be substantially less than the threshold for cover provided by the excess insurers (proceedings against the primary insurer was settled before trial).

The judgment may be accessed here. Stay tuned for our detailed analysis on this case.

Full federal court ruled that Uniting Church can no longer rely on its insurers to indemnify it for Knox Grammar cases

On 7 February 2025, the Full Court of the Federal Court of Australia allowed an appeal by Allianz Australia (Allianz) against the Uniting Church of Australia Property Trust (UCPT). Allianz contended that none of the insureds took the opportunity under s 40(3) of the Insurance Contracts Act 1984 (Cth) (ICA) to give it notice of a report they received which detailed findings from an investigation into possible child sexual abuse at Knox Grammar School (Knox). This would have extended cover under the relevant policy.

In allowing Allianz’s appeal, the court relevantly held:

1. A reasonable insured in Knox’s position would, upon receiving the report, become aware of facts that might give rise to the claims which subsequently emerged
2. On the proper construction of the policy, Knox’s knowledge of these facts could be attributed to UCPT for the purposes of a notification under s 40(3) of the ICA
3. UCPT’s argument that s54 of the ICA could remedy a late notification, should be rejected

As such, the court found that Allianz was not obliged to indemnify UCPT under the policy. This means that UCPT could no longer rely on Allianz to cover their costs of settling civil claims in respect of historical sexual and physical abuse.

Full judgment may be accessed here. Stay tuned for our detailed analysis on this case.

ASIC proposed guidance on sustainability reporting regime

From 1 January 2025, under the Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Act 2024 (Cth), many large Australian businesses and financial institutions (including registered schemes, RSEs and retail corporate collective investment vehicles) must prepare annual sustainability reports and make climate-related financial disclosures.

In preparation for the commencement of the sustainability reporting regime, ASIC released its draft Regulatory Guide 000 Sustainability reporting (Draft RG 000).

Draft RG 000 offers guidance on:

• Which entities must prepare a sustainability report
• What should be included in a sustainability report
• Sustainability-related financial disclosures outside the sustainability report
• How the regime interacts with existing legal obligations
• How ASIC will administer the obligations and grant relief from compliance

ASIC invited stakeholders to comment on Draft RG 000 (comments were due in December 2024) and a final regulatory guide is expected to be released in Q1 2025.

ASIC’s media release can be accessed here. Consultation Paper 380 Sustainability reporting can be accessed here. Draft RG 000 can be accessed here.

ASIC releases new and updated guidance in response to the DBFO Act

In response to reforms under the Treasury Laws Amendment (Delivering Better Financial Outcomes and Other Measures) Act 2024 (Cth) (DBFO Act), ASIC has issued new regulatory guidance and updated some existing regulatory guidance.

ASIC has issued four new information sheets:

• Information Sheet 286 FAQs: Ongoing fee arrangements and consents (INFO 286)
• Information Sheet 287 FAQs: Non-ongoing fee requests or consents (INFO 287)
• Information Sheet 291 FAQs: FSGs and website disclosure information (INFO 291)
• Information Sheet 292 FAQs: Informed consents for insurance commissions (INFO 292)

ASIC has updated Regulatory Guide 246 Conflicted and other banned remuneration (RG 246) and Regulatory Guide 175 AFS Licensing: Financial product advisers – Conduct and disclosure (RG 175).

ASIC’s media release can be accessed here.

ASIC announces new enforcement priorities with a focus on cost of living pressures

ASIC has announced its enforcement priorities for 2025 which include:

• Misconduct exploiting superannuation savings
• Unscrupulous property investment schemes
• Failures by insurers to deal fairly and in good faith with customers
• Misconduct impacting small businesses and their creditors
• Licensee failures to have adequate cyber-security protections
• Greenwashing and misleading conduct involving ESG claims
• Member services failures in the superannuation sector
• Auditor misconduct

ASIC’s media release can be accessed here. ASIC’s enforcement priorities for 2025 can be accessed here.

ASIC writes to superannuation trustees to improve handling of death benefit claims

In a letter dated 19 November 2024, ASIC urged CEOs of superannuation trustees to assess their death benefit claims handling practices and remedy any identified deficiencies. ASIC is particularly concerned about operational failures by trustees to gather and analyse data providing insights into the outcomes experienced by claimants, as these failures make it difficult for trustee boards to provide appropriate oversight on their performance when handling death benefit claims.

ASIC’s initial observations about death benefit claims handling include:

• Trustees must collect claims handling data that is accurate and fit for purpose
• Boards need regular and complete reporting of meaningful performance metrics
• The importance of meeting the trustee’s obligations to members and beneficiaries

ASIC’s media release can be accessed here. The letter can be accessed here.

ASIC extends arrangements to streamline insurance payments in emergency situations

ASIC has made ASIC Corporations (Amendment) Instrument 2024/883 to extend the operation of legislative relief which allows insurers and their representatives to give emergency payments (up to $5,000 cash) to consumers, in certain circumstances, without first giving them a Cash Settlement Fact Sheet.

