Key Moments:
- AUSTRAC has advised reporting entities to review and update risk settings following the latest updates from FATF.
- The FATF Call for Action continues to single out the Democratic People’s Republic of Korea, Iran, and Myanmar for significant compliance gaps.
- Australian entities must enhance due diligence on transactions involving high-risk and increased-monitoring jurisdictions.
FATF’s Evolving Risk Landscape and Impact on Australia
Australia has been reminded of the rapidly changing nature of financial crime risks, as AUSTRAC has called on reporting entities nationwide to reassess their existing controls. This alert follows two new publications from the Financial Action Task Force (FATF), which highlighted emerging threats related to money laundering, terrorism financing, and proliferation financing.
As global risk profiles shift, organizations including financial institutions, casinos, and all sectors governed by anti-money laundering (AML) regulations are being directed to respond accordingly.
Ongoing Concerns Over High-Risk Jurisdictions
FATF’s Call for Action list continues to designate the Democratic People’s Republic of Korea, Iran, and Myanmar as jurisdictions with significant strategic deficiencies in anti-money laundering, counter-terrorism financing, and counter-proliferation financing efforts. Transactions involving these countries are automatically classified as high risk for Australian reporting entities under the AML/CTF Act, requiring rigorous due diligence and heightened scrutiny.
| Jurisdiction | FATF Status | AUSTRAC Expectation |
|---|---|---|
| Democratic People’s Republic of Korea | Call for Action | Apply enhanced due diligence |
| Iran | Call for Action | Apply enhanced due diligence |
| Myanmar | Call for Action | Apply enhanced due diligence |
Enhanced Monitoring for Grey-Listed Jurisdictions
Another recent FATF statement outlined countries currently under increased monitoring, often referred to as the “grey list.” These jurisdictions are engaging with FATF to address system gaps, but still carry elevated risk that requires ongoing vigilance. While countermeasures are not mandated for these countries, AUSTRAC expects entities to adjust their risk assessments and monitoring procedures to take these risks into account.
Immediate Action Items for Regulated Entities
AUSTRAC has specified a set of required actions for banks, casinos, bookmakers, remitters, and any other businesses subject to Australia’s AML framework:
- Update existing money laundering and terrorism financing (ML/TF) risk assessments
- Strengthen customer due diligence where applicable
- Apply enhanced due diligence to transactions connected with high-risk jurisdictions
- Review and amend transaction monitoring settings
- Reevaluate triggers for Suspicious Matter Reports (SMRs)
- Maintain vigilance for activity connected to sanctioned jurisdictions, tax havens, and identified terrorist groups
AUSTRAC has emphasized that beneficial ownership checks must also become more rigorous when handling cases connected to high-risk jurisdictions.
Maintaining the Integrity of Australia’s Financial System
The latest warnings serve as a clear reminder that risk controls must continually evolve. FATF’s assessments guide Australia in understanding potential threats and ensuring robust monitoring systems. According to AUSTRAC, the most recent FATF updates are a crucial resource for shaping effective, risk-based controls needed to protect the nation’s financial integrity.
The overarching message is this: remain aligned with global best practices, stay attentive to new and emerging risks, and be proactive in countering financial crime that is constantly advancing.
- Author
Daniel Williams
