The Imperative of a Robust AML Compliance Framework
In Australia's dynamic regulatory landscape, businesses face an increasingly complex and sophisticated threat from financial crime, including money laundering (ML) and terrorism financing (TF).
For those designated as reporting entities under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act), a comprehensive AML/CTF Program is not just a best practice—it is a mandatory legal obligation.
Beyond the initial development of a program, a critical and ongoing requirement is to ensure its continued effectiveness. Our lawyers and compliance specialists have conducted lots of independent reviews for businesses across a range of sectors. In this article, we explain what an AML Review is and why your AML/CTF Program needs to be independently reviewed regularly. We will also clarify who the review obligations apply to, who is qualified to undertake a review, where they come from, and what you should anticipate from the process.
Newly regulated Tranche 2 entities
If your business will be regulated under Tranche 2 of the AML/CTF reforms in Australia, now is the time to prepare. At Click Legal, we provide specialist AML/CTF legal advice, compliance training, and tailored resources to help you understand and meet your future anti-money laundering and counter-terrorism financing obligations.
Current reporting entities
If you are a current reporting entity, you need to comply with the changes to your AML/CTF obligations. On 31 March 2026, reforms to the AML/CTF Act come into effect for current reporting entities. For current reporting entities this includes changes:
· to value transfer obligations and the definition of bearer negotiable instruments for the financial services
· to AML/CTF program requirements and due diligence.
These changes will apply from 31 March 2026.
Changes to the tipping off offence started 31 March 2025. This means it’s now a criminal offence to disclose certain types of information to another person only in circumstances where it would or could reasonably be expected to prejudice an Investigation.
The AML/CTF Amendment Act introduces major reforms, including a shift from prescriptive compliance to a risk-based approach requiring overarching AML/CTF risk assessments, proportionate mitigation strategies, and strengthened customer due diligence (CDD) with ongoing monitoring.
Other significant changes include the travel rule for financial institutions and virtual asset service providers (VASPs), and value transfer reporting (VTR) for services that transfer value.
These reforms take effect on 31 March 2026 for current reporting entities and from 1 July 2026 for newly regulated Tranche 2 entities such as lawyers, accountants, real estate agents, and trust and company service providers. Businesses that act early can reduce compliance costs, mitigate regulatory risk, and demonstrate a strong culture of compliance.
Contact Click Legal today to stay ahead of the AML/CTF reforms and ensure your business is ready for 2026.
If you are a business that will be regulated in 2026 under Tranche 2 of the AML/CTF reforms, we can help you stay up to date as the reforms progress, providing guidance, training, and resources to support you in navigating and complying with your future statutory obligations.
What is an Independent Review of an AML/CTF Program?
AUSTRAC explains that an independent review is an impartial assessment of Part A of your AML/CTF Program, designed to ensure it is effective, compliant, and robust. Its core purpose is to provide assurance that this critical part of your program is not only compliant but also effective and robust in managing your specific money laundering and terrorism financing risks.
The Rule: Part 8.6 – Independent Review
The legal obligation to have an independent review is formally set out in the legislation, the Anti-Money Laundering and Counter-Terrorism Financing Rules Instrument 2007 (No. 1). This rule sets out the non-negotiable standards that all reporting entities must follow.
· Part 8.6 of the AML/CTF Rules – Independent review (standard programs).
· Part 9.6 of the of the AML/CTF Rules – Independent review (joint programs) This is for reporting entities that are part of a designated business group (DBG).
What Does the Review Assess?
The scope of the independent review is comprehensive and must evaluate four key areas:
1. Effectiveness: must assesses the effectiveness of Part A of the Program, taking into account the ML/TF risks faced by your business.
2. Compliance: Whether the program fully complies with the AML/CTF Rules.
3. Implementation: Whether the program's policies and procedures have been effectively put into practice.
4. Adherence: Whether the entity has consistently complied with its own program.
Who can conduct an independent review?
The independent reviewer can be someone internal to your organisation or an external party. However, they must meet strict criteria to ensure true impartiality.
According to AUSTRAC and the AML/CTF Rules. the reviewer must be someone who:
- Understands your business or organisation.
- Understands ML/TF risks.
- Was not involved in any part of developing the program, including your ML/TF risk assessment, developing controls, or implementing or maintaining the program.
Examples:
- An internal reviewer could be an internal auditor from a separate division with no compliance role.
- An external reviewer could be a lawyer, an accountant, or a specialised AML/CTF consultant.
