Setting up a self-managed super fund (SMSF), company or trust? You may be asked to answer questions about Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF), Politically Exposed Persons (PEPs) and sanctions.
These are standard compliance checks designed to help prevent financial crime and protect Australia’s financial system.
So what do these terms mean, why do we ask these questions, and what happens if you answer yes? Here’s a simple explanation.
What is AML/CTF (Anti-Money Laundering and Counter-Terrorism Financing)?
AML/CTF stands for Anti-Money Laundering and Counter-Terrorism Financing.
Money laundering is when someone tries to make money obtained through illegal activities appear legitimate.
For example, someone might attempt to move illegally obtained money through a business, company or trust to disguise where it originally came from.
Terrorism financing involves providing or collecting money or resources to support terrorist activities, even when the money comes from legitimate sources.
Australia has laws designed to prevent criminals from using financial services, companies and trusts to hide or move money for illegal purposes.
Depending on the services we provide, we may need to verify your identity, understand who owns or controls an entity, and ask where funds are coming from.
You can learn more about Australia’s anti-money laundering laws on the AUSTRAC website.
What does this mean for you?
In most cases, it simply means providing accurate personal details and, where required, documents to verify your identity.
You might also be asked about the source of funds being used in a transaction. For example, whether money comes from employment income, savings, an inheritance or the sale of an asset.
These questions help establish where money originates. They don’t automatically mean there’s anything unusual about your circumstances.
What is a Politically Exposed Person (PEP)?
A PEP is someone who holds, or has held, a prominent public position.
Examples include senior politicians, government officials, senior judges and high-ranking military officers.
Close family members and associates of these individuals may also be considered PEPs.
Being a PEP doesn’t mean someone has done anything wrong. It simply means additional checks may be required because certain public positions can carry a higher risk of bribery or corruption.
What if you answer yes to being a PEP?
Don’t worry. Being a PEP doesn’t automatically prevent you from establishing an SMSF, company or trust.
We may simply need to ask a few additional questions or request further information, depending on the circumstances.
And if you’re unsure whether you or a family member qualifies as a PEP, please ask us rather than guessing.
What are Australian sanctions checks?
Sanctions are legal restrictions affecting certain people, organisations, countries or activities.
Australia uses sanctions to address issues such as terrorism, international security threats and serious human rights abuses.
Some sanctions restrict or prohibit financial transactions and dealings with particular individuals or organisations.
We may need to check whether a person or organisation is subject to applicable restrictions before providing certain services or facilitating transactions.
You can learn more about these restrictions through the Australian Government’s Department of Foreign Affairs and Trade (DFAT).
What if you were born overseas or have family in another country?
Having overseas connections doesn’t automatically mean you’re affected by sanctions.
Simply being born overseas, holding dual citizenship or having relatives living in another country doesn’t automatically prevent you from establishing an SMSF, company or trust.
These restrictions apply according to specific legal rules, and their effect may depend on the people, organisations, countries or activities involved.
If you’re unsure whether they might apply to your circumstances, please contact us.
Why are these compliance questions required?
These checks help us meet applicable Australian legal obligations and protect the integrity of the financial system.
From 1 July 2026, Australia’s anti-money laundering laws were expanded to cover certain services provided by accountants, lawyers and other professional service providers.
Where these requirements apply, businesses must undertake relevant customer identification, verification and other compliance checks.
Depending on your circumstances and the services being provided, we may ask you to:
Confirm your identity and personal details.
Identify the people who own or control a company or trust.
Confirm whether you or a close family member or associate is a politically exposed person.
Answer questions about sanctions.
Provide information about the source of funds, where required.
Not every client will need to provide the same information. The checks depend on the services involved and the applicable legal requirements.
What happens if you answer yes to one of these questions?
Answering yes doesn’t automatically mean there’s a problem.
For example, being a politically exposed person may simply mean additional checks are necessary.
Other circumstances, such as being subject to certain sanctions, may legally restrict or prohibit particular services or transactions.
If further information is needed, we’ll explain what is required and help you understand the next steps.
The important thing is to answer accurately rather than trying to work out which answer might make the process easier.
What happens to your personal information?
Information collected for compliance purposes is handled in accordance with applicable privacy and record-keeping requirements.
Depending on the circumstances, certain information may need to be retained for legally prescribed periods or disclosed to relevant authorities where required by law.
You can find more information about how we handle personal information in our Privacy Policy.
The bottom line
For most clients, these checks are simply a matter of answering a few straightforward questions.
Being asked these questions doesn’t mean we suspect you of anything. They’re a normal part of the compliance process.
By providing accurate information, you’re helping us complete the necessary checks and get your SMSF, company or trust arrangements underway.
And remember, if you’re unsure how to answer any question, we’re here to help.
General information only. This article explains common compliance requirements and does not constitute personal financial or legal advice. Anti-money laundering and sanctions obligations depend on the services provided and applicable Australian laws.