The relief came into effect on 11 February 2022 and was due to expire on 11 February 2025. Following consultation with industry, consumer and government stakeholders, ASIC has decided to extend the relief until 2030. However, ASIC has made one minor amendment: from 22 November 2024, insurers can use the streamlined process where the offer is made within 42 days of an insurable event, rather than 14 days.

ASIC’s media release can be accessed here. ASIC Corporations (Amendment) Instrument 2024/883 can be accessed here.

ASIC update on maintenance of regulatory guides

As part of its stated commitment to improving regulatory efficiency and reducing complexity, ASIC intends to consult with stakeholders to update the following regulatory guides in 2025:

• Regulatory Guide 53 The use of past performance in promotional material
• Regulatory Guide 168 Disclosure: Product Disclosure Statements (and other disclosure obligations)
• Regulatory Guide 181 Licensing: Managing conflicts of interest
• Regulatory Guide 183 Approval of financial services codes of conduct
• Regulatory Guide 234 Advertising financial products and services (including credit): Good practice guidance

ASIC’s media release can be accessed here. ASIC’s Regulatory Development Timetable can be accessed here.

ASIC flags key observations from inaugural IDR data publication

ASIC has published Report 801 Insights from internal dispute resolution data reporting: July 2023 to June 2024 (REP 801), which provides high-level insights into the trends observed in complaint data lodged by financial firms under the internal dispute resolution (IDR) data reporting framework.

ASIC found variations in the volume of complaints reported by comparable firms and gaps in the IDR data that indicate that the data reported to ASIC may not fully reflect the complaints received by some firms.

ASIC is encouraging firms to review the report and the previously issued guidance to assist in reporting complete and accurate IDR data as ASIC intends to publish firm-level IDR data in 2025.

ASIC’s media release can be accessed here. REP 801 can be accessed here.

ASIC invites feedback on proposed updates to digital asset guidance

ASIC has released Consultation Paper 381 Updates to INFO 225: Digital Assets: Financial Products and Services (CP 381), setting out proposals to update Information Sheet 225 Crypto Assets (INFO 225). Submissions are due by 28 February 2025.

INFO 225 provides information for businesses involved in crypto-assets such as cryptocurrency, tokens or stablecoins, and businesses raising funds through an initial coin offering, about their obligations under the Corporations Act 2001 (Cth) and the Australian Securities and Investments Commission Act 2001 (Cth).

To provide greater clarity in INFO 225, ASIC proposes to add 13 practical examples of how the current financial product definitions apply to digital assets and related products. In addition to the worked examples, CP 381 seeks feedback on:

• The application of the existing AFS licence processes, ASIC guidance and standard conditions to digital asset businesses.
• Practical licensing issues for wrapped tokens and ‘stablecoins’, issues arising from the potential transition to the Governm
proposed digital asset platform and payment stablecoins regimes, and consideration of potential regulatory relief.
• A potential class ‘no action’ position for digital asset businesses that are in the process of applying for or varying an AFS licence, Australian Markets Licence or Clearing and Settlement Facility licence.

ASIC intends to publish a final version of the updated INFO 225 in mid-2025, after considering feedback from CP 381.

ASIC’s media release can be accessed here. See CP 381 here and INFO 225 here.

Reportable situations: Findings of ASIC’s review and how licensees can improve compliance with the regime

ASIC has completed its review of compliance arrangements for 14 licensees that had low numbers of reportable situations, or had not reported at all, between October 2021 and June 2024. ASIC reviewed the policies, processes and practices of the 14 licensees, aimed at meeting their reportable situations obligations under s912DAA of the Corporations Act 2001 (Cth) and/or s50B of the National Credit Consumer Protection Act 2009, as at November 2023.

ASIC’s review identified poor practices among licensees, such as slow reporting times, delays in identifying breaches, deficiencies in licensees’ incident management, and gaps in how licensees monitored their own compliance with the regime.

ASIC has identified the following key questions licensees should ask themselves (in the context of practices outlined in the review) to determine whether they need to uplift their arrangements and improve compliance with breach reporting obligations:

• Are you identifying incidents and breaches?
• Are you escalating and investigating incidents and breaches comprehensively and in a timely way?
• Do you capture important information about incidents and breaches in a single register?
• Have you got the necessary arrangements in place to monitor your compliance with the regime?

ASIC’s media release can be accessed here.

ASIC puts insurers on notice for blind spots in complaints handling

ASIC has published REP 802 Cause for complaint: Complaints handling in general insurance (REP 802). REP 802 sets out findings from ASIC’s review into how 11 general insurers (representing about 86 per cent of the general insurance market by premium) are complying with select enforceable obligations under Regulatory Guide 271 Internal dispute resolution (RG 271).

The review identified shortcomings in how general insurers identify complaints and systemic issues, how they communicate with customers, and how they report on incidents and outcomes.

