By: Amanda Beattie, Jonathon Ferraro and Natasha Chand

Last week the Commonwealth Attorney-General tabled a bill into Parliament to amend the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Act) and repeal the Financial Transaction Reports Act 1998 (FTR Act).

The Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2024 (Bill) is the Government’s signal to criminals and criminal syndicates that Australia is committed to reforming, expanding and improving its anti-money laundering and counter-terrorism financing (AML/CTF) regime in its crackdown on crime.

The key objectives of the Bill are to:

  • capture services typically provided by lawyers, accountants, real estate professionals and dealers in precious stones and metals (also known as ‘tranche two’ or ‘gate-keeper’ entities), and in doing so, close a significant regulatory gap
  • improve the effectiveness of the AML/CTF regime by making it simpler and clearer for businesses to comply with their obligations, and
  • modernise the regime to reflect changing business structures, technologies and illicit financing methodologies.

In delivering on the key objectives, it is hoped that Australia will be brought into line with international standards set by the Financial Action Task Force (FATF) ahead of its next evaluation, set to occur mid-2026.

In this note, we set out a high-level snapshot of the breadth of changes expected to impact entities who are presently regulated by the Act and the approximately 100,000 additional entities to be regulated. Over the coming weeks, we intend to deep dive on each constituent component of the Bill. Sign up to receive our updates here.

Background on AML/CTF

Criminals exploit Australia’s financial system when they legitimise the proceeds of crime. Parliament agreed to regulate the provision of certain services it deemed as posing a money laundering (ML) or terrorist financing (TF) risk to Australia’s economy – these services are known as designated services.

The Act requires persons offering designated services to:

  1. develop and maintain a Program that shows how they address the ML/TF risks their business may reasonably face – this means:

    (a) assessing (by way of risk assessment) their business’ level of exposure to ML/TF risks, and
    (b) developing and documenting the policies, procedures, systems and controls they use to identify, mitigate and manage those risks

  2. assess the risk level of customers by undertaking customer due diligence prior to offering a designated service
  3. act in accordance with their Program whenever the business offers a designated service, and
  4. report any unusual or suspicious activity to the regulator, AUSTRAC.

Key measures of the Bill

Schedule Current regime Key change
Schedule 1 – AML/CTF programs and business groups The current regime requires a reporting entity to adopt an AML/CTF program with a ‘primary purpose’ of identifying, mitigating and managing their ML/TF risk. The Bill proposes:

  • that reporting entities be required to identify, assess, mitigate and manage their illicit financing risks
  • new, flexible concepts for reporting entities that organise themselves into groups to manage risks more efficiently, and
  • greater clarity of the roles and responsibilities of a reporting entity’s governing body and AML/CTF compliance officer.
Schedule 2 – Customer due diligence (CDD) Currently, the AML/CTF regime requires reporting entities to identity and then verify the identity of their customers, and also understand what risks are associated with providing their designated service to that customer, and then to mitigate those risks. The Bill proposes a number of new definitions and recharacterises the CDD processes. These amendments aim to:

  1. reframe and clarify the core requirements of both initial customer due diligence and ongoing customer due diligence
  2. clarify when enhanced customer due diligence measures are required, and
  3. streamline the circumstances on when a simplified approach to customer due diligence may be utilised.
Schedule 3 – Regulating additional high-risk services The list of designated services in the Act currently regulates the services typically provided by the gambling, bullion dealer, digital currency exchange provider and financial services sectors. The Bill aims to expand the AML/CTF regime to services provided by gatekeeper professions (also known as tranche two professions) which are recognised as medium to high-risk, being:

  1. real estate professionals
  2. dealers in precious metals and precious stones, and
  3. professional service providers, including lawyers, conveyancers, accountants, and trust and company service providers.
Schedule 4 – Legal professional privilege Section 242 of the Act already provides that the Act does not affect the law relating to legal professional privilege. In response to stakeholder feedback, the Bill proposes stronger protections for the disclosure of information or documents subject to legal professional privilege once legal practitioners are brought into the AML/CTF regime.
Schedule 5 – Tipping off offence and disclosure of AUSTRAC information to foreign countries or agencies Currently, there is a prohibition against reporting entities ‘tipping off’ their customer about the formation of a suspicion.

