So, what is AUSTRAC and what does it do?
The Australian Transaction Reports and Analysis Centre (AUSTRAC) is tasked with enforcing compliance with the Financial Transaction Reports Act 1998 (FTR Act) and the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act).
One of the purposes of the FTR Act and AML/CTF Act is to seek to ensure that instances of tax evasion, money laundering and the potential financing of terrorists are reported to the appropriate authorities.
The AML/CTF Act
The AML/CTF Act imposes obligations on entities that provide ‘designated services’ (such as account/deposit-taking services, cash carrying/payroll services, currency exchange services, life insurance services and lending).
Entities that provide one or more designated services under the AML/CTF Act are ‘reporting entities’.
Reporting entities must submit a Threshold Transaction Report (TTR) to AUSTRAC within 10 business days after the entity provides a customer with a designated service involving a ‘threshold transaction’.
Threshold transactions involve the transfer of physical currency or e-currency of AUD$10,000 or more (or foreign currency equivalent).
International funds transfers
The ‘sender’ of an International Funds Transfer Instruction (IFTI) transmitted out of Australia, or the ‘recipient’ of an IFTI transmitted into Australia, must report the instruction to AUSTRAC within 10 business days after the day the instruction was sent or received.
Suspicious matter reports
A reporting entity must submit an Suspicious Matter Report (SMR) to AUSTRAC within 24 hours after forming the relevant suspicion if the suspicion relates to terrorism financing (or otherwise within 3 business days) if it is suspected on reasonable grounds that:
- a person (or their agent) is not the person they claim to be, or
- information the reporting entity has may be: relevant to investigate or prosecute a person for; an evasion (or attempted evasion) of a tax law, or § an offence against a Commonwealth, state or territory law; or of assistance in enforcing: the Proceeds of Crime Act 2002 (or regulations under that Act); or a State or Territory law that corresponds to that Act or its regulations
- providing a designated service may be: preparatory to committing an offence related to money laundering or terrorism financing; or relevant to the investigation or prosecution of a person for an offence related to money laundering or terrorism financing.
The FTR Act
Where an entity is covered by the AML/CTF Act (which was enacted years after the FTR Act), they are generally not covered by the FTR Act.
The FTR Act covers cash dealers include financial institutions, corporations that provide financial or insurance services, trustees and managers of unit trusts and a person who carries on a business of operating a gambling house or casino. The obligations of solicitors are also prescribed by the Act.
Where a significant cash transaction takes place (a cash transaction involving AUD$10,000 or more (or foreign currency equivalent including transactions which, when aggregated, exceed that amount), a Significant Cash Transaction Report (SCTR) is to be lodged with AUSTRAC.
Cash dealers who are a party to a ‘suspect’ transaction must report that transaction to AUSTRAC. The cash dealer must submit a suspect transaction report (SUSTR) to AUSTRAC as soon as practicable after forming the suspicion.
The objective of the FTR Act is that by preparing the reports to AUSTRAC, businesses can more easily identify their customers and are therefore more likely to reduce the incidence of fraud.