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Australian lawmakers are looking to introduce new measures that would “block the purchase of goods over AU$10,000 via cash and also introduce offences for entities that make or accept cash payments of AU$10,000 or more”.

Under the new legislation, individuals could face prison sentences of up to two years if found non-compliant.

In Australia, the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act) already mandates that businesses providing “high risk” services report cash payments for goods and services that exceed AU$10,000. Following the same rationale, a person travelling to or from Australia carrying physical currency of AU$10,000+ must declare it to the authorities. But with the new rules the approach will be extended to any transactions between businesses and individuals, regardless of the nature of the business or other circumstances.

Asha Barbaschow reports on ZDNet that the Senate Economics Legislation Committee has recommended the passage of the Currency (Restrictions on the Use of Cash) Bill 2019 on March 2nd. However, the committee is also asking for the commencement date to be pushed back again (the new rules should have taken effect from 1 January 2020, after being pushed back a first time from 1 July 2019).

Among the Committee’s recommendations, there is also the request for the government to develop an effective communications strategy to assist in “dispelling some of the unsubstantiated claims regarding the Bill”. “The strategy needs to be in place before the commencement of the Bill to allow sufficient time to inform the public and businesses of their responsibilities,” the Committee’s report says.

“Further recommendations included looking into the availability of electronic banking services in remote and regional Australia, including during natural disasters”, writes Barbaschow.

The new Australian legislation is very much in line with the requirements first introduced by the 4th Anti-Money Laundering Directive across the European Union.

First published in June 2015, AMLD4 reduced the threshold for cash transactions from EUR 15,000 to EUR 10,000, introducing additional client due diligence requirements “whether the transaction is carried out in a single operation or in several operations which appear to be linked”.

The new European rules apply to all individuals or businesses trading in goods. As a result, some cash-heavy sectors that had traditionally been less scrutinised by regulators – such as the art world – found themselves in need of more stringent compliance procedures to avoid hefty penalties or imprisonment.

Putting a threshold to cash transactions is a key measure to prevent and fight money laundering and financial crime. Supported by the advancements in digital payments and the rise of FinTech that are reducing transaction costs and extending services to unbanked sectors of the population, we expect a growing number of legislators around the world to introduce similar measures over the coming months and years.

For a comprehensive overview of recent AML/KYC Regulations (including AMLD4/5) introduced by the European Union, download our white paper here.

To discover how RegTech innovation can help your organisation meet compliance requirements in a cost-effective way, contact us here.

Last updated on April 23rd, 2023 at 07:35 pm

Claus Christensen

Claus Christensen is the CEO & Co-Founder of Know Your Customer. His vast array of previous experiences includes founding a technology company that develops email server infrastructure products for 60,000+ global customers and serving as VP Electronics at Thielert Aircraft Engines. A regular contributor to leading industry publications and a recognised expert in the anti-money laundering and financial regulation space, Claus is also the host of the RegTalks podcast and a senior lecturer of the Centre for Finance, Technology and Entrepreneurship (CFTE)’s RegTech Course.