How Banking Compliance Works in Australia and How It’s Being Enforced

Financial services is one of the most highly regulated industries in Australia. Being core to keeping Australian customers safe from frauds and scams, it’s vital to understand the different regulating bodies – and their roles – that oversee seemingly benign transfers of money across borders. 

In such a fast-paced industry that acts as a revolving wheel of new solutions, regulators are constantly playing catch-up to ensure they stay on top of security and responsible practices. Whether you’re a customer of money transfers or a provider, 

Regulatory Bodies and Their Roles 

The Australian Securities and Investments Commission (ASIC) and the Australian Transaction Reports and Analysis Centre (AUSTRAC) are the two primary regulatory bodies overseeing money transfer in and out of Australia. 

ASIC looks to oversee the activities and protocols of remittance dealers and money transfer providers. They’re focused on corporate regulation, customer complaints, assessing financial services and offerings, and general conduct. AUSTRAC differs here, as they’re a financial intelligence agency looking to combat money laundering, terrorist financing, and other crimes. Between them, money transfer providers must ensure they know their customer, offer safe transfers, prevent illicit activities, and ensure a fair market.

The Australian Financial Services Licence (AFSL) is a visible way for customers to see that a money transfer company is licensed. These licences are issued by ASIC and act as a certification that the provider is compliant with financial laws and ASIC regulations in Australia. This licence is make-or-break for a provider, because customers cannot trust companies with their money if they’re not compliant with international money transfer regulation.

When it comes to banking compliance and bank fines there are other regulatory bodies involved.

Understanding AFSL Compliance 

AFSL compliance is an extensive, ongoing process. It requires firms to meet specific requirements relating to risk management systems, financial health, employee training, and organisational capacity. 

The thrust of the compliance is to ensure operations remain honest, transparent, and fair. For example, there are requirements to ensure communication with their clients is up-to-date and accurate, which helps promote transparency for all transactions.

Competency also plays a big part of AFSL compliance, in which responsible managers must possess the requisite qualifications that are deemed necessary to carry out their duties. This trickles down throughout the company, in which employees must be trained and qualified to a certain standard depending on their responsibilities. This is a core aspect of compliance because it directly impacts the quality of the operations and services provided – a list of approved courses can be found here.

AFSL may also emphasise continuous professional development (CPD) activities, in which employees must visit industry seminars, workshops, or online courses to ensure they’re staying on top of industry changes. Financial advisers in particular must showcase strict requirements, such as a minimum of 100 hours structured training inside 1,600 hours of experience.

Client Money Reporting Rules 

One of the ASIC rules, named Client Money Reporting Rules (2017), exists to maintain accurate records of the client money held in each client’s account. This is also done on an aggregate basis too, to give an overall picture of client money held by the company. Reconciliations are performed daily and monthly to produce reports of discrepancies for ASIC.

Reportable client money refers to the money that a licensee holds on behalf of clients in regard to a derivative retail product. This is paramount to managing risk and solvency, hence the need for frequent reporting. It’s not just holding that money, but how the client uses it. For example, they’re not allowed to use this client money to meet other obligations for another client

Risk Management Systems

Risk management systems are hugely important to the operations of AFS licence holders. These systems help identify areas important to international money transfers, such as identifying and managing risks associated with currency transfers, hedging, and other financial services.

There are many risks to consider, from operational risks like processing errors, along with financial risks like currency fluctuations and non-payment. A robust risk management system should closely monitor, review, and manage these risks through internal audits, data analysis, and reviewing compliance.


Money transfer regulations are the bedrock of risk management in the remittance and currency industry. Understanding and complying with regulations is absolutely paramount to the success of an international money transfer. 

A money exchange licence Australia is the fastest way to show customers that they can be trusted, because ASIC currency exchanges bear a lot of responsibility in managing customers’ money. When it comes to finding an ASIC foreign exchange firm, regulations ensure that all options are safe.