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How FinTech is advancing AML Controls in the UAE?

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Jerin Mathew
14 Dec 2022
10 min
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With the advent of new technology, the way we conduct financial transactions has changed dramatically. We have gone from a world where cash was king to one where digital transactions are the norm. This shift has been especially pronounced in the Middle East, where a region traditionally dominated by physical currency is now embracing digitization and taking measures to increase innovation.

Compared with Europe’s annual growth of 4-5 percent, consumer digital payment transactions in the UAE grew at a rate of over 9 percent between 2014 and 2019. In 2022, digital payment volumes from SMEs grew by 44%, according to a report by McKinsey and Co.

Along with new opportunities, the growing cashless society in the Middle East has presented the need for new onboarding and ongoing due diligence mechanisms within fintech companies, with an increasing reliance on technology to fight financial crime. As more and more businesses move online, it's no surprise that financial crime is following suit.

The move to a cashless society in the Middle East presents both challenges and opportunities for anti-financial crime professionals. Traditional methods of due diligence and onboarding are no longer sufficient in a digital world. In order to explore some of the critical things that financial institutions need to know to ensure financial crime compliance in line with growing digitalization, Tookitaki conducted a webinar on December 13 as part of our Compliant Conversations webinar series.

Moderated by Gloria Chraim, Tookitaki’s Regional Head of Sales (MEA), we were fortunate to have on board Meyya EL Amine, Chief Compliance Officer at Yap Payment Services, and Gurminder Kaur, Head of Compliance at Al Rostamani International Exchange, as our key speakers in the webinar. The speakers covered topics such as addressing the shift from traditional banking to digital banking, how new trends and technologies are shaping up the anti-financial crime efforts in the Middle East and how the regulatory landscape is changing to support the continued adoption of technology.  The speakers also shared tips for fintech companies to stay proactive and ensure compliance with holistic visibility and better insights into customer behaviour and identifying suspicious activities at large.

The Rising Popularity of Digital Banking in the UAE

In the UAE, digital banking started with individuals, however, the sector has now grown to incorporate small and medium enterprises (SMEs) and even bigger companies. In digital banking, automation, multimedia and telecom came together to give customers a seamless banking experience. Compared to traditional banking, it is faster, more convenient, customer friendly and smart.

During the pandemic, the existing digital infrastructure in the UAE came to people’s rescue and they happily embraced digital banking and digital financial services. The emergence of digital banking positively impacted the way how financial institutions do their regulatory filing that too have gone digital to a large extent. The UAE government and the regulatory authorities were well prepared for the change as they have already laid down measures supported by a great infrastructure.

The Opportunities and Challenges of a Cashless Economy

The transition to a cashless economy has the potential to bring many benefits, such as increased convenience and speed of transactions, reduced costs for businesses and financial institutions, and improved financial inclusion for underserved populations.

However, the transition to a cashless economy also presents some challenges that the UAE must carefully address in order to ensure a smooth and successful transition. Some of the key opportunities and challenges of a cashless economy in the UAE are discussed below.

Opportunities:

Increased convenience and speed of transactions: Digital payment methods are typically faster and more convenient than using cash, allowing for more efficient transactions and reducing the time and effort required for both consumers and businesses.

Reduced costs for businesses and financial institutions: A cashless economy can help reduce the costs associated with handling and transporting physical money, such as security and transportation expenses. This can be particularly beneficial for small businesses and financial institutions.

Improved financial inclusion: A cashless economy can help improve access to financial services for underserved populations, such as migrant workers or rural communities. This can help promote economic growth and reduce inequality.

Challenges:

Access to technology and financial services: In order for a cashless economy to be successful, everyone must have access to the necessary technology and financial services. This can be a challenge in the UAE, where there is a large population of migrant workers who may not have access to bank accounts or the means to use digital payment methods.

Impact on small businesses and traditional industries: The transition to a cashless economy may be difficult for small businesses and traditional industries that do not have the infrastructure or resources to support digital payment methods. These businesses may struggle to compete with larger, more technologically advanced companies if they are unable to accept digital payments.

