AUSTRALIA Law and Practice Contributed by: Andrew Stone, Dhanushka Jayawardena, Andrew Choi and Chris Kinsella, Holding Redlich
Ongoing customer due diligence A reporting entity must monitor its customers to appropriately identify, assess, manage and mitigate the risks of money laundering/terrorism financing that the reporting entity may reasonably face in providing designated services. In relation to this overarching obligation, the core requirements for ongoing cus - tomer due diligence under the new regime are: • suspicious matter reports – monitor for unusual transactions and behaviours that may give rise to a suspicious matter report (the existing obligation to submit suspicious matter reports continues under the new regime). • risk assessment reviews – for business relation - ships, review and update money laundering/terror - ism financing risk assessments when: (a) significant changes occur to relevant matters in the relevant risk identification process; (b) unusual transactions or behaviours are de - tected; and (c) in circumstances specified in the AML/CTF rules; • KYC information updates – review, update, and reverify KYC information: (a) at a frequency appropriate to the customer’s money laundering/terrorism financing risk level; (b) when doubts arise about existing KYC infor - mation; and (c) in circumstances specified in the AML/CTF rules; • certain customers who received a designated service before 12 December 2007 and who already have a business relationship with a tranche 2 entity before 1 July 2026 (ie, pre-commencement cus - tomers) – monitor for significant changes in busi - ness relationship nature/purpose that could raise the money laundering/terrorism financing risk to medium or high; and • additional requirements – comply with any other requirements specified in the AML/CTF rules, including the requirement to review, update and reverify KYC information if a customer becomes a PEP.
Customer Due Diligence As of 2 October 2025, the requirements for conduct - ing customer due diligence are found in the AML/CTF rules and not under the AML/CTF Act. They include: • a requirement for initial customer due diligence; • a requirement for ongoing customer due diligence; and • in relation to the requirement for initial customer due diligence, an outcomes-focused approach to establish: (a) the customer’s identity (eg, that the customer is the person they claim to be); (b) the identity of the customer’s agents and ben - eficial owners; (c) whether the customer is a politically exposed person (PEP) or sanctioned; and (d) information about the nature and purpose of the customer’s business relationship with the reporting entity. Initial customer due diligence For all customer types, a reporting entity must estab - lish, on reasonable grounds: • the identity of the customer; • the identity of any person on whose behalf the cus - tomer is receiving the designated service; • the identity of any person acting on behalf of the customer, as well as their authority to act; • identity of any beneficial owners (if the customer is not an individual); • whether the persons referred to in the preceding points are PEPs or designated for targeted financial sanctions; • nature and purpose of business relationship or occasional transaction; and • any other matters prescribed by the AML/CTF rules. Simplified customer due diligence or enhanced cus - tomer due diligence requirements may apply, depend - ing on whether the customer relevantly presents a low or a high money laundering/terrorism financing risk.
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