Tranche 2 and AML/CTF Reforms Hub

The Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2024

On 29 November 2024, Parliament passed the Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2024 (Cth) (Bill). The Bill amends the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) (Act), making the most transformational changes since the Act commenced in 2006.

The amendments under the Bill impact both existing and new reporting entities, and have three key objectives:

1. To extend the Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) regime to certain higher-risk services (designated services) provided by real estate professionals, professional service providers including lawyers, accountants and trust and company service providers, and dealers in precious stones and metals (Tranche 2 entities).
2. To improve the effectiveness of the AML/CTF regime by making it simpler and clearer for businesses to comply with their obligations.
3. To modernise the regime to reflect changing business structures, technologies and illicit financing methodologies.

The amendments are likely to result in approximately 90,000 new reporting entities. New reporting entities that provide designated services will need to enrol with the Australian Transaction Reports and Analysis Centre (AUSTRAC) by 31 March 2026 and comply with the Act by 1 July 2026. These designated services are seen to be the highest risk of money laundering for these sectors and include, for example, acting as an agent on the buying and selling of real estate.

Changes to the AML/CTF Act

The changes for existing reporting entities are vast and will significantly impact business processes. Some of the material changes include (we have paraphrased these for brevity):

• Oversight and Governance: Governing bodies (e.g. Boards and senior management) will be required to take reasonable steps to ensure the business is appropriately identifying, assessing, managing and mitigating money laundering, proliferation financing and terrorism financing risks.
• Risk Assessment: The existing requirement will be clarified to expressly oblige reporting entities to undertake and update their money laundering, proliferation financing and terrorism financing risk assessments.
• Customer Due Diligence (CDD): There will be substantially redesigned obligations for initial customer due diligence (before designated services are provided), as well as for ongoing due diligence during the course of a business relationship.
• Value Transfers: Amending the approach to reporting of value transfers presently reported to AUSTRAC as international funds transfer instructions.
• Information Sharing and Tipping Off: Changes to the tipping off offence are proposed to facilitate better information sharing to manage financial crime risks, unless disclosure would or could reasonably be expected to prejudice a law enforcement investigation.
• Reporting Group: The current concept of a ‘designated business group’ will be replaced with a ‘reporting group’ concept, imposing obligations and expanded liability on the ‘lead entity’ of a reporting group.

Changes to the AML/CTF Rules 

In December 2024 AUSTRAC released its first consultation into the proposed new Anti-Money Laundering and Counter-Terrorism Financing Rules (Rules). 

Consultation will occur through two rounds of exposure drafts, titled ‘Exposure Draft 1’ and ‘Exposure Draft 2’. The first round of consultation on Exposure Draft 1 is open for submissions until midnight on Friday 14 February 2025.

The consultation includes consideration of the following subject matters:

Exposure Draft 1

• Reporting groups
• AML/CTF programs
• Customer due diligence
• AML/CTF compliance officers
• Keep open notices
• Transfer of value (including the ‘travel rule’)
• Correspondent banking
• Cross-border movement reports
• Disclosure of AUSTRAC information to foreign counterparts
• Compliance reporting

Exposure Draft 2

• Those presented in Exposure Draft 1, with amendments (as required)
• Enrolment details
• Registration details
• Reportable details for threshold transaction reports and suspicious matter reports
• Any additional measures (as required)
• Current rules-based exemptions subject to consequential amendment

The Exposure Drafts will include requirements applying to both existing and new reporting entities.

The Exposure Drafts will start providing more clarity to existing reporting entities on the impacts the reforms will have on their AML/CTF compliance. They will assist existing reporting entities to identify what components of their AML/CTF Programs may need to be amended in order for it to transition to the new requirements applying to AML/CTF Policies under the new laws. 

You can subscribe for more updates on Tranche 2 and the Reforms from our risk advisory team here.

Useful links

FATF Guidance

• Risk-based Approach Guidance for the Real Estate Sector (2022)
• Risk-Based Approach for the Accounting Profession (2019)
• Risk-Based Approach Guidance for Legal Professionals (2019)
• Risk-Based Approach for Trust and Company Service Providers (2019)
• Risk-Based Approach for Dealers in Precious Metals and Stones (2008)
• Australia's progress in strengthening measures to tackle money laundering and terrorist financing

Background Information

• Senate Inquiry Report: The adequacy and efficacy of Australia’s anti-money laundering and counterterrorism financing (AML/CTF) regime (2022)
• Attorney General’s Department: Report on the Statutory Review of the AML/CTF Act and associated Rules and Regulations (2016)
• Australia’s FATF Mutual Evaluation (2015)
• Law Council of Australia: Vulnerabilities Analysis

AML/CTF Bill

• The Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2024
• The Senate Legal and Constitutional Affairs Legislation Committee Report - Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2024

AML/CTF Rules 

• Exposure Draft on the Anti-Money Laundering and Counter-Terrorism Financing Rules
• Consultation into the Anti-Money Laundering and Counter-Terrorism Financing Rules
  

National Risk Assessment 

• Money Laundering in Australia (2024) 
• Terrorism Financing in Australia (2024) 
• Proliferation Financing in Australia (2022)