How Verifying Your Identity Will Protect People

Verifying Client Identity from 1 July 2026

From 1 July 2026, Australia will extend anti-money laundering and counter-terrorism financing rules (often called AML/CTF) to cover certain services commonly provided by accountants and lawyers. These reforms are being led by AUSTRAC.

Australia is moving toward stronger expectations for professional services firms with the new AML/CTF laws, to protect businesses, communities, and the broader economy from being exploited by financial crime.

For full details on these new laws read our article here.

The Figures

Financial crime accounts for $13.2 billion in total direct costs attributable to serious and organised crime; the second costliest behind illicit drugs.

Source: Australian Institute of Criminology

A Case Study: Why Are These Laws Important?

Between 2012 and 2017, Xiao Hua Gong created a plethora of new companies. For two of these, he fraudulently sold hundreds of millions of dollars of securities to Chinese citizens. To help cover his tracks, Gong purchased two-multimillion-dollar properties in New Zealand, whose trust laws enable anonymity. It was only due to AML/CTF laws that ANZ flagged the large sums of money entering Gong’s account.

The efficacy of these laws resurfaces in 2020, as Gong enters the court system hoping to re-gain access to $70 million of frozen assets. Gong employed a Queen’s Counsel (QC) defence lawyer, who under New Zealand law did not fall under AML regulation. However, the QC engaged an accounting firm using the First AML platform, necessitating due diligence that flagged fraudulent activity.

Key Takeaways

Without the AML/CTF regulations, Gong may have gotten away with his fraudulent affairs. Described as a ‘charming’ man who mixed with high-level people, including Canadian PM Justin Trudeau, we see how appearances are not always what they seem. It is imperative amidst the everchanging world of financial crime to profit credibility, as supported through the AML/CTF reforms.

How You Can (And Will) Help Prevent Crimes Like This

By verifying your identity, you are helping to safeguard against the dire consequences of financial crime, such as:

Enabling further harm:

Financial crime proliferates crime. ’Tainted’ money through criminal activity must be cleaned, and this is achieved through laundering. It’s one dirty cycle, establishing a criminal network. In the case of Gong, he had dealings with Ukrainian banking magnate Ihor Kolomoisky, who himself employed a Ponzi scheme to launder hundreds of millions of dollars.

Source: AUSTRAC Money Laundering in Australia National Risk Assessment

Corrupting markets:

Illegal funds can distort investment flows and represent unfair competition for legitimate businesses. On top of this, government income may be reduced, surmounting to less funding for sectors, e.g., healthcare, and the burden of tax increasing for compliant businesses.

Debasing institutions:

Financial crime undermines peoples’ trust in financial institutions, hindering economic growth. The criminal web can spread across politics or industries, and before you know it the whole system crumbles. In August 2022, Australian Federal Police (AFP) investigated one of Australia’s largest independent remittance businesses, finding it had concealed the movement of $229 million of illegal funds into and out of the country.

The impact on self:

The victims of financial crimes can have life savings wiped away, as well as personal security injured. A joint investigation as part of the Serious Financial Crime Taskforce discovered a mammoth criminal syndicate, whereby a phishing website mimicked a superannuation fund to collect log-in data. This was used to withdraw funds from members’ accounts and deposit them into fraudulent bank accounts for laundering purposes.

Protecting vulnerable communities:

According to the Australian Competition and Consumer Commission (ACCC) 2023 scam statistics,Australians aged 65 and over are the most targeted victims, proceeded by Australians aged between 55-64 years. Dually at high risk are vulnerable individuals such as Indigenous Australians, members of culturally and linguistically diverse communities and those with a disability.

By simply verifying your ID, you’re doing your part to protect businesses, communities, and the broader economy against financial exploitation.

Sources:

For further guidance on the AML Laws, please get in touch with our team.

This is general advice only and has not been prepared with your situation and needs in mind. For individual and personalised advice, we highly recommend that you seek out proper professional advice from your accountant.