Bodies shed light on referral issues with incoming Tranche 2 AML/CTF reforms

IPA general manager of advocacy and emerging policy, Michael Davison, clarified that merely providing a referral to a client would not be considered providing a designated service under the AML/CTF laws.

However, if they are referring their client to someone else as part of a transaction that they're helping or assisting with, it would be considered a designated service and they would need to meet the AML requirements, he explained.

CA ANZ group executive, policy and international, Geraldine Magarey, similarly said that accountants can still be a reporting entity if they choose to outsource designated services.

"Designation captures assisting, planning and organising activities that advance the final outcome. Reporting entities must ensure that outsourced designated services remain compliant with the AML/CTF regime," said Magarey.

CA ANZ stressed the importance of the AML/CTF framework and said it did not support any suggestion that reporting entities should avoid participation.

"Professions, including the accountancy sector, have a clear responsibility to contribute to the integrity of our AML/CTF regime," said Magarey.

"While decisions about which services a practice chooses to offer are ultimately commercial matters for its owners, those choices must be made with full awareness of the obligations and expectations that accompany participation in the AML/CTF system."

Joe Kaleb, Australianbiz and Make Accounting Great Again founder, said he had heard of accountants who planned to avoid their Tranche 2 AML/CTF compliance by outsourcing designated services to external providers.

Kaleb said further guidance from AUSTRAC and communications from the professional bodies in this area would be helpful for the profession.

He also said that accountants should focus on preparing for the new AML/CTF obligations rather than searching for loopholes.

"AML/CTF obligations aren’t just red tape, they’re essential to protecting your clients, your firm, and the integrity of the profession. Focus on how you’ll comply, including robust risk assessments, staff training, and clear reporting protocols," he said.

Davison said one of the common services that is caught by the new regime is providing a registered office for clients.

"Certainly the majority of our members do that, in which case, they would need to meet the AML-CTF requirements," he said.

"One of the big conversations they're going to have to have with their clients across the board over the next few months is that they may have to start charging for some services they've been providing in the past to cover the cost of registration and meeting the AUSTRAC requirements."