The AUSTRAC, or the Australian Transaction Reports and Analysis Centre, is the Australian intelligence unit in the financial sector that helps combat financial crimes in the country. Established in 1989, the centre helps keep money laundering in check, and AUSTRAC reporting has been beneficial in keeping various crime activities at bay, including terrorism financing.
The AUSTRAC ensures that institutions and companies in the country comply with the two main ACTS: The FTR act and the AML/CFT act.
FTR Act: Commonly known as the Financial Transaction Reports Act, the FTR act oversees all financial institutions that deal with cash, corporations that provide instant coverage and financial services, various trustees that manage different trust funds under their own or different parties and independent business owners. Whenever there is a significant cash transaction, usually about ten grand Australian dollars or more, a report must be made with the AUSTRAC. Suspicious cash dealers must also report to the body if they are suspected of any fraudulent transaction. The main objective of the FTR act is to make sure that business owners can identify their customers and reduce the chances of fraud to a great extent.
AML/CFT Act: The AUSTRAC reporting also covers the AML/CFT act that covers various bodies providing services such as account deposits, currency exchange, life insurance and loans. Just as in the case of the FTR, entities must report threshold transactions of about ten grand Australian dollars or more and that too within ten business days. Any transfer of international funds must also be reported within ten business days by either the sender or the recipient. In the case of any suspicious transactions, the entity must report the matter within 24 hours after discovering the incident. The suspicions can be in terms of the wrong identity, anything that can be used to investigate or prosecute a body, evasion of taxes and other illegal activity that is against the commonwealth’s laws.
The main purpose of these two acts is to make sure that companies adhere to the policies to bring down or report money laundering, terrorism financing and tax evasion.
Non-Compliance With the AUSTRAC:
AUSTRAC has the authority to impose restrictions and fines on the entities that do not comply with the two ACTs mentioned above:
Civil Penalty Order: The Federal Court will issue a penalty order ordering the entity to pay the required fine to the commonwealth. The amount will be according to the legality of the issue at hand.
Infringement Notices: When certain parts of the ACTs are violated, an infringement notice is issued.
Written Notices: AUSTRAC can urge the entity to appoint an external auditor if they have enough proof of suspicion regarding the breach of the ACTs or malpractice. The report will contain what must be audited.
Risk Assessment: Written notices can also be sent to various entities if the AUSTRAC is not satisfied with the way a risk assessment was carried out in the first place.
The AUSTRAC can also reject or suspend a registration application if there are viable causes for concern. This can happen due to the following reasons that have the potential to breach the prices set forward by the body:
- The business is at risk of smuggling, terrorism financing or money laundering.
- There is an unidentifiable risk in the business or the way it operates.
- If the registration details are wrong or incomplete and there are no documents to back them up.
- If the entity does not respond to further requests for additional information.
All these ensure that they are successful in carrying out their obligations.