Regtech disruptor advises businesses to keep anti-money laundering on the agenda ahead of tighter regulations for the real estate, accounting and law industries.

In what has been a seemingly slow paced effort by lawmakers, a revised version of AML/CTF (Anti Money Laundering – Counter Terrorism Financing) laws is expected to be tabled at Parliament in the new year.

The Financial Action Task Force (FATF), which plays a key role in setting global standards and implementing legal measures to prevent financial crime, reviewed Australia’s implementation and effectiveness of measures to combat money laundering and terrorist financing in 2015.

It made 84 recommendations including one to regulate Designated Non-Financial Businesses and Professions (DNFBPs) such as real estate agents, accountants and lawyers, under AML-CTF. This is because these professions are at high risk of being manipulated or coerced into facilitating the proceeds of crimes.

We’re still waiting

Seven years later, this has still not been implemented despite the fact that Labor ran on the policy in its 2019 Federal Election campaign. In fact, Australia’s current standards sit far behind the rest of the developed world with inaction making the country one of three worldwide, alongside Haiti and Madagascar, that have not moved to implement these tighter regulations.

Ultimately, further inaction could result in Australia being placed on FATF’s Grey List which includes countries that are unable to protect against money laundering and terrorist financing. A report by The International Monetary Fund estimates that ‘capital inflows decline on average by 7.6 percent of GDP’ when on the grey-list.

Country Manager of anti-money laundering SaaS provider First AML Andrew Jackson puts it frankly, “To neglect to tighten anti money laundering laws is to allow billions of dollars each year handled by gatekeepers to potentially fund terrorism, the trafficking of humans, drugs and child exploitation.”

“The culture around money laundering in Australia has resulted in it becoming a sort of money laundering haven, a very easy target. This is an industry-wide issue that impacts not just businesses but also the economy and everyday Australians.”

Not too late to act

It is expected that before Australia is greylisted, the Federal government will adhere to FATF’s recommendations. So what does this mean for Australian businesses and who will be most affected?

Stricter anti money laundering regulations will be put on real estate agents, lawyers and accountants and others placing them under the  microscope. When the government’s attention is eventually turned to enforcing regulations, business directors may also be on the firing line; finally placing a level of accountability on the individuals responsible for the actions of an entire firm.

In order to stay ahead of the curve, many organisations are including financial crime compliance in their ESG frameworks and reporting in order to effectively monitor and mitigate risks.

Perhaps one positive spin on Australia’s snail pace approach to AML regulation is that Australian businesses can look to counterparts from New Zealand, The United Kingdom or Singapore for implementation advice.

Here come the numbers

Recent research conducted by First AML found that 90% of Australian lawyers and accountants are more concerned about money laundering since discussions around AML/CTF expansions have increased.

It’s not all about regulations, though. The company’s data found that 100% of Australian individuals working in the banking and finance industry said AML has risen up the company agenda due to their company’s increased focus on customer transparency and ethical customer onboarding.

95% of respondents admitted that a money laundering incident would impact their company’s ability to attract new clients and retain existing ones.

“What this shows us is that regardless of progress in Parliament, it’s crucial for businesses to take internal measures to ensure compliance when crunch time occurs,” said Jackson.

“Investing in new technologies that can detect and monitor financial crime is a great way to establish mechanisms that ensure the integrity of business processes. Consider enhancing your financial crime policies and procedures. Finally, establishing engagement with AUSTRAC and international regulators will ensure accountability is sustained, effectively safeguarding a business’ reputation amongst its stakeholders.”

This article was developed in collaboration with First AML, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

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