The Bills to impose a levy to fund AUSTRAC's supervisory activities under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth (AML/CTF Act) were passed by Federal Parliament on 22 June 2011, received Assent on 28 June 2011 and commenced (for the most part) on 1 July 2011.
The only significant amendments made during the Bills' passage through Parliament are:
- a requirement for an independent review to be made by 31 December 2013 – the review must include the operation and calculation methodology of the levy and a consultation process with industry participants
- a delay in the commencement of the "late payment penalty" provision giving leviable entities until 31 December 2011 to pay the levy for the 2011/2012 financial year, before a penalty applies.
The Acts enable AUSTRAC to collect the levy from approximately 8,500 entities which provide "designated services" under the AML/CTF Act (Leviable Entities). Designated services typically encompass banking, lending, certain financial services, gambling services, bullion dealing and certain cash handling activities.
Providers of these services are already required to implement an AML/CTF program, report certain transactions to AUSTRAC and lodge an annual compliance report.
Calculation of the levy
According to a recently released draft Ministerial Determination to be made under the Bills, the levy will consist of a base component, a large entity component and a transaction reporting component.
The base component is to be A$284 per annum and will be imposed on all Leviable Entities with five or more employees (or with earnings of more than A$100 million).
The large entity component will be calculated on the basis of the earnings of the entity (or the entity's corporate group) as set out below:
| Entity/group earnings | Large Entity Component (2011 – 2012) |
| Less than A$100m |
Nil |
|
Between A$100m and A$200m |
A$14,000 |
|
Between A$200m and A$500m |
A$35,000 |
|
Between A$500m and A$1bn |
A$70,000 |
|
Between A$1bn and $A5bn |
A$350,000 |
|
Greater than A$5bn |
A$425,000 |
For the purpose of determining the Large Entity Component for a foreign entity or a local subsidiary of a foreign group, only the Australian business earnings will be taken into account. However, if the Australian business earnings are less than A$100 million but the entity or group's worldwide earnings are more than A$100 million, a large entity component of A$14,000 will still be imposed.
The transaction reporting component is to be A$0.01 per transaction which is required to be reported to AUSTRAC, plus A$0.000005066 per dollar of such transactions. For example, a A$100 million transaction which is reported to AUSTRAC would attract a transaction reporting component of A$506.61.
Impact on Leviable Entities
The rationale for basing the large entity component of the levy on the earnings of the entity or group is that AUSTRAC incurs greater expenses in regulating larger entities, because larger entities have more customers and typically provide more complex products.
However, this calculation does not take into account the extent to which a Leviable Entity's earnings are related to the provision of "designated services". As a result, an entity with high earnings may incur a large entity component, even though the entity only provides a small volume of "designated services".
Accordingly, while the levy is unlikely to represent a material or significant cost for most Leviable Entities, it may have a disproportionate effect on those Large Entities that only provide "designated services" as an incidental part of their business.
Exemptions under the AML/CTF Act
"Exempt Entities" will not be required to pay the levy. "Exempt Entities" are those entities that provide designated services but are not obliged to establish an AML/CTF Program because the designated services fall within an exemption set out in the AML/CTF Rules. For example, energy participants registered under the National Electricity Rules or Wholesale Electricity Market Rules are not obliged to establish an AML/CTF Program for over-the-counter derivatives relating to the wholesale price of electricity, gas or renewable energy certificates, when transacting with each other.
These entities are excluded from the levy requirement on the basis that AUSTRAC does not incur material costs in regulating these entities. However, such entities which have even a single transaction that is not covered by an exemption would be required to pay the levy, calculated on the basis of their total Australian earnings.
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.