Assessing Suitability:
When selecting a reviewer, you should consider:
- Their membership in a professional body with relevant standards.
- Whether they are free from influence by those who developed the program.
- Their understanding of how AML/CTF obligations apply to your specific business.
You can engage one reviewer for the entire Part A or different reviewers for different sections.
The Critical Requirement: Independence
The most important aspect is the reviewer's independence. To ensure a truly objective assessment, the reviewer must not have been involved in:
- Performing any of the functions or measures being reviewed.
- Designing, implementing, or maintaining Part A of your AML/CTF program.
- Developing your ML/TF risk assessment or related internal systems and controls.
You must have measures in place to ensure the reviewer’s independence and be able to demonstrate this to AUSTRAC.
Need an Independent Review?
Our team of qualified lawyers delivers statutory AML/CTF reviews, ensuring full compliance with AUSTRAC requirements. With transparent fixed fees, our expert team conducts regular independent reviews to ensure you’re meeting your obligations.
Contact us for free quotes: hello@clicklegal.com.au
Why Click Legal?
· We are AML Lawyers: When compliance is under scrutiny, you need legally sound solutions from professionals who interpret and apply the law effectively.
- We Read & Interpret the Law: We analyse your operation against the specific legal requirements of the AML/CTF Act and Rules.
- Practical, Actionable Solutions: Our lawyers provide pragmatic, defensible solutions that work in the real world.
- Deep Expertise: We have been working in this field since 2006.
You get a comprehensive review designed for practical implementation. That’s the Click Legal difference.
How often should Part A of your AML/CTF Program be independently reviewed?
The requirement and frequency for an independent review are explicitly defined in the AML/CTF Rules – Part 8.6 (Independent review).
The foundational rule, Part 8.6.1, states the core obligation:
"Part A must be subject to regular independent review."
The term "regularly" is not defined by a fixed calendar date. Instead, Part 8.6.2 provides the critical framework for determining the appropriate frequency, stating it must: "take into account the nature, size and complexity of a reporting entity’s business, and the type and level of ML/TF risk it might face."
What this means in practice:
Your obligation is to conduct a risk-based assessment to determine what "regular" means for your specific business. This is not a one-size-fits-all requirement.
High-Risk & Complex Entities: Businesses with larger operations, complex products (e.g., remittance, gambling), digital assets, or services in high-risk jurisdictions likely face a higher ML/TF risk. For these entities, "regular" will mean a more frequent review cycle, typically every 12 to 18 months.
Lower-Risk & Less Complex Entities: Businesses with a well-documented low-risk profile, simpler product offerings, and a stable customer base may determine that "regular" equates to a less frequent cycle, potentially every 2 to 3 years.
Aligning with AUSTRAC Guidance:
While the Rules provide the legal framework, AUSTRAC's guidance offers practical interpretation. AUSTRAC suggests that high-risk organisations should arrange for a review every 2 to 3 years. In practice, many reporting entities find a 2–3-year cycle to be a standard baseline, but this must be justified by your own risk assessment.
Trigger-Based Reviews: Beyond this scheduled cycle, a review must be triggered by any material change to your business or risk environment, such as:
· Launching a new high-risk product or service.
· Expanding into new markets or customer segments.
· A significant compliance failure or breach.
· Increased enforcement action or scrutiny within your industry.
Your key responsibility is to be able to demonstrate to AUSTRAC why your chosen frequency is appropriate. You must document your rationale, linking it directly to the factors in Rule 8.6.2: the nature, size, complexity, and ML/TF risk of your business. This decision must be proactively revisited as your business evolves.
What’s Involved in an Independent Review?
Here’s How We Do It.
An independent review isn’t just a compliance checkbox—it’s your opportunity to validate the strength and effectiveness of your AML/CTF program. At Click Legal, we conduct reviews that are thorough, practical, and designed to genuinely fortify your compliance framework. Here’s how we do it:
Our Three-Pillar Review Approach
We break down the review into three core pillars to ensure nothing is overlooked:
- Design Check: We verify that Part A of your Program is comprehensively designed, with policies and procedures that explicitly address every one of your business’s AML/CTF obligations under the Rules.
- Implementation Check: We move beyond the document to assess whether these policies have been effectively implemented into your daily operations and staff workflows.
- Compliance Check: We forensically examine whether your team has consistently complied with the Program in practice.
