.svg)
The Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2024 represents a major overhaul of Australia’s financial crime framework.
The bill, introduced to Australia’s parliament on September 11, is intended to bring the country’s laws into line with international standards and to close critical gaps in the fight against money laundering and terrorism financing.
Australia’s financial system has at times found itself mired in scandal as a result of financial crime issues.
For example, in 2018, the Commonwealth Bank of Australia was accused of a significant anti-money laundering (AML) failure after it was revealed that a Hong Kong crime syndicate had used it to launder funds for drugs.
The retail bank ultimately paid a A$700m ($468m) penalty to resolve the issue.
Due diligence overhaul
For banking and payments institutions, one of the most significant elements of the bill is the changes it will make to customer due diligence (CDD) procedures.
The CDD revisions outlined by the government will strengthen the ability of businesses to verify the identity of their customers, assess risks and prevent misuse of their services.
Key updates include new definitions for terms such as "beneficial owners" and "politically exposed persons", with the goal of helping businesses identify high-risk individuals and flag suspicious transactions more effectively.
Enhanced CDD measures will be required for high-risk customers, and a streamlined compliance process is intended to reduce the regulatory burden on businesses without compromising security.
Virtual assets
The bill also addresses vulnerabilities in the virtual asset sector.
Virtual asset service providers (VASPs) such as digital currency exchanges will now be regulated under the AML and counter-terrorism financing (CTF) regime, bringing them into line with traditional financial institutions.
The law also updates terminology, replacing "digital currency" with "virtual asset" to reflect the diverse and evolving range of digital financial products being used by criminals.
Moreover, the bill extends regulatory oversight to international value transfers involving unverified, self-hosted virtual wallets, a loophole frequently exploited to obscure the origin of illicit funds.
Expansion
Another significant reform is the expansion of AML/CTF obligations to include "tranche-two" entities, such as lawyers, accountants, real-estate professionals and dealers in precious stones and metals.
These industries have traditionally been outside the scope of AML/CTF regulations, despite being exploited by criminal organisations to launder money.
The reforms bring these sectors into compliance with global standards set by the Financial Action Task Force (FATF), addressing a gap that has made Australia vulnerable.
Australia’s failure to regulate these sectors led to warnings from FATF in 2015, putting the country at risk of being "greylisted" — a status that could have damaged its international reputation and harmed its economy.
Value transfer services
In addition to tightening regulations on virtual assets and tranche-two entities, the bill simplifies and modernises the framework for international value transfer services.
This includes replacing outdated concepts such as funds transfer chains with a more efficient value transfer chain framework, making it easier for businesses to comply with cross-border reporting requirements while reducing regulatory burdens.
The bill also introduces updated definitions for electronic funds transfers and international remittances, ensuring the laws reflect modern financial practices.
Authorities
The bill grants AUSTRAC, Australia’s financial intelligence agency, new powers to strengthen its ability to monitor, investigate and enforce compliance with the AML/CTF regime.
AUSTRAC will now have the authority to conduct examinations, gather evidence during investigations and compel businesses to produce information critical to tracking and preventing financial crime.
These new powers are aimed at improving AUSTRAC’s capacity to intervene in suspicious activities and take enforcement action when necessary.
As part of a broader effort to streamline the financial crime framework, the bill also repeals the Financial Transaction Reports Act 1988, which has become outdated.
This move consolidates the regime, reducing redundancy and complexity in financial crime regulations, while focusing on higher-risk activities.
In addition, the introduction of a risk-based approach to AML/CTF compliance will allow businesses to prioritise resources based on the level of risk posed by their customers, reducing the compliance burden on low-risk sectors and ensuring a more targeted approach to preventing money laundering and terrorism financing.
The centre-left Albanese government views these reforms as crucial for closing long-standing regulatory gaps, modernising Australia’s approach to financial crime, and aligning with international standards.
The bill is now set for debate in parliament, with the government urging swift approval.
