What are the penalties for failing to report to AUSTRAC?

AUSTRAC's penalty regime is one of the most significant in Australian financial regulation. The 2018 enforcement action against the Commonwealth Bank of Australia — which resulted in a $700 million civil penalty — demonstrated that AUSTRAC will use its full powers against entities that fail to meet reporting and program obligations.

Civil penalties

Civil penalties are calculated in penalty units. For serious and continuing contraventions, the penalties are:

• Body corporate (company): Up to $22 million per contravention
• Individual: Up to $4.4 million per contravention
• Each failure to report (e.g., each SMR not filed) is a separate contravention

Criminal penalties

Where the failure to report is deliberate — for example, where a person knowingly conceals a reportable matter or facilitates a client's attempt to evade detection — criminal liability can apply. Penalties include imprisonment. The threshold for criminal liability is higher than for civil penalties, but where it applies the consequences are far more serious.

Tipping-off offences

Disclosing to a client that you have filed, are filing, or are considering filing an SMR is a criminal offence under section 123 of the AML/CTF Act, carrying a maximum penalty of two years imprisonment. This applies even if the disclosure was inadvertent.

Non-financial consequences

Beyond financial penalties, AUSTRAC has a range of other enforcement tools:

• Remedial directions: Requiring a reporting entity to take specific corrective action
• Enforceable undertakings: Binding commitments to remedy non-compliance
• Court-imposed conditions: Restrictions on the conduct of a business
• Public disclosure: AUSTRAC publishes details of significant enforcement actions, creating severe reputational risk

AUSTRAC's approach to small firms

For smaller firms that are new to AML/CTF obligations under Tranche 2, AUSTRAC has indicated it will take an education-first approach in the early years of regulation. However, this goodwill is contingent on firms making genuine efforts to comply — firms that take no action are unlikely to receive leniency.