Our Step-by-Step Process
Phase 1: The Deep Dive Document Review
We start by building a complete picture of your compliance landscape through your documentation. Our team meticulously reviews:
- Your core AML/CTF Program document and all supporting policies and procedures.
- Your entity’s most recent ML/TF risk assessment to ensure your controls are aligned with your risk profile.
- Proof-of-compliance records, including:
- AML/CTF training materials and staff completion records.
- Employee screening and due diligence files.
- De-identified examples of Suspicious Matter Reports (SMRs) filed during the period.
- Evidence of ongoing customer due diligence, transaction monitoring alerts, and enhanced customer due diligence (ECDD) conducted on higher-risk customers.
- The previous year’s AUSTRAC Annual Compliance Report.
Phase 2: The Collaborative Operational Assessment
Paperwork only tells part of the story. We then schedule a video call with your key people to see how your program lives in your business. We speak directly with:
- Your AML/CTF Compliance Officer.
- A member of your senior management (for governance oversight).
- Relevant compliance staff involved in day-to-day operations.
Together, we walk through your: - Management oversight and reporting lines.
- Customer onboarding systems and processes.
- Real-time transaction monitoring and escalation procedures.
- Enhanced due diligence protocols for higher-risk scenarios.
This conversation is crucial for understanding your operational environment and identifying any gaps between policy and practice.
Phase 3: Delivering Your Actionable Roadmap
The final step is where we deliver immense value. We prepare a detailed Independent Review Report that doesn’t just meet the legal requirement—it becomes your blueprint for improvement. Our report clearly outlines:
- Our Methodology: How we conducted the review for full transparency.
- Our Findings: A clear, prioritised summary of what’s working well and what isn’t.
- Our Recommendations: Practical, legally sound, and actionable steps to rectify any issues, whether they require changes to your Program document or to your business practices.
We ensure this report is presented in a way that empowers your senior management and board to make informed decisions, providing them with the assurance and accountability they require.
This is the Click Legal difference: a review that is both rigorously independent and genuinely constructive, conducted by lawyers who speak the regulator’s language.
Is a Review of Part B of Your Program Required?
Not strictly speaking.
The AML/CTF Rules specifically mandate an independent review for Part A of your program, which focuses on your risk-based systems and controls to mitigate ML/TF risks. There is no equivalent legal requirement for a formal, independent review of Part B (the Customer Identification Program or "KYC" procedures).
However, at Click Legal, we go beyond the strict legal minimum.
We typically conduct high-level testing of whether your business has complied with its Part B obligations. Here’s why we believe this is a critical component of a truly comprehensive review:
- Testing Part A Effectiveness: Your Part B procedures are a direct output of the risk assessment and controls defined in your Part A program. Reviewing how well you have executed your KYC checks is one of the most effective ways to test whether your Part A program has been effectively implemented and complied with in practice.
- Providing a Holistic View: A real-world compliance failure often occurs at the intersection of policy (Part A) and execution (Part B). Ignoring Part B would give an incomplete picture of your overall AML/CTF health. Our approach provides a more holistic and valuable assessment of your entire compliance framework.
- Identifying Practical Gaps: This proactive approach helps identify potential gaps in customer onboarding, verification, and ongoing due diligence that could pose a significant regulatory risk, allowing you to address them before they become an issue.
In short, while the Rules require a review of Part A, our method includes a practical assessment of Part B compliance to give you greater assurance that your entire program is robust, effective, and defensible.
Special Offer: Strengthen Your Compliance Framework
Book Your AML/CTF Independent Review Today & Receive Complimentary Staff Training!
At Click Legal, we believe that robust compliance is built on both strong systems and educated staff. That’s why we’re offering a special package to give you complete peace of mind.
When you book a full AML/CTF Independent Review with us, you will receive:
A Comprehensive, Legally Defensible Independent Review of your Part A program, including high-level testing of your Part B KYC compliance.
One Free, Tailored AML/CTF Training Session for your staff, delivered by our expert lawyers.
Why is this important? Even the best program can fail if your team isn't properly trained on how to implement it. Our training equips your frontline staff with the practical knowledge they need to identify and report risks effectively, turning your policy into practice.
Don't just check the box—build a culture of compliance. Ensure your entire organisation is prepared to meet its obligations.
Contact Us Today for a Fixed-Fee Quote!
Email: hello@clicklegal.com.au
Let Click Legal, your expert legal partners, ensure your program is not only compliant but also effectively implemented across your entire business.