AUSTRAC expects AML/CTF obligations to apply based on whether an AFS licensee provides a designated service, not whether the adviser handles client funds. If the advice or service falls within designated services, customer identification and AML/CTF controls must still be applied regardless of fund handling.
Expanded Answer
AUSTRAC’s regime is triggered by the provision of designated services, which can include arranging, advising on, or dealing in financial products, depending on the structure of the service. The obligation is not limited to situations where the adviser physically receives or controls client money. Many advice businesses are captured because of their role in facilitating transactions or providing financial services linked to product acquisition.
In practice, advisers and licensees must assess whether their services fall within the definition of designated services under the AML/CTF framework. Where captured, firms must apply their AML/CTF program, including customer identification procedures, risk assessments, and ongoing monitoring. The absence of direct fund handling does not remove the requirement to identify clients or assess money laundering and terrorism financing risk.
Regulatory scrutiny increases where firms assume they are out of scope without a documented analysis of their services. AUSTRAC expects a clear, evidence-based determination of whether obligations apply. Practical scope considerations are outlined in AML/CTF financial planners Australia and Five AML questions you must be able to answer.
Why it matters
Excluding services from AML/CTF obligations incorrectly exposes firms to regulatory breaches and enforcement risk. AUSTRAC action often focuses on failures to properly assess whether a business is captured by the regime.
Practical guidance
- Assess whether the services provided fall within designated services, regardless of whether client funds are handled
- Apply AML/CTF controls, including customer identification and risk assessment, where obligations are triggered
- Document the scope assessment and rationale for inclusion or exclusion within the AML/CTF program
Further reading
Why AML programs fail adviser audits