Key findings from REP 802 include:

• Every insurer failed to comply with one or more of their mandatory Internal Dispute Resolution (IDR) obligations with significant variations in the level of non-compliance
• Insurers failed to identify one in six customer complaints
• Insurers identified only 85 systemic issues from over 1.4 million complaints (with nearly 50 per cent of insurers identifying no systemic issues at all), yet AFCA found 11 systemic issues from approximately 16,000 external dispute resolution complaints
• Insurers had immature systems for handling complaints and reporting on complaints
• The top complaints by product or service were home building insurance, car insurance, and home contents insurance
• The top complaints by issue were other service-related issues, premiums, and delay in claims handling
• The top complaints by outcome were no remedy (apology or explanation only), service-based remedy, and monetary remedy

The 11 insurers in the review must prepare an action plan explaining how they will address these issues and better support their customers. ASIC expects all insurers to act on the findings in REP 802.

ASIC’s media release can be accessed here. See REP 802 here and RG 271 here.

ASIC speech – Fair’s fair: The case for prohibiting unfair trading practices in financial services

On 6 December 2024, ASIC Commissioner Alan Kirkland addressed the Australasian Consumer Law Roundtable.

Key points from the speech include:

• The proposed Unfair Trading Practices prohibition is necessary to address the increasing gap between the fair outcomes that consumers expect and what the law can deliver
• The unfair practices of firms engaged in providing financial services will not be covered in the initial stage of these proposed reforms
• ASIC believes including financial services in these reforms is an opportunity to strengthen Australian consumer law at a time when consumers need its protections the most

ASIC’s speech can be accessed here.

ASIC reissues Regulatory Guide 133 on funds management and custodial services

ASIC has reissued Regulatory Guide 133 Funds management and custodial services: Holding assets (RG 133), providing updated guidance for asset-holding AFS licensees.

RG 133 includes:

• Updated references to relevant legislative instruments, including legislative instruments imposing financial requirements
• Good practices for crypto-assets holders, including maintaining robust information security controls and risk management processes

ASIC’s media release can be accessed here. See RG 133 here.

ASIC consults on relief for business introduction services

ASIC invited feedback on whether the relief under ASIC Corporations (Business Introduction Services) Instrument 2022/805 (Instrument) should be extended for a further period in relation to managed investment schemes, and should reinstate previous relief from Chapter 6D of the Corporations Act 2001 (Cth) in relation to securities other than debentures.

The Instrument, which is due to expire on 1 April 2025, provides conditional relief from the fundraising, financial product disclosure, hawking and advertising requirements under the Corporations Act 2001 (Cth) that would otherwise apply to a person offering interests in a managed investment scheme through a business introduction service. The Instrument does not provide relief from AFS licensing requirements.

Submissions closed on 5 February 2025.

ASIC’s media release can be accessed here. See the consultation CS 13 Extending relief for business introduction services here.

ASIC alerts buy now pay later providers to apply for a licence under new laws

The Treasury Laws Amendment (Responsible Buy Now Pay Later and Other Measures) Act 2024 received royal assent on 10 December 2024, extending the National Credit Code to buy now pay later contracts.

From 10 June 2025, providers of buy now pay later contracts must hold a credit licence that authorises them to engage in credit activities as a credit provider, subject to transitional arrangements. Providers must also become a member of AFCA.

ASIC’s media release can be accessed here. See Information Sheet 285 Buy now pay later credit contracts: Credit licensing here.

ASIC and APRA host Superannuation CEO Roundtables to discuss climate risk

ASIC and APRA have released a public note from two joint Superannuation CEO Roundtables held on 25 November and 5 December 2024. The Roundtables were attended by 14 superannuation CEOs representing a broad cross-section of the industry.

Key points from the public note include:

• Climate risk is a key focus for APRA and ASIC, given the potential impact on financial stability and the sustainability of superannuation funds
• Industry participants recognise the importance of consistent climate risk disclosure and reporting, including the need for standardised metrics, methods and scenarios to ensure comparability across the industry
• Nature risk is an area of emergency significance

ASIC’s media release can be accessed here. See the public note here.

ASIC invites feedback on proposed remake of employee incentive scheme instruments

ASIC is seeking feedback on its proposal to remake two employee incentive scheme class orders which are due to expire on 1 April 2025. Submissions are due on 22 February 2025.

ASIC plans to combine the two class orders, Class Order [CO 14/1000] Employee incentive schemes: Listed bodies and Class Order [CO 14/1001] Employee incentive schemes: Unlisted bodies, into one legislative instrument, and remake the exemptions for a period of five years.

ASIC’s media release can be accessed here. See CS 14 Proposed remake of relief for employee incentive schemes here.

ASIC proposes to remake relief for offers of CHESS Depository Interests

ASIC proposes to remake Class Order [CO 14/827] Offers of CHESS Depository Interests, which is due to expire on 1 April 2025. Stakeholder feedback is due by 28 February 2025.

