Specialised AML/CTF Solutions for Authorised Deposit-Taking Institutions

We offer a comprehensive set of anti-money laundering (AML), counter-terrorist financing (CTF), and fraud prevention solutions tailored to authorised deposit-taking institutions’ (ADI) anti-money laundering compliance, and aligned with the requirements of Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act), Australian AML/CTF Rules, Australian Transaction Reports and Analysis Centre’s (AUSTRAC) AML guidance, including sector-specific red flags and indicators for this sector, to help your business meet applicable obligations that cover ADI money laundering and terrorist financing risk mitigation, fraud prevention, the detection and handling of other types of financial crime.

We have designed our AML solutions to help you navigate the complexities of AUSTRAC ADI AML requirements in a commercially oriented and goal-focused manner, providing effective AML/CTF support for all aspects of authorised deposit-taking institutions’ AML/CTF compliance, including but not limited to:

• Business Profile and Strategic Factors:
• Your commercial objectives
• Your products
• The size and structure of your business
• Your available AML/CTF compliance technology and resourcing
• Your risk appetite for AML/CTF-related risks
• Your governance framework and reporting lines
• Your client demographics
•  Your countries of operation

 

• Applicable Regulatory and Fraud Prevention Obligations:
• AML/CTF regulations for authorised deposit-taking institutions
• Any ADI fraud prevention obligations or expectations your business may be subject to
• Any related compliance obligations, including, but not limited to, authorised deposit-taking institutions’ obligations under:

• Privacy laws
• Financial market laws
• Fair trading laws
• Financial licensing requirements
• Other relevant regulatory frameworks

• Operational AML/CTF Compliance Requirements:

• Money laundering and terrorist financing (ML/TF) risk assessment
• AML risk management
• Customer due diligence (CDD) and Know Your Customer (KYC) obligations for authorised deposit-taking institutions
• Enhanced customer due diligence
• Ongoing customer due diligence and transaction monitoring
• PEP identification and sanctions compliance
• Staff vetting and AML/CTF training
• Ad-hoc and periodic reporting
• Other obligations relating to ADI anti-money laundering, counter-terrorist financing and sanctions compliance, as well as financial crimes prevention

 

 

What Jurisdictions Do Our ADI AML Solutions Cover?

This page is about our sector-specific Authorised Deposit-Taking Institutions' AML/CTF compliance solutions in Australia. For AML/CTF services for this industry in other jurisdictions, you can visit the following pages:

• ADI anti-money laundering AML Solutions in the United States: Where ADIs are equivalent to Savings and Loan Associations operating under the Bank Secrecy Act (BSA).
• ADI anti-money laundering Solutions in the United Kingdom: Where ADIs are equivalent to Building Societies operating under the Money Laundering Regulations 2017, last amended in 2020.
• ADI anti-money laundering Solutions in Singapore: Where ADIs are equivalent to finance companies operating under Singaporean AML/CTF regulations.
• ADI anti-money laundering solutions in New Zealand: Where ADIs are equivalent to Non-Bank Deposit Takers under the Anti-Money Laundering and Countering Financing of Terrorism Act 2009.

 

 

Which Types of ADIs Do We Support?

Focusing on money laundering (ML), terrorism financing mitigation (TF), and fraud prevention, our Authorised Deposit-Taking Institutions’ AML solutions cover the following types of ADI service providers and institutions that are deemed to be AML/CTF designated service providers (aka “reporting entities”):

• Retail ADIs
• Wholesale ADIs
• Credit Unions
• Building Societies
• Foreign Authorised Deposit-Taking Institutions Expanding to Australia: We help with local regulatory obligations under the AML/CTF Act and AML/CTF rules, and AUSTRAC ADI AML requirements ranging from helping with the initial registration with AUSTRAC to customising your AML compliance framework to tailor your AML/CTF compliance to the local requirements.
• Other deposit takers providing AML/CTF-regulated deposit-taking services under the AUSTRAC ADI AML requirements

Additionally, we offer AML/CTF support for related financial services to help resolve ADIs' money laundering, fraud, and terrorism financing issues across profit-generating activities, such as trading, lending, funds management and more.

 

ADI AML Advisory and Support

Our AML/CTF advisory services for authorised deposit-taking institutions include, but are not limited to, the following:

• Detailed AML/CTF compliance advice: Tailored to the AUSTRAC ADI AML requirements for different processes, including but not limited to customer due diligence (CDD), transaction risk scoring, transaction monitoring, customer onboarding and know-your-customer (KYC) analysis, and other AML processes. Also tailored to the specific money laundering and terrorist financing (ML/TF) risks involved in these processes, helping you with effective ML/TF risk management.
• ADI fraud risk management advice: Advising on measures, controls, and processes for detecting, preventing, and responding to different types of fraud, scams, and other types of financial crime relevant to authorised deposit-taking institutions. Also, tailored to ADI fraud environment, risk management practices, and stakeholders' expectations and obligations (banks, regulators, insurers, shareholders, etc.).
• Banking relationships advice: Advising authorised deposit-taking institutions on AML/CTF issues related to maintaining and expanding their banking relationships, complying with banks' AML/CTF risk appetite standards, recall procedures and expectations, and other operational requirements.
• Operational AML/CTF advice: Advising support and KYC teams on day-to-day onboarding, support queue management processes, allocating AML/CTF resources effectively, and making operational improvements to enhance overall customer experience and AML compliance efficiency.
• Specific matter advice (difficult clients, high ML/TF risk matters, customer due diligence for high-net-worth clients, complex transactions and more): Advising on handling specific AML/CTF issues related to clients and complex and unusual transactions, including assessing the adequacy of Sources of Wealth (SOW) or Source of Funds (SOF) information and documentation for specific enhanced due diligence (EDD) cases.
• Peer benchmarking and best practices: Helping authorised deposit-taking institutions compare their AML/CTF practices with industry standards, AML/CTF supervisor guidance, and internationally recognised best practices set up by international organisations like the Financial Action Task Force (FATF) for complying with authorised deposit-taking institutions’ AML/CTF obligations.
• Government agencies liaison advice: Advising senior management and compliance teams on handling relationships with external bodies, including AML/CTF supervisors and law enforcement agencies, such as the FIU or its local equivalents.
• AML/CTF audit advice: Advising senior management and compliance teams on matters related to the statutory AML/CTF audits, including auditors' guidelines, requirements, AML/CTF audit process, and obligations related to the audit's outcome, tailored to both generic ADI anti-money laundering compliance obligations and your specific situation.
• AML/CTF remediation advice: We help authorised deposit-taking institutions to effectively navigate situations involving an AML/CTF breach, warning, or investigation. The cost of non-compliance can result in significant regulatory fines and penalties, as well as irreparable reputational damage. Therefore, when you are on your supervisor's radar, it’s essential to have AML/CTF advisors who know how to set things right and effectively engage with AML/CTF supervisors and other stakeholders. For more details, please visit our Remediation Solutions page.
• Further information: You can visit our AML advisory page for an extensive list of AML/CTF advisory services we offer to support ADI anti-money laundering compliance, as well as AML/CTF compliance for other types of financial institutions and businesses subject to the AML/CTF regime.

 

AML/CTF Training and Capacity Building

We offer the following set of AML/CTF training and education solutions tailored to the authorised deposit-taking institutions’ AML/CTF compliance requirements:

• Customised AML/CTF Training Solutions: Specialised AML training sessions for various teams, including management, compliance, operations, sales, and customer relations, focusing on the AUSTRAC ADI AML requirements, AML/CTF awareness, best practices, and ML/TF red flags.
• Up-to-date Regulatory AML Updates: Keeping your compliance officers, managers, and teams updated with changes in the AUSTRAC ADI AML requirements, AML regulations and guidance.
• Workshops on Emerging Trends and Red Flags: Advising on new AML trends, red flags, and typologies relevant to ADI money laundering, terrorist financing, fraud, and other types of financial crime.
• Practical Workshops: Interactive workshops for effective and goal-oriented AML/CTF compliance, capacity planning, and resource allocation, covering:

• KYC procedures for ADIs
• KYB analysis and ML/TF risk assessment application to specific clients, transactions and situations
• The ADI money laundering risks, common money laundering schemes and terrorist financing methods
• Improvements in clients' onboarding and transaction monitoring procedures
• Reg-tech for AML compliance
• Internal and external AML/CTF reporting
• Related risk and compliance issues, including financial crime prevention
• Application of the risk-based approach to ADI money laundering, fraud risks, and terrorism financing
• Suspicious matter reporting guidelines
• The implementation of customer identification programs and KYC procedures
• Strategic and operational ML/TF risk management
• AML/CTF specifics of the Cross-border custodial services
• Other obligations related to the AUSTRAC ADI AML requirements

• Practical Compliance Applications: Ensuring the practical application of training, focusing on real-world ADI money laundering, terrorist financing, and common ADI fraud scenarios, as well as specific challenges related to the authorised deposit-taking institutions’ AML/CTF compliance that your business is likely to face.
• Further information: You can visit our AML training solutions page for an extensive list of AML/CTF training solutions we offer to ADIs and other businesses subject to AML/CTF regulations.

 

Comprehensive AML/CTF Managed Solution for ADIs

Our authorised deposit-taking institutions’ AML/CTF compliance management solutions include but are not limited to:

• AML/CTF Compliance Leadership: We act as your dedicated AML/CTF compliance officers (aka "Money Laundering Reporting Officers" (MLROs)) and as compliance managers, fully managing AML/CTF compliance and handling the ADI anti-money laundering obligations for your business.
• ADI Anti-money Laundering Risk Management: Conducting detailed assessments to identify ML/TF risks, assess their inherent impact and likelihood of occurrence for your business, evaluate the effectiveness of mitigations and controls in place, and formulate residual risk ratings.
• Managing Client Onboarding Process and Customer Due Diligence: Implementing robust Know Your Customer (KYC), Know Your Business (KYB), customer due diligence (CDD), and enhanced due diligence (EDD) processes, for all types of clients, including higher ML/TF risk clients.
• PEP and Sanctions Screening: Managing thorough compliance with AML surveillance requirements by screening against global sanctions and politically exposed persons (PEPs) lists. This covers both initial and ongoing screening, as well as escalation processes for true positives.
• UBO Verification Streamlining: Verification of beneficial ownership in line with the AUSTRAC ADI AML requirements, identifying and assessing individuals who hold ultimate control over assets. This includes initial and ongoing checks, with procedures to address discrepancies and high-risk cases as they arise.
• AML Transaction Monitoring: Developing and implementing a set of business-specific ML/TF alerts and red flags to detect and report suspicious transactions, helping you comply with the AUSTRAC ADI AML requirements in a commercially efficient manner without making AML/CTF compliance a business hindering factor.
• Transaction Monitoring and ADI Fraud Prevention Solution: Related to the above, we also help with the implementation of fraud alerts and red flags to detect, prevent, and respond to fraudulent transactions and activities.
• AML/CTF Tech Handling: Leading the alignment of AML/CTF technology implementation with your business processes and AML/CTF objectives. This also includes reviewing AML/CTF technology against the AUSTRAC ADI AML requirements and your core policies and procedures.
• AML/CTF and Data Sharing: Handling information requests from law enforcement agencies, AML/CTF supervisors, and other relevant AML/CTF-designated entities—such as your banking partners, FX platforms, liquidity providers, finance providers, etc.—to help you manage your AML/CTF compliance-related communications.
• Internal AML/CTF Reporting Solutions: Facilitating structured reporting workflows for your board and its delegate committees, with a specific focus on AML/CTF compliance. This includes:

• preparing and presenting comprehensive AML/CTF performance metrics
• providing insights into AML/CTF compliance effectiveness
• reporting on the effectiveness of internal controls and mitigations for your general AML/CTF obligations and the sector-specific ADI money laundering risks
• identifying areas for improvement

Our AML/CTF compliance reports cover:

• the status of compliance with the AUSTRAC ADI AML requirements
• the progress of an organisation-wide AML/CTF compliance calendar
• alignment of your business's AML/CTF performance with specific project goals and relevant KPIs
• other factors to ensure that the management function is well-informed and aligned with the AML/CTF compliance requirements for authorised deposit-taking institutions.

• Authorised deposit-taking institutions’ AML and Externally Reportable Matters: Implementing effective external reporting procedures to help you comply with the ADI anti-money laundering requirements for reporting captured activities and transactions. This includes managing externally reportable matters covered by the following report types: Suspicious Activity Reports (SARs), Suspicious Matter Reports (SMRs), Suspicious Transaction Reports (STRs), Prescribed Transaction Reports (PTRs), Threshold Transaction Reports (TTRs), and their equivalents.
• Periodic AML/CTF Reporting: Organising and overseeing the preparation, data storage, and effective submission of required periodic reports to your AML/CTF supervisors, helping you comply with AUSTRAC ADI AML requirements for statutory reporting.
• ADI Fraud Prevention Management: Implementing targeted fraud prevention measures, enhancing internal controls, and helping you comply with internal policies and external regulations. We work to mitigate fraud risks without disrupting business processes, aligning fraud prevention efforts with your broader compliance objectives.

 

 

KYB Solutions for ADI Anti-Money Laundering Compliance

We offer a range of KYB solutions to help you effectively comply with AUSTRAC’s ADI AML requirements. These include:

• Establishing ML/TF risk scoring models and parameters for different risk categories: We establish criteria to assess the ML/TF risk levels of your client base by identifying key risk factors based on their business nature, activities, jurisdictions, and other relevant characteristics and develop a risk scoring model to classify clients into different ML/TF risk categories such as low, medium, and high risk.
• Implementing a Customised KYB Process: We can help you roll out the KYB process across all departments to help your teams become sufficiently trained and equipped to handle clients' ML/TF risk effectively when it comes to verification, monitoring, ongoing due diligence, and other processes.
• KYB Technology and Automation: We select and evaluate technologies that can automate various parts of the KYB process, such as data collection, risk scoring, sanctions screening solutions, and ongoing monitoring.
• KYB-Related Escalation Process: We can develop and implement a clear escalation procedure for handling high-risk clients or irregularities, including the triggers for escalation, the actions required at each step, and the responsibilities for resolving these issues.

