The AML/CTF geographical link test for Australian businesses

Start with the statutory alternatives

AUSTRAC explains that a designated service has the required geographical link where one of three alternatives is met. The service may be provided at or through a permanent establishment in Australia. An Australian resident may provide it at or through a permanent establishment in a foreign country. Alternatively, a subsidiary of an Australian resident company may provide it at or through a permanent establishment in a foreign country. The alternatives mean that some offshore delivery can remain in scope, while an Australian-facing service is not automatically captured without the required establishment connection.

Apply the test only after identifying the exact designated service. Record the relevant item, the provider legal entity, the customer, when the service starts, and the activities that constitute provision of that service. A group chart alone cannot answer the question because different group entities may contract, advise, receive funds, make decisions or execute the outcome. If a matter contains several services, test each one rather than carrying one conclusion across the whole engagement.

Identify the permanent establishment facts

For this AML/CTF analysis, a permanent establishment is a place at or through which the provider carries on activities or business, including through an agent. Relevant evidence can include premises, people, decision-making, contracts, operating systems, agents, servers and the steps performed at each location. A business can have more than one permanent establishment. Staff who travel or work across borders also require a factual analysis of where the relevant service is provided rather than a conclusion based solely on payroll or a registered office.

An Australian street address, mail service or corporate registration does not by itself show that the designated service is provided at or through that place. Conversely, a modest location can matter if people or infrastructure there genuinely conduct the activities that provide the service. Preserve engagement documents, entity responsibilities, delegation arrangements, process maps and system records that support the conclusion. Do not import a tax-treaty or income-tax conclusion without checking the AML/CTF definition and current guidance.

Treat payments, agents and technology as evidence, not shortcuts

Receiving payment into an Australian bank account can be relevant, but AUSTRAC cautions that an account alone does not establish the link. Ask whether the designated service is actually provided through that account and what operational steps it performs. The same discipline applies to an Australian agent. Document the agent's authority, activities and location, whether those activities form part of providing the service, and which entity remains responsible for the engagement.

Digital delivery is similarly fact dependent. Making an online platform available to Australian customers does not automatically satisfy the test. Consider where the provider's people operate, where instructions are accepted, where service decisions and execution occur, and whether Australian premises or servers are part of providing the service. AUSTRAC notes that Australian-owned or operated servers on business premises can be relevant to a permanent establishment. Cloud hosting, a domain name or an Australian user base should not be treated as conclusive without analysing the actual operating model.

Build a service-by-service scope register

A defensible register should show the designated-service item, provider entity, residence basis relied on, each relevant establishment, delivery steps, supporting evidence, conclusion, reviewer and review date. Add assumptions and unresolved questions. For example, if an Australian firm introduces a customer to a foreign affiliate that separately contracts and performs all work, capture the facts about referral, authority, systems and execution instead of assuming either that the Australian brand captures everything or that the foreign contract excludes everything.

Link the scope result to enrolment, the AML/CTF program, customer due diligence and reporting operations. A positive geographical-link finding does not remove the need to check an exclusion or exemption; a negative finding should not be used to ignore other services performed through Australia. Revisit the register when an office opens or closes, staff relocate, an agent is appointed, a platform architecture changes, contracts move between entities, or delivery responsibilities change. Obtain specialist advice where the evidence supports more than one reasonable view.

Apply a controlled decision workflow

The workflow should produce evidence rather than a checkbox. Where facts are incomplete, classify the conclusion as pending and control delivery until the question is resolved. That is especially important where an offshore group structure, mobile workforce or agency arrangement makes it unclear which establishment is providing a critical step.

• List every activity and map it to a designated-service item before considering geography.
• Name the legal entity that provides each service and document customer-facing and back-office responsibilities.
• Establish residence and parent-subsidiary facts using current corporate records, without substituting them for the permanent-establishment test.
• Map the people, agents, premises, systems, accounts and execution steps through which the service is delivered.
• Test all three geographical-link alternatives and record why each is met or not met.
• Review exclusions and exemptions separately, approve the conclusion, and set a trigger-based review date.