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- The Australian Transaction Reports and Analysis Centre
(AUSTRAC) has established an intelligence unit
dedicated to monitoring compliance with Russian sanctions,
signalling a sharper regulatory focus on sanctions laws.
- Given this increased regulatory focus, businesses need to take
steps to ensure they comply with sanctions.
- We recommend that businesses take a particularly cautious
approach when dealing with individuals or entities based in Russia
or the sanctioned region of Ukraine and develop and implement
robust compliance policies, procedures and other controls for
monitoring for compliance with sanctions laws.
- Businesses that provide a designated service should also update
their anti-money laundering and counter-terrorism financing
(AML/CTF) program and compliance arrangements to
ensure they adhere to AML/CTF laws when dealing with persons who
are sanctioned or in sanctioned territories, which AUSTRAC regards
as ‘high risk’.
Background – AUSTRAC’s 27 June Russian sanctions
On 27 June 2022, AUSTRAC made an announcement about two
important sanctions-related matters:
- The establishment of a dedicated AUSTRAC intelligence unit to
monitor and triage financial reporting about Russian sanctions,
which will be used to detect sanctions evasions by relevant
- Participation in the Russia-Related Illicit Finance Sanctions
Financial Intelligence Unit Working Group
(theFIU Working Group), an
international network for the sharing of financial intelligence
between key authorities on sanctions-related matters.
AUSTRAC’s sanctions announcement signals increased
sanctions law enforcement
Traditionally, the Australian Sanctions Office
(ASO) of the Department of Foreign Affairs and
Trade (DFAT), the Australian Federal Police
(AFP) and the Commonwealth Department of Public
Prosecutions (CDPP) have been responsible for
ensuring compliance with Australian sanctions laws (such as the
Autonomous Sanctions Act 2011 (Autonomous
Under these laws, a court may impose a financial penalty on a
company that is guilty of a sanctions offence of up to 10,000
penalty units (currently A$2.22m) or three times the value of the
offending transaction(s) (whichever is greater). Individuals can
face a 10-year prison sentence and/or a fine of up to 2,500 penalty
units (currently A$555,000).
Despite the dedicated sanctions regulatory architecture and
stringent penalties applicable, Australian sanctions laws have not
been rigorously enforced in the past. Prosecutions for sanctions
offences have been few and far between, and have been confined to
the clearest instances of offending, for example:
- In May 2019, a Melbourne woman pleaded guilty to sanctions
offences for exporting nickel (which can be used to build nuclear
arms) to Iran between March 2009 and April 2010.
- In July 2021 a Sydney man was convicted of sanctions offences
for exporting missile componentry to North Korea.
However, the 27 June announcement by AUSTRAC signals a
heightened focus on sanctions law compliance.
While authorities like the ASO, the AFP and CDPP are retaining
their responsibilities under Australian sanctions laws, AUSTRAC
— Australia’s money laundering regulator — will now
be playing a key role in investigative efforts by establishing a
dedicated intelligence team to monitor financial reporting
(including suspicious matter reporting and international funds
transfer reporting) which concerns Russia.
These reports are being used to produce financial intelligence
to assist responsible authorities with detecting sanctions
breaches. AUSTRAC also announced that it is joining global efforts
to coordinate sanctions evasion intelligence through its
participation in the international the FIU Working Group.
Raising the bar on Russian sanctions
A brief overview of Australia’s Russian sanctions
AUSTRAC’s announcement came in response to Australian
Government sanctions imposed on various individuals, companies and
organisations with ties to Russia following its invasion of
Ukraine. Australian sanctions laws apply generally to activities in
Australia and to activities undertaken overseas by Australian
citizens and Australian-registered bodies corporate.
Sanctions introduced following the invasion include the
Supplying certain ‘export sanctioned goods’ to a person
‘Export sanctioned goods’ include certain oil and gas
Sanctioned commercial activity
Engaging in financial activity with specified Russian financial
Providing services that assist with either of the above
Importing certain goods from Russia (such as coal, peat, various
Importing goods of any kind from a specified Ukraine region.
Dealings with designated persons and entities
Directly or indirectly making an asset available to, or for the
Designated persons and entities include certain key Russian
In addition to the sanctions referenced above, Australia
maintains various sanctions against countries including the
Democratic People’s Republic of Korea, Iran, Libya, Syria, Iraq
and others. Sanctions are also maintained against certain extremist
groups, individuals and companies (who are on the Consolidated
Although the sanctions vary depending on the subject, common
prohibitions include export restrictions (typically on raw
materials, metals and industrial goods), import restrictions and
restrictions on providing certain services (especially assistance
relating to military activities).
AML/CTF compliance links to Russian sanctions
AUSTRAC’s primary responsibility is to ensure compliance
AML/CTF laws (such as the Anti-Money Laundering and
Counter-Terrorism Financing Act 2006 (AML/CTF
However, AUSTRAC’s recent announcement recognises the
potential for overlap between those laws and sanctions laws, as
both sets of laws aim to preserve the integrity of Australia’s
financial system. Since AUSTRAC’s announcement signals
increased regulatory monitoring of transactions involving persons
who are sanctioned or in a sanctioned country, the announcement
also marks the potential for a heightened regulatory focus on
ensuring compliance with overlapping AML/CTF laws and is in line
with their increased focus on cybercrime in relations to
cryptocurrency and ransomware.
This means that entities who provide a ‘designated
service’ under the AML/CTF Act need to be conscious of this
heightened focus, particularly in relation to any transactions with
persons in countries or regions subject to sanctions. AUSTRAC
regards such countries and regions as ‘high risk’,
triggering various obligations (such as enhanced customer due
AUSTRAC advises that customers or suppliers from these places,
and transactions to and from these places, should be carefully
What should AML/CTF Act ‘reporting entities’ do?
Given AUSTRAC’s 27 June Russian sanctions announcement, we
recommend ‘reporting entities’ take a number of important
steps in relation to AML/CTF laws and sanctions compliance, such
- updating AML/CTF programs to accommodate sanctions (for
instance, by implementing appropriate risk-based systems and
controls for identifying which transactions involve sanctioned
persons or persons in sanctioned territories); and
- when dealing with any persons identified as sanctioned or in a
sanctioned place, ensuring:
- transactions with those persons are carefully monitored for
compliance with AML/CTF laws;
- enhanced customer due diligence procedures are applied;
- sanctions are even more carefully considered when deciding
whether to make a suspicious matter report.
- transactions with those persons are carefully monitored for
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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