Money Laundering/Terrorist Financing Risks: A cashless economy can make it easier for criminals to conduct financial transactions without leaving a paper trail, making it more difficult for law enforcement agencies to detect and prevent money laundering and terrorist financing.

Cybersecurity risks: As more transactions are conducted digitally, there is an increased risk of sensitive financial information being compromised. The UAE must take steps to ensure the security of digital payment systems in order to protect against fraud and hacking.

Overall, while the transition to a cashless economy in the UAE has the potential to bring many benefits, it is important for the government and other stakeholders to carefully address these challenges in order to ensure a smooth and successful transition.

The Gaps of Traditional Approaches to Fighting Financial Crime

With financial channels going online, the bad actors have more chances for their illicit activities, taking advantage of possible gaps in the digital financial system. Regulatory scrutiny over financial institutions has continued to increase and fines have been rising too. It might be because of a disconnect between what we have been practicing and what needs to be done given the changing scenarios.

We still create customer risk profiles n silos. Within compliance, customer screening, transaction monitoring and customer risk scoring processes do not speak to each other, thereby failing to provide a holistic view of the customer. This is one of the reasons why the traditional rule-based or scenario-based approaches are failing today. With a huge customer base, where the data fields are static and are not regularly updated, the actual customer risk remains not captured. Compliance analysts are often burdened with a large number of alerts, leading to the possibility of many high-risk customers remaining unaffected.

The Need for New Onboarding and Ongoing Due Diligence Mechanisms

Rule-based customer risk assessment is no longer an option. This needs to be done in a dynamic fashion and on an ongoing basis. If our data on customer is obsolete or not up to the mark, then definitely we will feel the pinch as those data is the basis of all our customer risk assessment, transaction monitoring and name screening processes. Despite the possibilities of fraud, digital know your customer or KYC has actually come as a boon as it helps in remediating your data issues to a large extent. However, digital KYC alone is not going to help us; we need to feed the digital KYC systems properly.

We need to first understand our data and segment our customers. There cannot be a one-size-fits-all approach. Customers need to be segmented based on geographies, nationalities, occupation, industries, etc., depending on the business model, and proper risk values or scores need to be determined for each customer. Based on perceived risk, the nature of questions at the time of onboarding can be simplified or made tougher.

Technologies like Optical Character Recognition (OCR) and facial recognitioncan also help to a great extent. OCR can take old data, validate it and populate it into a more readable, more accurate form. With facial recognition, we can have liveliness check, biometrics assessment and validate the customer with a central database. Ongoing due diligence is also required to feed the customer risk rating models. This will help rescore customer risk dynamically at regular intervals or if there are any changes in the original customer profile.

The Impact of New Trends and Technologies on Compliance

The UAE in particular and the GCC or MENA region in general are embracing the risk-based approach (RBA) to fighting financial crime. Today, the compliance trend is to have easily verifiable and real-time channels for customer identification documents and commercial registries. Technology is helping us a lot in compliance, and the regulatory requirements are also boosting technology to be more innovative, smarter and quicker. All of us, the customers, the businesses and regulators, are benefiting from it. Businesses are even using it for understanding the consumer better and customise their product and service offerings.

This is all coming to the surface of the final consumer and the business. Even though it is compliance related and a part of regulatory requirements, it is serving us immensely and it's growing exponentially.

The Role of Technology in Fighting Financial Crime

Technology plays a crucial role in the fight against financial crime by providing tools and systems that can help detect and prevent illegal activities.

  • Machine learning is a type of artificial intelligence that involves training algorithms on large amounts of data to enable them to make predictions or take actions based on that data. This technology can be used in the fight against financial crime by providing algorithms with data on past financial crimes, such as money laundering or fraud. The algorithms can then learn to identify patterns and anomalies in financial data that may indicate illegal activity.
  • One potential application of machine learning in the fight against financial crime is in the detection of money laundering. By analyzing transaction data, algorithms can learn to identify the characteristics of money laundering transactions, such as the use of multiple bank accounts or the movement of money through different countries. This can help law enforcement agencies and financial institutions detect potential money laundering activities and take action to prevent them.
  • Another potential application of machine learning in the fight against financial crime is in the detection of fraud. Algorithms can be trained on data from past fraud cases to learn the patterns and characteristics of fraudulent transactions.
  • Overall, machine learning has the potential to play a significant role in the fight against financial crime by providing algorithms with the ability to identify patterns and anomalies in financial data that may indicate illegal activity.
  • Another way that technology is used in the fight against financial crime is through the development of secure payment systems. These systems use encryption and other security measures to protect financial transactions and prevent fraud. This can help protect consumers and businesses from becoming victims of financial crimes.
  • Additionally, technology is also used to improve communication and collaboration among law enforcement agencies, regulatory bodies, and financial institutions. This can help these organizations share information and collaborate effectively to combat financial crime.

