AML/CTF: Your practical questions answered

The article is relevant to members in Australia and was current at the time of publication.

Australia’s expanded AML/CTF regime is now in place, but many accountants still have questions about compliance.

If you’re unsure, do not panic.

“We do not expect perfection from day one,” says Katie Miller, Deputy CEO of Regulation for AUSTRAC. 

“What we do expect is that, as professionals apply the program and work through different circumstances with different clients, their practice will improve. 

“Now that we are regulating professional services firms, we hope to get much better visibility and understanding of where organised crime groups are seeing vulnerabilities they can exploit.”

INPRACTICE asked Miller and Neville Birthisel FCPA, Adviser – Policy & Advocacy CPA Australia, to answer some questions from accountants. 

I have completed my AML/CTF preparations. How do I put them into practice?

“Your business didn’t change just because you have come into the AML/CTF regime,” Birthisel says. 

“Of course, you have new obligations. You must do due diligence on clients and monitor for suspicious matters and threshold transactions. You also must keep training up to date, review your AML/CTF program and have it externally evaluated at least once every three years. 

“But most of that you should already be across. You probably even have software that is handling part of the work for you. So take a breath and remember that your first focus should be on your business.”

Reviewing which designated services are regulated can also help.

Miller says some accountants overlook the fact that providing a registered office for a client as an add-on service is a designated service.

Should I enrol with AUSTRAC as a precaution, or wait until I am certain I provide a designated service?

Some obligations, such as having an AML/CTF program, must be met before you provide a designated service, Miller says.

Birthisel adds: “So, get your AML/CTF program in place, get training done and talk to a third-party software provider.” 

You must then enrol within 28 days of providing a designated service.

I do not currently provide designated services. If a client requests one tomorrow, what must be in place before I accept?

“What does need to be in place is an AML/CTF program that sets out what risks you possibly face and your procedures for managing those risks, your procedures for client due diligence, and your procedures for suspicious matter reporting and so on,” Miller says.

What is the difference between enrolment and registration, and do I need both?

Enrolment is most common for accountants, Birthisel says. 

Registration applies to virtual asset service providers, such as those dealing with cryptocurrency, and remittance service providers. 

AUSTRAC says a professional service must be ‘sufficiently linked’ to a transaction to be a designated service. How does this differ from ‘merely influencing’ it?

The key question is, are you simply advising the client about undertaking a particular transaction or are you helping move the transaction forward? 

Miller notes: “If it’s the latter, that’s a designated service. An example might be when a client is thinking about buying a business and an accountant provides advice on tax implications. If it’s only advice, that does not fall under the regulations. However, if the accountant goes further and helps the client to implement that advice, it’s a designated service.”

Am I outside the regime if I do not perform every step in a transaction, such as incorporating a company?

If you are providing a holistic service which includes, for example, filling out forms to establish the new company, you’re still just as much in the transaction as the third-party provider that physically set up the company, Birthisel says. 

If in doubt, contact AUSTRAC Central on 1300 021 037, Miller advises. 

Which services do accountants commonly overlook that may be designated services?

“What we see businesses generally doing is focusing on the professional label attached to the service, rather than the actual work,” Miller says. 

“If they are directly assisting with sales or acquisitions, handling client money or doing restructures, for example, they are inside the regime.”

‘I never handle more than A$10,000, so AML/CTF does not apply to me.’ Why is this assumption wrong? 

A designated service is a designated service, regardless of its value, Miller says.

What triggers a threshold transaction report?  

Dealing in notes and coins worth A$10,000 or more needs to be reported, even if that amount is broken into lesser amounts – something criminals call ‘structuring’, Miller says.

How can I tell if someone else is influencing a nominee director or shareholder?

Client onboarding should help accountants identify beneficial owners, including who controls the client, Miller says. 

“They should ask questions around shareholder and director identity, for example, to understand how the arrangement works in practice and who is actually making the financial decisions.”  

She adds: “Accountants need to remember that we are not asking them to stop every incidence of money laundering. But they do need to keep an eye out for what doesn’t add up.”

What should I do if I suspect money laundering but lack sufficient grounds to submit a suspicious matter report (SMR)?

“You do need to have more than a gut feeling,” Miller says. “At the same time, you don’t need to be investigating the matter to a standard that would support a police charge or complaint. If in doubt, I advise contacting AUSTRAC Central.” 

What is a ‘keep open notice’ and what are my obligations if I get one?

“A keep open notice is designed to help law enforcement investigate someone without them knowing,” Miller says. 

“It doesn’t force a professional to keep servicing the client if that is not within their risk appetite, while AUSTRAC will provide partial protection for businesses that decide to keep providing service. Receiving a notice also doesn’t mean you have to trigger a suspicious matter report.”