Geographical Link Explained: Are You Under AUSTRAC’s Scope?

This infographic explains what a Geographical Link means, how it’s defined under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act) and the different ways a business could fall under AUSTRAC’s reporting obligations, even if it operates from overseas. 

If an entity offers financial or professional services, it might be legally required to follow Australia’s AML/CTF laws. Under the AML/CTF Act, a business may come under the umbrella of being a Reporting Entity if it provides designated services and it has a Geographical Link to Australia. This can arise in any one of the several ways, including: 

• Designated Services provided from a permanent establishment in Australia  

• An Australian-based entity offers designated services overseas 

• Designated services provided by a foreign branch of an Australia-based entity 

Amongst these three ways, a business will be considered to have a Geographical Link with Australia if it offers services in either one of these ways. Let’s discuss them in detail.

Permanent Establishment: Who Qualifies and Why It Matters

In simple terms, if you regularly carry out activities and business from a fixed location, that would be considered a permanent establishment. This includes offices, branches, or even an agent acting on your behalf. It can have more than one permanent location.  

A person or a business will be treated as having a permanent establishment in Australia if: 

• They provide a designated service from, or through, a physical office or other business premises located in Australia. 

• You are a foreign person or entity providing a designated service through branches or offices located in Australia. 

• You are a person who travels to Australia and delivers designated service through mobile or from a temporary location. 

• You or your agent provide services online to Australian customers through a website. However, the related activities concerning the designated services must be carried on through a permanent establishment in Australia. 

• Your website runs on servers in Australia, and you own or operate those servers (or they are in a building you own/operate). 

• You or an agent conduct activities related to the services provided by you through the Australian office address. 

• You hold a bank account which is operated from an Australian office and used to provide a designated service.  

Having a permanent establishment in Australia is just one way to meet AUSTRAC’s Geographical Link test. Another way is when you are an Australian resident, but you operate through branches of offices located overseas.

Resident of Australia: Operating Overseas

The Geographical Link test is not limited to having a physical presence in Australia. Being an Australian resident with business branches or offices overseas can also bring you under AUSTRAC’s rules. Let’s discuss what makes you an Australian resident for the Geographical Link requirement. 

Who Counts as a Resident of Australia? 

Individuals 

An individual will be treated as an “ordinarily resident” if they live in Australia with a certain level of permanence and not if they’re just visiting temporarily. 

Company 

A company would be considered a resident of Australia if: 

• It was set up (incorporated) in Australia 

• It is controlled by a person who is an Australian resident 

Trust 

A trust is considered resident of Australia if any of the following applies: 

• At least one trustee is a resident 

• A resident person controls the trust 

• A resident person is a beneficiary of the trust. 

Partnerships

If even one partner is a resident of Australia, the partnership will be treated as Australian. 

Corporation Sole or Body Politic  

Corporations sole or bodies politic are automatically considered Australian residents if they’re established in Australia or governed by Australian law.

Foreign Subsidiaries Linked to Australian Parents

Your company might not be based in Australia, but if your parent company is an Australian resident, and you provide services overseas through a permanent establishment, you still fall under AML/CTF Obligations. 

There’s one major exception to the rules above. 

Special Case: Remittance Network Providers

If you are a remittance network provider (money transfer businesses) in Australia, you would automatically be considered a Reporting Entity under the AML/CTF Act. This is applicable even if you don’t meet the Geographical Link requirement or have a permanent establishment in Australia. 

Key Takeaway 

Meeting the Geographical Link requirement under the AML/CTF Act can happen in different ways, through having a permanent establishment in Australia, being considered an Australian resident while operating overseas, or falling under specific exceptions like those for remittance network providers. Incorporating appropriate AML Software and solutions within these operating structures further supports compliance by helping entities maintain visibility and control over activities connected to Australia. 

Each pathway ensures that businesses and individuals with meaningful connections to Australia remain accountable for preventing Money Laundering and Terrorism Financing.