Financial Services and Credit Monthly Update May 2026

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CONSUMER PROTECTION

First designated sectors under scams prevention framework

The Federal Government has designated banking, telecommunications and major digital platforms as the first sectors to be brought within the new Scams Prevention Framework, marking a shift from voluntary measures to mandatory anti‑scam obligations. The designation targets sectors where consumers face the highest scam risks.

From 31 March 2027, designated sectors will be required to have systems in place to prevent, detect and disrupt scams, and to provide clearer pathways for reporting and resolving scam‑related complaints. Draft rules and sector‑specific codes have been released for consultation to support implementation. The Federal Government has also outlined proposed arrangements to improve consumer redress, including automatic reimbursement for verified scam losses below $3,000. Further sectors may be brought into scope over time, depending on scam activity and emerging risks. Consultation on the draft rules and codes closes on 25 June 2026.

ASIC warns of scams involving fake crypto trading platforms

The Australian Securities and Investments Commission (ASIC) has issued a warning about a rise in scams involving fake crypto‑asset trading platforms promoted through messaging apps and social media. The scams typically begin with advertisements or posts offering share trading tips, which direct users to messaging groups where scammers impersonate reputable figures and promote investment opportunities.

Victims are encouraged to invest via fraudulent crypto platforms that display fabricated trades and profits. ASIC notes that no real trading occurs, and funds deposited are transferred directly to scammers. Victims may also be asked to pay additional “withdrawal” or “release” fees, with no funds ultimately returned. ASIC also highlighted the targeting of younger investors, with research indicating high exposure to crypto promotions and influencer‑driven trading.

ASIC highlights $2.7 billion in unclaimed money

ASIC has reminded Australians to check for unclaimed money, with approximately $2.7 billion currently held on behalf of individuals. The funds largely arise from inactive bank accounts, shares and insurance policies where institutions have been unable to contact the owner, often due to changes in address or name. Unclaimed money is transferred to ASIC after seven years, with some records dating back decades. While smaller balances under $500 remain with the relevant bank, larger amounts are held by ASIC, with no time limit for making a claim.

COMPETITION

ACCC gains streamlined powers for competition law exemptions in emergencies

The Australian Competition and Consumer Commission (ACCC) has been granted streamlined powers to provide faster exemptions from competition law in response to national emergencies and other exceptional circumstances. The changes were introduced by the Competition and Consumer Amendment (Responding to Exceptional Circumstances) Act 2026 (Cth).

Under the new framework, the ACCC can fast‑track authorisations and issue class exemptions to allow businesses to coordinate where necessary to respond to or recover from declared emergencies. This may include coordination to maintain the supply of critical goods or services. The powers are triggered by a national emergency declaration or a declaration of exceptional circumstances by the Treasurer. The reforms retain existing safeguards, requiring the ACCC to be satisfied that any coordination is limited to what is necessary to address the emergency. The ACCC will also develop guidance to support businesses in using the new streamlined exemption processes.

CORPORATE

ASIC seeks feedback on registry and digital engagement changes

ASIC has invited feedback from businesses and intermediaries as part of its digital improvement program for business registers and online services. The consultation was aimed at informing how ASIC engages with stakeholders on upcoming registry and digital changes. The survey seeks input on their current interactions with ASIC, including how they receive information, use online services and manage regulatory obligations. It also asks respondents to identify preferred communication channels and support mechanisms. The survey closed on 22 May 2026.

ASIC outlines financial reporting, audit and sustainability priorities for 2026–27

ASIC has announced its financial reporting, audit and sustainability focus areas for the 2026–27 financial year, alongside updates to its surveillance programs. In financial reporting, ASIC will continue to scrutinise areas involving significant judgement, including revenue recognition, asset impairment and financial instruments. Surveillance will extend across listed and unlisted entities, registrable superannuation entities and managed investment schemes, with additional attention to disclosures relating to decommissioning and site‑restoration provisions.

ASIC’s audit surveillance will include a review of 25 audit files selected on a risk and random basis, with a continued focus on remediation actions taken by audit firms and firm‑wide responses to independence and conflict findings. Compliance activity will also target non‑lodgement of financial reports and auditor obligations. In sustainability reporting, ASIC will focus on the operation of the mandatory climate reporting framework, including reports lodged by Group 1 entities, supported by updated guidance, relief measures and ongoing engagement with audit firms on assurance approaches.

