On 29 November 2024, the Australian Parliament passed the AML/CTF Amendment Bill 2024 (the Bill), amending the Anti-Money Laundering and Counter-Terrorism Financing Act 2006  (AML/CTF Act). The coming changes to the AML/CTF Act will affect tens of thousands of Australian businesses which will need to prepare appropriate business practices to satisfy new reporting and compliance obligations under Australia’s changing AML/CTF regulatory regime.

In this article we look at the core reporting and due-diligence obligations for companies, and the expanded scope of “designated services” provided by businesses subject to the AML/CTF Act.

Purpose of the Bill

The Bill has three key objectives. These are:

1. to extend the AML/CTF regime to certain higher-risk services provided by real estate professionals, professional service providers including lawyers, accountants;
2. to improve the effectiveness of the AML/CTF regime by making it simpler and clearer for businesses to comply with their obligations; and
3. to modernise the regime to reflect changing business structures, technologies and illicit financing methodologies.

The basic concepts of the existing regime will remain substantively the same.

The Bill contains 12 Schedules which amend the AML/CTF Act. A table outlining a brief summary of the Schedules is contained at the end of this article.

As noted by AUSTAC (Australian Transactions Reports and Analysis Centre) in its Consultation paper on the new AML/CTF Rules, the current AML/CTF rules are “overly prescriptive, providing extensive mandatory steps to achieve the objectives of the current AML/CTF Act. The Amended AML/CTF Act will establish a more outcomes-based system of compliance, outlining the outcome to be achieved while affording flexibility to meet this outcome” (p. 7).

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Changes to the AML/CTF regime will “result in a large number of Australian businesses that are authorised or obligated to collect and verify customer and beneficial owner information when providing a designated service…It is anticipated that AUSTRAC’s reporting population will increase from approximately 17,000 by approximately 90,000 entities”¹

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New services and entities covered by the AML/CTF Act

The AML/CTF regime hinges on two key concepts: reporting entities, and designated services.

Under the new law, a reporting entity is (summarised briefly) a person, business or business group that provides a “designated service”.

The existing AML/CTF already contains a list of more than 60 designated services, mostly covering banks, authorised deposited-taking institutions and financial services providers. The Bill expands this list to include real estate services and professional services as “designated services”.

The Bill creates 2 new real estate services, and 9 new professional services, as designated services. These new designated services include:

1. brokering the sale, purchase or transfer of real estate on behalf of a buyer, seller, transferee or transferor in the course of carrying on a business;
2. selling or transferring real estate in the course of carrying on a business selling real estate, where the sale or transfer is not brokered by an independent real estate agent;
3. assisting a person to plan or execute, or otherwise acting on behalf of a person in, the creation or restructuring of a legal arrangement;
4. acting as, or arranging for another person to act as, a nominee shareholder of a body corporate or legal arrangement, on behalf of a person (the nominator), in the course of carrying on a business; and
5. providing a registered office address or principal place of business address of a body corporate or legal arrangement, in the course of carrying on a business

The expanded regime of the updated AML/CTF Act also includes dealers in precious metals and stones as providers of designated services.

A person or business that provides a designated service is, for the purposes of the AML/CTF Act, a reporting entity.

Obligations of Reporting Entities

Reporting entities that provide designated services have a number of obligations under the updated AML/CTF Act. These include:

1. Undertaking, reviewing and updating, and maintaining up-to-date money laundering and terrorism financing risk assessments.
2. Developing and maintaining policies, procedures, systems and controls that, amongst other things, appropriately mitigate the risks of money laundering, financing of terrorism and proliferation financing that the reporting entity may reasonably face in providing its designated services.
3. Complying with the AML/CTF policies of the reporting entity.
4. Designating an individual as the AML/CTF compliance officer for the reporting entity.
5. Notifying AUSTRAC of the reporting entity’s AML/CTF compliance officer.
6. Undertaking initial and ongoing customer due diligence. Subject to some exemptions, a reporting entity must not commence to provide a designated service to a customer if the reporting entity has not established on reasonable grounds a number of matters that includes the identity of the customer, or a person acting on behalf of the customer.
7. Report suspicious matters to AUSTRAC.
8. Enrol on the “Reporting Entities Roll” as a reporting entity.

Summary

Although the basic concepts of the AML/CTF regime will remain substantively the same under the updated Act, business and organisations that provide real estate and professional services that fall within the expanded scope of designated services under the new AML/CTF Act will need to be aware of their new obligations under the updated regime. An initial public consultation period on the draft rules closed on 14 February 2025, and a second round of consultation is expected to be initiated this year., with the new rules coming into effect in 2026.

