How designated services apply to insolvency practitioners | AUSTRAC
This guidance from AUSTRAC explains how Anti-Money Laundering obligations under the AML Act 2006 will require tasks to be performed by insolvency practitioners in relation to the insolvents to which the IPs are appointed; necessarily at cost.
The guidance explains how professional designated services under table 6 in subsection 6(5B) of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (the AML Act) may apply to activities commonly carried out by insolvency practitioners.
It sets out, as it says, how it interprets “certain Australian legislation”, apparently being, in this case, apart from the AML Act, the Corporations Act and the Bankruptcy Act and more besides. Advisedly it says, “Australian courts are ultimately responsible for interpreting these laws and determining if any provisions of these laws are contravened”.
AUSTRAC offers examples and scenarios which “are meant to help explain [its] interpretation of these laws. They’re not exhaustive or meant to cover every possible scenario”.
AUSTRAC necessarily says that the guidance “provides general information and isn’t a substitute for legal advice”. In fact, like any such guidance, it suffers from its avoidance of legal references and use of what it concedes are generalisations about the application of the law which in some cases, as it says, have exceptions or important qualifications. And overall, the particular circumstances must be taken into account when determining how the law applies.
Insolvency
Arguing no special pleading but insolvency and its practitioners are rather unique among professionals with high levels of business discretion, deference only to creditors’ wishes, and with particular legal responsibilities and limits contained in the relevant legislation.[1]
Given the inherent lack of funds any public interest tasks imposed will impact on creditor returns. If any such tasks are to be imposed, that should usefully be stated and explained. The enactment of laws that purport to override or qualify the tasks and purposes of insolvency law is constant – including in tax, environmental, and work safety.[2]
This may be another example; that is, it may be, as the guidance says, that Schedule 6 has qualified the IP’s role and duties, including as officer, or delegate, of the court.
PJC Report 2023
In preparing this law, issues raised in the 2023 PJC Report on Corporate Insolvency as to the public interest role of the IP would no doubt have been taken into account, even in advance of any government response.
The PJC Report raised several public interest issues, including the need to assess the extent to which public interest work carried out by liquidators for no or limited pay is sustainable; whether the current statutory reporting obligations for insolvency practitioners remain appropriate. In both cases, as also given the costs imposed on creditors.
Productivity Commission inquiry 2026-2027
Those issues remain and may now arise in the present review of insolvency law by the Productivity Commission in the context of its inquiry into the barriers to business dynamism.
Its call for submissions indicates it will examine the principles and objectives and the extent to which they are achieved, or indeed remain relevant.
The threshold recommendation of the 2023 PJC Report is now, some 3 years later, being considered.
It may be that those objectives have changed. As is said in Keay’s Insolvency, (ch 1; 12th ed pending) the insolvency regime can’t offer a solution and redress or a panacea for all wrongs or misfortunes that are left unresolved by the insolvent.
“To suggest otherwise serves only to reinforce what is sometimes an ongoing community misconception of what the aims and purposes are of the insolvency regime”.
The claimed proper approach to clarifying those respective responsibilities and limits in insolvency has been explained as being that
“private functions should be performed by the private sector and paid out of funds otherwise available for distribution among creditors, while public functions should be performed by public officials and paid for out of public funds …”.[3]
That may change. In any event, the law needs to more clearly delineate the role of the state and the role of the private profession in insolvency, an issue now highlighted by the AML Act. This may arise in the current PC business dynamism inquiry.
None of this is to diminish the importance of the AML Act, of 2006, and its broader reach, now being enacted in 2026.
This is important guidance on the AML Act from AUSTRAC as the regulator.
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[1] C Symes and M Murray, Australian Insolvency Practitioners as Unique Professionals: An Examination of the History of Liquidators and Trustees (2023) 31 Insol LJ 97.
[2] M Murray, “The last man standing” — (2017) 18(2) INSLB 38; M Murray & J Harris, Rebuilding the structure of the Australian insolvency system — (2022) 22(1&2) INSLB 14
[3] P Heath, Insolvency Law Reform: The Role of the State (1999) NZLRev 569; M Murray & J Harris, Rebuilding the structure of the Australian insolvency system — (2022) 22(1&2) INSLB 14; Murray, Offence reporting by insolvency practitioners — (2019) 20(4&5) INSLB 88.