ASIC has assessed that the current class order continues to form a necessary and useful part of the legislative framework. Therefore, ASIC proposes to remake the class order for a period of five years, on largely the same terms except with minor revisions to the definition of 'depository interests' and the wording of the AFS licence exemption.

ASIC’s media release can be accessed here. See CS15 Proposed remake of relief for offers of CHESS Depository Interests here.

Distributor ordered to pay $8 million in penalties for failing to comply with its design and distribution obligations

The Federal Court has ordered Firstmac Limited to pay $8 million in penalties for failing to meet its design and distribution obligations. The Court found that Firstmac contravened section 994E(3) of the Corporations Act when it sent product disclosure statements for the Firstmac High Livez investment product to existing term deposit holders, without first taking reasonable steps to ensure consistency with its Target Market Determination for the product.

This was ASIC’s first civil penalty action against a distributor in the context of its design and distribution obligations.

ASIC’s media release can be accessed here. See the full judgment here.

ASIC’s key issues outlook 2025

ASIC has identified the most significant current, ongoing and emerging issues within its regulatory remit in 2025, including:

• Changing dynamics between public and private markets
• Superannuation members being let down by their fund and trustee
• Consumer losses through fraud and scams, driven by increasing sophistication and the use of technology
• Unsuitable superannuation advice resulting in adverse consumer outcomes
• Cyber-attacks, data breaches, and internal system failures undermining market confidence and causing financial loss
• Poor household outcomes following natural disasters due to deficient claims handling by general insurers
• Impact of ASX’s CHESS replacement on Australian markets
• Poor quality climate-related financial disclosures leading to misinformed investment decisions
• Poor audit quality resulting in declining market confidence and misinformed investment decisions
• Banks and lenders exacerbating consumer financial hardship

ASIC’s media release can be accessed here.

ASIC calls out superannuation trustees for weak scam and fraud practices

On 30 January 2025. ASIC published an open letter to superannuation trustees urging them to strengthen anti-scam practices in order to protect members. The letter provides guidance on preventing, detecting and responding to scams and fraud.

ASIC’s media release can be accessed here. See the letter here.

APRA consults on adjustments to its general insurance reinsurance framework

APRA has invited submissions from industry participants and stakeholders on targeted adjustments to its general insurance reinsurance framework.

The consultation was in response to reinsurance market developments, such as severe weather events and rising geopolitical instability contributing to higher retentions and increased reinsurance costs, as well as industry feedback, including an increased appetite for alternative reinsurance arrangements. APRA seeks to promote access to all forms of reinsurance, reduce regulatory burden, and ensure consistency with international standards and practice.

Submissions have now closed. Further consultation on proposed changes to prudential standards and guidance is planned for the first half of 2025. Any new standards would commence no earlier than June 2026.

APRA’s media release can be accessed here. APRA’s letter to all general insurers and reinsurers can be accessed here.

APRA releases survey results assessing management of risks associated with climate change in the financial sector

On 13 November 2024, APRA published findings from its second climate risk self-assessment survey, which investigates how regulated entities identify, manage and disclose the financial risks of climate change and align their practices with the Prudential Practice Guide CPG 229 Climate Change Financial Risks.

All APRA-regulated banks, insurers and superannuation trustees were invited to respond to the voluntary survey.

Key findings from the survey include:

• Most large entities have improved their climate risk maturity since 2022. However, around one-quarter have seen their climate risk maturity score decline
• within the insurance industry, there is a large difference in climate risk maturity across the general, life and private health cohorts
• climate governance and strategy, and climate risk management, are two areas of comparative strength across most industries and the different tier groups, whereas entities did not perform as well on disclosure or metrics and targets
• More mature governance structures are typically in place at entities where climate risk has been integrated into risk management
• Entities are starting to consider adjacent risks and practices such as nature risk and transition plans

In 2025, APRA plans to consult on amending Prudential Standards CPS 220 and SPS 220 Risk Management to include climate risk.   

APRA’s media release can be accessed here. The Climate Risk Self-Assessment Survey 2024 can be accessed here.

APRA publishes new and updated FAQs on capital for ADIs and insurers

APRA has published a new frequently asked question (FAQ) in relation to measurement of capital for authorised deposit-taking institutions and insurers, as well as updating 19 FAQs and deleting 11 FAQs.

These changes were to remove duplication and incorporate updates to the general insurance, life insurance and private health insurance Prudential Standards.

APRA’s media release can be accessed here. The measurement of capital FAQs can be accessed here.

APRA releases 2024-25 Corporate Plan

On 22 November 2024, APRA Chair John Lonsdale addressed the Senate Economics Legislation Committee and released APRA’s 2024-25 Corporate Plan (Plan).

The Plan sets out how APRA will use its strengths and key enablers to deliver outcomes for the safety and stability of Australia’s financial system. APRA’s strategic objectives include:

• Maintaining financial and operational resilience
• Responding to significant and emerging risks
• Addressing industry-specific challenges

APRA’s media release can be accessed here. APRA’s Plan can be accessed here.