The Importance of Collective Intelligence

Collective intelligence can play an important role in fighting financial crime by allowing organisations and individuals to share information and resources, coordinate efforts, and work together towards a common goal. For example, financial institutions can use collective intelligence to share information about suspicious transactions and patterns of behaviour that may indicate financial crimes such as money laundering or fraud. This can help identify potential threats and enable law enforcement and other agencies to take action.

In addition, collective intelligence can be used to develop and improve algorithms and other technologies for detecting and preventing financial crimes. By pooling their expertise and resources, organisations and individuals can work together to create more effective solutions for detecting and preventing financial crime.

The Change in Regulatory Landscape to Support Tech Adoption

The regulatory acceptance to new technology has come at a very fast pace. The regulators are not just interested in that you have a system, rather they are interested in knowing why do you have that system. They're interested in understanding that whether you have the know-how of your technology, customer base and typologies, and whether that has been correctly embodied them in your customer risk assessment model.

Regulators can play an active role in bringing standardization in compliance technology adoption also. The federal registry, the IP validations for retail customer database and the public registry for the beneficial ownership are proactive measures from the regulators to ensure that the financial industry is upgrading itself with newer systems.

One example of a change in the regulatory landscape to support tech adoption is the growth of regulatory sandboxes. These are controlled environments in which companies can test new technologies and business models without being subject to all of the usual regulations. This can help companies innovate and bring new products and services to market more quickly, while also ensuring that these products and services are safe and comply with relevant regulations.

How can Fintechs Ensure Compliance?

Fintechs can ensure compliance by optimizing on their systems, by optimizing and investing in their human capital and by looking up to the best practices around the world and applying that. Even if the regulators are not asking to do it, do it now. Furthermore, we need to share knowledge across the organization. We need to make every line of defense understand what is the risk that is associated to our organization, and how we are best at mitigating it.

Improving Compliance with Tookitaki

Headquartered in Singapore, Tookitaki is a regulatory technology company offering financial crime detection and prevention to some of the world's leading banks and fintechs to help them stay vigilant and compliant.

The anti-money laundering (AML) compliance departments of today’s financial institutions are inundated with voluminous false positives and case backlogs that add to costs and prevent them from filtering out high quality alerts.

Tookitaki’s Anti-Money Laundering Suite (AMLS) helps protect your customers throughout the entire onboarding, and ongoing proceses through two modules customised to suit your needs- Intelligent Alert Detection (IAD) for detection and prevention and Smart Alert Management (SAM) for management. Designed on three C-principles – comprehensive, convenient and compliant, the AMLS uses transaction monitoring, smart screening and customer risk scoring solutions. The alerts from all solutions are unified in an interactive, modern-age Case Manager that offers speedy alert disposition and easy regulatory report filing.


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Blogs
19 Jun 2025
5 min
read

Australia on Alert: Why Financial Crime Prevention Needs a Smarter Playbook

From traditional banks to rising fintechs, Australia's financial sector is under siege—not from market volatility, but from the surging tide of financial crime. In recent years, the country has become a hotspot for tech-enabled fraud and cross-border money laundering.

A surge in scams, evolving typologies, and increasingly sophisticated actors are pressuring institutions to confront a hard truth: the current playbook is outdated. With fraudsters exploiting digital platforms and faster payments, financial institutions must now pivot from reactive defences to real-time, intelligence-led prevention strategies.

The Australian government has stepped up through initiatives like the National Anti-Scam Centre and legislative reforms—but the real battleground lies inside financial institutions. Their ability to adapt fast, collaborate widely, and think smarter will define who stays ahead.

