Changes to the AML/CTF Act for current reporting entities, which will commence on 31 March 2026, include a change to the Compliance Officer requirement. Background.
New section 26J requires that:
(1) The reporting entity must designate an individual as the compliance officer (the AML/CTF compliance officer ) for the reporting entity.(2) A reporting entity must ensure that the individual designated as the AML/CTF compliance officer for the reporting entity:
(a) is a person employed or otherwise engaged by the reporting entity at management level; and
(b) has sufficient authority, independence and access to resources and information to ensure the individual can perform the functions of an AML/CTF compliance officer effectively.
(3) An individual is not eligible to be designated as the AML/CTF compliance officer for a reporting entity unless the individual:
(a) if the reporting entity provides its designated services at or through a permanent establishment of the reporting entity in Australia–is a resident of Australia; and
(b) is a fit and proper person; and
(c) meets the requirements (if any) specified in the AML/CTF Rules.
The requirement to have a compliant AML Compliance Officer is a civil penalty provision.
Section 4-18 of the second draft exposure rules details the fit and proper requirements.
A reporting entity must have regard to the following matters in determining whether an individual is a fit and proper person for the purposes of paragraph 26J(3)(b) of the Act:
(a) whether the individual possesses the necessary competence, skills, knowledge, diligence, expertise and soundness of judgement to properly perform the duties of the AML/CTF compliance officer for the reporting entity (also having regard to the nature, size and complexity of the reporting entity);
(b) whether the individual has the attributes of good character, honesty and integrity;
(c) whether the individual has been convicted of a serious offence;
(d) whether the individual has been the subject of adverse findings, or found to have engaged in serious misconduct, by a regulatory body in Australia or a foreign country;
(e) whether the individual is an undischarged bankrupt under the law of Australia or a foreign country;
(f) whether the individual has executed a personal insolvency agreement under Part X of the Bankruptcy Act 1966 or a similar law of a foreign country;
(g) whether the individual has a conflict of interest that will create a material risk that the individual will fail to properly perform the duties of the AML/CTF compliance officer for the reporting entity.
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Author: David Jacobson
Principal, Bright Corporate Law
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About David Jacobson
The information contained in this article is not legal advice. It is not to be relied upon as a full statement of the law. You should seek professional advice for your specific needs and circumstances before acting or relying on any of the content.
