Time to get serious about dirty money

The Australian Government is turning the screw on criminals and the movement of dirty money, by stepping up its level of regulation over Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF).

Australia has fallen behind the rest of the world in terms of the level of regulation around AML/CTF, becoming an easy target for global criminals.

Locally we have seen significant shortfalls, such as CBA and Tabcorp, which have brought heavy publicity and tarnishing of reputations.

The regulator of AML/CTF, AUSTRAC, has received significant additional funding to not only scrutinise more closely those organisations that are currently regulated by AML/CTF, such as financial services and gambling businesses, but to also encompass an additional Tranche of entities.

Tranche 2 is expected to be implemented later in the year, and suddenly whole new sectors will have obligations under the AML/CTF Act 2006, including lawyers, accountants and the real estate industry – seen as the “gate keepers” to Australian business and high value assets.

PKF Recommendations:

Current Reporting Entities

As can be seen recently in the media, not only are AUSTRAC raising their level of surveillance, but the repercussions for failings are becoming greater, not only in monetary terms but also the adverse impact on brand. There is also the time and cost associated with the investigations and remediation processes.

Therefore, we recommend that Reporting Entities are on the front foot and are being proactive. Those in scope need to internally assess their compliance with all aspects of the AML/CTF Act and regulations, and ensure they have sufficient systems and appropriately qualified resources, and ongoing education and training. A robust independent review or use of external experts would also challenge and improve standards.

Tranche 2 Entities

The rolling out of AML/CTF regulations to Designated Non-Financial Businesses and Professions (DNFBPs) will impact an estimated 100,000 plus entities in the accounting, law, trust service and real estate professions.

We recommend initially gaining an understanding of the potential impact of the AML/CTF rules and regulations on your business, and the proposed compliance and reporting procedures under this legislation. Consideration should then be made around how an AML/CTF program would be established and maintained.

The key areas to consider and focus on are your customer due diligence processes, also known as Know Your Customer (KYC), and transaction monitoring and reporting.

By planning earlier, this will ensure that implementation is smooth and effective.

Adopting the AML/CTF regulations should not be seen as a compliance headache, but as a chance to mitigate the risk of doing business with inappropriate parties, and to protect your organisation’s reputation.

We can help

In response to the escalation of AML/CTF obligations, PKF has developed a “one stop shop” service offering for its network, called PKF AML. This covers all potential AML/CTF requirements of Current Reporting and Tranche 2 Entities – from setting up of new systems, provision of templates and training, through to Independent Reviews, Risk Assessments and Remediation work.

Please contact your PKF office if we can assist.