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The Evolving Threat Landscape

Australia’s shift to instant payments via the New Payments Platform (NPP) has revolutionised financial convenience. However, it's also reduced the window for detecting fraud to mere seconds—exposing institutions to high-velocity, low-footprint crime.

In 2024, Australians lost over AUD 2 billion to scams, according to the ACCC’s Scamwatch report:

  • Investment scams accounted for the largest losses at AUD 945 million
  • Remote access scams followed with AUD 106 million
  • Other high-loss categories included payment redirection and phishing scams

Behind many of these frauds are organised crime groups that exploit vulnerabilities in onboarding systems, mule account networks, and compliance delays. These syndicates operate internationally, often laundering funds through unsuspecting victims or digital assets.

Recent alerts from AUSTRAC and ASIC also highlighted the misuse of cryptocurrency exchanges, online gaming wallets, and e-commerce platforms in money laundering schemes. The message is clear: financial crime is mutating faster than most defences can adapt.

Australia FC

Why Traditional Defences Are Falling Short

Despite growing threats, many financial institutions still rely on legacy systems that were designed for a static risk environment. These tools:

  • Depend on manual rule updates, which can take weeks or months to deploy
  • Trigger false positives at scale, overwhelming compliance teams
  • Operate in silos, with no shared visibility across institutions

For instance, a suspicious pattern flagged at one bank may go entirely undetected at another—simply because they don’t share learnings. This fragmented model gives criminals a huge advantage, allowing them to exploit gaps in coverage and coordination.

The consequences aren’t just operational—they’re strategic. As financial criminals embrace automation, phishing kits, and AI-generated deepfakes, institutions using static tools are increasingly being outpaced.

The Cost of Inaction

The financial and reputational fallout from poor detection systems can be severe.

1. Consumer Trust Erosion

Australians are increasingly vocal about scam experiences. Victims often turn to social media or regulators after being defrauded—especially if they feel the bank was slow to react or dismissive of their case.

2. Regulatory Enforcement

AUSTRAC has made headlines with its tough stance on non-compliance. High-profile penalties against Crown Resorts, Star Entertainment, and non-bank remittance services show that even giants are not immune to scrutiny.

3. Market Reputation Risk

Investors and partners view AML and fraud management as core risk factors. A single failure can trigger media attention, customer churn, and long-term brand damage.

The bottom line? Institutions can no longer afford to treat compliance as a cost centre. It’s a driver of brand trust and operational resilience.

Rethinking AML and Fraud Prevention in Australia

As criminal innovation continues to escalate, the defence strategy must be proactive, intelligent, and collaborative. The foundations of this smarter approach include:

✅ AI-Powered Detection Systems

These systems move beyond rule-based alerts to analyse behavioural patterns in real-time. By learning from past frauds and adapting dynamically, AI models can flag suspicious activity before it becomes systemic.

For example:

  • Unusual login behaviour combined with high-value NPP transfers
  • Layered payments through multiple prepaid cards and wallets
  • Transactions just under the reporting threshold from new accounts

These patterns may look innocuous in isolation, but form high-risk signals when viewed in context.

✅ Federated Intelligence Sharing

Australia’s siloed infrastructure has long limited inter-institutional learning. A federated model enables institutions to share insights without exposing sensitive data—helping detect emerging scams faster.

Shared typologies, red flags, and network patterns allow compliance teams to benefit from collective intelligence rather than fighting crime alone.

✅ Human-in-the-Loop Collaboration

Technology is only part of the answer. AI tools must be designed to empower investigators, not replace them. When AI surfaces the right alerts, compliance professionals can:

  • Reduce time-to-investigation
  • Make informed, contextual decisions
  • Focus on complex cases with real impact

This fusion of human judgement and machine precision is key to staying agile and accurate.

A Smarter Playbook in Action: How Tookitaki Helps

At Tookitaki, we’ve built an ecosystem that reflects this smarter, modern approach.

FinCense is an AI-native platform designed for real-time detection across fraud and AML. It automates threshold tuning, uses network analytics to detect mule activity, and continuously evolves with new typologies.

