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AUSTRAC Issues Wake-Up Call to Wealth Management Sector Over AML/CTF Compliance Failures

Updated: 11h

AUSTRAC has concluded a supervisory campaign targeting the Wealth Management sector, and the findings paint a concerning picture of widespread AML/CTF compliance gaps.


In a letter dated 23 March 2026, AUSTRAC CEO Brendan Thomas has written directly to Chief Executive Officers and Board Chairs across the sector, outlining key findings, areas of concern, and the actions he expects businesses to take immediately.


The Campaign: What AUSTRAC Found


In late 2025, AUSTRAC engaged with a range of businesses in the Wealth Management sector, focusing on Managed Investment Scheme Trustees and Financial Services Intermediaries such as advisers and planners. The campaign assessed how these businesses identify, mitigate, and manage money laundering and terrorism financing (ML/TF) risks, with a particular focus on the submission of Suspicious Matter Reports (SMRs).


While AUSTRAC acknowledged examples of good practice among some businesses, the overall findings revealed deeply concerning compliance gaps across the sector. The statistics speak for themselves:


  • Approximately 98% of Wealth Management businesses enrolled with AUSTRAC did not submit a single SMR in the 2025 calendar year.

  • Approximately 64% of SMRs submitted across the sector during this period were submitted by only three businesses.

  • Approximately 92% of Wealth Management businesses stated they had zero high-risk customers in their latest s47 Compliance Report.



Why SMR Reporting Matters


AUSTRAC's letter makes clear that SMRs are a critical tool in the fight against financial crime. An SMR from a wealth management business can provide a vital piece of information to support an ongoing investigation or help identify, prevent, or disrupt criminal activity. Importantly, businesses do not need to have evidence that an offence is being committed to submit an SMR - reasonable grounds for suspicion are sufficient.


Businesses can also continue a customer relationship after designating them as high-risk or even after submitting an SMR, though in some cases the ML/TF risk may be too high to mitigate within the business's risk tolerance.



What AUSTRAC Expects From You


As a result of this campaign, AUSTRAC CEO Brendan Thomas has outlined a clear set of actions that Wealth Management businesses are expected to take. These include:


  • Provide a copy of the CEO's letter to your Board and Senior Management.

  • Review the letter and identify areas where you can improve the design and effectiveness of your AML/CTF Program and ML/TF risk assessment, policies, procedures and systems.

  • Ensure your business has the capability to identify high-risk customers, both at onboarding and during the customer lifecycle.

  • Ensure your business has the capability to identify and submit SMRs to AUSTRAC.

  • Provide relevant information in your SMRs, including a clear description of the grounds for suspicion.

  • Where funds are suspected to be linked to fraudulent activity, restrict access to the account to prevent further transactions - ensuring restrictions are proportionate, documented, and in line with internal policies and legal obligations.



AUSTRAC's Monitoring and Upcoming Reforms


AUSTRAC will be actively monitoring SMR submissions from the Wealth Management sector throughout 2026.


The regulator will assess whether there has been a material increase in the overall number of SMRs reported by the sector and the number of businesses that are reporting. AUSTRAC has made clear that while it prefers to work collaboratively with industry to lift AML/CTF controls, it will move to regulatory action where improvement is not evident.


AUSTRAC has also recently published updated AML/CTF Reforms guidance. Businesses are expected to consider this letter as part of their preparation for the new AML/CTF laws and in maintaining and updating their AML/CTF programs.



What This Means For Your Business


If your business is a Managed Investment Scheme Trustee or Financial Services Intermediary operating in the Wealth Management sector, AUSTRAC's message is unambiguous: the status quo is not acceptable.


You should read the CEO's letter in full, share it with your board and senior leadership, and take concrete steps to strengthen your AML/CTF program - particularly around identifying high-risk customers and submitting SMRs where there are reasonable grounds for suspicion.


If you need assistance reviewing your AML/CTF program or understanding your obligations under the AML/CTF Act, please contact us. Our team of compliance specialists can help you assess your current position, strengthen your compliance frameworks, and ensure you're prepared for both AUSTRAC's ongoing scrutiny and the upcoming AML/CTF reforms.


Read the Letter in full below and if you would like to discuss what this means for you, contact the 3Lines Consulting team here.






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