Impacts of AML Tranche 2 on accounting practices

Accounting firms are one of the main targets of AML/CFT Tranche 2 and not all firms understand the likely impact of the revised AML/CFT regulations. What do accounting firms need to do to avoid problems with regulators? This insight highlights ways accounting practices can prepare for AML/CFT Tranche 2.

Background of AML/CFT Tranche 2

The Anti-Money Laundering and Counter-Terrorism Financing Act of 2006 in Australia, which governs how reporting companies handle the risks of money laundering and terrorism financing, was passed more than ten years ago. In 2023, this is likely to be substantially broadened.

AML/CTF compliance is only now required by 14,000 Reporting Entities in Australia. However, revisions to the Act (Tranche 2) would widen the area of compliance and include   attorneys, conveyancers, real estate agents, accountants, and other professional services providers as pressure to acclimatise Australia to other Financial Action Task Force (FATF) jurisdictions grows.

With attorneys required to conform as of 1 July 2018 and accountants as of 1 October 2018, New Zealand has overtaken Australia. The proposed legislation for AML Tranche 2 in Australia is to be published and  may come into effect as early as the middle of 2023.

Lag in implementation

Given that Australia has become   an attractive market for laundering money and terrorism funding, the delay until now of Australia’s adoption of Tranche 2 law may have consequences for professional industries both locally and internationally.

Financial institutions will start investigating the Know Your Customer (KYC) policies followed by their professional services customers up until the start of Tranche 2 to see if the threat they comprise is too great, potentially leading to the de-banking of sizable accounting and/or legal clients to prevent risk contagion. The business environment for Australian attorneys and accountants could be severely disrupted. Multiple examples exist internationally of the consequences of failing to comply with AML Tranche 2 legislation.

Embracing regulation with the contingent workforce

Australia’s historical lack of legislative reform has created a substantial compliance gap which must be closed, and  technology solutions by themselves cannot ensure a complete compliance with the latest rules and regulations.

When combined with the skillsets of contingent or permanent  specialists offer an actual risk reduction and  client due diligence capabilities (OCDD). Professionals need to safeguard their companies and themselves against AML/CTF vulnerabilities and start  preparing for what will be a significant industry transformation i when Tranche 2 is enacted in Australia.

Significance of contingent workforce by Momenta Group

Your compliance teams can work better with the help of our contingent and permanent specialists.. Companies are adapting their traditional working models to be more agile, flexible and remain competitive in the market. This has been further exacerbated by the Covid 19 implications and shift to alternate working models such as Work From Home. Finding the right talent is a great challenge  regardless of industry or level of seniority. Momenta Group is building the global workforce of the future and the firm is led by a team of seasoned professionals. Providing an economical contingent and permanent workforce for compliance is our absolute focus. If you want to make your business compliant with AML/CFT regulations, we can  facilitate this.

Using the expertise of specialist  resourcing can offer many firms breathing space in terms of resolving any issues their AML controls may have. Setting up the right teams to ensure any gaps are found will be key for firms this year as regulators place more pressure on financial service participants to strengthen current compliance systems and controls.

Momenta Group  is addressing genuine issues in AML/CFT based on our 30+ years of experience collaborating with small and large companies. The solution to common compliance concerns is an experienced specialist  workforce. Momenta is ready to provide a small or large contingent team to companies regardless of size. We offer skilled and experienced industry experts with in-depth knowledge about the continuously changing requirements of various sectors.

If your business has been impacted by additional regulatory or compliance pressures and needs additional staffing support in your compliance departments, speak to us to see how we can help in supplying experienced and effective members to your team.

 

 

Works Cited

• Committee, Senate Legal and Constitutional Affairs References. “The Adequacy and Efficacy of Australia’s Anti-Money Laundering and Counterterrorism Financing (AML/CTF) Regime.” Apo.org.au, 30 Mar. 2022, apo.org.au/node/317204#:~:text=Report-. Accessed 8 Dec. 2022.

• “3 Tips to Prepare for Tranche 2 of the AML/CTF Act.” Www.accountantsdaily.com.au, 11 May 2018, www.accountantsdaily.com.au/business/11658-3-tips-to-prepare-for-tranche-2-of-the-aml-ctf-act. Accessed 7 Dec. 2022.

• Momenta Group. “What Will AML Tranche 2 Mean for Your Business.” Momenta, 6 Oct. 2022, momentagroup.com/what-will-aml-tranche-2-mean-for-your-business/. Accessed 3 Jan. 2023.

• Don’t Get Blindsided by New Regulations What “Tranche Two” Means for Your Business. 1 June 2017. Accessed 8 Dec. 2022