ASIC warns about unsolicited business name and company review notices

ASIC has warned companies and business name holders about unsolicited communications from third‑party service providers offering assistance with annual company reviews or business name renewals. These communications may resemble official correspondence and create the impression they are issued by ASIC, although they are not.

ASIC noted that while some providers may be registered agents, they often charge additional service fees and must not misrepresent themselves as ASIC or imply that payment is required. The regulator highlighted common red flags, including invoice‑like notices, urgent payment requests, and fees that do not distinguish between ASIC charges and service fees. Businesses are reminded that they can complete renewals directly with ASIC or through an existing registered agent, and should verify whether any renewal is actually due before making payments.

DIGITAL ASSETS

Deadline looms for digital asset licence applications

ASIC has warned that providers of financial services involving digital asset financial products must determine whether they require an Australian Financial Services (AFS) licence, or a variation to an existing licence, and apply by 30 June 2026. The deadline marks the end of ASIC’s sector‑wide ‘no‑action’ position, which has allowed firms time to assess updated guidance on when digital assets fall within the financial services regime.

Firms that do not apply by the deadline risk breaching financial services laws, with unlicensed conduct carrying potential civil and criminal penalties. ASIC’s updated guidance indicates that a range of digital asset products (including stablecoins, wrapped tokens, tokenised securities and certain wallets) may constitute financial products. Businesses requiring an Australian market licence or clearing and settlement facility licence must also notify ASIC of their intention to apply and hold a pre‑application meeting by 30 June 2026.

Report on tokenised asset markets

The Reserve Bank of Australia (RBA) and Digital Finance Cooperative Research Centre have released the final report for Project Acacia, a joint initiative examining the use of digital money and settlement infrastructure in wholesale tokenised asset markets. The project tested 20 use cases across different asset classes, demonstrating how tokenisation could be applied across issuance, trading and settlement, including through mechanisms such as exchange settlement balances, wholesale central bank digital currency (CBDC), tokenised bank deposits and stablecoins.

The report identifies potential benefits including faster settlement, reduced counterparty risk and improved capital efficiency, while also highlighting challenges to scaling tokenised markets. It outlines a forward program of work focused on industry‑regulator coordination, exploration of a regulatory sandbox for digital market infrastructure, further work on tokenised deposits, consideration of tokenised government bonds, and continued investigation of wholesale CBDC and settlement infrastructure changes.

ESG

ASIC and AASB launch sustainability reporting webinar series

ASIC and the Australian Accounting Standards Board (AASB) have announced a series of free webinars to support entities preparing for Australia’s new sustainability reporting regime. The sessions are designed to build foundational knowledge of climate‑related financial disclosures, particularly for smaller and mid‑sized entities and those in early implementation stages.

The three‑part webinar series, scheduled for June 2026, will cover topics including climate science, physical and transition risks, emissions accounting, scenario analysis, and governance and risk management. The sessions will include presentations from the University of Technology Sydney, followed by Q&A with ASIC and AASB. The initiative sits alongside the release of eight e‑learning modules on sustainability reporting concepts. The new reporting requirements are being phased in, with many entities expected to report for the first time from the 2026–27 financial year.

ASIC outlines early findings on mandatory sustainability reporting

ASIC has published early observations on the first sustainability reports prepared under Australia’s mandatory disclosure regime, which commenced in 2025 for large entities. The review draws on a sample of reports lodged for 31 December 2025 year‑ends under Chapter 2M of the Corporations Act 2001 (Cth) (Corporations Act) and Australian Sustainability Reporting Standard AASB S2 Climate‑related Disclosures.

ASIC observed improved quantity, consistency and comparability of climate‑related financial information compared with prior voluntary disclosures. However, it identified areas for improvement, including the use of disclaimers that may conflict with statutory reporting objectives, insufficient disclosure of assumptions and uncertainties, and failures to clearly distinguish material information from additional voluntary disclosures. The regulator also highlighted issues with cross‑referencing practices and inconsistent approaches to identifying climate‑related targets, including those imposed by law.

FINANCIAL ADVICE

ASIC consults on remaking dollar disclosure and licensing relief

ASIC is consulting on proposals to remake two legislative instruments providing relief from dollar disclosure and certain AFS licensing requirements for a further 5-year period, ahead of their scheduled expiry on 1 October 2026. The instruments relate to exemptions from requirements to disclose specified information in Australian dollars in disclosure documents, and relief for entities providing general financial product advice in certain transactional and foreign regulatory documents. ASIC has proposed minor and technical amendments to these instruments to improve clarity and consistency. As part of the remake, ASIC is considering extending dollar disclosure relief to certain risk products issued by discretionary mutual funds, which are not currently covered. Submissions are due by 1 June 2026.

