For accountants
Equity and debt finance transactions: AML/CTF for accountants
Item 4 of table 6 is limited to a transaction for equity or debt financing relating to a body corporate or proposed body corporate, or a legal arrangement or proposed legal arrangement. The funds raised must be capable of being paid to that body or arrangement or held in trust on its behalf. A personal loan for an individual's own purposes is therefore not brought into item 4 merely because an accountant assists. Nor does every cash-flow forecast or funding-options paper qualify. The boundary changes when the firm directly advances a sufficiently concrete, qualifying entity-financing transaction by structuring, negotiating, documenting, coordinating or executing it.
See the accountants AML/CTF workspaceDistinguish options advice from a specific financing
General analysis of working-capital needs, debt capacity, capital structure or possible funding sources may influence a client without directly advancing a financing. A forecast prepared for internal planning is not captured merely because it could later be shown to a lender. Record the purpose, intended audience and absence of a defined transaction where that supports the conclusion.
Before testing direct advancement, confirm that the financing relates to a body corporate or legal arrangement, including a proposed one, and that the raised funds can be paid to it or held in trust on its behalf. A qualifying financing becomes more concrete when a lender or investor is approached, proposed terms or an instrument are identified, and the firm is instructed to move it forward. Preparing an information package, negotiating terms, coordinating due diligence, preparing finance documents or satisfying completion conditions can directly advance it.
Map every active step and participant
Describe the issuer or borrower, investor or lender, guarantors, security providers, related acquisition or legal-form change, proposed amount, instrument, jurisdictions and use of proceeds. Identify the accountant's deliverables and authority. A referral or introduction may differ from arranging and negotiating the finance, but the commercial label finder, CFO support or advisory does not determine the statutory outcome.
Within item 4, equity work can include share subscriptions, new issues or other capital raisings, while debt work can include loans, notes, bonds or other borrowing arrangements. Those examples remain subject to the entity-or-arrangement and funds-destination limitations. Do not apply item 4 to ordinary trade credit, personal borrowing or every movement of funds without testing them. If the financing also creates an entity, changes legal form through a merger or demerger, transfers a company or involves management of transaction property, analyse those service items separately.
Identify the customer and complete CDD before active work
Establish who receives the firm's designated finance service. Although the transaction must relate to a body corporate or legal arrangement, the item 4 customer is the person the firm assists or otherwise acts for, which may be an issuer, borrower, promoter or another instructing person. Different workstreams can create different customer relationships. Identify representatives and authority and, for entity customers, establish legal details, ownership and control, relevant beneficial owners, purpose and expected nature of the transaction.
Complete required initial CDD before the designated service begins. Apply PEP and targeted-financial-sanctions checks and assess customer, service, delivery-channel and geographic risk. Understand the stated source and use of finance to the depth required by risk and the program. Higher-risk or inconsistent information may require corroboration, enhanced CDD and senior approval before the firm continues active transaction work.
Review funding and transaction risk without making assumptions
Relevant risk indicators can include opaque investors or lenders, unexplained intermediaries, funding routed through unrelated third parties, complex offshore vehicles without a credible commercial reason, rapidly changing counterparties or terms, and proceeds inconsistent with the customer's business. These features do not establish criminal conduct. They require proportionate inquiry, documentation and escalation under the risk-based program.
Compare actual negotiations, subscriptions, drawdowns and proceeds with the recorded purpose. If the firm receives, holds, controls or manages money or securities for the financing, apply item 3 and its boundaries separately. If instructions become inconsistent or suspicion arises, follow confidential internal escalation and suspicious-matter reporting procedures while observing tipping-off restrictions.
Keep a phase-based finance file
Retain the initial advice scope, trigger into transaction work, engagement phases, instructions, counterparties, term sheets, models and documents prepared, negotiation role, due-diligence requests, CDD, authority, ownership and control analysis, risk decisions, monitoring and approvals. The evidence should show why early work remained outside or entered scope and that required controls preceded designated steps.
Reassess when a lender or investor is identified, terms become specific, a new entity or security provider is added, funding source or destination changes, the firm gains authority over proceeds, or the transaction expands into an acquisition or legal-form restructure. After completion, routine covenant reporting or accounting is not automatically designated; test the entity-or-arrangement limitation and direct advancement for any amendment, refinance or new raising.
Official sources
Use these primary AUSTRAC pages to confirm the current rules and apply them to your circumstances.
Frequently asked questions
Is preparing a cash-flow forecast a designated finance service?
Not automatically. An internal planning forecast may only inform a decision. A forecast used as an active step to secure identified finance can be relevant only after the item 4 entity-or-arrangement and funds-destination limits are met. Record purpose, stage and intended use.
Does introducing a client to a lender always trigger AML/CTF duties?
No automatic rule follows from the word introduction. Assess what the firm does before and after it, whether a specific financing exists and whether the steps directly advance it. Structuring, negotiating or coordinating the transaction is materially different from a bare referral.
Does item 4 cover a personal loan to an individual?
Not where the loan is for the individual's own purposes. Item 4 requires financing relating to a body corporate or legal arrangement, including a proposed one, and the funds must be capable of being paid to it or held in trust on its behalf. If those facts exist, assess the complete service rather than relying on the borrower's label.
Does handling loan or subscription money create another service?
It may. If the firm receives, holds and controls or manages money, securities or other property as part of directly advancing the transaction, table 6 item 3 requires separate analysis, including its statutory boundaries and customer implications.
Put it into practice
Cassandra AML turns these obligations into a working system: designated-service decisions, customer due diligence, screening, monitoring and reporting records — hosted in Sydney, free to start.
This guide is general information for Australian professionals. It is not legal advice and does not replace the AML/CTF Act, the AML/CTF Rules or AUSTRAC guidance. Confirm your specific obligations with AUSTRAC or a qualified legal adviser. See our editorial and correction standards.