For lawyers navigating satellite actions brought by parties who are not AUSTRAC, Australia’s tipping off prohibitions have frequently vexed their discovery obligations and, in certain circumstances, required defendants to seek exemptions from the AUSTRAC CEO.

 The proposed amendments will bring Australia’s tipping off prohibition in line with other international players, such as the UK and Ireland (among others), by adding the requirement to the prohibition that disclosure of relevant information would or could reasonably be expected to prejudice an investigation of particular offences.

While seemingly minor, the addition of the “prejudice” requirement may have the effect of reducing costs associated with considering production of documents that would otherwise require opaque and protracted discourse between parties, or an exemption by the CEO of AUSTRAC.
Schedule 6 – Services relating to virtual asset Currently, the AML/CTF Act uses the terminology of ‘digital currency’ and only regulates transactions converting fiat currency to digital currency or vice versa, or where digital currency is exchanged for gaming chips or tokens. The amendments would:

  • change the terminology used in the Act from ‘digital currency’ to ‘virtual asset’, to align with FATF’s recommendations, and
  • extend the AML/CTF regime to additional virtual asset-related services to address the sector’s risk.
Schedule 7 – Definition of bearer negotiable instrument There has been industry concern that the current definition of ‘bearer negotiable instrument’ is unclear and too broad. By clarifying what monetary instruments are captured by the definition of a ‘bearer negotiable instrument’ and its subsequent reporting requirements, the amendment aims to reduce the volume of reportable bearer negotiable instruments, which will, in turn, reduce the burden on reporting entities’ resources.
Schedule 8 – Transfers of value and international value transfer services The current regime has been criticised as placing undue regulatory burden on the industry. These amendments would simplify and modernise the framework for electronic funds transfer instruction obligations, designated remittance arrangements and international funds transfer instruction (IFTI) reporting purposes. The “funds transfer chain” concept will be replaced with a “value transfer chain” concept.
Schedule 9 – Powers and definitions The current regime was absent certain investigatory powers and the power to conduct examinations, which exist with other regulators such as ASIC and APRA. The Bill would grant AUSTRAC:

  • examination powers, enabling AUSTRAC to obtain relevant information needed to make enforcement decisions and obtain evidence to be used in proceedings, and
  • additional notice to produce powers, enabling AUSTRAC to gather information in the absence of threshold, IFTI or suspicious matter reporting circumstances, which is expected to assist with financial intelligence efficacy.
Schedule 10 – Exemptions The Act permits the AUSTRAC CEO to make rules regarding exemptions concerning responsibilities set out in the Act. The rules are contained in the AML/CTF Rules Instrument 2007 (Rules). The Senate Standing Committee for the Scrutiny of Delegated Legislation (SSC) expressed the view that exemptions contained in delegated legislation should not operate for more than 3 years.

The Bill would bring the AML/CTF regime into line with the SSC’s views by moving those exemptions that are intended to be enduring from the Rules to the Act.
Schedule 11 – Repeal of the Financial Transaction Reports Act 1988 Currently, the obligations imposed on certain providers of designated services are split between the Act and the FTR Act. The Bill would repeal the FTR Act to streamline and simplify the AML/CTF regime, establishing a single source of obligations for industry.

The repeal of the FTR Act would deregulate low-risk cash dealers, including motor vehicle dealers, sellers of traveller’s cheques and offshore online remitters.
Schedule 12 – Transitional rules — The Bill would provide a power for the Minister to make rules concerning any amendments introduced by this Bill. This modification power would be limited to 4 years.

Proposed timing

Assuming the Bill is successfully voted in by Parliament and there are no delays, it will have effect in the following stages:

  1. On the date of Royal assent – substituting certain key definitions including ‘reporting entity’.
  2. 28 days after receiving Royal Assent – examination powers are introduced, information gathering powers are expanded, particular financial instrument definitions are substituted, the FTR is repealed, and the Minister may make rules of a transitional nature.
  3. On 31 March 2026, the majority for the reforms would come into effect, including the:
    • application of the Act to tranche two entities
    • programs and business groups amendments
    • changes to the CDD process
    • reframed tipping off prohibition
    • expansion of the designated services of digital currency exchange providers, and
    • introduction of the “value transfer chain” concept.
  4. On 1 July 2026 – increasing protections regarding legal professional privilege and clarifying reporting requirements in respect of bearer negotiable bonds.