 

 

Core Policies and Procedures for ADI AML/CTF Compliance

We develop, enhance, and implement a set of core policies, manuals, frameworks, and procedures for effective authorised deposit-taking institutions’ AML/CTF compliance management, including the following:

• Authorised deposit-taking institutions’ AML/CTF Framework Development: Covering specific AUSTRAC ADI AML requirements and obligations under national AML/CTF laws and regulations, any applicable AML/CTF guidance, your risk appetite, your existing human and technology resources, your business structure, your history of AML/CTF compliance, and your current and future business goals.
• AML/CTF Risk Assessments: Focused on the AUSTRAC ADI AML requirements for risk management as they relate to specific ML/TF risks faced by your business in terms of its size, products, client types, jurisdictions of operation, delivery channels, and the financial institutions it interacts with when delivering its services. Also covering the assessment of the effectiveness of existing controls and mitigations in place to determine the residual risk rating for both general ML/TF risks relevant to the most designated service providers/AML/CTF reporting entities and industry-specific ML/TF risks faced by ADIs as these apply to your business operations. Visit our AML/CTF Risk Assessment page for more information.
• Comprehensive AML/CTF Programs (aka "AML/CTF Programme" in some jurisdictions): When it comes to ADI anti-money laundering compliance, your AML/CTF program is a core document that details how your business complies with various compulsory AML/CTF obligations, covering:

• the initial and ongoing CDD and EDD processes
• verification methods and requirements for identity, address, and source of funds
• internal and external reporting
• ongoing due diligence
• transaction monitoring
• employee vetting and training
• PEP and sanctions screening, and more

Our authorised deposit-taking institutions’ AML solution is about grounding your AML/CTF program in reality and developing it based on your circumstances, including:

• your AML/CTF Risk Assessment
• your available ML/TF systems and controls
• your available resources
• your compliance budget
• your AML/CTF compliance team's experience and size
• your stakeholders' interests
• your available AML technology and other relevant factors
• Further Information: Visit our AML/CTF Programs page for more information.

• Authorised deposit-taking institutions’ AML/CTF Procedures for Effective AML Compliance: Effective procedures are another core pillar of authorised deposit-taking institutions’ AML/CTF compliance. This is why our solutions cover the development and enhancement of a detailed set of AML/CTF procedures and protocols to meet the distinct needs of your business, with a focus on effective AML risk management across various business processes and the AUSTRAC ADI AML requirements as they apply to each step of your customer journey.
• AML Manuals and Guidelines: These are more detailed, practical resources that support the procedures by providing step-by-step instructions, specific reference points, and standards. Depending on your business size and complexity, we develop and enhance internal manuals and guidelines necessary for effective and efficient AML/CTF compliance. These include AML Operating Manuals, guiding materials, and guidelines that outline what to do for each process, step, or decision within your procedures.
• ML/TF Controls Mapping: Implementing controls based on your documented risks is another cornerstone of ADI anti-money laundering compliance. We help you develop, map, and assess your internal ML/TF controls and improve their effectiveness to ensure compliance with AUSTRAC ADI AML requirements, address specific financial crime, money laundering, and terrorist financing trends, and respond to any findings from internal and external AML/CTF auditors and supervisors.
• AML Red Flag Identification and Response Protocols: This is another area where a well-written AML policy or program must face the reality of operational speed, the workload across different teams, available tools, client base size, and other factors. That is why another part of our authorised deposit-taking institutions’ AML/CTF solution focuses on developing clear guidelines for identifying and responding to red flags indicative of fraud, money laundering, or terrorist financing activities, enabling you to take timely and appropriate action in different circumstances.
• AML/CTF Policy Update: Assisting with the review and enhancement of your core AML/CTF documents and operational procedures to reflect changes in your AML policies, including those caused by:
• updates in the AML/CTF laws, authorised deposit-taking institutions’ AML regulations or AML supervisors’ sector guidance
• internal changes in your business structure, size, and resources
• the launch of new products or expansion to new jurisdictions
• changes in your risk appetite
• changes in related obligations, such as privacy laws, information sharing, ADI fraud prevention requirements, and more
• AML/CTF issues identified during internal or external reviews or audits
• other relevant factors

 

AML/CTF Technology Integration Support

Streamlining AML Compliance: Our authorised deposit-taking institutions’ AML solutions include needs assessment and assistance in selecting and integrating appropriate AML technologies for efficient ADI anti-money laundering compliance management. This includes AML compliance technologies and tools that cover:

• Customer Due Diligence Automation
• E-KYC and Online Identity Verification
• Customer Onboarding Streamlining
• PEP and Sanctions Screening
• Ultimate Beneficial Owner (UBO) identification,
• KYB Solutions and AML/CFT Risk Management
• AML Alert Management
• Ongoing Due Diligence Obligations Management
• ADI Fraud Prevention
• Internal AML/CTF Reporting
• ADI AML/CTF Obligations for External Reporting
• AML/CTF Incident Management
• Exception Escalation and Management
• AML/CTF Management Automation: Including automated response workflows, and AI technology
• Customisable AML/CTF measures specific to onboarding and monitoring of your high ML/TF risk clients
• ADI AML/CTF obligations for Record-Keeping
• Transaction Monitoring and Surveillance: Including transaction monitoring tools to automate detection and response to ADI money laundering and terrorist financing red flags
• Effective CRM for handling AUSTRAC ADI AML Requirements

 

Authorised Deposit-Taking Institutions’ AML/CTF Audit Solutions

Having over ten years of AML/CTF compliance experience, ranging from AML/CTF framework and controls development and testing to successful AML/CTF management and issues resolution for various reporting entities, gives us the necessary expertise and qualifications to be your AML/CTF auditors.

