Attorney-General Mark Dreyfus has launched a new round of consultation with industry over the government’s plan to extend Australia’s anti-money laundering and counter-terrorism financing regime to cover so-called “tranche 2” entities.
Currently, AML/CTF law applies to financial institutions, money remitters, digital currency exchanges, gambling service providers and gold bullion dealers.
Under tranche 2, the regime would be extended to professional service providers, such as lawyers, accountants, real estate agents, conveyancers, trust and company service providers, and dealers in precious metals and stones.
Consultation papers released last week include detailed proposals for the move to tranche 2.
Dreyfus said in a statement: “Australia is one of a handful of countries that are not meeting the Financial Action Task Force’s requirements to regulate tranche 2 entities.
“These reforms will ensure Australia’s AML/CTF regime can more effectively detect, deter and disrupt money laundering and terrorism financing and meet international standards set by FATF.”
FATF is the global AML/CTF standard setter and monitoring agency. In March, it released a report on Australia’s compliance with global AML/CTF requirements, assigning non-compliant ratings to four of its previous recommendations for improvement of the regime.
Three of the non-compliant ratings relate to AML/CTF coverage of “designated non-financial businesses and professions”. These DNFBPs include lawyers, accountants, real estate agents, conveyancers, trust and company service providers.
The other area of non-compliance identified in the latest FATF report related to “transparency and beneficial ownership of legal arrangements”. FATF said Australia relies exclusively on ASIC to trace beneficial ownership of shares, which only covers public companies. “No such mechanism exists for private companies,” it said.
In March 2022, the Senate Legal and Constitutional Affairs References Committee released a report on the adequacy of Australia’s AML/CTF regime, recommending that the government “accelerate its consultation with stakeholders on the timely implementation of tranche 2 reforms.”
In April last year, Dreyfus released a consultation paper that included proposals to introduce tranche 2 reforms.
The consultation papers released last week incorporate feedback from last year’s consultation.
They also include options for expanding coverage affecting financial institutions to bring regulations up to date with digital currency services and changes to international funds transfer instructions.
The government is keen to have the reforms in place before FATF’s next assessment of Australia in 2026 and 2027.
“A poor assessment risks Australian being ‘grey listed’ by FATF, which could have serious consequences for Australia, including tangible economic and GDP impacts, and increased threats, risks and burdens for law enforcement,” the consultation papers said.