Changes to AML Requirements

The Anti-Money Laundering and Countering Financing of Terrorism Amendment Bill 2024 is currently before parliament. There is no definite commencement date yet.

The Bill if passed will amend the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (the AML/CTF Act) to:

• clarify existing obligations and give greater certainty about compliance requirements;
• strengthen enforcement provisions;
• ease compliance obligations to some extent; and
• reduce compliance costs.

Of most importance to law firms are the following changes under the Bill:

1. The requirements to conduct customer due diligence will be relaxed for low-risk trusts, such as small family trusts. Currently, the same enhanced customer due diligence requirements apply to all trusts, regardless of the risk. Standard customer due diligence measures will be permitted for low-risk trusts.
2. The reasonable steps requirement in the AML/CFT Act, which requires firms to have appropriate risk management systems in place to determine whether a customer or beneficial owner is a foreign politically exposed person, will be clarified so that the proactive steps required are dependent on the level of risk, reducing compliance costs for firms less likely to encounter such a customer.
3. Compliance officers will be required to be senior managers or report to senior managers, with the intention that businesses can adopt a more flexible, risk-based approach to deciding who is best placed to be an AML/CFT compliance officer.
4. The definition of beneficial owner will be updated to include a person with ultimate ownership or control of the customer, and to exclude the customers of a customer.
5. Section 14 of the AML/CTF Act will be amended to clarify that a reporting entity must conduct standard due diligence if a person who is not an existing customer seeks to conduct an occasional transaction or activity through the reporting entity; however, an amendment to s 18 provides that simplified due diligence may apply in that case.
6. Penalties for civil liability acts under the AML/CTF Act will include a reporting entity failing to:

• • report as required under the Act;
  • undertake or review a risk assessment as required under the Act; and
  • prepare or provide an annual report as required under the Act.

The commentary and related precedents in all By Lawyers guides will be updated in line with these amendments when they commence.