We offer two comprehensive AML/CTF audit options to review your compliance with ADI anti-money laundering obligations. These options are:

Statutory AML/CTF Audit Option: A comprehensive review of your existing AML/CTF framework to assess whether your business complies with Australian AML/CTF standards and regulatory obligations. We independently test your compliance with both Australia’s AML/CTF obligations and specific AUSTRAC ADI AML requirements. For more information, please visit our Australian Independent AML Review page.

Internal AML/CTF Audit Option: Apart from an independent statutory audit, we also offer an internal AML audit option to prepare authorised deposit-taking institutions for an external audit by an independent auditor, an AML/CTF supervisor's review, or a review by another significant business stakeholder, such as a banking partner or an equity purchaser. This option is also suitable for significant business events like reorganisation or expansion.

Here, we go beyond merely meeting AUSTRAC ADI AML requirements and focus on evaluating the effectiveness of your AML/CTF controls and ML/TF risk management processes for alignment with:

• the ML/TF risks faced by your business, including your Know Your Business (KYB) analysis
• ADI anti-money laundering compliance obligations
• your current and future goals
• your business model
• your current and prospective client inflow
• the specific AML/CTF compliance areas or requirements (this process can be tailored to address particular AML issues or compliance areas, ensuring a targeted approach to ADI anti-money laundering compliance)

We help you not only identify any gaps and weaknesses but also provide insights on how to enhance your controls and respond to these in a commercially oriented manner for smarter AML/CTF compliance. Please visit our Internal AML/CFT Review Solution page for more information.

AML/CTF audit-related solutions:

• Post-Audit Remediation Support: We assist with the implementation of post-audit remediation actions, addressing and resolving any identified AML/CTF issues.
• AML/CTF Attestation Support: Our authorised deposit-taking institutions’ AML solutions include helping you prepare the required attestations for your AML/CTF supervisor and other stakeholders. This involves confirming that all necessary remedial actions have been completed and that adequate AML/CTF compliance measures have been put in place.
• Post-Audit Stakeholders' Liaison: We manage your communications with national AML/CTF supervisors, banks, auditors, insurers, and other stakeholders, ensuring smooth progress in reporting on the status and completion of your post-audit action plan.

 

 ADI Fraud Prevention Solutions

The ADI anti-money laundering control environment is closely related to prevention of financial crime in general, and fraud prevention in particular. ADI fraud prevention controls and ML/TF controls can form a unified compliance management framework tailored to the specific ML/TF and fraud risks your business is facing or is likely to face. Our ADI Fraud Prevention Solutions include:

• Fraud Risk Assessment and Analysis: Conducting assessments to identify and prioritise fraud risks across your operations, allowing you to allocate resources effectively.
• Incident Response and Investigation: Creating response plans to manage fraud incidents, including guidelines for investigating, documenting, and applying corrective actions to minimise potential damage.
• Implementing Preventive Measures: Setting up checks, alerts, and controls to tackle fraud risks in the non-bank deposit taking sector, as well as drafting a set of procedures and guidelines to address fraud scenarios that you are likely to face or have faced.
• Data Analytics for Fraud Detection: Leveraging data analytics to identify focus points for your fraud prevention efforts and areas for improvement.
• Fraud Detection Technology Implementation: Choosing and helping you implement appropriate technology for real-time fraud detection.
• Fraud Awareness Training: Educating staff about fraud risks, including identity theft and impersonation.
• Further information: Please visit our Fraud Management Solutions page for more information.

ADI Fraud Response Requirements: In the current risk and compliance environment, implementing fraud prevention measures is either already mandated by law in some jurisdictions or, at minimum, expected by government agencies, financial market participants, and other stakeholders

 

Broader Risk & Compliance Solutions for ADIs

Your AML/CTF compliance is generally more effective when the right hand knows what the left hand is doing, and at the very least, they do not interfere with each other. Incorporating your controls and procedures for compliance with the AUSTRAC ADI AML requirements into an overall risk and compliance management framework efficiently can increase your overall risk compliance effectiveness. This is where our experience can help you. Apart from AML/CTF compliance solutions for authorised deposit-taking institutions, we include the following risk and compliance solutions:

• Compliance Advisory and Management: A comprehensive set of solutions for second-line compliance management, including both compliance advisory and compliance management options. Visit our Compliance Solutions Page for ADIs for more information.
• Third-line Compliance Assurance: A range of third-line compliance defence solutions covering compliance assurance program development and implementation, internal controls design, and controls testing solutions
• ISO Standards Compliance: A range of solutions for compliance with the International Organization for Standardization (ISO) standards, helping you prepare for ISO certification
• FATCA and CRS Compliance: A comprehensive set of solutions for complying with the Foreign Account Tax Compliance Act (FATCA) and the Common Reporting Standard (CRS) requirements, including tax residency verification, ongoing due diligence, reporting, and record-keeping
• Privacy Law Compliance: A range of solutions covering development, implementation, and testing of data privacy controls, procedures, and tools required to meet the applicable obligations under the Privacy Act, the GDPR, ISO 27701, etc.
• Financial Licensing and Registration: A set of financial licensing solutions for ADIs, including preparation, licensing process management, regulator liaison, and post-licensing support in:

• Australia
• New Zealand
• Singapore
• The United Kingdom
• The United States
• Offshore financial centres and tax havens
• The European Union

 

 

Common Money Laundering Risks for ADIs

ADI money laundering risk types can be broadly classified into five categories:

• Product types (services offered)
• Delivery methods
• Customer types
• The institutions involved in delivering your services
• Jurisdictions of operation

Given the variety of products offered by different businesses, as well as their different business structures and operations, the examples below of money laundering risks faced by authorised deposit-taking institutions represent only a sample and are not exhaustive.

