Why are changes being implemented?
The Federal Attorney-General’s Department (AGD) is responsible for the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 which currently regulates the financial, gambling and bullion sectors.
The AGD is currently reviewing the anti-money laundering and counter-terrorism financing (AML/CTF) regime to ensure it is fit-for-purpose, responds to the evolving threat environment, and meets international standards set by the Financial Action Task Force (FATF), the global financial crime watchdog and standard-setter. If Australia falls behind global standards, it is at risk of being “grey listed” by the FATF, resulting in increased monitoring and economic repercussions.
The Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2024 passed Parliament on 29 November 2024. This will have the effect of extending the regime to the legal profession. It is intended that these laws will commence in 2026.
This below video, presented by Diana Newcombe on 22 October 2024, Chief Executive of the Law Society, provides a clear understanding of the key changes, their impact on existing reporting entities, and the new obligations for businesses entering the AML/CTF regime.
How is the Law Society responding to the changes?
Through representatives on the Law Council of Australia’s dedicated AML/CTF Working Group and law reform submissions to the Law Council of Australia, the Law Society is involved in assisting the Law Council to represent the interests of the national profession in relation to the proposed changes. This includes the maintenance of legal professional privilege, compliance measures which are proportionate and balanced, and ensuring adequate preparation time once legislation is passed.
The Federal Government has taken on board much of the profession’s feedback and the Society expects the proposed reforms to be less burdensome than initially anticipated. The Law Council’s submission to the most recent round of consultation, to which the Society contributed, can be read here. All Law Council submissions can be found here.
The Society is committed to supporting the profession in readiness for the reforms. The AML/CTF Homepage will be continually updated with resources and guidance to assist the profession to familiarise itself with, navigate and respond to the new obligations. Once there is certainty as to the nature and extent of the reforms and their impacts on the profession, CPD sessions will be delivered to ensure firms and practitioners are confident in safeguarding the integrity of their practice.
What can I do now to mitigate my risk of exposure?
Lawyers and firms should familiarise themselves with their current AUSTRAC reporting obligations.
The Law Council of Australia has released Guidance for the legal profession on what it can do now to mitigate risk of exposure to money laundering and terrorism financing. The primary audience is solicitors whose legal practices are associated with transactional work, including the holding, investment and disposal of clients’ funds, because these are the main areas of risk.
It is important to note that the Guidance does not reflect practitioners’ obligations under any anti-money laundering and counter-terrorism financing (AML/CTF) statutory regime.
The Guidance can be accessed under the heading, Law Council of Australia Guidance on the right of this page, or on the Law Council’s website.
What risks should I be aware of?
In late 2023, the Law Council of Australia commissioned an independent expert to analyse the vulnerabilities of the Australian legal profession. The report of the analysis is available to read here.
On 9 July 2024, AUSTRAC released a National Risk Assessment which provides information on Australia’s threat environment and the methods that criminals use to launder proceeds of crime or fund extremist violence.