Sanctions 2025

AUSTRALIA Trends and Developments Contributed by: Dennis Miralis and Jack Dennis, Nyman Gibson Miralis

Iran and Russia to evade the financial impact of Australian sanctions” and repurpose such assets. In March 2025, the Human Rights Subcommittee of the FADT Committee published a report of the amend - ments made by the Autonomous Sanctions Amend - ment (Magnitsky-style and Other Thematic Sanctions) Act 2021. The public consultation concluded on 17 January 2025. The Subcommittee made five recom - mendations, orientated towards increasing transpar - ency and accountability by publishing reasons for listing decisions, expanding the use and basis for Magnitsky-style sanctions criteria, and introducing a humanitarian exception. Overall, these reviews noted a serious need to strengthen regulatory monitoring and enforcement capabilities and a strong desire for increased reason - ing and challenging processes. If these reports are anything to go by, there may be significant legisla - tive reform ahead, increased regulatory operations for both compliance and enforcement, and more move - ment in this space than ever before. AUSTRAC’s AML/CTF Rules Speaking of law reform, the Australian Parliament amended the Anti-Money Laundering and Counter- Terrorism Financing Act 2006 (the Amended AML/CTF Act) to introduce tranche 2 reforms on 29 Novem - ber 2024. Relevantly, these amendments expressly included sanctions law in the ongoing obligations of AUSTRAC-regulated entities in defining “proliferation financing”. Section 28 of the newly amended legislation requires reporting entities, in undertaking initial customer due diligence of new customers of designated services, to establish on reasonable grounds “whether the customer, any beneficial owner of the customer, any person on whose behalf the customer is receiving the designated service, or any person acting on behalf of the customer is… a person designated for targeted financial sanctions”. Further, sections 26C and 26D require entities to undertake ML/TF risk assessments before providing designated services. Failure to do so can result in a civil penalty.

On 11 December 2024, AUSTRAC sought feedback on new anti-money laundering and counter-terrorism financing (AML/CTF) rules (AML/CTF Rules), to reflect the impending Amended AML/CTF Act. This initial consultation closed on 14 February 2025. On 19 May 2025, AUSTRAC commenced a second round of pub - lic consultation on new AML/CTF Rules. The proposed draft AML/CTF Rules: • introduce a requirement for AUSTRAC-regulated reporting entities to develop, maintain, and comply with AML/CTF policies to address the Autonomous Sanctions Act 2011 (Cth) and the Charter of the United Nations Act 1945 (Cth) in the provision of their designated services; however, there is an exception to developing such a policy if the risk of proliferation financing is low and otherwise appro - priately managed (on this point, DFAT released a new advisory note on low-risk sectors in June 2025); • retains a discrete and temporary exception for the obligation to establish whether a customer was a politically exposed person or designated for targeted financial sanctions; this temporary excep - tion is subject to certain requirements, including that commencement of the services “is essential to avoid interrupting the ordinary course of business”, but also that the “AML/CTF policies [are imple - mented] to mitigate and manage the associated risks”; and • expressly inserts ongoing customer due diligence and monitoring obligations related to sanctions to reflect the Amended AML/CTF Act. Failure to develop sanctions-related policies, as well as to comply with these policies, will result in a civil penalty. In their current form, the draft AML/CTF Rules repre - sent a marked shift from the official role sanctions poli - cies played for AUSTRAC-regulated reporting entities. However, the actual impact in practice remains to be seen given that many entities likely already incorpo - rated proliferation financing risks into their AML/CTF policies or had self-standing sanction policies.

CHAMBERS.COM