AUSTRAC Enforcement Actions
The Australian Transaction Reports and Analysis Centre (AUSTRAC) issued two enforcement actions this past week.
Mercedes Benz Financial Services
On 15 May, AUSTRAC ordered the appointment of an external auditor to Mercedes Benz Financial Services Australia after raising concerns about their compliance with the Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) Act.
Among the concerns were the following serious issues:
assuming most customers were low risk
lack of systems to identify and escalate suspicious matters
inadequate transaction monitoring
AUSTRAC considers that the non-bank lending sector is vulnerable to money launderers and organised criminals. Yet, almost 90% of non-bank lenders and financiers did not report a single suspicious matter (SMR) to AUSTRAC in 2024. Moreover, 89% of businesses in this sector said they had no high-risk customers at all.
“This needs to change, and it needs to change quickly, or more businesses will find themselves in Mercedes Benz’s position. We expect businesses to improve their identification of high risk customers and to increase their reporting. We will be watching this very closely.”
Cointree Pty Ltd
On 16 May, AUSTRAC issued infringement notices of $75,120 to digital currency exchange provider Cointree Pty Ltd for the alleged failure to file SMRs to AUSTRAC on time. The digital currency exchange sector is vulnerable to money laundering due to its speed, global reach, pseudonymity and ability to facilitate funds flows to and from foreign jurisdictions with low visibility.
SMR reporting is a key aspect of AML/CTF compliance as it forms the backbone of AUSTRAC financial intelligence function. AUSTRAC commented that the fact that reporting entities do not report SMRs on time is a symptom that their AML/CTF systems and controls are not sufficient.
Moreover, AUSTRAC commented that Cointree has fully co-operated in self-disclosing the breaches and is taking proactive steps to remediate its systems and controls to ensure future compliance.
“Without these steps, Cointree may have been subject to a much more serious regulatory response.”
Internal detection
Ideally, you would want to detect any non-compliance issues internally, so that they can be addressed before a supervisory visit or investigation. Ways to detect potential aspects of AML/CTF non-compliance include:
Independent AML/CTF reviews;
Internal assurance exercise, conducted by your AML/CTF compliance team; or
Assurance review conducted by an external provider.
Get in touch if you have any questions on how we can help you detect any potential non-compliance within your AML/CTF regime. We can help you with your independent reviews, guide you through an internal assurance exercise, or we can conduct the assurance review for you and issue you with a report.