 

Product-Related Risks and Authorised ADI AML Compliance

Some of the product-related ML/TF risks relevant to ADI anti-money laundering compliance include:

• Inadequate Monitoring of Cash Deposits: Lack of mechanisms to detect large or structured cash deposits that could indicate layering or placement of illicit funds (relevant to retail and community ADIs).
• Insufficient Verification for Fixed-Term Deposits: Weak controls for verifying the source of funds in fixed-term deposit accounts, increasing exposure to layering risks (relevant to retail and wholesale ADIs).
• Weak Controls for High-Interest Deposit Products: Lack of due diligence on customers seeking high-interest deposit products, which could attract individuals looking to place illicit funds for integration (relevant to retail ADIs).
• Absence of Controls Over Dormant Accounts: Insufficient oversight of dormant accounts that may be used to temporarily hold or layer illicit funds before being activated for transfers.
• Inadequate Screening for Joint Deposit Accounts: Weak controls to identify risks in joint accounts opened with unrelated or high-risk individuals, which could be used to obscure beneficial ownership (relevant to retail ADIs).
• Misuse of Nominee Deposit Accounts: Failure to prevent or monitor the use of nominee accounts or accounts opened by third parties, facilitating anonymity for illicit fund placements (relevant to wholesale and retail ADIs).
• Lack of Oversight for Structured Time Deposits: Absence of mechanisms to identify customers structuring time deposits across multiple accounts to avoid detection thresholds (relevant to wholesale ADIs).
• Weak Monitoring of Cross-Border Deposit Transfers: Insufficient controls on deposits originating from high-risk jurisdictions or through international correspondent banks (relevant to wholesale and some retail ADIs).

Jurisdictional Risks and ADI AML Compliance

Some of the jurisdictional risks relevant to ADI money laundering prevention include:

• Weak Monitoring of Cross-Border Deposit Transfers: Insufficient controls on deposits originating from high-risk jurisdictions or through international correspondent banks (relevant to wholesale and some retail ADIs).
• Complications Arising from International Sanctions: Lack of effective mechanisms to navigate sanctions regimes, particularly when clients have connections to sanctioned individuals or entities (relevant to wholesale and some retail ADIs).
• Inadequate Enhanced Due Diligence for Foreign PEPs: Weak procedures for conducting enhanced due diligence on foreign Politically Exposed Persons (PEPs) linked to jurisdictions with high levels of corruption or financial crime (relevant to wholesale and some retail ADIs).

Delivery Method Risks and ADI AML Compliance

Some of the delivery method-related ML/TF risks relevant to ADI anti-money laundering compliance include:

• Inadequate Verification of Remote Transactions: Failure to implement stringent verification processes for remote banking services (e.g., online and mobile banking) increases the risk of unauthorised transactions and ML/TF activities.
• Insufficient Monitoring of Automated and Algorithm-Based Transactions: Lack of effective monitoring and calibration of automated transaction systems can allow suspicious patterns to go undetected, facilitating ML/TF activities.
• Weak Controls for Linking Documentation to Customer Identity: Lack of mechanisms to effectively verify and link identification documents to the individual submitting them increases vulnerabilities to identity fraud and impersonation (relevant to retail, regional, and community ADIs).
• Lack of Screening for Complex and Unusual Transactions: Absence of mechanisms to detect and monitor third-party payments, layered or complex payment structures, and transactions inconsistent with customer profiles increases exposure to ML/TF risks (relevant to retail and mutual ADIs).
• Weak Detection Mechanisms and Alert Systems for Digital Payment Platforms: Insufficient triggers, alert systems, and investigation procedures for detecting suspicious or high-risk transactions conducted through digital payment platforms increase ML/TF vulnerabilities (relevant to retail and regional ADIs).
• Lack of Controls for Deposits and Payments in Non-Traditional Currencies or Alternative Payment Methods: Failure to assess and monitor deposits made in non-traditional currencies, digital currencies, or currencies subject to currency control laws (e.g., restricted foreign currencies). Similarly, insufficient mechanisms to evaluate and monitor requests to pay interest or withdraw principal in these currencies or through alternative payment methods (relevant to wholesale ADIs).

