Tackling the AML/CTF behemoth: practical insights for AML/CTF compliance officers

One role that is central to the successful implementation of compliance obligations is the AML/CTF compliance officer (AMLCO).¹

The AMLCO is defined in the AML/CTF Act as “the individual designated as the AML/CTF compliance officer for the reporting entity under subsection 26J(1)”.² The AMLCO must meet eligibility requirements including, being employed or engaged by the law practice, be an Australian resident, and be a fit and proper person.

But what does it really take to be an effective AMLCO in practice?

I recently had the pleasure of talking with Rachelle Boyle, Head of Business Acceptance and AMLCO at Mallesons, about what makes a successful AMLCO.  Our conversation explores the realities of the role, the skills and attributes that matter most and some challenges and insights for those stepping into this important position.

The discussion below is a summarised version of the full podcast. It has been edited for clarity and organised around the key questions law firms are asking.  

1. What training and skills do you need to be an AMLCO?

An AMLCO needs a deep understanding of risk and the AML/CTF legislative framework. They also need to understand the regulator (AUSTRAC) and regulatory expectations.  Equally, they need a thorough understanding of their own firm – its services, clients and the specific risks it faces and how similar firms are approaching compliance.

This is not a one-time study. Risks evolve and clients’ expectations change. At the same time, data and technology available to firms continually reshape legal practice and financial crime. Which means having a deep understanding is a process. The AMLCO needs curiosity and a commitment to continuous learning.

To be effective, the AMLCO needs to understand, rely on and confidently reference reliable information. They need to make decisions and provide advice, based on clear facts.  Particularly in larger firms, the AMLCO needs to pull data; map its path through various technology systems; and analyse that data. Even in small firms, data matters – it is needed to answer critical questions, such as: what designated services does the firm provide? How many clients is the firm providing designated services to? What portion of clients pose a higher risk? What portion of clients are based overseas? How long does it take to onboard a client?

Being an AMLCO is a constant juggling exercise.  There are always multiple priorities competing for attention. The best AMLCOs often resemble a swan – calm on the surface while frantically paddling beneath the surface.

2. What does an AMLCO actually do day-to-day beyond what people might assume?

On any given day, the AMLCO may find themselves both “on the balcony and down on the dance floor”. From the balcony they need to maintain a strategic view – reviewing the firms AML/CTF policies; redesigning the risk assessment; reporting to senior executives or governing body; and engaging with their technology provider about strengthening compliance or dealing with an error in the system. At the same time, they are also on the dance floor dealing with the practical realities of implementation and compliance; they are acting as the escalation point for the team; delivering training; supporting the onboarding and compliance team; or talking to a senior partner who needs to find the right way to talk to their client about new onboarding requirements.

The AMLCO may also lead a compliance team. This means investing in people – providing guidance, answering questions and creating an environment in which the team feel supported, recognised and confident in carrying out their responsibilities. A good AMLCO recognises that an effective AML/CTF program depends not only on robust systems and processes but also on an engaged and capable team.

In smaller firms the challenge can be even greater. The AMLCO is often wearing multiple hats, balancing compliance responsibilities while at the same time running the practice and managing day-to-day demands.

Whether leading a team or wearing multiple hats in a smaller firm, the AMLCO must learn to manage themselves. There will always be more to do. An effective AMLCO must therefore know how to prioritise and how to remain calm under pressure. Just as importantly, they need to look after their own wellbeing. The role is demanding and maintaining perspective and resilience is essential to sustaining long term effectiveness.

3. How can the AMLCO balance commercial pressures? There is always that tension of getting a client onboarded quickly and meeting compliance requirements.

It’s important to remember that compliance isn’t something “out there on its own”. It sits within its own context. AML/CTF compliance is a business enabler. When the AML/CTF program is embedded across the firm it will provide better client insights which can build strong relationships and help the firm understand client needs and how to adapt to them. The firm’s AML/CTF program will support good governance, good hiring practices and good record management.

4. How can the AMLCO be effective in that role and what can leaders do to support them?

The AMLCO needs to be able to advise the firm, have influence and sometimes make difficult, unpopular decisions. They need the appropriate level of seniority and the backing and support of executives and decision makers at the firm.

An effective AMLCO needs to have good relationships across the firm. Every conversation, every email is an opportunity to build confidence and a good compliance culture.

5. What’s your approach to training and building a strong compliance culture?

The AMLCO must be able to talk to real scenarios, real typologies and real cases involving money laundering and terrorism financing. They should be able to talk in a language that is appropriate to the firm, and in a way that makes sense for the people they are talking to or training.

