AUSTRAC sets sights on non-bank lenders

The Australian Transaction Reports and Analysis Centre (AUSTRAC) has said that it will be targeting non-bank lending compliance with Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) laws, after raising concerns with the sector.

The Australian government financial intelligence agency, which is responsible for monitoring financial transactions to identify money laundering, organised crime, tax evasion, welfare fraud, and terrorism financing, has revealed that non-banks will be under scrutiny next year as part of its 2024 regulatory priorities.

According to the body, the increase in its regulatory activities in the non-bank lending space came as a result of the sector’s “rapid and significant growth”, as well as “concerns about AML/CTF compliance and significant variation in compliance levels between reporting entities in these sectors” and following “AUSTRAC intelligence and partner agency concerns”.

As well as the non-bank lenders and financiers, AUSTRAC will also focus on digital currency exchanges (DCEs), payment platforms, and bullion due to the same concerns.

It suggested that it will be looking at board and senior management oversight around the culture and risk management practices, effective transaction monitoring, and managing outsourcing arrangements.

Its priorities also include an ongoing focus on businesses understanding, mitigating, and managing the money laundering and terrorism financing risks they face, particularly across the banking, gambling, and remittance sectors, which face higher risks.

Speaking of the 2024 priorities, AUSTRAC’s acting chief executive Pete Soros said: “These priorities signal our ongoing intent to work with businesses to embed a culture of vigilance, ensuring everyone at every level is aware of the threat of financial abuse and criminal exploitation.

“Criminals target businesses with weak anti-money laundering settings, which is why AUSTRAC’s regulation, through education and supervision, is crucial to safeguarding Australia’s communities and financial systems from financial harm.

“Although today’s announcement calls out certain sectors, all industries sectors should expect interaction and engagement from AUSTRAC.”

The body added that if it ​identifies emerging issues or serious non-compliance, it will “promptly intervene to address such matters”.

This may result in increased engagement, assessment, notifications, and, in some cases, AUSTRAC enforcement action.

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