AUSTRAC Introduces Stricter Tipping-Off Laws to Combat Financial Crime

What the Changes Mean for Businesses

Under the new regulations, businesses will face criminal liability if they disclose specific information to a third party in a way that could reasonably be expected to influence an investigation. This includes situations where a disclosure might alert individuals involved in criminal activities or lead to the public release of sensitive information, thereby hindering law enforcement efforts. The penalty for breaching these rules can be as high as AUD 39,000 ($24,580) or a two-year jail term, underscoring the gravity of the offense.

AUSTRAC CEO Brendan Thomas highlighted that these changes are part of a broader reform of the country’s AML/CTF laws, which were last updated nearly 20 years ago. He emphasized that these reforms aim to modernize the system, addressing new challenges posed by technological advances in the financial sector.

“The previous legislation was almost 20 years old, and a lot has changed in that time,” said Thomas, noting that the goal is to strike a balance between intelligence gathering and operational practicality. Businesses must help in identifying and preventing financial crime, but they must do so without alerting criminals and undermining law enforcement investigations.

Industry-Wide Implications

These updates apply to all entities covered by the AML/CTF legislation, including banks, casinos, remittance providers, and money lenders. As of the enforcement date, these businesses will be prohibited from sharing information with third parties unless explicitly permitted by law. However, AUSTRAC is encouraging internal cooperation within businesses to enhance the detection of illicit transactions, which is seen as a key part of tackling money laundering and other financial crimes.

“Effective information sharing helps stop money laundering,” said Thomas, stressing the importance of collaboration between businesses and AUSTRAC in the fight against financial crime.

Compliance Timeline and Enforcement

While the tipping-off provisions will come into force immediately, the full range of obligations under the amended AML/CTF Act will not be enforced until 2026. This extended timeline provides businesses with ample time to adjust and ensure full compliance with AUSTRAC’s updated regulatory framework.

AUSTRAC itself is also undergoing internal changes to improve risk transparency and strengthen its relationships with regulated industries. Thomas warned that businesses failing to adhere to the new tipping-off laws would face strict enforcement actions, reinforcing the importance of compliance as more businesses come under AUSTRAC’s oversight.