What you need to know

A new bill is being passed by the Australian government which will introduce new measures aimed at strengthening Australia’s Anti Money Laundering and Counter-Terrorism Financing framework.

The amending legislation will improve Australia’s compliance with the recommendations of the Financial Action Task Force (FATF) which establish the global standards for combatting money laundering and the financing of terrorism & proliferation.

The amendment extends the AML/CTF regulatory regime to include designated services provided by non-financial businesses and professions (DNFBPS) including lawyers, conveyancers, accountants, high-value dealers, real estate agents, and trust and company service providers.

The amendment also introduces the establishment of an ultimate beneficial ownership (UBO) public register that contains information about companies registered under the Corporations Act 2001 and certain other legal persons and legal arrangements.

Why have the changes been introduced?

The Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) Act 2006 puts in place practical measures to detect and deter money laundering and terrorism financing to protect businesses and make it harder for criminals to profit from and fund illegal activities.

However, the current non-regulation of certain designated non-financial businesses and professions (DNFBPs) under the Act creates a significant gap or blind spot in Australia’s AML/CTF regulatory regime.

Company structures, including foundations and trusts, can also be used to disguise the identity of those involved in illicit activities, including tax evasion, money laundering, bribery, corruption, and terrorism financing.

The amendment responds to these challenges and several of FATF’s concerns and recommendations regarding the application of the Act to DNFBPs (recommendations 22 and 23) and the transparency and beneficial ownership of legal persons and arrangements (recommendations 24 and 25).

What are the key changes?

Expanded designated services

The Amendment extends the AML/CTF regulatory regime to cover the remaining DNFBPs.

Section 6 (definition of designated service) will now include the provision of designated services by professionals including but not limited to lawyers, conveyancers, accountants, high-value dealers, real estate agents, and trust and company service providers, to address the risk of money laundering and terrorism financing.

The Amendment expands the range of information to be collected and reported to the Australian Transaction Reports and Analysis Centre (AUSTRAC) and shared with law enforcement.

Ultimate beneficial ownership register

The Amendment enables greater transparency of who owns, controls, and benefits from companies by requiring the establishment of a register that:

a)     contains information about the ultimate beneficial ownership of:

i) each company and foreign company registered under the Corporations Act 2001; and
ii) each other legal person or legal arrangement as the Minister considers appropriate; and

b)     is publicly accessible.

i) This will assist in preventing the misuse of companies for illicit activities.

When do these changes come into effect?

This bill would require the government to introduce legislation into Parliament by 30 September 2022

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