Impacts of AML Tranche 2 on trusts in Australia

A key component of the Anti-Money Laundering (AML) and Counter-Terrorism Financing (CFT) Act in Australia is the implementation of Tranche 2 legislation. This tranche is set to have a significant  impact on trusts in Australia, and it’s important to understand the changes it will bring. In this insight, we will look at the likely and expected impact of AML Tranche 2 on trusts in Australia.

Understanding AML Tranche 2

AML Tranche 2 refers to the second stage of Anti-Money Laundering (AML) regulations, which includes a set of measures to prevent and detect money laundering activities. These measures are being  implemented to ensure financial transactions are compliant with relevant legal requirements and international standards. Examples of measures included in Tranche 2 include enhanced customer due diligence, record keeping, and risk management policies.

What are the key changes?

This AML Tranche 2 seeks to provide significant changes to the existing Anti-Money Laundering (AML) regulations and guidelines, including enhanced due diligence and customer risk profiling requirements, expanded know your customer (KYC) requirements, and greater monitoring of transactions and customers. It also aims to increase the transparency of international transactions and reduce the anonymity associated with virtual currencies such as Bitcoin. Finally, this legislation provides a more effective enforcement mechanism by giving regulators greater powers in pursuing investigations and prosecuting violations of AML regulations.

The Anti-Money Laundering (AML) Tranche 2 includes the following changes:

• Strengthening due diligence measures to detect suspicious activities related to money laundering or terrorist financing
• Enhancing transaction monitoring systems to ensure the identification and reporting of suspicious transactions
• Increasing staff training to enhance understanding of AML regulations
• Improving customer identification and authentication procedures
• Introducing new record-keeping requirements for higher risk customers

What are the impacts of these changes?

The changes to AML Tranche 2  will have several impacts. Firstly, it will result in an increased burden of compliance on businesses, as they will be expected to adhere to a more stringent set of rules and regulations when managing customer data and financial transactions. Secondly, these changes may lead to higher costs for businesses due to the additional time and resources that may be required to meet compliance requirements. Third, the enhanced level of transparency associated with the new AML Tranche 2 could provide regulators with a clearer picture of potential risks posed by companies operating within certain sectors or jurisdictions. Finally, stricter monitoring procedures may help ensure that customer funds are safeguarded from financial crime and any unlawful activities.

What do you need to do to comply?

All applicable anti-money laundering (AML) laws and regulations should be complied with. The following steps must be taken to do this:

Establish a comprehensive AML policy that defines your approach to preventing money laundering.

1. Train staff on AML issues and our company’s policies for preventing money laundering.
2. Monitor customer activity for suspicious behaviour and investigate any possible violations of AML law.
3. Maintain records of customer activity, transactions, and other data related to our AML efforts.
4. Screen customers against sanctioned party lists in order to identify any prohibited relationships or activities.
5. Report any suspected cases of money laundering to the relevant financial authorities and comply with their requests for information or assistance in investigations.

Staying secure through Momenta’s advisory

AML/CFT compliance is already mandatory for multiple industry sectors in Australia and no business can risk its future by avoiding key compliance regulations as these increase to cover additional industries.  Momenta have worked with multiple companies across industries globally in successfully building their compliance  workforce. Momenta can  help if your business has been impacted by additional regulatory or compliance pressures and needs additional staffing support in your claims handling and risk/compliance departments. industries.

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 increase the  pressure on financial service participants to strengthen current compliance systems and controls.

Organisations like Momenta Group are 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 and specialist  workforce. Momenta is ready to provide a small or large contingent or permanent team to companies regardless of size. We offer skilled and experienced industry experts with in-depth knowledge about the continuously changing requirements of the compliance  sector.

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

 

Works cited

• Attorney General Department, Australian Government. Consultation Paper Trust and Company Service Providers: A Model for Regulation under Australia’s Anti-Money Laundering and Counter-Terrorism Financing Regime 2. 2016.

• Cameron, Sarah. “AML in Australia: What You Need to Know.” ComplyAdvantage, 23 Sept. 2022, complyadvantage.com/insights/aml-australia/. Accessed 6 Jan. 2023.

• FATF. “Money Laundering Using Trust and Company Service Providers.” Www.fatf-Gafi.org, www.fatf-gafi.org/documents/documents/moneylaunderingusingtrustandcompanyserviceproviders.html. Accessed 6 Jan. 2023.