 

Customer Type Risks and ADI AML Compliance

Some of the customer type-related ML/TF risks relevant to ADI money laundering prevention include:

• Weak Controls for Verifying Third-Party Depositors: Lack of mechanisms to identify and verify third parties making deposits on behalf of customers (relevant to retail, regional, and mutual ADIs).
• Failure to Identify High-Risk Occupations or Industries: Inadequate measures to identify clients operating in industries such as gambling, money remittance, or unregulated financial services (relevant to retail, regional, and community ADIs).
• Insufficient Due Diligence for Clients in High-Risk Jurisdictions: Absence of enhanced due diligence for customers with connections to jurisdictions with weak AML/CTF measures, high levels of corruption, or organised crime activity (relevant to wholesale and mutual ADIs).
• Lack of Screening for Complex or Layered Legal Entities: Weak controls to detect complex company structures or trust arrangements designed to obscure beneficial ownership (relevant to wholesale and mutual ADIs).
• Entities with Minimal Physical Presence: Failure to identify customers whose operations are limited to virtual offices or who lack a tangible presence in the jurisdiction of formation (relevant to community and mutual ADIs).
• Obscure Beneficial Ownership Across Jurisdictions: Inadequate controls to verify entities where beneficial owners are located in one jurisdiction, bank accounts in another, and operations in a third (relevant to wholesale ADIs).
• Overreliance on Self-Declared Customer Information: Dependence on unverified customer-provided data during onboarding without robust verification procedures (relevant to retail and mutual ADIs).
• Lack of Controls for Cash-Intensive Clients: Insufficient risk categorisation and ongoing monitoring for clients from cash-heavy businesses, such as retail or hospitality, which are vulnerable to laundering illicit funds (relevant to retail and community ADIs).

 

Institutional Risks and ADI AML Compliance

Some of the institutional ML/TF risks relevant to the authorised deposit-taking institutions’ AML compliance include:

• Inadequate Screening of Institutional Clients: Weak verification processes for institutional clients, particularly those with complex ownership structures or links to high-risk jurisdictions (relevant to wholesale and mutual ADIs).
• Inadequate Oversight of Deposit Brokers and Introducing Agents: Weak monitoring and controls over deposit brokers or introducing agents conducting AML/CTF checks on behalf of ADIs may result in reliance on substandard due diligence procedures (relevant to wholesale and regional ADIs).
• Reliance on Payment Providers Without Sufficient Transparency: Lack of mechanisms to assess and monitor transactions processed through payment providers may prevent ADIs from identifying the ultimate beneficiaries of deposits and withdrawals (relevant to mutual and wholesale ADIs).

 

 

Standard Anti-Money Laundering Requirements for ADIs

Given the variety of ADIs’ AML requirements, this list is not exhaustive:

• Conducting customer due diligence, including appropriate KYC checks: Ensuring verification of customers’ identities, as well as identities of beneficial owners of customers that are legal entities.
• Conducting transaction monitoring: Monitoring deposits, withdrawals, and other transactions to identify and report suspicious transactions and patterns.
• ODD requirements: Conducting ongoing customer due diligence, which is generally based on the customers' ML/TF risk profiles and ML/TF risk categories, as well as changes in their activities, behaviours, or risk factors.
• Staff Vetting: Performing comprehensive background checks and ongoing vetting of staff to maintain high standards of integrity and awareness.
• Threshold Transaction Reports (TTRs) and International Funds Transfer Instructions (IFTIs): ADIs must report cash transactions of AUD 10,000 or more through TTRs and submit IFTIs for cross-border electronic transfers, covering both incoming and outgoing transactions.
• Compliance with the regulatory obligations: Including registering with your local AML/CTF supervisor, appointing an AML/CTF officer or an MLRO, answering requests for information from the police, regulators and your AML/CTF supervisor, filing an annual report and more.
• Regular Staff Training: Providing continuous training to ensure employees are aware of AML/CTF protocols and can recognise red flags.
• Timely Reporting of Suspicious Transactions: Ensuring that suspicious transactions and activities are reported to the relevant authority (either your local AML/CTF supervisor or a financial intelligence unit (FIU)) within the required deadlines.
• ML/TF Risk Assessments: Conducting regular assessments of ML/TF risks faced by your business is a part of AML risk management for ADIs.
• Independent AML/CTF Reviews and ADIs: Organising periodic independent reviews of part A of the AML/CTF program, other core documents, and components of your AML/CTF framework to assess their existence, compliance, application, and, where applicable, effectiveness.
• Applying EDD measures: Conducting enhanced due diligence on certain customers and certain transaction types.
• Establishing Clear AML/CTF Policies and Procedures: Creating documented guidelines for staff to follow.
• Monitoring PEPs and Sanctioned Entities: Implementing measures for additional scrutiny of politically exposed persons and entities on sanction lists.
• Screening Against Watchlists: Regular checks of clients against domestic and international watchlists.
• Ensuring Proper Record-Keeping: Maintaining detailed and accurate records of client information and transactions in compliance with AML/CTF regulations.

 

Common ADI AML/CTF Issues

This is not an exhaustive list and could include:

During Customer Onboarding

• Inadequate Identity Verification: Failure to thoroughly verify customer identity, increasing the risk of identity fraud.
• Insufficient Risk Profile Assessment: Inability to accurately assess a customer's risk profile, including inadequate analysis of the source of funds.
• Over-reliance on Outdated Information: Relying on outdated or insufficient documentation, leading to non-compliance with KYC norms.