The AFC Ecosystem is our collaborative network of compliance professionals and institutions who contribute real-world risk scenarios and emerging fraud patterns. These scenarios are curated, validated, and available out-of-the-box for immediate deployment in FinCense.

Some examples already relevant to Australian institutions include:

  • QR code-enabled scams using fake invoice payments
  • Micro-laundering via e-wallet top-ups and fast NPP withdrawals
  • Cross-border layering involving crypto exchanges and shell businesses

Together, FinCense and the AFC Ecosystem enable institutions to:

Building a Future-Ready Framework

The question is no longer if financial crime will strike—it’s how well prepared your institution is when it does.

To be future-ready, institutions must:

  • Break silos through collaborative platforms
  • Invest in continuous learning systems that evolve with threats
  • Equip teams with intelligent tools, not more manual work

Those who act now will not only improve operational resilience, but also lead in restoring public trust.

As the financial landscape transforms, so too must the compliance infrastructure. Tomorrow’s threats demand a shared response, built on intelligence, speed, and community-led innovation.

Strengthening AML Compliance Through Technology and Collaboration

Conclusion: Trust Is the New Currency

Australia is at a turning point. The cost of reactive, siloed compliance is too high—and criminals are already exploiting the lag.

It’s time to adopt a smarter playbook. One where technology, collaboration, and shared intelligence replace outdated controls.

At Tookitaki, we’re proud to build the Trust Layer for Financial Services—empowering banks and fintechs to:

  • Stop fraud before it escalates
  • Reduce false positives and compliance fatigue
  • Strengthen transparency and accountability

Through FinCense and the AFC Ecosystem, our mission is simple: enable smarter decisions, faster actions, and safer financial systems.

Australia on Alert: Why Financial Crime Prevention Needs a Smarter Playbook
Blogs
23 Jun 2025
5 min
read

Behind the Compliance Curtain: The Future of AML in Australia

Australia’s sunny financial reputation has come under scrutiny—and this time, the spotlight is global.

From casino scandals to multi-billion-dollar remittance breaches, the country’s anti-money laundering (AML) framework is facing a pivotal moment. What was once seen as a gold standard in regional governance is now under pressure to catch up—and compliance officers across banks, fintechs, and regulatory bodies are watching closely.

So what lies behind the curtain of AML in Australia today—and what must the financial community do next?

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The AML Landscape in Australia: Where Things Stand

Australia’s AML/CFT regime has long been led by AUSTRAC, the nation’s financial intelligence unit and regulator. Over the past few years, AUSTRAC has made headlines with major enforcement actions:

  • Westpac (2020): A $1.3 billion penalty over 23 million breaches of AML laws.
  • Crown Resorts (2022): Systemic failure to monitor high-risk transactions, especially tied to junket operators and casinos.
  • Star Entertainment Group (2022): Similar failings in AML controls and customer due diligence.

These cases revealed a troubling pattern: AML risks were known, red flags existed, but institutions lacked either the technology, urgency, or capability to respond in real time.

More worryingly, Australia’s AML legal framework—particularly its coverage of non-financial sectors like lawyers, accountants, real estate agents, and high-value dealers—remains incomplete. This gap in regulatory coverage continues to raise red flags with global watchdogs, especially the Financial Action Task Force (FATF).

The Tranche 2 Reforms: Closing the Gaps or Buying Time?

For nearly two decades, Australia has delayed implementing the so-called Tranche 2 reforms, which would bring designated non-financial businesses and professions (DNFBPs) into the AML regulatory net.

What Tranche 2 Proposes:

  • AML obligations for real estate professionals, lawyers, accountants, and company service providers.
  • Stronger beneficial ownership transparency.
  • Enhanced customer due diligence and reporting mechanisms across non-financial channels.

Yet, while successive governments have pledged action, progress has been sluggish. Industry bodies have raised concerns about cost, feasibility, and regulatory overreach. But international momentum is building, and patience is wearing thin.

In its 2023 follow-up review, FATF explicitly called out Australia’s delayed reforms. Without Tranche 2, the country faces increased scrutiny—and potential reputational damage that could affect correspondent banking relationships and investor trust.