Outline of Schedules

Schedule	Area of Focus	Description of Measures
1	Anti-money laundering and counter-terrorism financing programs and business groups	Replaces Part 7 of the AML/CTF Act with a set of outcomes-focused obligations that will ensure reporting entities undertake appropriate measures to mitigate and manage risk.   This includes:   New (flexible) concepts for reporting entities that organise themselves into groups to manage risks more efficiently   Clarifying the roles and responsibilities of a reporting entity’s governing body and its AML/CTF compliance officer, and   Clarifying obligations for Australian companies operating overseas through a foreign branch of an Australian reporting entity, or a foreign subsidiary of an Australian parent company
2	Customer due diligence (CDD)	CDD requires reporting entities to:   Identify, and verify the identity, of their customer and certain associated persons, and   Understand the money laundering, terrorism financing and proliferation financing risks associated with providing designated services to the customer, and take appropriate steps to mitigate and manage these risks.
3	Regulating additional high-risk services	Schedule 3 of the Bill expands the list of designated services in section 6 of the AML/CTF Act to include higher risk services provided by tranche two entities. Businesses that provide these designated services would be regulated under the AML/CTF regime.
4	Legal professional privilege	Clarifies the treatment of information subject to legal professional privilege for the purposes of the reporting and information disclosure obligations in the AML/CTF Act.   The Bill provides stronger protections for the disclosure of information or documents subject to legal professional privilege once legal practitioners are brought into the AML/CTF regime.   Explanatory Memorandum states that these amendments preserve the core intention of the doctrine of legal professional privilege in both common law and statute, and ensure that regulated entities who handle client information that is subject to legal professional privilege can comply with their reporting and information disclosure obligations under the AML/CTF Act.
5	Tipping off offence and disclosure of AUSTRAC information to foreign countries or agencies	Schedule 5 would reform the current prohibition against reporting entities ‘tipping off’ their customer about the formation of a suspicion. The new offence will focus on preventing the disclosure of suspicious matter report (SMR) information or information related to a notice issued under section 49 or 49B of the AML/CTF Act where it would or could reasonably prejudice an investigation. The new offence framework would be more flexible for reporting entities seeking to share information for legitimate purposes, including within reporting groups to manage risk and prevent further crime.
6	Services relating to virtual assets	Schedule 6 extends the AML/CTF regime to additional virtual asset-related services to appropriately address the sector’s risk, amends the current terminology of ‘digital currency’ to ‘virtual asset’, and inserts a new definition of ‘virtual asset’ in line with FATF Recommendation 15. The amendments would ensure that the rapidly growing virtual asset sector is hardened against exploitation by criminals.
7	Definition of bearer negotiable instrument	Schedule 7 clarifies what monetary instruments are captured by the definition of a ‘bearer negotiable instrument’ and its subsequent reporting requirements. This responds to industry concerns that the current definition is unclear and too broad because it includes negotiable instruments that are not payable to bearer.
8	Transfers of value and international value transfer services	Replaces the previous funds transfer chain concept with an updated and simplified value transfer chain. Streamlining value transfer chains would reduce undue regulatory burden on industry. The value transfer chain concept will provide a framework for key AML/CTF reporting obligations for certain entities that transfer value on behalf of customers, like the travel rule and IFTI/international value transfer service reporting obligations.
9	Powers and definitions	Introduces a number of new information gathering powers for AUSTRAC to effectively monitor, investigate and enforce compliance with the AML/CTF regime. These include an examination power, an important investigatory tool to enable AUSTRAC to obtain relevant information needed to make enforcement decisions and obtain evidence to be used in proceedings, and additional notice to produce powers allowing AUSTRAC to gather information to assist with its financial intelligence functions.
10	Exemptions	Moves current exemptions under the AML/CTF Rules into the AML/CTF Act either by reframing the primary obligation to avoid the need for the exemption, or incorporating an express exception in the AML/CTF Act. This will ensure that enduring exemptions are codified in the AML/CTF Act, and subject to appropriate parliamentary scrutiny.   This Schedule also make amendments to the exemption currently in Chapter 75 of the AML/CTF Rules, lower the threshold exempting casinos, on-course bookmakers, 5 totalisator agency boards and gaming machine operators from conducting initial CDD measures when providing certain gambling services to customers involving transactions from less than $10,000 to less than $5,000 to align with the FATF Standards.
11	Repeal of the Financial Transaction Reports Act 1988	Scheule 11 repeals 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 cash dealers who provide low risk services under the FTR Act, including motor vehicle dealers, sellers of traveller’s cheques and offshore online remitters.
12	Transitional rules	Provides a power for the Minister to make rules concerning any amendments introduced by this Bill. This modification power is limited to 4 years to address any unforeseen issues that may arise after the reforms commence and to accommodate the extensive time needed for industry to effectively implement each measure.

1. Explanatory Memorandum to the Anti-Money Laundering and Counter Terrorism Financing Amendment Bill 2024, p. 11 ↩︎