AUSTRAC releases first consultation on Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) rules

Structure of the Rules

AUSTRAC will amend the Rules framework by creating two separate instruments:

• Most rules will be included in a new instrument that will align with the amended Act and will be named the Anti-Money Laundering and Counter-Terrorism Financing Rules 2025 (New General Rules).
• Some existing exemptions to the current Act will be retained (where appropriate) in the existing Rules, which will be renamed the AML/CTF (Exemptions) Rules 2007 (Exemption Rules).

AUSTRAC states in the Consultation Paper that: “separating the rules instrument in this way ensures that laws of general application are confined to a single instrument, while existing exemptions are separated for reporting entities they affect.”

AUSTRAC has also focussed on modernising and simplifying the New General Rules by reorganising the relevant Rules into ‘Parts’, which are set out thematically. The New General Rules are also in an order that mirrors each obligation in the Act:

• Part 1: Preliminary
• Part 2: Enrolment
• Part 3: Registration
• Part 4: AML/CTF programs
• Part 5: Customer due diligence
• Part 6: Correspondent banking
• Part 7: Transfers of value
• Part 8: Reporting
• Part 9: Record-keeping
• Part 10: Secrecy and Access
• Part 11: Other matters
• Part 12: Application, saving and transitional provisions
• Schedule 1: Forms

Approach to Exemptions

Almost all chapters will be repealed from the existing Rules as they are either redundant due to the reforms in the Bill, or will be rewritten in the New General Rules. For example, AUSTRAC states that rules that prescribe methods of verification are no longer necessary as the central principle underpinning verification, that it is based on ‘reliable and independent data’, is now enshrined in paragraph 28(3)(d) of the amended Act.

The only chapters of the Rules that are being preserved are Chapters 21, 22, 28, 31, 42, 43, 45, 47, 48, 49 and 66, which relate to exemptions. The second round of consultation will include an Exposure Draft version of the new Exemption Rules containing these chapters with necessary consequential amendments to fit in the amended Act.

This approach also ensures that the existing rules-based exemptions that do not require significant amendments can be retained without the need to remake them. This ensures greater stability for existing exemptions going forward.

Submissions on the Rules and Time to Respond

AUSTRAC has invited submissions on the Rules and the consultation paper. This includes a number of general questions, including the following:

1. Do any aspects of the Exposure Draft Rules create unnecessary friction with existing approaches to risk mitigation in your business or sector? If so, what are they? Are there alternative approaches that could achieve the same regulatory outcomes?
2. Are any rules not sufficiently flexible to be scalable to specific circumstances of small businesses, sole traders or sole practitioners? Are there alternative approaches that could achieve the same regulatory outcomes?
3. Are any rules not sufficiently flexible to be scalable to specific circumstances of large or multinational businesses? Are there alternative approaches that could achieve the same regulatory outcomes?

AUSTRAC has stated that industry feedback will assist in determining whether measures in the Exposure Draft 1 require any amendment, or whether additional rules are required. Further opportunities to comment on any updated measures will occur when Exposure Draft 2 is released for consultation in 2025.

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