Australia's AML/CTF report card: plenty of room for improvement

Australia's anti-money laundering and counter-terrorism financing regime has received a report card suggesting there is plenty of room for improvement.

The Financial Action Task Force, an inter-governmental body whose role is to set standards for combating money laundering and terrorism financing, said Australian authorities needed to exercise more effective oversight of the not-for-profit and professional sectors, as well as "legal persons" (including foreign companies operating in Australia).

In a report published yesterday, FATF also said major reporting entities, including the big domestic banks, did not always meet FATF standards. It said the AML/CTF regulator Austrac needed a stronger focus on compliance.

It said there were deficiencies in the preventive measures put in place by organisations working in the remittance market.

And it said conviction rates for money laundering offences were "lower than they could be, relative to the nature and scale of the risks."

Overall, FATF said Australia's AML/CTF co-ordination was very comprehensive.

"Australia develops and disseminates good quality financial intelligence to a range of law enforcement bodies, customs and tax authorities," it said.

"Australia has a good understanding of its ML and TF risks and has mechanisms in place to mitigate them. The institutional framework is strong."

However, Australian authorities needed to develop their understanding further in certain areas.

The report said: "Australia has not exercised oversight in dealing with not-for-profit organisations that are at risk from the threat of terrorist abuse. It has not implemented a targeted approach. Australia has not undertaken a risk review of the NFP sector to identify the features and types of organisations that are particularly at risk of being misused for TF. There is no TF-related outreach to the sector."

FATF said professional groups did not demonstrate an adequate understanding of their ML/TF risks or have measures to mitigate them effectively. "This includes real estate agents and lawyers, both of which have been identified as high ML risks in Australia's National Threat Assessment," it said.

"Some improvements are needed for preventive measures and supervision for non-financial businesses and professions."

It said Australia had not conducted a formal risk assessment of TF risks associated with legal persons (including foreign companies operating in Australia).

"Very limited verification is conducted on information that is registered. Information on the beneficial ownership of legal persons and legal arrangements is not maintained and accessible to authorities in a timely manner," the report said.