Australia is pressing ahead with a significant overhaul of its Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) regime, with AUSTRAC releasing the Second Exposure Draft Rules (ED2) under the Amended AML/CTF Act 2024. This latest draft builds on last year’s proposals, offering further clarity and operational guidance aimed at modernising compliance obligations.
Napier AI, a next generation intelligent compliance platform, recently delved into what firms need to know about these new changes.
Among the most notable updates are new requirements for Suspicious Matter Reports (SMRs) and Threshold Transaction Reports (TTRs). Reporting entities must now provide far more detailed data via updated digital forms. This includes specific information on transaction parties, payment channels and transaction types, Napier AI explained.
The ED2 Rules also tighten enrolment and registration procedures for all reporting entities. Remittance Service Providers (RSPs) and Virtual Asset Service Providers (VASPs) face increased scrutiny, with AUSTRAC now reviewing an entity’s AML/CTF capabilities, key personnel backgrounds, business models, and international footprint.
Customer Due Diligence (CDD) requirements have also been revised. AUSTRAC is expanding flexibility for low-risk customers and digital onboarding. Entities may now delay verifying beneficial owners for up to 30 days under broader conditions, and simplified due diligence applies to regulated entities such as listed firms or government bodies. Importantly, AUSTRAC has clarified that entities only need to identify persons on whose behalf a customer acts in the case of trust or fiduciary arrangements, it said.
A further development is the mandatory inclusion of financial sanctions procedures within AML/CTF compliance programmes. Regulated firms must be able to detect sanctioned individuals or entities, avoid handling frozen assets, and document escalation procedures.
AUSTRAC has also refined the rules for reporting groups, clarifying how lead entities are chosen, the responsibilities they may delegate, and how holding companies can serve as group leads.
Recognising the scope of these reforms, AUSTRAC has introduced transitional measures. For example, entities involved in cross-border transfers can continue using existing reporting formats temporarily.
Responding to these changes, Napier AI welcomed the direction of AUSTRAC’s reforms but called for more detailed implementation guidance. The firm stressed the need for clarity on the new Suspicious Matter Report process, particularly around the technological integration and data granularity requirements. Napier AI highlighted the importance of understanding specific attributes such as direct counterparties, beneficial owners and other associated parties, and how this data should be submitted through the new platform.
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