Preparing Your Accounting Practice for AML/CFT Tranche 2

Accounting firms are a   principal targets of AML/CFT Tranche 2, and not all understand 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 Australiagoverns how reporting companies handle the risks of money laundering and terrorism financing, and was passed more than ten years ago.

AML/CTF compliance is only now  applicable for circa 14,000 Reporting Entities in Australia. However, expected and pending revisions to the Act (Tranche 2)  will significantly broaden  the area of compliance and have a material  impact on attorneys, conveyancers, real estate agents, accountants, and other professional services providers as pressure to align Australia  with other global Financial Action Task Force (FATF) jurisdictions grows.

. New Zealand adopted similar legislation in mid-2018, moving ahead of Australia’s regulatory stance for legal and accounting professionals.The proposed legislation for AML Tranche 2 in Australia is likely to be published and to  come into effect  during 2023.

Lag in implementation

The delay in AML Tranche 2 legislation is one of the major reasons for why Australia  has become  a more alluring market for laundering money and terrorism funding. The ‘catch up’ from the delay in Australia’s adoption of Tranche 2 law  will 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, creating the risk of  de-banking of sizable accounting and/or legal clients in  a step towards preventing risk contagion. The business environment for Australian lawyers and accountants  may be severely disrupted.

Embracing regulation with the contingent workforce

Australia’s lack of legislative reform has created a substantial compliance gap, and technology solutions alone cannot assure a complete compliance with the  future changes to rules and regulations.

Contingent services offer an actual risk reduction and  enhanced client due diligence capabilities (OCDD). Industry professionals need to safeguard themselves against AML/CTF vulnerabilities, and start making early preparations for what will be a significant industry transformation  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 team. Companies are adapting their traditional working models to be more agile, flexible and remain competitive in the market. Finding the right talent is a great challenge in this market. . Momenta Group is building the global workforce of the future.

Providing economical contingent workforce for risk and regulatory compliance is our key focus . As you will need to make your business compliant with AML/CFT regulations,  Momenta is able to facilitate this.

Using the expertise of contingent resourcing can offer Professional firms the breathing space  to resolve  issues their AML controls may have. Establishing  the right teams to ensure any gaps are found will be key for firms  as regulators increase the  pressure on  Professional services  firms to strengthen current compliance systems and controls.

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

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:

• Coburn, Tony, and Jonathon Ferraro. “Latest Thinking.” Herbert Smith Freehills | Global Law Firm, 2 May 2022, herbertsmithfreehills.com/latest-thinking/scope-of-australia. Accessed 10 Dec. 2022.

• (2015). Mutual Evaluation Report Australia 2015. FATF.

• Law Council of Australia. (2017). Response to Consultation Paper: Legal practitioners and conveyancers: a model for regulation under Australia’s anti-money laundering and counterterrorism financing regime. Law Council of Australia.

• Legal and Constitutional Affairs References Committee. (2022). The adequacy and efficacy of Australia’s anti-money laundering and counterterrorism financing (AML/CTF) regime. Legal and Constitutional Affairs References Committee.

• “Don’t Get Blindsided by New Regulations.” 2017. Accessed 6 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.

• Moody’s Analytics. “KYC Insights / Blog / the Tranche 2 Anti-Money Laundering Reforms in Australia.” Kyc.moodys.io, 5 Apr. 2022, kyc.moodys.io/content-highlights-section/the-tranche-2-anti-money-laundering-reforms-in-australia. Accessed 10 Nov. 2022.

• Ross, Anna, and Tegan Harrington. “AML and CTF Gatekeeper Reform: What Could “Tranche 2” Reforms Look like in Australia?” Corrs Chambers Westgarth, 27 June 2022, corrs.com.au/insights/aml-and-ctf-gatekeeper-reform-what-could-tranche-2-reforms-look-like-in-australia. Accessed 3 Jan. 2023.

• Ross, A., Yates, D., Harrington, T. and Santos, B.D., 2022. Money laundering reform recommendations for ‘gatekeeper professions’. Governance Directions, 74(4), pp.504-507.