APRA releases response to consultation on minor amendments to prudential framework for ADIs, insurers and RSE licensees

On 5 December 2024, APRA published a response to the consultation, released in September 2024, on proposed minor amendments to the prudential framework for authorised deposit-taking institutions (ADIs), insurers and registrable superannuation entity (RSE) licensees.

APRA received two submissions supportive of proposed changes to APS 110 Capital Adequacy and APS 112 Capital Adequacy: Standardised Approach to Credit Risk, and no submissions regarding other proposed changes.

APRA is in the process of finalising these technical clarifications and corrections.

APRA’s media release can be accessed here. APRA’s letter can be here.

APRA releases details on insurance Climate Vulnerability Assessment

On 5 December 2024, APRA published an information paper outlining the objectives and design of the insurance Climate Vulnerability Assessment (CVA). The CVA explores how the affordability of general insurance may change between now and 2050, modelled against two climate scenarios and an additional baseline scenario.

The CVA currently applies to Australia’s five largest general insurers, covering approximately 80 per cent of Australia’s general insurance market by gross written premium. APRA expects to receive the affordability data from these CVA participants in early 2025 and will publish a report later in the year.

The CVA will also contribute to the government’s Sustainable Finance Roadmap, which aims to ensure that the financial system remains stable and resilient throughout different operating and economic environments.

APRA’s media release can be accessed here. See the information paper here.

APRA finalises enhancements to superannuation data collections

In a letter dated 6 December 2024, APRA responded to its November 2023 consultation on enhancing superannuation data collections covering investments, trustee licensee profile and trustee profile.

APRA’s proposed enhancements seek to improve member outcomes by increasing the visibility of accurate and comparable superannuation data and enabling appropriate regulatory oversight.

APRA intends to determine the reporting standards in early 2025 and release the accompanying APRA Connect taxonomy artefacts by early 2025. The first reporting period will be 30 June 2025 for annual reporting and September 2025 for quarterly reporting, with the first submissions in respect of all new reporting due in December 2025.

APRA’s media release can be accessed here. APRA’s response can be accessed here.

APRA review highlights the need for improved valuation and liquidity risk governance in superannuation

On 17 December 2024, APRA released findings from its review into how superannuation trustees are implementing enhanced valuation governance and liquidity risk management requirements. APRA expects trustees to align their practices with Prudential Standard SPS 530 Investment Governance (SPS 530), including in relation to the use of independent external asset valuations and the effective management of potential conflicts of interest in valuation processes.

In relation to unlisted asset valuation governance, APRA observed weaknesses in:

• Board oversight and conflict of interest management
• Revaluation frequency and triggers
• Valuation control
• Fair value reporting

In relation to liquidity risk management, APRA observed weaknesses in:

• Liquidity stress trigger frameworks
• Unlisted asset liquidity risks
• Lliquidity action plans

APRA’s media release can be accessed here. The review can be accessed here.

AUSTRAC: Legislation to strengthen Australia’s anti-money laundering and counter-terrorism financing regime has passed Parliament

AUSTRAC welcomed the passage of the Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) Amendment Bill 2024 (Bill) through Parliament, marking a significant step in strengthening Australia’s AML/CTF regime. The amendments aim to enhance the effectiveness of the system by simplifying, clarifying, and modernising regulations, ultimately helping businesses understand their obligations while reducing regulatory burden.

The Bill received Royal Assent on 10 December 2024. Most of the provisions will not take effect until 31 March 2026: Federal Register of Legislation - Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2024).

Key changes introduced by the Act:

• Expansion of the regime: The Act extends the AML/CTF regime to include high-risk services from additional sectors, such as lawyers, accountants, real estate professionals, trust and company service providers, and dealers in precious metals and stones (‘Tranche 2’ entities).
• Simplified compliance: The amendments make the regime easier to navigate, aligning with modern business structures, technologies, and illicit financing methods.
• Increased effectiveness: The changes will improve financial intelligence collection and enable better identification and mitigation of money laundering and terrorism financing risks.

The Act also repeals the Financial Transaction Reports Act 1988 (FTR Act), which primarily affects solicitors and motor vehicle dealers acting as insurers. These businesses’ reporting obligations under the FTR Act will end on 7 January 2025.

AUSTRAC CEO Brendan Thomas emphasised that these changes will help close gaps, reduce compliance burdens for regulated businesses, and enhance Australia’s ability to disrupt financial crime. He noted that the financial harm from crimes such as drug trafficking, cybercrime, and child exploitation amounts to $60.1 billion annually in Australia.

Mr Thomas encouraged businesses and associations to participate in the consultations regarding the new draft Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) Rules. These rules come after the passing of the AM

The draft Rules was open for public consultation and the deadline was on 14 February 2025, with a second round to be scheduled in early 2025. Mr Thomas emphasises the importance of input from both businesses who are currently regulated by AUSTRAC and those which will be a regulated business under the new regime.

