The 2018 Australian Due Diligence survey by technology company InfoTrack has found there is a disturbing lack of due diligence being undertaken by lawyers, conveyancers and accountants to verify the identity of clients or check sanctions lists to ensure they really know who they are doing business with. Worse still, the findings of the 2018 survey compared those of a similar survey conducted in 2016 clearly demonstrate the situation is deteriorating. 

For example:

  • In 2018, only two per cent searched sanctions lists, compared to 18 per cent in 2016 while 12 per cent conducted Anti-Money Laundering and Counter Terrorism Financing (AML/CTF) searches compared to 28 per cent in 2016.  
  • In 2018, 12 per cent performed searches on international companies and people compared to 40 per cent in 2016. 
  • In 2018, two per cent conducted a search for a politically exposed person compared to 16 per cent in 2016.

 “Conveyancers and lawyers are not convinced that the current regime is effective in deterring AML/CTF activity and believe more needs to be done to before Tranche 2 of the Act is introduced,” says InfoTrack chief executive John Ahern.

The survey also found external threats continue to grow with 15 per cent having uncovered fraudulent or criminal behaviour while carrying out due diligence and 56 per cent believing cryptocurrencies such as bitcoin will be key tools for money laundering.

On a brighter note, 47 per cent conducted know your client searches in 2018 compared to 44 per cent in 2016.

InfoTrack’s 2018 survey also found 82 per cent of respondents believe that Australian directors are not fully aware of their responsibilities under the AML/CTF Act.

“Lawyers, conveyancers, accountants and real estate agents should start preparing now for the implementation of Tranche 2 of the AML/CTF Act,” added InfoTrack chief executive John Ahern. “Recent events involving Australian businesses tied up in global investigations are placing pressure on the government to expand the regime as a matter of priority. As these events (including Tabcorp’s $45 million fine and the allegations against Commonwealth Bank’s involving alleged breaches of the AML/CTF Act) demonstrate any business can be the target of money laundering and terrorism financing.

“With any new compliance program, one of the main concerns is always the cost to business; the extra time, resources and money needed to become compliant.  The Aussie mantra of ‘she’ll be right mate’ combined with the inclination to do the minimum required could lead to disaster. The Tabcorp and CBA cases clearly show any breaches of the Act are severely dealt with. Organisations big and small need to be on guard against these threats and be able to demonstrate they’ve put sufficient procedures in place.

“Conveyancers, lawyers, accountants and real estate agents need to get on top of the requirements of this Act now.  The technology is in place the make compliance with the Act relatively stress free and efficient and the sooner they start implementing it the better.

 “All parties need to act now and AUSTRAC must put in place appropriate education and information programs to ensure the new professions and sectors captured in Tranche 2 are aware of the impending changes and what they have to do to be compliant,” Mr Ahern concluded.

For more information, you can download InfoTrack’s Definitive guide to complying with AML/CTF 
https://www.infotrack.com.au/campaigns/aml-ctf-ebook-p/