Penalties increase for businesses that fail to enrol with AUSTRAC

Summary:

The AML/CTF Act has recently been amended, the effect of which is a significant increase in the penalties if your business providing designated services is not enrolled within 28 days of commencing the provision of these services. The change results in businesses accruing daily penalties of upto $3,756, or $18,780 for bodies corporate, from 9 November 2023.

Businesses should review their enrollment status and if not enrolled, take immediate action before the above date to mitigate the risk of high penalties.

Details:

The products and services under the AML/CTF legislation's purview are referred to as 'designated services'. If your business offers these designated services, you have an obligation to enrol your business with AUSTRAC, within 28 days of commencing the provision of designated services for the first time. Failing to meet this deadline exposes you to regulatory action and penalties.

The updated AML/CTF regulations, effective from 9 November 2023, changes the method of calculating penalties for failure to enrol your business with AUSTRAC. Under the new methodology, penalties accrue daily until you either enrol or cease providing designated services. The penalty is upto 12 penalty units, or up to 60 penalty units for bodies corporate, for each day of failure to enrol. The current penalty amount for each unit is $313. This translates to a daily penalty of upto $3,756, or $18,780 for bodies corporate.

Do note that the remittance service and digital currency exchange service providers require enrollment and registration, and AUSTRAC’s registration confirmation must be received before commencing providing these services.

What you should do to ensure enrollment and avoiding enhanced penalties?

- Review whether you provide designated services and that you are enrolled.

- If not enrolled, take steps to enrol asap before the change takes effect to avoid high penalties.

- To enrol, you will need to complete and submit the AUSTRAC Business Profile Form

(ABPF) on AUSTRAC’s website.

Change in designated services of a business already enrolled with AUSTRAC

As an aside, if a business providing designated services is already enrolled, and there is a change in its designated services subsequently (eg: introducing new designated services or discontinuing some), this change will trigger your obligation to update your enrollment details. This is a different obligation than the one discussed above. In such case, the business has to lodge changes by updating its ABPF on AUSTRAC online. Legislation requires any change of particulars on ABPF has to be advised within 14 days of the change arising.

Regulatory References:

- AUSTRAC's update on the aforementioned issue: click here

- AML/CTF Act 2006 and AML/CTF Rules Instrument 2007 - click here

- Crimes and Other Legislation Amendment (Omnibus) Act 2023 – click here

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Compliense Advisors is an AML and FinCrime compliance and risk management advisory services provider. We provide solutions aligned with your business profile to minimise and mitigate risks associated with money laundering and finCrime activities, and achieve compliance.

Our experience include Austrac registration/ enrollment; setting up, implementing, uplifting AML program; risk assessment; preparing and documenting procedures and framework; and a range of other matters.

This article provides overview of the above change in the AML/CTF regulations. The article is for general informational purposes only. It is not to be relied on as full provisions of law. You should carefully evaluate your own circumstances, and seek professional advice for your specific needs. You are responsible for your compliance obligations, and for any action taken or omitted. We are not a law firm, and do not provide legal advice.