What does AML Tranche 2 mean for real estate firms in Australia?
Tranche 2 is expected to have a significant impact on the real estate sector in Australia. This article takes a look at what the changes mean for businesses and investors, from new regulations to increased economic confidence.
Legislating AML/CTF Obligations for Real Estate Firms
This change to legislation seeks to strengthen existing measures and introduce new obligations for entities including Real Estate Agents (REAs) in countering the potential of money laundering and terrorist financing. This includes,
- Introducing new compliance requirements, risk assessments, customer due diligence procedures and record keeping for REAs in order to prevent misuse of the financial system for money laundering and terrorism financing purposes.
- REAs will be required to develop an Anti-Money Laundering/Counter-Terrorism Financing (AML/CTF) program, which may involve developing training programs, policies, internal controls and risk management practices.
- The introduction of this legislation will be been designed to ensure that businesses dealing with the purchase or sale of real estate are taking necessary steps to reduce their exposure to potential risks associated with criminal activity.
What Might ‘Tranche 2’ Reforms Look Like in Australia?
Peak Designated Non-Financial Businesses and Professions (DNFBP) organisations may be a key element in the process of creating legislation
If the Financial Action Task Force (FATF) recommendations are followed, we predict that Tranche 2 reforms will most likely:
- Extend the current AML/CTF legislation to the categories of DNFBPs mentioned previously in this article (where not already in place)
- Establish requirements for these businesses and professions to recognise, control, and manage their associated AML/CTF risks.
- Establish a scheme that is either activity-based or risk-based, as has been done in New Zealand and the UK, respectively, to provide a reporting exemption on the basis of LPP.
Momenta’s Compliance Solutions for Vigilant Real Estate Firms
Organisations like Momenta Group are tackling the actual issues in Australia’s AML/CFT debate based on more than 30 years of expertise working with small and large organisations. A readily applicable solution to common compliance worries is a well-trained contingent workforce. Momenta provides a dependable workforce at a reasonable price for both large and small organisations. We provide qualified industry experts with in-depth knowledge about the continuously changing requirements of various sectors.
Using the expertise of contingent resourcing can offer 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 to regulators place further pressure on additional participants to strengthen current compliance systems and controls.
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.
(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.