AUSTRAC has published an information paper to provide reporting entities and other stakeholders with insights into how AUSTRAC views its regulatory and enforcement role and financial intelligence functions.
Austrac’s objective is to ensure that ML/TF risks are effectively managed by reporting entities.
It says that it will apply a forceful and credible deterrent to serious and systemic non-compliance to maintain public confidence in Australia’s AML/CTF regulatory framework and financial system, prevent future non-compliance, and ensure that businesses which meet their AML/CTF obligations are not disadvantaged.
Because the consequences of poor AML/CTF systems and controls can be very serious, AUSTRAC may take enforcement action against a reporting entity for serious and/or systemic breaches of the AML/CTF Act, particularly where ML/TF risk exposure is high and AUSTRAC is not confident that the entity is meeting its obligations or managing its risks effectively.
When considering whether enforcement action is the most appropriate response to identified non-compliance, AUSTRAC says it considers the circumstances of each case including:
• The nature of the non-compliance, such as the type and the seriousness of the breach and whether it appears to be a systemic or isolated/one-off breach.
• The ML/TF risk associated with the reporting entity, including whether the entity’s non-compliance has exposed itself and the financial system more broadly to the significant risk of criminal abuse.
• The reporting entity’s willingness and effort to comply, i.e. its compliance history, its level of engagement with AUSTRAC and its demonstrated efforts to identify, mitigate and manage its ML/TF risks.
• Whether the non-compliance was voluntarily reported by the reporting entity. Voluntary disclosure does not preclude formal enforcement action but is a factor we will consider. It may also be relevant to penalty if we do take formal action.
• The likely consequences of the enforcement action, for example, the expected impact (remediation and deterrence) on both the individual entity involved and the broader reporting entity population.
