AML/CTF Penalties. Understand the Risks

AUSTRAC can impose severe penalties for non-compliance with Australia's Anti-Money Laundering and Counter-Terrorism Financing Act. Civil penalties can reach up to 100,000 penalty units for body corporates and 20,000 penalty units for individuals. With each penalty unit currently valued at $313, this means corporations can face fines up to $31.3 million per contravention, while individuals can be fined up to $6.26 million. These penalties apply to any business that provides designated services, regardless of size or revenue.

Fines are calculated by multiplying the value of one penalty unit by the number of units an offence or civil penalty provision carries. The value of a penalty unit is set by the date you committed the offence or contravened the civil penalty provision. AUSTRAC has successfully obtained significant civil penalties against major institutions, including Westpac's $1.3 billion penalty in 2020 for over 19 million breaches, Commonwealth Bank's $700 million penalty in 2018, and Crown Melbourne and Crown Perth's $450 million penalty in 2023.

Criminal penalties apply to the most serious AML/CTF violations where AUSTRAC can demonstrate wilful or reckless disregard for obligations. The maximum criminal penalties range from six months to 10 years imprisonment, or 30 to 10,000 penalty units, or both. Criminal prosecutions carry devastating personal consequences for directors and senior managers who face the prospect of imprisonment, and the reputational damage extends far beyond the immediate penalty.

For less serious violations, AUSTRAC can issue infringement notices with fixed penalties. For body corporates, infringement notices can be up to 120 penalty units or another amount specified in the AML/CTF Rules. While these amounts seem modest compared to civil penalties, they often signal the beginning of increased regulatory scrutiny that can escalate to more serious enforcement action if compliance issues are not addressed promptly.

AUSTRAC has a range of enforcement tools beyond monetary penalties. These include issuing remedial directions requiring specific actions to address compliance failures, appointing external auditors to review your money laundering and terrorism financing risk management or AML/CTF compliance, and requiring enforceable undertakings setting out how you will comply with the AML/CTF Act. Not complying with the agreed terms of an enforceable undertaking is a serious matter, and AUSTRAC can apply to the Federal Court to enforce its terms. These undertakings can be made public.

The Federal Court of Australia can also order additional enforcement measures including injunctions to prevent certain conduct, suspension or revocation of registration for remittance service providers and digital currency exchange providers if they pose an unacceptable risk of money laundering or terrorism financing, and public declarations of contraventions. Beyond financial consequences, enforcement actions result in severe reputational damage, loss of client trust, operational disruptions, and potential disciplinary measures from professional bodies.

With Tranche 2 reforms bringing approximately 100,000 new businesses under the AML/CTF regime from 1 July 2026, AUSTRAC expects higher compliance standards from professional services including lawyers, accountants, and real estate agents. Early enforcement patterns suggest higher initial penalty risk as businesses adapt to new obligations. Daily penalties for non-enrolment can reach $18,780 for firms and $3,756 for individuals, highlighting the strict liability nature of enrollment requirements. Businesses should establish robust compliance frameworks now to avoid these penalties and protect against the significant risks of non-compliance.