Money Transfer Regulations, Compliance and Safety

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.


Here is a short summary and glossary of the main actors:

Regulatory Bodies and Their Roles

ASIC (Australian Securities and Investments Commission)

ASIC, the vigilant watchdog of Australia’s financial sector, ensures compliance with company and financial services laws. In their latest crusade, ASIC imposed a $113 million fine on Westpac for a smorgasbord of compliance failures. It’s not just a slap on the wrist; it’s a clear message that playing fast and loose with financial regulations comes with a hefty price.

  • Established: Originally formed as the Australian Securities Commission (ASC) on 1 January 1991 and became ASIC on 1 July 1998.
  • Website URL:
  • Quote: “ASIC’s governance and accountability framework sets out a clear, transparent and common understanding of ASIC’s governance and accountability structures and processes. The objective of the Framework is to promote effective, efficient and impartial decision making at ASIC and articulate clear accountabilities.”

AUSTRAC (Australian Transaction Reports and Analysis Centre)

AUSTRAC, with its eagle eye on money laundering and terrorism financing, has the power to impose significant fines for non-compliance. Their notable enforcement action includes a record $1.3 billion penalty against Westpac, setting a precedent in the financial enforcement arena.

AUSTRAC (Australian Transaction Reports and Analysis Centre)

  • Established: 1989
  • Focus: Preventing money laundering and terrorism financing.
  • Notable Enforcement: Imposed a record $1.3 billion penalty against Westpac.

APRA (Australian Prudential Regulation Authority)

APRA’s focus is on the financial well-being of banks, ensuring they’re fortified against economic upheavals. Their approach is about making sure banks are not just surviving, but thriving in today’s volatile economic climate.

APRA (Australian Prudential Regulation Authority)

  • Role: Oversees the financial well-being of banks.
  • Approach: Ensures banks are fortified against economic upheavals and thrive in volatile economic climates.

ACCC (Australian Competition and Consumer Commission)

The ACCC, the champion of competition and consumer rights, focuses on ensuring fair play in the financial marketplace. They keep a watchful eye on consumer interests, making sure everyone gets a fair deal.

ACCC (Australian Competition and Consumer Commission)

  • Established: 1995
  • Role: Administers and enforces the Competition and Consumer Act 2010 and other legislation, promoting competition, fair trading, and regulating national infrastructure for the benefit of all Australians.
  • Notable Actions: Engages in various regulatory activities, including imposing fines on companies that breach competition or consumer protection provisions, and conducting market studies and inquiries to support competition, consumer, and regulatory outcomes.

Regulatory Bodies and Their Roles in Money Transfers 

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.

“In the vigilant oversight of Australia’s financial transactions, ASIC and AUSTRAC stand as guardians of integrity and security. ASIC focuses on the regulation of financial services, ensuring fair play and compliance in the corporate sector. In contrast, AUSTRAC, with its keen eye on preventing money laundering and terrorism financing, scrutinizes the flow of money to safeguard against the shadows of crime. Together, they form a robust framework that mandates money transfer providers to prioritize customer safety, transparency, and adherence to regulatory standards, ensuring the Australian financial landscape remains safe.”

How to Remain Safe and Avoid Scams

Verify the Recipient’s Identity

Always confirm the identity of the person or entity you’re sending money to. This precaution is vital in personal transactions and when dealing with new businesses or service providers.

Understand the Risks of Different Payment Methods

Be aware that different payment methods offer varying levels of protection. For instance, credit card transactions often provide fraud protection that is not available when transferring money directly from your bank account. Before making a transaction, consider which method offers you the most security, especially for high-value transfers.

Be Cautious with Advance Payments

Exercise extreme caution when asked to make payments in advance for goods or services. This caution is particularly relevant for online purchases or when dealing with unfamiliar entities. Research the provider thoroughly and look for reviews or feedback from other customers.

Use Regulated Money Transfer Services

Opt for money transfer services that are regulated by Australian authorities like ASIC and AUSTRAC. These services comply with Australian financial laws and regulations, ensuring a higher level of security and accountability.

Know Where to Turn if Scammed

If you suspect that you’ve been scammed, it’s important to act quickly. Contact your bank or financial service provider immediately to report the fraud and seek advice on next steps. Additionally, report the scam to the Australian Competition and Consumer Commission (ACCC) via the Scamwatch website, and consider filing a report with the police, especially if a significant amount of money is involved.

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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

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.