In one of its publications, AUSTRAC revealed that the Australian economy faces almost 36 billion dollars of economic loss due to several financial crimes including money laundering, Fraud, corruption, and tax evasion.
Doesn’t such a huge amount pose some serious concerns over the country’s credibility in detecting and combating such crimes? Is Australia having weaker AML regulations or criminals are too smart in the country that, despite the strict scrutiny process find loopholes for illicit activities?
Australia has introduced a series of AML regulations and continuously making efforts to tighten the efforts against them.
The AUSTRAC is one of the major Australian AML regulations that lead the charge against money laundering and terrorism financing.
Businesses are obliged in Australia to adhere to this regulation to not only save their company reputation but also build trust among customers.
This blog explores the key AML regulations in Australia, how they work, and practical ways businesses can ensure compliance in 2024.
Major AML Regulations in Australia
The cornerstone of Australia’s AML regime is the 2006 AML/CFT Act. This legislation particularly focuses on making sure that businesses, particularly financial institutions are obliged to follow this regulation.
AUSTRAC is responsible for making sure businesses are following the regulations. For businesses, it is compulsory to comply with the country and international AML regulations, identify the risk of money laundering, and warn them that if any organization fails to comply with this regulation will have to pay the price.
The second most important legislation in Australian compliance regulation comes from the Financial Transaction Reports Act 1988 (FTR Act) complements the AML/CTF Act. This law is particularly focused on large cash transactions. It means if any transaction goes up to AUD 10,000, the compliance team must see it as suspicious and thoroughly investigate the legality of such transactions.
How Businesses in Australia Can Ensure AML Compliance in 2024?
Though, following regulatory laws for financial institutions has always been a challenging task, Australia’s AML laws also need more than just checking the AML compliance box. The country’s AML laws require businesses to implement an approach that must mitigate the risk level, and enhance the chances of detecting the criminals with the ongoing monitoring system.
Here are key steps businesses can take to remain compliant:
- Develop and Maintain a Comprehensive AML/CTF Program
Identifying the risk level is more crucial for financial institutions in the first stage and that only happens when companies have built their internal AML program robust and efficient. What is robust AML compliance? You must be thinking of that. Well
At first, businesses must focus on the Risk identification and management procedures that help them assess the small chances of exposure to money laundering and other criminal activities.
Another important feature of any AML/FCT program is that the company focuses on the protocols of verifying customer identification while onboarding them. It includes the implementation of comprehensive CDD, EDD, and Know Your Customer.
- Conduct Regular Risk Assessments
No two businesses are the same, and neither are their risks. This statement becomes even more important when you are dealing with the diversity of financial crimes from money laundering, and corruption fraud to terrorist financing.
Therefore, for businesses Conducting regular risk assessments is essential as it helps them to identify vulnerabilities and alter their AML program accordingly.
The changes in the compliance program must be made based on the geographical risks (such as customers from high-risk countries), transaction risks (large or unusual transactions), and customer risks (PEPs or high-net-worth individuals).
- Ensure Robust Reporting Mechanisms
Identifying the risk and detecting the suspicious transaction isn’t enough to stop the crime from being committed. The real efforts start after the detection process, how to manage such cases, and what resource must be implemented in which case. This must be done with a proper AML case management system. You can check the AML Watcher’s advanced management system for better handling of the cases.
From there, the business can submit Suspicious Matter Reports to the department for further investigations.
The Cost of Non-Compliance with Australian Regulations
Failing to comply with Australia’s AML regulations can result in hefty penalties from the AUSTRAC as well as from the international regulatory bodies. In Australia, AUSTRAC has the authority to impose significant financial penalties on that business not complying with the said AML/CFT compliance regulations.
For business what could be more damaging than the Reputational damage as it can be long-lasting?
How Advanced AML Solutions Can Help Your Business Stay Compliant with Australian AML Regulations
Adhering to Australia’s ever-evolving AML regulations can be a challenging and resource-intensive task, but with the right tools and strategies, it becomes more manageable.
AML Watcher offers an advanced solution, capable of screening over 60,000 sanctioned lists across multiple countries, all while maintaining a zero false positive rate. By leveraging AML Watcher, businesses can reduce compliance efforts by 50%, ensuring both accuracy and efficiency in their AML processes. Stay compliant, save time, and focus on growing your business with AML Watcher.