AUS blog

The Tech Factor: How Modern AML Looks in 2025

Even where regulations exist, legacy compliance systems are struggling to keep up with today’s threats. Financial crime has evolved. So must the tools to fight it.

What’s Changed:

  • Speed: Real-time payments and digital wallets mean funds can be layered, split, and moved across jurisdictions in seconds.
  • Complexity: Fraudsters are using mules, shell companies, and social engineering to blend illicit flows with legitimate ones.
  • Volume: Transaction volumes are rising, making manual reviews and static rules increasingly unviable.

Modern AML compliance now demands real-time monitoring, behavioural analysis, and AI-driven detection engines that adapt to new patterns as they emerge. This is where advanced platforms like Tookitaki’s FinCense come in—offering scenario-driven intelligence and federated learning capabilities tailored for high-risk markets like Australia.

Case Insight: Where Detection Failed—and Where Tech Could Have Helped

Consider the AUSTRAC case against Crown Resorts. Red flags—such as large, unexplained cash deposits, transactions linked to politically exposed persons (PEPs), and high-risk jurisdictions—were not acted upon for months, sometimes years.

The problem wasn’t a lack of data. It was a failure to connect the dots in real time.

With an adaptive AML system like FinCense in place, the scenario might have looked different:

  • Suspicious transaction patterns would have triggered real-time alerts.
  • Beneficiary risk scoring could have flagged high-risk links earlier.
  • AI-based learning could have surfaced anomalous activity invisible to static rule sets.

The outcome? Faster intervention, reduced institutional risk, and regulatory confidence.

Building the Future: Tookitaki’s Role in Strengthening Australia’s AML Defences

Tookitaki’s FinCense platform is designed for the complexity of modern financial ecosystems—especially those navigating regulatory reform and reputational pressure, like Australia.

Key Features That Matter:

  • Federated Learning Engine: Enables institutions to learn from emerging typologies across the region—without sharing sensitive data.
  • Real-Time Transaction Monitoring: Uses AI to surface anomalous patterns and risk indicators at the speed of today’s financial crime.
  • Scenario-Based Approach: Combines regulatory intelligence with real-world cases to keep detection capabilities relevant and context-rich.
  • Audit-Ready Investigations: Helps compliance teams manage alerts, document findings, and demonstrate control effectiveness.

As Tranche 2 looms and regulatory expectations rise, FinCense can help banks and fintechs in Australia stay ahead of both criminal innovation and regulatory demand.

What Compliance Teams Must Do Now

✅ Prepare for Tranche 2 (Even If It’s Not Here Yet)

  • Map exposure to DNFBPs.
  • Engage with vendors and consultants to scope out necessary controls.

✅ Build for Agility and Resilience

  • Invest in dynamic risk-scoring engines and AI-powered analytics.
  • Integrate systems that can adapt, not just flag transactions.

✅ Collaborate and Learn

  • Participate in intelligence-sharing platforms like the AFC Ecosystem.
  • Use scenario libraries to anticipate typologies before they strike.

✅ Rethink ROI from an AML Lens

  • With regulators now tracking the effectiveness (not just existence) of AML systems, demonstrate real-time capability, reduced false positives, and improved investigation turnaround.
Strengthening AML Compliance Through Technology and Collaboration

Conclusion: The Curtain’s Up—What Will Australia Do Next?

Australia stands at a crossroads. Behind the curtain of its legacy AML system lies both risk and opportunity.

The risk is clear: continued global scrutiny, regulatory gaps, and potential grey listing if reforms stall.
But the opportunity is greater: to lead the region with tech-driven, intelligence-led compliance that’s faster, smarter, and more collaborative than ever.

As the regulatory environment evolves, so must the institutions within it. With the right partners, like Tookitaki, and a commitment to real-time defences, Australia can transform its AML posture from reactive to revolutionary.

Because in the fight against financial crime, detection is no longer enough. It’s time to defend.