AUSTRAC is working closely with industry sectors impacted by the changes, including existing reporting entities and new tranche 2 businesses, through industry forums and working groups. These ongoing consultations will support the development of guidance, education materials, and system changes, helping businesses meet the updated obligations.

See our update here, discussing AUSTRAC’s consultation on the new rules: Consultation on AMF/CTF Rules.

AUSTRAC has an online tool which regulated sectors can use to see if they are affected by the new AML/CTF Rules.

AUSTRAC’s media release can be accessed here.

A copy of the Bill and its explanatory materials can be accessed here. AUSTRAC’s media releases can be accessed here and here.

AUSTRAC: FATF updates on global ML/TF risk – October 2024

The Financial Action Task Force (FATF) has recently published two important updates regarding international money laundering and terrorism financing (ML/TF) risks:

• High-Risk Jurisdictions subject to a Call for Action (October 2024): This update reaffirms that the 21 February 2020 call for action regarding the Democratic People’s hereRepublic of Korea, Iran, and Myanmar remains in effect.
• Jurisdictions under Increased Monitoring (October 2024): This report lists jurisdictions with strategic deficiencies in their AML/CTF regimes that are working with the FATF to address these issues.

Reporting entities should be aware of these high-risk jurisdictions to inform their ML/TF risk assessments, compliance programs, and decisions on submitting suspicious matter reports to AUSTRAC. For more details, refer to AUSTRAC’s guidance on high-risk countries, regions, and groups.

AUSTRAC’s media release can be accessed here.

The High-Risk Jurisdictions subject to a Call for Action report and the Jurisdictions under Increased Monitoring (October 2024) report can be accessed here and here.

AUSTRAC has also now set up a dedicated webpage: AML/CTF Reform | AUSTRAC.

AUSTRAC CEO Brendan Thomas - Speaking notes at The Regulators 2024, hosted by FINSIA, Sydney

In his address at The Regulators 2024 event in Sydney, AUSTRAC CEO Brendan Thomas outlined key regulatory priorities and insights from AUSTRAC’s supervisory work, focusing on the ongoing risks of ML/TF in Australia. The key points from the speech included: top money laundering threats, Australia’s attractiveness for criminals, Rising complexity in financial pathways, focus on the banking sector, emerging risks (gambling, remittance, crypto exchanges), supervisory findings, upcoming reforms and industry collaboration.

AUSTRAC’s media release can be accessed here.

AUSTRAC issues 16 businesses with infringement notices for failing to comply with reporting requirements

In November 2024, AUSTRAC issued infringement notices to 16 businesses for failing to meet reporting obligations under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act). Whilst most of the 17,000 regulated business complied, AUSTRAC CEO Brendan Thomas emphasised the importance of compliance, stating that AUSTRAC relies on reporting entities to monitor and report their compliance, as it is a fundamental part of their obligations.

The businesses had a history of non-compliance with this reporting obligation. The fines ranged from $3,756 for sole traders to $18,780 for companies, with five businesses remaining under AUSTRAC investigation.

AUSTRAC regularly reminds businesses of their reporting obligations, and this follows eight infringement notices issued for non-compliance in April.

More information about the consequences of not complying can be found here. The list of the 11 businesses which have discharged their infringement notices are available here.

AUSTRAC’s media release can be accessed here.

AUSTRAC takes action to stamp out financial crime through cryptocurrency ATMs

AUSTRAC is increasing its efforts in regulating cryptocurrency ATM providers in Australia, due to increased risks of money laundering, scams and money mule activities. AUSTRAC has established a taskforce to ensure digital currency exchanges (DCEs) that provide crypto ATM services meet minimum standards and have robust practices in place to minimise risks.

Under the AML/CTF Act 2006, DCEs, including those providing crypto ATM facilities, have to register with AUSTRAC and are also required to:

• Undertake transaction monitoring
• Complete know your customer (KYC) information checks
• Report suspicious activity
• Submit threshold transaction reports (TTRs) for cash deposits and withdrawals of $10,000 or more

AUSTRAC CEO Brendan Thomas highlighted the dangers of cryptocurrency being used for illicit activities and expressed concerns about Australians becoming victims to scams. Mr Thomas also warned cryptocurrency ATM providers to ensure compliance with their obligations, as they risk being subject to significant fines by AUSTRAC otherwise.

There are about 400 registered DCEs in Australia, with 1,200 crypto ATMs in operation, which is the third highest globally.

To report fraud or scams involving crypto ATMs, the public is encouraged to contact the police and relevant anti-scam organisations.

Further information can be found in AUSTRAC Money Laundering in Australia National Risk Assessment page.

AUSTRAC’s media release can be accessed here.

How to write a good quality “suspicious matter” report

AUSTRAC has introduced a new e-learning module that focuses on quality reporting for suspicious matter reports (SMRs) in relation to anti-money laundering and counter terrorism financing. This module assists with submitting good quality suspicious matter reports, adhering to best practice and avoiding common mistakes.

The e-learning module can be found on AUSTRAC’s e-learning resource page.

AUSTRAC’s media release can be accessed here.

