New AUSTRAC investigation and examination powers take effect

07 January 2025

AUSTRAC's new investigative and information gathering powers under the Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2024 (Cth) (the AML/CTF Act) come into effect on 7 January 2025. These changes mark a significant shift, providing AUSTRAC with stronger enforcement tools and putting it on an even investigative footing with ASIC and APRA. They also come in as the number of businesses to be regulated by AUSTRAC increases from 17,000 to nearly 100,000.

The wider regulatory context

Australia’s comprehensive updates to its money laundering and terrorism financing (ML/TF) laws reflect a global appetite for stronger AML/CTF accountability.

While Australia has previously been assessed as technically compliant with FATF Recommendation 29, which addresses the establishment and role of a ‘financial intelligence unit’, the enhancement of AUSTRAC’s audit, information-gathering and enforcement powers has been recognised as an area for improvement since at least 2016.

The amendments to Australia’s AML/CTF laws through the AML/CTF Act strengthen AUSTRAC’s ability to undertake its dual function as Australia’s AML/CTF regulator and financial intelligence unit efficiently and properly, in line with global best practice.

Amendments to AUSTRAC powers

The AML/CTF Act has expanded AUSTRAC’s powers in the following ways:

A new examination power, which enables AUSTRAC to seek information and documents, including by requiring a person to appear before an examiner;
A new information gathering power, which gives AUSTRAC the power to proactively seek information and documents from businesses, even in the absence of a suspicious transaction or report. This broadens the scope of AUSTRAC’s intelligence gathering abilities;
An expanded investigation power that amends the existing section 167 information gathering power to allow AUSTRAC to issue notices to anyone reasonably believed to have relevant information, not just reporting entities. AUSTRAC will now also have power to request information or documents that are relevant to AML/CTF Act compliance, regulations or AML/CTF Rules, or an offence against the Crimes Act 1914 (Cth) or the Criminal Code (to the extent that those latter offences relate to the AML/CTF Act). Currently, AUSTRAC may only issue such notices to reporting entities, or their employees or officers. The expansion of AUSTRAC’s powers to offences under the Crimes Act and Criminal Code gives it broader jurisdiction than before, and could see it gathering information and documents regarding a number of other offences, including foreign and domestic bribery, people smuggling and human trafficking and fraud;
Abrogation of the privilege against self-incrimination, so that individuals may be required to provide documents or answers to AUSTRAC during an examination, even if doing so may incriminate them. While such evidence is admissible in proceedings relating to money laundering, terrorism financing, or proliferation financing, it cannot be used in unrelated criminal proceedings; and
Significant penalties for non-compliance with AUSTRAC’s new examination powers, including up to two years of imprisonment or 100 penalty units (currently $33,000) for intentional or reckless non-compliance with a notice from AUSTRAC under its examination power.

The increased enforcement powers come off the back of AUSTRAC’s indication that it will focus its enforcement work on the joinder of individuals in proceedings against reporting entities where an individual is in any way party to a contravention of a civil penalty provision of the AML/CTF Act. Although board and senior management oversight of AML/CTF Programs has long been an AUSTRAC priority, the regulator’s new investigation and examination powers, and the speed with which they have taken effect, could indicate a shift in its approach to pursing individuals more actively. Coupled with the expansion of AUSTRAC’s powers to also cover offences under the Crimes Act and Criminal Code (to the extent they are related to the AML/CTF Act), the changes highlight the need for robust AML/CTF governance, and an examination of how those frameworks overlap with the FAR regime and directors’ duties.

Comparative analysis

A comparative breakdown of the current and new regime is set out below.