Bespoke training that the firm has created or using base training which is modified for your audience will help develop both relationships and the compliance culture. Where training covers different topics; is appropriately designed; and provided regularly; that makes it real for staff. It becomes something they think of when they are doing their regular work. It helps embed compliance so when they are talking to new prospective clients, they are thinking about obligations. For example, do I know who the client is, what is their legal form and who are the legal owners? Questions that may aid lower money laundering risk is in the back of their minds because they have had the training.

6. Behind the policies and frameworks, there’s the day-to-day challenge of implementation — managing alerts, training staff, and keeping the business engaged.

Captured law firms are all experiencing the same things and so it is important to talk to other AMLCOs. There is no reason (outside privacy and client confidentiality) not to talk about the types of issues firms are seeing and ways that other firms may have resolved them. This can include ways, for example to have difficult conversations and land a good outcome; ways to design training so that it makes sense to people receiving it; ways to work through issues where clients who are feeling frustrated about a particular process. Ventilating questions, such as, whether there is a better way for the firm to work through process redesign – can be helpful in a knowledgeable and supportive community.

7. What are your best tips for training staff — especially in keeping AML/CTF awareness alive beyond the induction period?

It is so important to show enthusiasm for the subject matter. AMLCOs who talk about AML/CTF and related topics because they find it exciting will get much more traction including by presenting it in a way that is exciting to others for example, by including a pop quiz or having an interactive discussion about sanction evasions. Not only is it topical, but that excitement catches on.

8. What personal qualities do you think makes someone a strong and credible AMLCO?

A strong and credible AMLCO is curious and an awesome communicator.

9. What are your top three tips for someone stepping into the role for the first time?

1. Always be learning.

2. Communicate well.

3. Prioritise. There will always be too much to do so make sure you focus on the most important things first.

10. What gives you optimism about the future of AML/CTF and financial crime prevention in Australia?

It is an exciting time for “AML/CTF nerds”. There are changes in AML/CTF expectations for Tranche 1 entities and Tranche 2 entities such as law firms are being brought into the fold.

More broadly, there are also reforms to digital ID, privacy, cyber resilience and scam prevention. AI tools are being used more widely including by law enforcement to stop criminals. Our big island is making it less easy, less attractive to launder crime and finance terrorism.

11. AUSTRAC has really evolved over the years – it’s more data-driven, more collaborative, but also more demanding. The AMLCO often sits at the front line, and in fact, at the heart of that engagement. What makes for an effective and transparent relationship with the regulator?

The AMLCO is the person who holds the relationship with the regulator. We are lucky in Australia as AUSTRAC is a relatively collaborative regulator. They want to talk to regulated entities and have a relationship with them. AUSTRAC is keen to learn more about tranche 2 entities which is a great benefit for AMLCOs as it provides opportunities to build an actual relationship with the regulator.

That relationship is fundamental from an AMLCOs perspective because they can learn from the regulator – observe their approach; their perspective; how they see issues and at the same time, provides them with the opportunity to inform or educate AUSTRAC how the law practice see issues.

It’s also important because the AMLCO needs to give the regulator confidence. It is important for AUSTRAC to have a good relationship with the AMLCO so that they can have faith in the firm, and that it is well managed in terms of its AML/CTF compliance. This is important as it allows the regulator to have a good perspective on the reporting entity and have a good relationship so they can question and test waters rather than potentially going directly to pursuing punitive outcomes.

An important part of that relationship and the trust that the regulator builds in the firm comes from the regulator understanding that the AMLCO knows what they are talking about; that they can use data; they understand the firm’s risk; they understand AML/CTF obligations; they can talk confidently to those obligations; they are curious; they have been learning along the way; and they can demonstrate this too the regulator – that they’ve got this!

The Law Society of NSW AML/CTF Resources

Our AML/CTF Hub contains the latest information on AML/CTF, as well as access to complimentary resources and information including CPD claimable, self-paced, interactive on-demand courses.

Our Professional Support Unit (PSU) provides free and confidential guidance to all solicitors regarding their obligations under the Legal Profession Uniform Law in the areas of costs, ethics, regulatory compliance and AML/CTF. Enquiries regarding AML can be made to PSU by telephone on (02) 9926 0249, email at aml@lawsociety.com.au, or in person by appointment.

¹ See sections 26J – 26 M of the AML/CTF Act

² See section 5 of the AML/CTF Act