An additional $160.8m over two years from 2024–25 represents a significant increase in funding for the Australian Transaction Reports and Analysis Centre (AUSTRAC) to expand its regulatory, intelligence and data capabilities and provide guidance to newly regulated entities. With $47.6m being made available in FY 2024/25 and $113.2m in FY 2025/26, this indicates a significant proportion of the funding and, therefore, regulatory reform effort will occur between July 2025 and June 2026.
A further $7m will be provided to the Attorney-General's Department (AGD) over the next four years to support the implementation of the legislative reforms through policy and legal advice and stakeholder consultation and to deliver a program of AML/CTF capacity building in the Pacific.
This additional funding for AUSTRAC and the AGD will be held in the Contingency Reserve and not provided until the proposed AML/CTF legislative reforms have been passed by the Federal Parliament.
What is AUSTRAC?
AUSTRAC is Australia's financial intelligence agency and regulatory body responsible for preventing, detecting, and responding to money laundering, terrorism financing, and other serious financial crimes.
AUSTRAC's primary functions include collecting, analysing, and disseminating financial intelligence to law enforcement agencies and other relevant authorities, regulating various industry sectors, and ensuring compliance with AML/CTF laws and regulations.
What does the extra funding mean?
The Federal Budget funding increase will also allow AUSTRAC to deliver comprehensive education and guidance to support businesses – especially newly regulated entities in the Tranche 2 industry sectors – who must comply with AML/CTF obligations for the first time.
In announcing the additional funding, Attorney General Mark Dreyfus recognised each year billions of dollars of illicit funds are generated from illegal activities such as drug trafficking, tax evasion, people smuggling, cybercrime, arms trafficking, as well as other illegal and corrupt practices.
The Attorney General further acknowledged Australia is failing to meet the international standards set by the Financial Action Task Force (FATF) required to combat criminal abuse of Australia’s financial system, which is at increased risk of becoming a haven for money laundering.
What is FATF?
The FATF is an intergovernmental organisation established in 1989 to combat money laundering and terrorist financing. It sets standards and promotes the effective implementation of legal, regulatory, and operational measures to combat these threats and other related threats to the integrity of the international financial system.
The FATF also regularly assesses the implementation of these measures by its member countries and jurisdictions and issues recommendations to address any deficiencies observed. Compliance with FATF standards is considered crucial for countries to maintain a credible position in the global financial system.
Australia’s next FATF evaluation is in 2026. However, Australia is one of only five countries out of more than 200 that do not regulate Tranche 2 entities—lawyers, accountants, trust and company service providers, real estate agents, and dealers in precious metals and stones.
In addition, Australia’s current AML/CTF regime, which covers around 17,000 businesses across the financial services, gambling, and bullion sectors, has remained largely unchanged since 2006. The FATF's most recent evaluation identified significant improvements in Australia’s AML/CTF regime were required to meet the current FATF standards, which have evolved to adapt to emerging threats, technological advancements, and changes in the global financial landscape.
FATF grey list
In announcing the extra funding, the Attorney General warned Australia is at risk of being ‘grey-listed’ by the FATF, which could result in significant harm to our economy if Australia does not undertake the proposed AML reforms and falls short when it is evaluated by the FATF in 2026.
Being on the FATF grey list indicates a country’s AML/CTF regime has strategic deficiencies that pose risks to the international financial system. FATF grey-listing can significantly affect the country's financial system and its ability to engage in international transactions. Businesses in grey-listed countries may face enhanced due diligence requirements, higher compliance costs, and reputational risks.
The additional funding follows the commencement of the next consultation stage on reforms to Australia’s AML/CTF regime, which will likely be followed by legislative amendments later in 2024 and, in 2025, businesses covered by the AML/CTF regime being required to comply with the revised AML/CTF requirements.
Businesses will also likely be provided an ‘assisted compliance’ period throughout 2025 and into 2026, allowing them some time to comply with the new AML/CTF regime before the FATF’s assessment.
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Please get in touch with our specialists to discuss how we can assist your business to meet the requirements of the wide-ranging reforms to the anti-money laundering and counter-terrorism financing (AML/CTF) regime.
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