Behind the Compliance Curtain: The Future of AML in Australia
Blogs
02 Jul 2025
4 min
read

Inside AUSTRAC: Navigating Australia’s AML/CTF Regulations in a High-Risk Era

As money laundering methods grow more sophisticated, the pressure on financial institutions to detect, report, and prevent financial crime is intensifying — and AUSTRAC is at the centre of it all.
In an era where financial ecosystems are rapidly digitising, AUSTRAC’s role in overseeing Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) compliance has become mission-critical. For banks, fintechs, and other reporting entities, staying ahead of regulatory expectations is no longer just a compliance issue — it’s a matter of reputation, trust, and long-term viability.

In this blog, we explore:

  • AUSTRAC’s mandate and structure
  • Key AML/CTF obligations under Australian law
  • Landmark enforcement cases
  • Upcoming reforms, including Tranche 2
  • FATF scrutiny and global compliance pressures
  • How tech-forward compliance strategies are reshaping the future
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What is AUSTRAC and Why Does It Matter?

AUSTRAC — the Australian Transaction Reports and Analysis Centre — is the government body responsible for detecting and disrupting criminal abuse of Australia’s financial system.

AUSTRAC has a dual mandate:

  • Regulator: Supervises compliance with AML/CTF obligations.
  • Financial Intelligence Unit (FIU): Collects and analyses data to support law enforcement, national security, and international counterparts.

It works with over 17,000 reporting entities, ranging from traditional banks to digital wallets, remittance providers, gaming platforms, and more. As both a data collector and enforcer, AUSTRAC is uniquely positioned to uncover illicit financial activity at scale.

A Brief History of AML/CTF Regulation in Australia

Australia’s journey in strengthening its anti-money laundering and counter-terrorism financing framework began in earnest with the passage of the AML/CTF Act in 2006. This legislation introduced foundational obligations such as KYC procedures, transaction monitoring, and reporting requirements for a wide range of financial institutions and service providers.

Over time, the regime has evolved significantly. In 2014, AUSTRAC formalised the risk-based approach, requiring entities to tailor their AML programs based on their specific exposure to financial crime risks.

The period between 2018 and 2020 marked a turning point in enforcement, with AUSTRAC taking decisive action against some of Australia’s largest institutions — including Tabcorp, the Commonwealth Bank, and Westpac — for major compliance failures.

In the years that followed, Tranche 2 reforms were proposed to expand AML/CTF obligations to include professions such as lawyers, accountants, and real estate agents, which are known to be exploited for laundering illicit funds.

As of 2024, these reforms remain under active discussion, with the Australian government under growing pressure from international bodies such as the FATF to close regulatory gaps. The expected passage of Tranche 2 in 2025 would significantly broaden AUSTRAC’s regulatory reach and bring Australia closer in line with global AML standards.

AUSTRAC


Understanding Your AML/CTF Obligations

If your institution provides “designated services” under the AML/CTF Act, here’s what you’re required to do:

🔹 AML/CTF Program (Part A and Part B)

  • Part A: Institutional risk assessments, governance, reporting, and training
  • Part B: Customer identification and verification procedures (KYC)

🔹 Reporting Requirements

  • Suspicious Matter Reports (SMRs)
    Must be submitted when the activity raises suspicion, regardless of the amount.
  • Threshold Transaction Reports (TTRs)
    For cash transactions of AUD 10,000 or more.
  • International Funds Transfer Instructions (IFTIs)
    Mandatory for cross-border fund movements.

🔹 Customer Due Diligence (CDD)

  • Verify customer identity at onboarding
  • Apply Enhanced Due Diligence (EDD) for high-risk customers or transactions
  • Conduct ongoing monitoring

🔹 Record Keeping

  • Maintain transaction and identity verification records for at least 7 years.

AUSTRAC’s Enforcement Power: Learning from Past Failures

AUSTRAC is not just a passive regulator. When institutions fall short, the consequences are severe and public.

The Crown Resorts Case

In 2022, Crown Melbourne and Crown Perth were found guilty of systemic AML/CTF program failures. AUSTRAC investigations revealed:

  • Inadequate risk assessments of high-risk customers and junket operators
  • Poor transaction monitoring
  • Weak governance and oversight

Penalty: AUD 450 million settlement
Impact: Major reputational damage and licence scrutiny

The Westpac Case

Arguably, the most consequential case in Australia’s AML history. In 2020, Westpac was fined AUD 1.3 billion — the largest civil penalty in Australian corporate history — for:

  • Failing to report over 23 million IFTIs
  • Inadequate transaction monitoring
  • Enabling transactions linked to child exploitation networks

These cases underscore the high expectations placed on financial institutions — not just to comply, but to detect, investigate, and prevent abuse of their services.

