How ready are you?
Under new laws, accountants, real estate agents, lawyers/conveyancers and high-value dealers will be required to join the fight against money laundering and terrorism financing. Reforms are likely to be introduced in early 2025 and take effect by mid-2025, so businesses should begin preparing and ensuring their processes are ready.
Why is Tranche 2 coming into effect now?
Global concerns about money laundering and the financing of terrorism are rising. Financial crime is increasingly seen as a major issue, with annual costs estimated between US$1.6 trillion and US$3.1 trillion. In response to this growing threat, the Australian Government passed the Anti-Money Laundering and Counter-Terrorism Financing Act in 2006. The legislation targeted high-risk sectors such as banks, financial institutions, cash carriers, bullion dealers, casinos, remittance services, and stored value card providers.
However, the laws left loopholes that allowed criminal activity to persist, particularly by excluding certain "high-risk" professions outside Australia's traditional financial system, including lawyers, accountants, real estate agents, dealers in high-value goods, and trust and company service providers. These groups, collectively known as designated non-financial businesses and professions (DNFBPs), or "tranche two" entities, are often referred to as "gatekeepers."
Upcoming legislation aims to close these gaps by requiring tranche two entities to adopt the same measures as tranche one businesses to combat money laundering and terrorism financing. This will involve implementing risk management programs, conducting customer due diligence, monitoring transactions for suspicious activity, and registering with AUSTRAC (Australian Transaction Reports and Analysis Centre).
As AML/CTF obligations expand to more industries, business owners must adapt their processes to ensure compliance. Following these rules isn't just a legal obligation—it also helps prevent financial crime and safeguard your business's reputation.
Businesses impacted by the Act must register with AUSTRAC (Australian Transaction Reports and Analysis Centre), the government agency tasked with preventing financial crime.
Once registered, your business becomes a ‘reporting entity’ and must adhere to the Act’s requirements. These include:
So how will tranche 2 affect me?
Select your profession below for a deeper dive into how Trache 2 will affect your business.
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Frequently Asked Questions
What are my AUSTRAC KYC & AML Obligations?
AUSTRAC requires financial advisors and their Licensees to perform customer identification (verification) and check for Money Laundering (ML) alerts before providing any financial advisory services.
What is Know Your Customer (KYC)?
KYC (Know Your Customer) compliance in financial planning involves a set of verification processes that include client ID verification, as well as AML checks. These procedures ensure that your firm or Licensee meets legal and regulatory requirements. Failure to adhere to these requirements may result in fines and license revocation.
What is Anti-Money Laundering (AML)?
Anti-Money Laundering (AML) screening is a process used by financial services and other regulated industries to prevent and detect illegal activities, specifically money laundering. AML screening involves checking the background of customers to ensure they are not involved in these activities or connected to any known criminals or entities on international watchlists.
How do you protect my clients data?
All data uploaded and processed by us is encrypted using RDS-AES 256bit encryption, and fragmented across multiple server instances. We also use continuous monitoring technologies, and frequently test for potential vulnerabilities. Put simply, you're in safe hands.
Does Personr integrate into my CRM?
Through Zapier and Microsoft PowerAutomate, you can integrate Personr into 5,000+ platforms, including financial planning CRMs like Fin365. We're working hard to bring you even more integrations - let us know if there's one you'd like to see.
What is AML screening?
AML (anti-money laundering) screening checks customers using multiple types of sources (sanctions, PEPs lists, etc.) to check if they’re on sanctions lists, involved in money laundering/financial crime, and so on. To optimize the process, companies use AML user screening software which decreases manual workload and speeds up user checks.
What is sanction list and watchlist screening?
Sanction list and watchlist screening is the process of checking individuals and entities against various databases, such as sanctions lists, politically exposed persons (PEP) lists, terrorist watchlists, and more. This helps prevent individuals or entities that may be involved in money laundering, terrorist financing, or other illegal activities from becoming customers. To do this, businesses often use specialised AML screening software.
Why do you need to perform sanctions screening?
Businesses are required to perform sanction screening by AML regulations. The process involves checking customers through sanctions databases allows businesses to prevent financial crimes by detecting persons who are high-risk or compromised. To automate this process, companies use sanction screening software that allows them to save time and get notified of updates to sanction lists.
Who should be screened against sanctions lists?
In order to comply with regulations and mitigate risks, businesses need to screen customers, business partners, and any other relevant parties against sanctions lists. This helps avoid potential involvement with individuals or entities involved in prohibited or restricted activities. Sanction checking also allows to ensure a safe and compliant business environment.
Is PEP screening mandatory?
PEP screening is not universally mandatory, but is often required by regulatory bodies in many sectors. Screening politically exposed persons (PEPs) helps identify individuals who hold influential or prominent public positions, reducing the risks associated with corruption, bribery, and money laundering. Specific requirements may vary depending on the jurisdiction and industry in which your company operates. To meet these requirements, companies use automated PEP screening solutions.