 

After Customer Onboarding

• Ineffective Transaction Monitoring: Inadequate monitoring of transactions, leading to missed detection of suspicious activities.
• Outdated Customer Information: Failure to regularly update customer information and risk profiles, resulting in obsolete risk assessments.
• Non-Detection of Behavioural Changes: Lack of detection mechanisms for changes in customer behaviour or transaction patterns that may indicate money laundering or terrorist financing

 

Common ADI Fraud Risks

The following list of ADI fraud types is not exhaustive:

• ADIs and Identity Fraud: Fraudsters can attempt to use stolen or falsified identities to open deposit accounts, facilitating unauthorised transactions or the placement of illicit funds.
• ADIs and Transaction Fraud: Fraud involving manipulated or fabricated deposit records, withdrawal requests, or documentation can be used to legitimise illicit funds or divert funds improperly.
• ADIs and Insider Fraud: Employees may exploit their access to deposit systems for unauthorised transactions, diversion of customer deposits, or tampering with account details for personal gain.
• ADIs and Phishing Fraud: Cybercriminals can target deposit account holders through phishing schemes, stealing credentials to gain unauthorised access and manipulate deposits or withdrawals.
• ADIs and Technology Fraud: Exploitation of digital deposit platforms, including hacking, unauthorised access, or data manipulation, can compromise customer accounts or misappropriate funds.
• ADIs and Cross-Border Deposit Fraud: International deposit systems may be misused to layer funds through multiple jurisdictions, obscuring the source or ownership of deposited funds.
• ADIs and Deposit Structuring Fraud: Deposits can be structured below reporting thresholds to evade detection, often used in layering money laundering schemes.
• ADIs and Account Takeover Fraud: Unauthorised individuals gain control over legitimate customer accounts through various means, facilitating unauthorised transactions and fund manipulation.
• NBDTs and Synthetic Identity Fraud: Fraudsters can create synthetic identities by combining real and fake information to open deposit accounts, making it difficult to detect and trace illicit activities.

 

 

Standard AML/CTF Red Flags for Authorised Deposit Takers

The Financial Action Task Force (FATF) and various national AML/CTF supervisors mention the following ML/TF red flags for ADIs. This is not an exhaustive list:

• Activity Inconsistent with Business Profile: Transactions that do not match the nature of the customer's stated business activities, such as a non-profit organisation receiving large commercial payments.
• Unusual Transaction Patterns: Transactions that significantly deviate from the customer’s normal activity, such as sudden large deposits or withdrawals without a clear business or personal rationale.
• Use of Third Parties Without Clear Justification: Customers making or receiving payments through third parties without a legitimate business or personal explanation.
• Disproportionate Transactions: Financial activities, such as deposits or withdrawals, that are disproportionate to the customer’s stated business or income levels.
• Involvement in High-Risk Jurisdiction Transactions: Frequent or high-value transactions involving countries with weak AML/CTF measures, high corruption levels, or known for organised crime.
• Rapid Succession of Financial Activities: Multiple high-value deposits or withdrawals conducted within short timeframes, inconsistent with normal account behaviour.
• Frequent Early Termination of Fixed Deposits: Clients repeatedly withdrawing fixed-term deposits prematurely, potentially as a method to layer illicit funds.
• Accounts Used as Pass-Through for Funds: Accounts receiving and immediately transferring funds without retaining balances, suggesting layering activities.
• Unclear Source of Funds or Wealth: Customers unable to provide sufficient documentation or credible explanation for the origin of their deposits.
• Transactions Involving Unregulated Financial Institutions: Engaging with intermediaries or entities in regions where financial institutions lack proper oversight or AML controls.
• Structuring of Deposits to Avoid Reporting Thresholds: Clients making multiple deposits just below the threshold requiring enhanced due diligence or reporting.
• Unusual Use of Digital Banking Channels: Customers who primarily use online or mobile banking to conduct large or frequent transactions inconsistent with their profile, potentially to avoid face-to-face interaction.
• Frequent Changes to Account Details: Repeated and unexplained changes to customer account information, such as contact details or authorised signatories.
• Multiple Accounts with Minimal Activity: Opening numerous accounts that remain largely inactive or have minimal balances, which may be used later for illicit purposes.
• Reluctance to Provide Required Information: Customers who are unwilling or refuse to provide complete information or documentation required for verification purposes.
• Frequent Use of Multiple Accounts by the Same Customer: Highly relevant as ADIs often monitor customer accounts for patterns of fund layering or obfuscation.
• Frequent Requests for Changes to Account Ownership: Relevant for ADIs, as changes to account ownership are often exploited to conceal beneficial owners or launder funds.
• Accounts with Minimal Activity Followed by High-Value Transactions: Relevant as ADIs must monitor account activity for sudden spikes in transactions.
• Transactions Structured Across Multiple Financial Institutions: Highly relevant due to the collaborative nature of financial transactions within Australia’s banking ecosystem.