23rd November 2017

Money laundering is a problem that affects Australians and businesses worldwide. Recently this issue has been brought into focus with Australia’s new AML legislation. But how is money laundering defined? For those who don’t know, it happens when criminals try to hide the source of money they gained via illegal means. These means can be tax evasion, drug trafficking, theft or any range of illegal activities that generate money. Once the criminals acquire the money, they will attempt to run it through a legitimate business to 'clean' the 'dirty' money.

What do accountants need to know about anti-money laundering legislation?

Generally speaking, the new law changes are created to give the public confidence in Australia’s financial systems.  Once the laws are implemented, they will make it much more difficult for criminals to generate a profit from illegal activities. What’s more, the AML laws will help Australia keep its reputation as a nation that does not tolerate corruption, and will provide a positive image for the country as a good destination to conduct business.

The AML law is being implemented in two phases. While many accountants were exempt from Phase 1, which has been in effect for a number of years, these same accountants may no longer be exempt from the Phase 2.

How AML affects accountants

When it comes to money laundering, accountants can be easy targets for criminals. Criminals can exploit accountants, which is why the AML legislation will eventually affect many of those in this profession. While New Zealand accountants will need to be ready to comply with the law by 1st October 2018, Australian accountants have a bit more time to prepare. The law will not affect more accountants until 2019.

Which accountants will be affected? Those accountants who manage client funds or accounts, engage in or give instructions for various transactions (including buying, selling or transferring) on behalf of a client, act as a formation agent of legal arrangements or persons, as well as perform other duties. 

To comply with Australia’s AML act, accountants will have to identify a new customer before providing a designated service. In addition to this, accountants must set up an AML/CTF programme that does the following:

·         Assesses the risk of performing accounting for a client, considering the customer on an individual basis

·         Conducts employee due diligence

·         Assigns a nominated AML/CTF Compliance Officer

·         Utilises an AML/CTF risk awareness training programme

·         Submits an annual compliance report

·         Reports any suspicious matters to the supervisor

·         Conducts an appropriate customer identification process

·         Engages an independent party to perform regular independent reviews of their AML/CTF programme

·         And more

This article provides a general overview of some of the new challenges accountants face as part of the of the AML law changes. However, as the law is extensive, this article is not comprehensive. If you would like to know more, Accountancy Insurance recommends you to reference this helpful site as well as the Australian government’s site.





         Chartered Accountants

Tax Institure