New video on cross-border movement of monetary instruments available now

AUSTRAC has developed and released a new video explaining the obligations of overseas travellers in submitting Cross-Border Movement of Monetary Instruments (CBM-MI) forms. Travellers entering or leaving Australia with over AUD10,000 (or foreign currency equivalent) in cash, must report this to AUSTRAC.

Members of the general public seeking information about moving money across Australian borders should be directed to AUSTRAC’s Moving money across international borders guidance page.

The CBM-MI video can be accessed here. AUSTRAC’s media release can be accessed here.

Bolstering international cooperation on financial intelligence

AUSTRAC highlights the importance of global partnerships and collaborations to combat money laundering, terrorism financing (ML/TF) and other serious crimes. In 2024, AUSTRAC delivered its ‘in-house’ developed financial data analytics system called TAIPAN to five more countries in the Pacific – Vanuatu, Samoa, Papua New Guinea, Marshall Islands and Palau, enhancing their financial intelligence capabilities. AUSTRAC also posted its first liaison Officer to the Pacific to strengthen regional collaborations with financial intelligence units (FIUs).

In 2024, AUSTRAC engaged in joint operations and delivered training sessions focused on various issues, including narcotics trafficking and child sexual exploitation. AUSTRAC also engaged with Chinese authorities on anti-money laundering regulations and established a new secure platform for information sharing among analysts across the region.

AUSTRAC also participated in key multinational forums, emphasising the need for international corporation in addressing financial crimes.

In November 2024, Financial intelligence units (FIUs) from across the Pacific met in Brisbane Australia for the Pacific Financial Intelligence Community (PFIC) plenary, to identify ways to combat serious financial crimes.

AUSTRAC CEO Brendan Thomas emphasised the importance of regional collaboration in combating money laundering and other serious financial crimes. The Head of the Cook Islands FIU and outgoing Co-Chair of the PFIC, Mr Walter Henry, highlighted the PFIC’s role in sharing intelligence and enhancing capabilities.

AUSTRAC is the permanent Co-Chair of the forum, with the Head of the Fiji FIU being scheduled to take on the rotating Co-Chair position at the end of this hearing.

AUSTRAC facilitated over 1,000 intelligence exchanges in the previous year and maintained 107 Memoranda of Understanding worldwide to improve collaboration and share financial intelligence effectively.

AUSTRAC’s media releases can be accessed here and here.

Ensuring data quality for AUSTRAC’s regulatory and intelligence operations

Data quality is essential for AUSTRAC’s analytics capabilities, serving as a foundation for AUSTRAC’s regulatory and intelligence operations in identifying anti-money laundering and counter-terrorism financing (AML/CTF) trends and patterns. By collecting accurate data, AUSTRAC can share information enhancing community understanding of emerging financial crime threats, supports compliance, and strengthens defences.

There are three ways that AUSTRAC suggests achieving data quality. Firstly, there are the new enrolment and registration forms in AUSTRAC Online, along with the upcoming 2024 compliance reporting, which make it easier for organisations to provide up-to-date information. These will provide accurate and reliable data, which will assist AUSTRAC identify non-compliance with AML/CTF obligations, trends, threats, vulnerabilities and emerging regulatory risks.

Secondly, maintaining accuracy in Financial transaction reports data is crucial. These reports assist AUSTRAC with generating actionable financial intelligence. Reporting entities should ensure that all required fields are completed accurately and consistently, verifying the customer information, implementing robust controls to prevent errors, and implementing accessible document attachment structures.

Lastly, Suspicious matter reports (SMRs) are essential for providing valuable insights into financial trends. Providing comprehensive details in the ‘Grounds for Suspicion’ field, attaching relevant documents, and correctly entering transaction amounts enhance the quality of the reports.

AUSTRAC’s media release can be accessed here.

Key trends for regulatory activities in 2024

AUSTRAC observed several improvements across various sectors, including improvements in the compliance culture and upgrades to system processes and technology.

However, AUSTRAC also noted critical areas for business to improve on:

• Board oversight and engagement: AUSTRAC continues to encourage wider board involvement in managing, developing, assessing and monitoring ML/TF risk.
• Compliance function capacity: Businesses are encouraged to match compliance capabilities and resourcing with business growth.
• ML/TF risk exposure: Regular review and assessment of risks.
• Customer identification: Checks on customer identity and source of wealth and funds.
• Transaction monitoring: Tailored rules and triggers for detection can help businesses prioritise high-risk investigations.
• Independent reviews: Reviews of AML/CTF programs, which will assist with identifying gaps and improvements.

AUSTRAC’s media release can be accessed here.

