Impact of Federal Government’s Recommended AML/CFT Guidelines On Lawyers and Other Professional Services

The federal government has recently stated that anti-money laundering laws will cover professional services such as attorneys, accountants, and real estate brokers.

After two rounds of discussion about ideas for updating Australia’s anti-money laundering and counter-terrorism financing (AML/CFT) framework, the government finally decided to take this action on 19 July 2024.

According to the revised laws, the suggested reforms would comply with international standards established by the Financial Action Task Force (FATF) to prevent, identify, and disrupt money laundering.

Improving the AML/CFT framework in Australia

An important feature of the reform is the extension of AML/CFT regulation to organizations categorized as “tranche two.”

These bodies, such as accountants, lawyers, real estate agents, and other professional service providers, do not currently follow the AML/CFT framework.

According to the new law, these experts must learn about their clients, evaluate the risks associated with their companies, and implement risk management plans.

Brendan Thomas, CEO at AUSTRAC stated in the same National Press Club address that the current regulations primarily target financial institutions only.

Moreover, he added that the new requirements align with global standards administered by the FATF.

“And those obligations are based on a set of international standards enforced by a group called the Financial Action Task Force, the international body that sets money laundering standards,” Brendan Thomas commented.

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Balancing regulation with legalization:

Law companies are also obligated to implement risk-reducing measures, recognize the risks posed to their organizations, and understand their customers.

Thomas remarked, “It’s really about putting controls around risk and not turning a blind eye to crime that might be in front of you.”

The Law Council of Australia has recommended monitoring risks that can help combat money laundering in Australia.

Juliana Warner further declared that “Legislation needs to be balanced and proportionate to the real risk, targeted and carefully drafted to ensure vital foundations of our legal system, including access to justice and client legal privilege, are not weakened.”

She also pointed out that law firms already follow strict reporting obligations, such as reporting huge amounts of transactions over  $10,000 to AUSTRAC.

Industry Response to New AML Laws

Supporting Warner’s view, a principal lawyer named Justin Wong at Streeton Lawyers added,

“I think it’s wrong to suggest that law practices are largely unregulated and therefore susceptible to money laundering risks. … more than any other industry, law practice trust accounts are highly regulated.”

Moreover, he explained, “Law practices must keep records of depositors and transactions, which are easily available if legally required. Most law practices have strict ‘know your customer’ requirements.”

Wong has also highlighted that different legal fields have different kinds of risks.

Broader Implications of AML Reforms:

The suggested reforms aimed to improve Australia’s defense system against financial crimes by ensuring AML/CFT compliance with international requirements.

This approach added stability to the security of the financial environment. It improved the nation’s standing in the world by assisting in the prevention of financial crimes.

How Does AML Watcher Strengthen AML/CFT Compliance?

AML Watcher offers screening and monitoring tools for tracking suspicious activities in real-time, risk assessment, automated PEP, adverse media, and sanctions checks.

Incorporating AML Watcher in the AML/CFT framework of professional sectors such as legal, real estate, and financial organizations assists in identifying and reducing risks and ensuring enhanced AML/CFT compliance to international standards and protecting their financial activities against financial crimes.