Are You Providing a Designated Service?Tranche 2 AML/CTF
Important Disclaimer (Please Read):
This webpage provides general information only about Australia’s anti-money laundering and counter-terrorism financing (AML/CTF) regime. It does not constitute legal advice. Whether your business provides a “designated service” depends on your specific activities and circumstances. If you are uncertain, you should obtain independent legal advice about your obligations.
What is a ‘designated service’ for a professional services firm?
Accountants, lawyers, conveyancers and real estate agents have all been named as professions or industries captured under Australia’s AML/CTF framework.
However, obligations don’t apply simply because of your profession or job title.
They apply because of the services you provide.
The law works by regulating specific activities called ‘designated services’. If your business provides one or more designated services, then AML/CTF obligations may apply to those services.
This is an important distinction. Two firms in the same profession can have very different obligations depending on what they actually do in practice.
For example, a professional firm might:
Provide some services that are clearly designated services
Provide other services that are not designated at all
Or provide services that sit in a grey area and need careful assessment
Whether you are captured is therefore a services question.
Designated Services Defined
Designated services are listed in the Anti-Money Laundering and Counter-terrorism Finance Act 2006 (the Act).
The professional services listed include:
assisting in the planning or execution of a transaction to sell, buy or transfer real estate
assisting in the planning or execution of a transaction to sell, buy or transfer a body corporate or legal arrangement
receiving, holding, controlling or managing a person’s property to help in the planning or execution of a transaction
assisting in organising, planning, or executing a transaction for equity or debt financing relating to a body corporate or legal arrangement
selling or transferring a shelf company
assisting in the planning or execution of the creation or restructuring a body corporate or legal arrangement
acting, or arranging for someone to act on behalf of a person in particular positions in a body corporate or legal arrangement
providing a registered office address or principal place of business address of a body corporate or legal arrangement .
According to AUSTRAC they consider:
“‘assisting’ and ‘otherwise acting for or on behalf of a person’ as separate actions. A designated service can arise if you either ‘assist’ or ‘otherwise act’ for a client in certain circumstances.
The terms ‘planning’ and ‘organising’ extend to preliminary and preparatory steps that directly advance the outcome specified in the designated service, such as a transaction. This includes, for example, preparing a contract for the sale of real estate when the seller and buyer have agreed to the sale price of the property.”
Examples of Designated Services
Real Estate Services
According to AUSTRAC, you’re likely to provide these designated services if you do any of the following in the normal course of business:
work as a buyer's or seller's agent
are a property developer or other business selling house and land packages, apartments off the plan, and blocks of land in new subdivisions.
If you’re a lawyer or conveyancer who helps plan or execute the sale, purchase or transfer of real estate, you may be regulated under different designated services.
What does this mean in practice? You commence to provide a designated service when you, in the normal course of business:
enter into a Sales Agency Agreement with a client
enter into a Buyers Agency Agreement with a client
purchase or sell property, or facilitate purchases or sales, without an intermediary such as an agent involved.
Conveyancing Services
Conveyancing services fall under the designated service of planning or executing a transaction to buy, sell or transfer real estate for other people in particular:
Receiving, holding, moving or controlling money or assets to help a person plan or complete a transaction
What does this mean in practice? You commence to provide designated services when you, in the normal course of business:
Use a trust account to receive a purchaser's funds for settlement of a property.
Use a trust account to receive sales proceeds for a property settlement.
Prepare a contract for sale where there is no agent involved in a property transfer.
Assist a family in transferring property ownership, even with nil consideration paid.
Professional Services - Accountants and Lawyers
These concepts have been grouped together because they may in part be undertaken by a professional services firm providing a range of services. All of the services are to be considered in the normal course of business on behalf of a client.
Buying, Selling or Transferring Entities
Buy, sell or transfer a legal arrangement* or body corporate
Examples
Preparing Contract for Sale of a Business
Preparing share sale or share transfer documents
Brokering the sale of a business or entity
Providing a trust account to facilitate a transaction
Securing Equity or Debt Financing
Secure equity or debt financing for a legal arrangement or body corporate
Examples:
Act on behalf of a client to execute a financing transaction
Assisting with capital raising
Arranging private funding or private lending (including for families)
Facilitating shareholder or investor equity injections
Company Services
Create or restructure a legal arrangement or body corporate
Sell or transfer a shelf company
Appoint a person, or act as, a director or secretary of a company, power of attorney for a legal arrangement or body corporate, partner in a partnership, trustee of an express trust or any equivalent position
Appoint a person, or act as, a nominee shareholder of a legal arrangement or body corporate
Provide a registered office address or principal place of business for a legal arrangement or body corporate
Examples:
Preparing a company constitution
Registering a company
Preparing share transfers for a company
Preparing documents to establish or alter a trust
Preparing documents to establish or alter an incorporated association
Implementing a restructure of entities
Acting as an executor where managing assets or structures
Acting as or arranging nominee shareholders, directors, partners or trustees
Providing a registered business address
Handle a person’s assets
In this case, a person includes a body corporate or legal arrangement.
handle a person’s money, accounts, securities, virtual assets or other property to help a person to plan or execute a transaction?
Examples
Receiving or paying funds as part of a transaction
Using a trust account or business account to facilitate settlement or completion of a deal
Handling securities, virtual assets or other property to complete a transaction
*note a Legal Arrangement refers to an entity that doesn't have a legal personality, including express trusts, general partnerships, joint ventures, unincorporated associations and foreign equivalents.
The Practical Test
You are more likely to be providing a designated service if you are:
Preparing legal documents
Setting up or changing structures
Handling client money or assets for a transaction
Executing or facilitating transactions
Acting in formal control or governing roles
You are less likely to be providing a designated service if you are:
Only giving advice
Only providing general information
Only holding money for your own fees or retainers
IMPORTANT DISCLAIMER:
This information is general in nature and does not take into account your specific business, services or circumstances. AML/CTF obligations can be complex and fact-specific. You should seek independent legal advice to confirm whether you provide a designated service and what obligations apply to you.
Additional Resources
AUSTRAC provide a tool to check if you are regulated, check it out here.
For specific industry advice see AUSTRAC’s resources:
Practical AML/CTF support, when you need it
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