Summary of key changes

	Current regime	Proposed changes
Examination power	AUSTRAC does not currently possess an examination power.	Under the AML/CTF Act, where the AUSTRAC CEO (or their delegate) believes on reasonable grounds that a person has information or documents that are relevant to compliance with the AML/CTF regime, the AUSTRAC CEO may, by written notice, require the person to produce documents or appear before an examiner for examination. The notice must set out the nature of the matter that the examination questions will relate to. The AML/CTF Act sets out a framework for the conduct of examinations: Examinations are to take place in private; An examinee’s lawyer may intervene to address the examiner or examine the examinee; and Examinations may be recorded. Statements a person makes under examination are admissible in evidence against the person in certain proceedings. Examinees are required to answer questions, notwithstanding the possibility that those answers might be self-incriminating or expose the individual to a penalty. However, if an examinee claims privilege over answers given, that answer is not admissible in evidence against the individual in civil or criminal proceedings or a proceeding for the imposition of a penalty.
New examination offences	There are currently no provisions relating to examinations.	The AML/CTF Act creates several new criminal penalty provisions for offences where: A person does not comply with a section 172A notice to disclose documents or attend an examination, which carries a maximum penalty of two years imprisonment or 100 penalty units (i.e. currently up to $33;000); An examinee refuses or fails to comply with affirmation requirements, which carries a maximum penalty of three months’ imprisonment (strict liability); An examinee recklessly refuses or fails to answer questions, which carries a maximum penalty of two years’ imprisonment; A person uses or publishes a copy of an examination recording except in connection with preparing or carrying on a proceeding, which carries a maximum penalty of 30 penalty units (i.e. currently up to $9,900) (strict liability); A person is present at an examination without meeting the criteria, which carries a maximum penalty of 30 penalty units (i.e. currently up to $9,900) (strict liability); A person refuses or fails to comply with a requirement made by an examiner, which carries a maximum penalty of 20 penalty units (i.e. currently up to $6,600) (strict liability); A person fails to comply with a requirement to read or sign a statement, which carries a maximum penalty of three months’ imprisonment (strict liability); and A person breaches a condition related to disclosing the copy of the record of an examination, which carries a maximum penalty of 30 penalty units (i.e. currently up to $9,900) (strict liability).
Information gathering for intelligence purposes	Under section 49, AUSTRAC may give notice requesting the production of information or documents when a suspicious matter has been reported. However, there are no proactive intelligence gathering powers.	The AML/CTF Act introduces a new information gathering power, whereby the AUSTRAC CEO may give a notice requiring a person to provide information or documents that may assist AUSTRAC to perform its intelligence functions. This is not tied to the existence of a suspicious matter report. The intention is to empower AUSTRAC to proactively gather information in circumstances that are not triggered by the receipt of a suspicious matter or threshold transaction. The Explanatory Memorandum (EM) indicates that individuals may refuse AUSTRAC requests for information under this information gathering power where their responses would be self-incriminating. If a person receives a request for information notice from AUSTRAC, the person must not disclose to another person the fact that they have received the notice nor the information that has been requested. Under the Act, AUSTRAC will be able to authorise other entities or regulators to supply it with information or documents, thereby enabling those entities to overcome privacy and confidentiality issues.
Information gathering for compliance purposes	Under section 167 of the AML/CTF Act, authorised officers may, by written notice, require a person who is or was a reporting entity, an officer, employee or agent of a reporting entity, or on the Remittance Sector Registry, to provide information or documents where that person has information or a document that is relevant to the operation of the AML/CTF regime. A person is not excused from producing a document or information on the grounds that such production might tend to incriminate the person. However, any information or documents that are provided are not admissible in civil or criminal proceedings other than those brought under the AML/CTF Act.	The AML/CTF Act amends the existing information gathering power under section 167, so AUSTRAC may now issue a notice to anyone who it reasonably believes has information or documents that are relevant to compliance with or enforcement of an offence and/or civil penalty provisions of the AML/CTF regime, the Commonwealth Crimes Act, or the Commonwealth Criminal Code (to the extent that those latter two statutes relate to the AML/CTF Act). Currently, AUSTRAC may only issue such notices to reporting entities, or their employees or officers. The AML/CTF Act also narrows the scope of the self-incrimination protections to exclude any proceedings relating to money laundering, terrorism financing, or proliferation financing as defined under the AML/CTF Act.

AUSTRAC’s regulatory priorities

In 2024, AUSTRAC continued its regulatory and enforcement focus on the banking, gambling and bullion sectors, with supervisory engagements with more than 100 regulated businesses in the banks and financial services sectors. Last year, AUSTRAC also resolved two of the three civil penalty enforcement proceedings against casinos, and accepted an enforceable undertaking from a corporate bookmaker, whilst initiating a civil penalty proceeding against another.

AUSTRAC issued an infringement notice to 19 other reporting entities for failing to file an annual compliance report.

In line with AUSTRAC’s 2024 Regulatory Priorities, AUSTRAC has signalled that it will increase its regulatory activities across the following sectors:

Digital currency exchanges and crypto ATMs;
Payment platforms;
Bullion; and
Non-bank lenders and financiers.

This is due to rapid and significant sector growth, concerns about AML/CTF compliance and variance in compliance levels between reporting entities in these sectors, and AUSTRAC intelligence and partner agency concerns.

For 2025, AUSTRAC has encouraged reporting entities to focus on:

wider board oversight and involvement in managing ML/TF risks, greater active engagement in assessing entities’ ongoing ML/TF risk tolerance and supporting transitions to meet compliance capabilities and resourcing;
enhanced transaction monitoring and prioritising the investigation of high-risk transactions; and
comprehensive and regular independent reviews of reporting entities’ AML/CTF programs.

Key considerations

AUSTRAC’s enforcement of the AML/CTF regime shows no signs of slowing. It is also clear that AUSTRAC’s enhanced enforcement arsenal will allow it to go further in its investigations and look to individual accountability.

Businesses should take proactive steps to ensure compliance. This includes:

enhancing board-level oversight of AML/CTF programs;
implementing robust monitoring systems; and
preparing for potential AUSTRAC reviews and audits.

AUSTRAC has indicated that it will publish guidance to help businesses navigate these changes, so staying informed and ready to respond will be key to minimising risk.

Authors