Regulatory alert: Anti-money laundering act – retirement villages

Retirement village operators across Australia may be forgiven for wondering when the ‘regulation party’ will end.  Across the country, operators have been battered by ongoing and significant state based regulatory changes.  Multi-state operators even more so.

With so much reform in train, many may have missed the changes at the federal level to the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) (AML Act).  Its purpose is to provide measures to detect, deter and disrupt money laundering, the financing of terrorism and other serious financial crimes. The AML Act creates a series of obligations for any business or person providing ‘designated services’.

Under the AML Act, any ‘lease-for-life’, or lease of over 30 years, or transfer or an interest in real estate (such as a strata lot) will be caught as a ‘designated service’.  This is a wide net and will capture operators who create these leases or sell the underlying lots (in the case of a strata titled retirement village). They will then become ‘Reporting Entities’ under the AML Act.

What to do?

Operators, as Reporting Entities, will need to:

1. register with the regulator, AUSTRAC;
2. establish an Anti-Money Laundering and Counter-Terrorism Financing Program in accordance with the AML Act (Program);
3. report significant transactions (over $10,000) and, under the Program, have a method for identifying and making suspicious matter transaction reports;
4. complete customer due diligence investigations, in accordance with their Program;
5. conduct training in accordance with the AML Act and Program;
6. submit other annual regulatory reports to AUSTRAC;
7. maintain relevant records for 7 years; and
8. appoint an AML officer to oversee the Program and make reports.

AUSTRAC’s guidance is very clear, there is no ‘one-size fits all’ approach. Operators will need to take time to consider how it will meet all of the requirements as they apply to their organisation.

Failure to comply exposes operators to a significant penalty regime. The penalties for breach of the AML Act extend into the millions of dollars. The maximum civil penalty which can be issued for non-compliance under the AML Act is 100,000 penalty units ($31.3 million) with further penalties for significant breaches.  To be doubly clear; AUSTRAC means business, it was under the AML Act that Australia’s largest civil penalty of $1.3 billion was issued.

Obviously, there is a risk of regulation overload or fatigue here.  The real art will be in delivering on more regulatory requirements within the same envelope of resources.  Lavan has a number of practical solutions to support your organisation to:

1. identify whether your organisation is captured by the AML Act;
2. create a Program to suit your organisation;
3. deliver training to staff in accordance with your Program and the AML Act; and
4. integrate your Program into the governance of your operations in a way which minimizes further stress while preparing your organisation for success under the AML Act.

Disclaimer

The information contained in this publication does not constitute legal advice and should not be relied upon as such. You should seek legal advice in relation to any particular matter you may have before relying or acting on this information. The Lavan team are here to assist.