Australia’s AML Pain Points and What Tranche 2 Means

Unregulated Professions: The Tranche 2 Gap

Australia’s AML/CTF regime currently does not cover “gatekeeper” professions — lawyers, accountants, real estate agents, and company service providers. This gap has drawn criticism from both the FATF and domestic watchdogs.

Tranche 2, expected to be legislated in 2025, will:

  • Extend AML obligations to these sectors
  • Close critical vulnerabilities exploited for shell companies, illicit property purchases, and tax evasion
  • Align Australia with global AML standards

For fintechs and financial institutions, this will mean greater scrutiny of third-party relationships and new customer categories.

FATF Evaluation: Australia Under the Global Lens

The Financial Action Task Force (FATF) — the global AML watchdog — is expected to conduct its next mutual evaluation of Australia soon. In its last review, Australia was flagged for:

  • Delays in enacting Tranche 2 reforms
  • Over-reliance on self-regulation in some sectors
  • Inconsistent enforcement levels

AUSTRAC and the government are now under pressure to demonstrate tangible improvements, including:

  • Broader coverage of at-risk sectors
  • Better risk-based supervision
  • More tech-led compliance outcomes

How Fintechs Can Stay Ahead

For fintechs, the AML/CTF journey can seem overwhelming, especially when scaling across regions. Here are five key steps to staying ahead:

  1. Invest Early in AML Infrastructure
    Don’t wait until licensing or audits to build compliance controls.
  2. Use Technology to Monitor in Real-Time
    Especially for high-velocity, small-value transactions common in wallets or P2P services.
  3. Customise Risk Scoring
    A high-risk customer in lending may not be the same as one in gaming or cross-border remittances.
  4. Build for Scalability
    Choose AML platforms that can grow with you, not patchwork solutions.
  5. Stay Informed on Regional Variations
    AUSTRAC’s expectations differ from MAS (Singapore) or BSP (Philippines); know your market.

Why AML Tech Is No Longer Optional

In today’s landscape, manual reviews and static rules don’t cut it. Criminals move faster — and so must compliance teams.

Key advantages of modern AML platforms:

  • Machine learning-based transaction monitoring
  • Dynamic threshold calibration to reduce false positives
  • Real-time alerting and case triage
  • Behavioural profiling and pattern recognition
  • Audit-ready investigation trails

How Tookitaki Helps You Stay Ahead

Tookitaki’s FinCense platform is purpose-built to tackle the real challenges banks and fintechs face in Australia and across APAC.

Key Modules:

🔹 Customer Onboarding Suite
Seamlessly integrates KYC, risk profiling, and watchlist screening

🔹 Transaction Monitoring
Scenario-based detection using patterns from the AFC Ecosystem

🔹 Smart Screening
Covers national ID, aliases, and local nuances — built to minimise false positives

🔹 FinMate (AI Copilot)
Assists investigators with summarised case narratives, red flags, and recommendations

Collaborative Advantage:

FinCense is powered by the AFC Ecosystem — a global community where financial institutions share typologies and red flags anonymously. This collective intelligence improves detection and reduces blind spots for all members.

For institutions facing rising risks from cross-border scams, shell company abuse, and real-time laundering, Tookitaki offers a smarter, community-driven alternative to traditional rule engines.

Strengthening AML Compliance Through Technology and Collaboration


Final Thoughts: A Smarter Future Starts Now

AUSTRAC’s expanding role and the upcoming Tranche 2 reforms signal a future where compliance will be more inclusive, tech-powered, and intelligence-driven.

For banks and fintechs, the opportunity lies not just in complying, but in leading. With the right tools, collaborative frameworks, and forward-thinking partners like Tookitaki, staying ahead of both regulation and risk is no longer an aspiration — it’s an expectation.

Inside AUSTRAC: Navigating Australia’s AML/CTF Regulations in a High-Risk Era