April 16, 2024 Catherine Lygoe

Compliance Radar March 2024

FATF Report - Review of Global AML and CTF Reforms

A new report by the global anti-money laundering (AML) and counter-terrorist financing (CTF) task force has backed the need for the Australian Government to continue with proposed reforms to Australia’s AML/CTF regime.

The report was tabled in March 2024 by the Financial Action Task Force (FATF). Based in Paris with 40 members including Australia, the FATF is an independent inter-governmental body that develops and promotes policies to protect the global financial system against money laundering and the financing of terrorism and the proliferation of weapons of mass destruction. The standards that it sets and recommends aim to prevent these illegal activities and the harm they cause to society.

The latest FATF follow-up report analyses Australia’s progress in improving compliance with FATF standards. It points out that since 2015, Australia has failed to comply with a number of key FATF standards, including extending the AML/CTF regime to “Tranche 2” entities. These include lawyers, accountants, real estate agents and dealers in precious metals and stones.

Although Australia’s framework for combatting financial crime is improving, gaps remain through which criminal abuse of our financial system can continue. In the pursuit of closing some of these key gaps, LAB Group welcomes the Australian Government’s focus on extending the existing AML/CTF legislation to capture the additional high risk professional entities covered by Tranche 2. These reforms will help to protect the wider Australian population from the impacts of money laundering and terrorism financing.

With the implementation date approaching, we estimate that the Tranche 2 reforms will increase the number of AUSTRAC-regulated reporting entities by over 700%, from approximately 15k entities to more than 120k. However, many professionals remain unaware or unclear of their upcoming reporting obligations.

LAB Group is positioned to be part of the solution in helping lawyers, accountants, auditors, real estate agents and dealers in high value items to engage with their clients in a compliant manner. LAB Group’s configurable digital tools and biometric screening capabilities can help to uncover the true identity of every customer. Firms can easily integrate their own screening rules and processes with LAB Group’s technology to ensure they identify their customers in an efficient and accurate way, whilst maintaining privacy.

We encourage all soon-to-be regulated entities not to wait for implementation of the Tranche 2 reforms to get your business compliant with the best practices established by the FATF. To learn more about the proposed reforms or to find out how LAB Group can help your business prepare for Tranche 2 of Australia’s anti-money laundering regulatory regime, please contact enquiries@labgroup.com.au.

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