Overview
AUSTRAC in its published regulatory priorities has indicated that it will increase its regulatory activities and surveillance across the following sectors:
Digital currency exchanges and crypto ATMs
Payment platforms
Bullion
Non-bank lenders and financiers.
New examination and investigation powers
AUSTRAC and other regulators are adopting a proactive and interventionist approach which is focussed on the digital economy in response to continuing technological innovation.
Recent amendments to the Anti-Money Laundering and Counter Terrorism Financing Amendment Act 2024 (Cth) (Amendment Act) provide AUSTRAC with new and expansive examination, investigative and enforcement tools which are geared to financial intelligence gathering.
These changes in Schedule 9 powers mark a significant shift in the scope of AUSTRAC’s investigation abilities and strengthens its capacity to supplement its supervision of compliance with AML/CTF regulation and to enhance its role and powers as a financial intelligence gathering unit.
AUSTRAC’s New Powers
The AUSTRAC website summarises the relevant statutory changes as follows:
Power | Nature of Change | Scope |
Section 49 Power to request further information
| Extends existing power under section 49 to request information | Includes information captured under section 46, section 46A and also section 16(1) or (1A) of the repealed Financial Transaction Reports Act 1988. |
Section 49B Notice to obtain information or documents | New power | Power allows the AUSTRAC CEO to issue a written notice compelling a person to give information or produce documents that may assist AUSTRAC with combating:
|
Section 49C Authorisation to obtain information or documents
| New power | This power allows the AUSTRAC CEO to authorise people to voluntarily share information with AUSTRAC. It does not compel the production of information or documents unlike the powers in section 49 and section 49B, section 49C. It gives relief from the Privacy Act 1988 and other laws and any general law obligation of confidence, where people do want to share information. |
Section 167 Information related to compliance or enforcement
| Expands existing power under section 167 to narrow the purpose for which the notice may be issued. | A section 167 notice can be issued to any person who has information or a document that is relevant to the compliance with, or enforcement of offences under:
|
Section 172A Compulsory examinations | New power | Gives AUSTRAC CEO the power to compel people to attend examinations to give evidence or produce documents. |
In summary, the amendments give effect to a range of intelligence gathering capabilities including:
a new examination power requiring a person to appear before an examiner including significant penalties for non-compliance. Notably the privilege against self-incrimination will no longer apply. A person is compelled under examination to provide evidence, documents or answers to AUSTRAC even if it may incriminate them. That is, it may be admissible in proceedings relating to money laundering, terrorism financing, or proliferation financing. However, it cannot be used in criminal proceedings unrelated to those matters.
a new information gathering power to request information and documents from a business, notlimited to a suspicious transaction or report and which otherwise may be relevant for the purposes of fulfilling AUSTRAC’s intelligence functions.
an expanded investigation power to request a person to provide information or documents that are relevant to the compliance and enforcement of the provisions of the AML/CTF regime and additionally the Crimes Act or the Criminal Code to the extent that those statutory provisions relate to the AML CTF Act.
The scope of AUSTRAC’s powers, potentially broaden the focus beyond board and senior management of reporting entities to extend to any individual who may be party to a contravention of the AML/CTF Act.
For example, the information gathering powers under s167 allow AUSTRAC to issue a notice to anyone AUSTRAC reasonably believes to have relevant information and is not confined to reporting entities, its officers and employees.
Further, AUSTRAC has a broader remit to use its powers to gather information and documents in respect of offences under the Crimes Act and Criminal Code to the extent they are related to the AML/CTF Act.
In effect, section 49B gives power to AUSTRAC to issue a notice if it reasonably believes a person has knowledge of information or control of documents that may assist with the performance of functions of the AUSTRAC CEO in:
obtaining or analysing information to support efforts to combat money laundering, terrorism financing, proliferation financing or other serious crimes.
identifying trends, patterns, threats or vulnerabilities associated with money laundering, terrorism financing, proliferation financing or other serious crimes.
Potential Trends
Increased Active Surveillance
AUSTRAC has indicated that it will publish guidance to help businesses navigate these reforms which expand the scope to examine individuals and make information requests. In our view, this aligns AUSTRAC’s investigative and enforcement capabilities consistently with those of ASIC and APRA.
We anticipate increased regulatory surveillance and intervention by AUSTRAC in its target areas such as digital currency exchanges and cryptocurrency, payment platforms and non-bank lending and finance.
If you or your business is subject to an AUSTRAC examination or a notice requesting information, we recommend seeking legal advice immediately given the new complexities and increased penalties.
Focus on non-bank lenders and financiers
In the case of non-bank lenders and financiers, we expect continuing active surveillance by AUSTRAC, following its identification of low reporting and the need to improve identification of high-risk customers. AUSTRAC indicated “the gaps are there but the sector isn’t attuned to the risks.”
For further information, please contact Michael Bracken and Zac Mizgalski of our Financial Services team.
