Two terms with different purposes
AML means anti-money laundering. CTF means counter-terrorism financing. Australian law and AUSTRAC use the combined term AML/CTF.
International sources also use AML/CFT. CFT refers to combating the financing of terrorism. The different abbreviation does not, by itself, change an Australian duty.
Sources: Federal Register of Legislation: Act title; Financial Action Task Force: Title and introduction: AML/CFT.
The source and use of funds
Money laundering often involves attempts to hide the origin or ownership of money or property connected with crime. Australian offences have specific legal tests.
Terrorism financing concerns funds for terrorist activity or organisations. The funds can have lawful or criminal sources. A lawful source does not remove the risk of terrorist use.
Australian AML/CTF duties also address proliferation financing risk. The AML/CTF Act gives this term a specific definition.
Sources: AUSTRAC: Money laundering; Terrorism financing; Proliferation financing; Federal Register of Legislation: Section 5 definitions.
- Money laundering
Attempts to hide the origin or ownership of money or property connected with crime.
- Terrorism financing
Funds for terrorist activity or organisations. The funds can have lawful or criminal sources.
Compare the source and use of funds
These are plain explanations. Australian offences have specific legal tests. A lawful source does not remove the risk of terrorist use.
Separate evidence questions. An answer to one does not settle the others.
From the terms to business duties
Identify whether the business provides a designated service with the required link to Australia. The business name or profession alone does not settle this.
Duties can include a risk assessment, an AML/CTF program, customer due diligence, reports and records. The applicable requirements depend on the service and legal conditions.
Source: Federal Register of Legislation: Section 6; Parts 1A, 2, 3 and 10.
A customer check in practice
In a fictional company transaction, a practice receives identity evidence from a representative. The practice also examines the authority of that representative.
The identity result answers one question. It does not answer every question about the customer, ownership or purpose of the service.
Initial CDD explains these checks. The assessment tool helps you examine readiness. It does not confirm compliance.