Recap of AML/CTF Advisers’ Forum 2024

AUSTRAC hosted the 2024 AML/CTF Advisers Forum in November 2024, to engage with and provide guidance to Australia’s AML/CTF advisers. The forum featured presentations and panel discussions on various topics, including:

• Outsourcing
• AUSTRAC’s 2024 Regulatory Priorities
• Actionable financial intelligence and law enforcement outcomes
• National risk assessment updates
• Update on the AML/CTF reforms

Dr Rochelle Hurst, AUSTRAC’s National Manager for Education and Industry Engagement, delivered the keynote address, highlighting the important role advisers play in the AML/CTF ecosystem. She emphasised AUSTRAC’s expectations for advisers to uphold professional standards and contribute to higher quality reporting that leads to actionable financial intelligence, ultimately supporting AUSTRAC’s vision of a financial system free from abuse.

The forum also stressed the importance for AML/CTF advisers to stay informed about AUSTRAC’s resources, industry trends, and best practices related to money laundering and terrorism financing risks.

AUSTRAC has encouraged all AML/CTF Advisers to familiarise themselves with:

• AUSTRAC’s expectation of AML/CTF advisers
• AUSTRAC’s guidance to reporting entities on engaging AML/CTF advisers, independent reviews and outsourcing AML/CTF functions.

AUSTRAC’s media release can be accessed here.

Reporting Entity System Transformation Program end of year update

On 9 November 2024, AUSTRAC launched updated enrolment and registration forms on AUSTRAC Online, making it easier for reporting entities to enrol new businesses and update details.

The REST Program is moving toward its final stage, focusing on developing an enhanced engagement portal to improve user experience, enhance cybersecurity, and improve data quality. AUSTRAC will be engaging with reporting entities to plan enhancements to the transaction reporting processes and ensure a smooth transition to the new platform.

In early 2025, AUSTRAC will engage with reporting entitles on the transaction reporting enhancements and provide opportunities for feedback on the new platform. Interested participants can register by emailing the REST Program team at haveyoursay@austrac.gov.au.

AUSTRAC’s media release can be accessed here.

Case study: Three to six years’ jail time for convicted money launderers

The Victoria County Court recently sentenced two men to prison for laundering over $63 million using ATMs in Melbourne. Financial intelligence from AUSTRAC and major banks helped Victoria Police identify the money laundering syndicate. The investigation took place between July 2020 and October 2021.

One man laundered close to $33.7 million in cash, while the second dealt with just over $30 million. They received sentences of five-and-a-half years and three-and-a-half year’s imprisonment.

The investigation involved collaboration among various police units, AUSTRAC, and the Australian Criminal Intelligence Commission. In October 2021, the two convicted men were arrested along with three others, resulting in the seizure of millions in cash, illicit tobacco, and other valuable items.

AUSTRAC highlighted the importance of cooperation between law enforcement and the private sector in tackling money laundering. Financial transaction reports and suspicious matter reports (SMRs) help AUSTRAC disrupt serious crimes and protect the community.

AUSTRAC’s media release can be accessed here.

Top tips for completing 2024 compliance reports

The 2024 compliance reporting period starts on 1 January 2025, and submissions are due by 11:59pm on 31 March 2025. Businesses are advised to check their login details for AUSTRAC Online and contact details to ensure they are up to date.

AUSTRAC’s media release answers many common questions, including:

How do I lodge my compliance report?

You can complete the report on the AUSTRAC Online account, under the My Business menu. To complete and submit the report:

• Log in to AUSTRAC Online
• Go to ‘My Business’
• Click the plus sign (+) next to ‘My Business’ to see more menu options
• Select ‘Compliance Reports’
• Select ‘Open Compliance Report’
• Complete the questions
• Review and submit

I’ve already submitted my compliance report but I need to change it. Can I do that?

For changes after submission, contact AUSTRAC Contact Centre before 31 March 2025.

Is my report for the financial year or the calendar year?

The report is for the previous calendar year – 1 January 2024 to 31 December 2024.

I stopped providing designated services during 2024. Do I still need to report?

Reports are required if designated services were provided at any time in 2024.

My last administrator left the business and I cannot log into AUSTRAC Online to submit my compliance report. How do I fix this?

If the last administrator is unavailable, appoint a new one using the AUSTRAC online user access form on the Manage your account page.

AUSTRAC’s media release can be accessed here.

CEO end of year message 2024

AUSTRAC CEO Brendan Thomas released an end of year message, reflecting on AUSTRAC’s 2024 achievements and his time as the CEO, including:

• Significant enhancements to AUSTRAC’s regulatory and intelligence capabilities’
• The release of AUSTRAC’s money laundering and terrorism financing national risk assessments
• The successful application of several penalties and enforceable undertakings by AUSTRAC

AUSTRAC’s media release can be accessed here.

Scam alert: Scammers impersonating AUSTRAC staff

A scammer has been impersonating an AUSTRAC official, by emailing members of the public about transferring funds and requesting business documents. Scammers often create fake websites and use AUSTRAC’s branding to appear legitimate.

AUSTRAC will never ask for business information outside their official portal. If you suspect an email or call to be a scam, AUSTRAC urges not to engage.

Scams can be reported to Scamwatch and more information can be found on the Frauds and scams page.

AUSTRAC’s media release can be accessed here.