Catherine Evans
Six weeks into Australia’s expanded anti-money laundering regime, and Kit Legal is warning advice, accounting and law firms against a mistake that is unfolding – reading the supportive tone from the Australian Transaction Reports and Analysis Centre (AUSTRAC) as a reason to wait.
AUSTRAC has said it does not expect newly regulated firms to be perfect from day one. But Kit Legal Founder and Head of Legal Catherine Evans says too many firms are hearing the reassurance and missing the condition attached to it.
“I keep hearing the same thing, we’ve got time, AUSTRAC isn’t going to come after small firms in the first year.
“That’s not what the regulator said. It said it doesn’t expect perfection early, it didn’t say it expects nothing, and its patience is for firms making an honest effort, not for firms doing nothing at all.”
Evans says AUSTRAC has been explicit about where its attention will go, and that is to firms that ignore the duty to enrol, and firms that are wilfully blind to money laundering.
“There’s a big difference between a firm still working through its controls and a firm that has filed nothing and is hoping the deadline was soft, she says.
“The first is exactly what AUSTRAC asked for, while the second is what it’s looking for.”
The assumption that regulators will stay hands-off in year one is already at odds with what they are doing. AUSTRAC has written to advice firms about the small number of suspicious matter reports the industry is lodging, and reminded them of their obligations.
“That’s not a regulator waiting quietly for twelve months, that’s a regulator already telling firms it’s watching.”
The concern is not that firms are acting in bad faith, it is that many have mistaken a softer tone for a lighter obligation.
“Most firms I speak to want to do the right thing,” Evans says. “The risk isn’t dishonesty, it’s delay. Assuming there’s more runway than there is, and being caught flat-footed when the questions start.”
So, what does honest effort look like? As it is less about having everything finished, and more about being able to show your workings:
- You know which of your services are designated services, and you have enrolled where you need to.
- You have a risk assessment built for your business, not a template downloaded and left in a folder.
- Your customer due diligence is ongoing, not treated as a one-off at onboarding.
- You can point to the decisions you have made, and explain why.
Evans says firms should also lift their eyes past 1 July. The regime is built to run continuously and obligations need to be embedded and tested.
“1 July was the start line, not the finish line, so the firms that come through this well won’t be the ones that scrambled to enrol and then stopped. They’ll be the ones that treated it as part of how they run the business.”
Kit Legal built its AML/CTF subscription and implementation package for exactly this, cutting through the noise so firms know what applies to them, and keeping their framework current as AUSTRAC’s guidance evolves, at a price the smallest firms can afford.