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3 tips to prepare for Tranche 2 of the AML/CTF Act

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70% of accountants don’t know what they’ll have to do to comply with upcoming AML/CTF regulations. Here’s how you can prepare.

Sponsored Features Infotrack 11 May 2018
— 2 minute read

Almost 70% of accountants don’t know what they’ll have to do to prepare for Tranche 2 of Australia’s AML/CTF Act according to our recent industry survey of almost 500 accounting professionals. With Tranche 2 expected to come into effect by 2019, it’s concerning that a large majority of the profession are unaware of what it will mean. Earlier this year, we sat down with leading industry experts to discuss the implications of Tranche 2 and develop an AML/CTF Guide. Here are three ways you can prepare your business.



1. Understand the basics of Australia’s AML/CTF regime

The AML/CTF Act was introduced in 2006 and currently applies to around 14,000 entities across Australia. The goal of the Act is to prevent money laundering and terrorism financing through mandatory compliance and reporting obligations. Currently only Tranche 1 of the Act has been implemented which extends obligations to those who work in financial businesses, including the financial sector, gambling sector, bullion dealers and remittance service providers.

There has been a lot of pressure on Australia internationally to roll out the next phase of the legislation, and recent scandals involving Commonwealth Bank, TabCorp and the Royal Commission have all highlighted the need for greater regulation across the business landscape.

Tranche 2 of the AML/CTF Act is expected to come in to place by 2019 and will extend compliance obligations to over 100,000 entities including accountants and other professionals who deal with large value transactions.


2. Conduct a risk assessment of your business 

With Tranche 2 on the horizon, it’s important to identify risk factors to your business and understand how vulnerable you are to money laundering and terrorism financing. In order to identify potential risks, you need to conduct a risk assessment of your business which includes reviewing your current procedures and customers, as well as your due diligence measures. How do you currently verify new clients? How do you gauge whether a transaction is suspicious? Do you regularly review your procedures and risk levels? These are important questions to ask. There are a number of third party providers who specialise in AML/CTF risk assessments that can help you with this process.


3. Develop a compliance program

There’s no one-size-fits-all compliance program; you need to take a risk-based approach to developing a program since you are best placed to identify and assess the risks to your business based on your customers, products and services.

Generally, a solid compliance program will require:

  • Senior management oversight and appointment of a compliance officer
  • An employee due diligence program and regular employee training
  • A transaction monitoring program to flag threshold transactions and suspicious matters
  • A customer due diligence program including verification of identity (VOI) and know your customer (KYC) components
  • A record keeping process to keep track of all transactions and checks

It’s important that you start thinking about your compliance procedures now to ensure you’re in a good position when the legislation comes into place and not scrambling to implement a program last minute. Once Tranche 2 comes into effect, failure to comply can lead to fines and even imprisonment. It’s not just about compliance though, if you fail to protect your business against these types of risks there are other potential consequences including damage to your reputation, lost business opportunities and decreased employee morale.  

Click here to download The Definitive Guide to Complying with AML/CTF

InfoTrack is an Australian technology company that provides easy-to-use searches and services for accounting professionals. We connect you to the information and tools you need all under one roof and integrate into your workflow to ensure consistency and efficiency across your systems.  We help you save time by streamlining your searching, compliance and due diligence processes. We understand that the industry is evolving and you’re facing increasing pressure to differentiate your services and meet growing client demands.


3 tips to prepare for Tranche 2 of the AML/CTF Act
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