Regulating additional high-risk services

The Bill would extend AML/CTF regulation to real estate professionals that provide the following services:

• Brokering the sale, purchase or transfer of real estate on behalf of a buyer, seller, transferee or transferor in the course of carrying on a business. This would apply to real estate agents and businesses that represent sellers and buyers.
• Selling or transferring real estate in the course of carrying on a business selling real estate, where the sale or transfer is not brokered by an independent real estate agent. This would apply to property developers and other businesses who sell house and land packages, apartments off the plan, and blocks of vacant land in new subdivisions.

The services would not capture:

• residential tenancy agreements
• property management
• leasing of commercial real estate
• auctioneer services (unless the auctioning services are provided by the seller’s agent alongside the sale of the real estate).

The Bill would also extend AML/CTF regulation to dealers in precious stones and precious metals.

AML/CTF regulation would apply where a business:

• sells or purchases precious metals, precious stones or precious products in the course of carrying on a business, and
• where the buyer or seller (the customer of the designated service) makes payment or receives payment in physical cash, virtual assets or a combination of physical cash and virtual assets of $10,000 or more.

These measures would not apply to:

• precious metal, precious stone or precious products transactions below $10,000
• precious metal, precious stone or precious products transactions above $10,000 made by payments other than physical currency or virtual assets, such as payments by debit card or credit card, BPAY or PayPal, and
• businesses that decide not to accept any physical currency or virtual asset payments equal to or above $10,000.

Businesses would need to make a clear decision as to whether they will accept these types of payments and ensure employees adhere to this business rule.

Accepting a payment over the threshold, even once, would mean the business meets the definition of a ‘reporting entity’ for the purposes of the AML/CTF Act and will be required to comply with regulatory obligations. A business must already have undertaken a risk assessment and developed AML/CTF policies as part of their AML/CTF program, and comply with other AML/CTF obligations, before providing a designated service.

The Bill would extend AML/CTF regulation to professional businesses and service providers, including:

• legal practitioners
• conveyancers
• accountants
• consultants
• insolvency and restructuring practitioners
• financial planners
• wealth advisors
• business brokers
• company secretarial service providers
• trust and company service providers.

Collectively, this group are referred to as professional service providers for the purposes of the AML/CTF regime.

Broadly, these designated services include:

• assisting a person in the planning or execution of a transaction, or otherwise acting for or on behalf of a person in a transaction to sell/buy/transfer real estate
• assisting a person in the planning or execution of a transaction, or otherwise acting for or on behalf of a person in a transaction to sell/buy/transfer a body corporate or legal arrangement
• receiving, holding and controlling (including disbursing) or managing a person’s money, accounts, securities and securities accounts, virtual assets or other property
• assisting a person in organising, planning or executing a transaction, or otherwise acting for or on behalf of a person in a transaction, for equity or debt financing relating to a body corporate, proposed body corporate, legal arrangement or proposed legal arrangement
• selling or transferring a shelf company
• assisting a person to plan or execute, or otherwise acting on behalf of a person in the creation or restricting of a body corporate or legal arrangement
• acting as, or arranging for another person to act as, certain appointments, including a director or secretary of a company, a power of attorney of a body corporate, a partner in a partnership, or a trustee of an express trust, on behalf of the nominator
• acting as, or arranging for another person to act as, a nominee shareholder of a body corporate or legal arrangement, and
• providing a registered office address or principal place of business address of a body corporate or legal arrangement.

These designated services are competitively neutral. These designated services do not need to be provided by particular professions in order to be regulated under the AML/CTF regime. If you provide a designated service, you will be regulated under the AML/CTF regime.

Legal professional privilege

To support the extension of the AML/CTF regime to legal practitioners, Schedule 4 of the Bill clarifies the treatment of information subject to legal professional privilege (LPP) in the AML/CTF Act.

The amendments would provide clearer protection for information subject to LPP once legal practitioners are brought into the AML/CTF regime. The Bill would preserve the important role of the doctrine of LPP, and ensure that reporting entities who handle client information that is subject to LPP can also comply with their reporting and information disclosure obligations under the AML/CTF Act.

A reporting entity would be required to:

• fulfil their reporting or information disclosure obligations to the extent possible without disclosing the privileged information or document, and
• provide details about any assertion of legal professional privilege under the AML/CTF Act to the AUSTRAC CEO via an approved form (the ‘LPP form’).

A reporting entity would not be required to disclose information or a document as part of any reporting and information or information disclosure obligation, where they believe that the information or document is subject to LPP.

A reporting entity may refuse to give a suspicious matter report where they reasonably believe that the entire grounds for a suspicion is composed of information that is subject to LPP. A reporting entity is also not required to provide an LPP form in this circumstance.