FINANCIAL MARKETS

ASIC moves to bring Euroclear under Australian licensing regime

ASIC has exercised its powers under the financial market infrastructure reforms to declare that Euroclear Bank SA/NV (Euroclear) has a material connection to Australia, requiring it to transition to Australia’s clearing and settlement (CS) facility licensing regime. The decision follows an assessment of Euroclear’s Australian operations and consultation with the RBA. Euroclear provides cross‑border settlement and custody services, including for Australian Government debt securities, and is a key participant in Australia’s bond market. ASIC has granted a temporary exemption to allow continued operations while Euroclear prepares to apply for a CS facility licence. The regulator expects Euroclear to lodge its application within 12 months, by 26 May 2027.

FINANCIAL PRODUCTS

Consultation on remake of managed investment scheme instruments

ASIC has commenced consultation on the proposed remake of six legislative instruments relating to managed investment schemes, which are due to sunset on 1 October 2026. The proposal would extend the operation of these instruments for a further five years. The instruments provide various forms of relief from managed investment, licensing, disclosure and fundraising requirements under the Corporations Act for specific arrangements, including property rental schemes, strata and serviced apartment schemes, charitable fundraising structures, school enrolment deposits, and certain horse and investment trust arrangements.

ASIC has indicated that the instruments remain necessary and generally effective, with only minor amendments proposed to improve clarity and consistency. Transitional provisions that are no longer required are also proposed to be removed. Submissions are open until 24 June 2026.

FINANCIAL SERVICES

ASIC consults on remaking client money relief for cash common funds

ASIC has commenced consultation on a proposal to remake its legislative instrument permitting AFS licensees to pay client money into cash common funds, ahead of its scheduled expiry on 1 October 2026. The existing instrument allows client money received by an AFS licensee to be deposited into a registered managed investment scheme that operates as a cash common fund. This provides operational flexibility for licensees while maintaining the client money protections under the Corporations Act.

ASIC has assessed that the instrument is operating effectively and proposes to remake it without substantive change, so that its current effect is preserved. The measure continues earlier relief provided under ASIC class order arrangements. Submissions close on 19 May 2026.

ASIC outlines further regulatory simplification measures

ASIC has released a report outlining further measures to simplify regulatory requirements and improve accessibility for regulated entities. ASIC has revised guidance and legislative instruments to make them easier to understand, and introduced sector‑based regulatory roadmaps for small company directors and financial advice businesses. ASIC has also updated 280 online form landing pages and significantly expanded digital lodgement, increasing electronic form availability and reducing paper submissions by around 45,000 annually.

The report highlights ongoing collaboration with the Australian Prudential Regulation Authority (APRA) to reduce inconsistencies in data collection and streamline regulatory reporting. Looking ahead, ASIC will prioritise consolidating data requests across regulators, enhancing digital services through the RegistryConnect program, and continuing to develop sector‑specific guidance. A further focus will be improving company registration processes and expanding digital transactions over the next 6–12 months.

FINANCIAL SYSTEM

Treasury publishes April 2026 regulatory initiatives grid

The Treasury released the third edition of its Regulatory Initiatives Grid (RIG) on 5 May 2026, consolidating announced and publicised regulatory reforms expected to materially affect Australia’s financial sector over the next two years. The RIG provides a forward-looking overview of planned regulatory activity across agencies, presented as a point‑in‑time snapshot. It is intended to assist industry participants in understanding the sequencing, timing and interaction of reforms, although all initiatives remain indicative and subject to change in response to policy priorities and market conditions.

ASIC calls for urgent cyber resilience uplift amid AI‑driven threats

ASIC has urged licensees and market participants to strengthen cyber resilience as emerging artificial intelligence (AI) capabilities increase the scale and sophistication of cyber risks. In a letter to industry dated 8 May 2026, ASIC warned that frontier AI tools can rapidly identify and exploit vulnerabilities, potentially turning isolated weaknesses into system‑wide risks. ASIC emphasised that cyber resilience is a core licensing obligation and should be treated as a governance and risk management issue rather than an information technology function. The regulator highlighted that boards and senior management are expected to ensure systems are tested, vulnerabilities are addressed early, and incident response capabilities are robust.

The letter sets out practical measures, including reassessing cyber risk frameworks, strengthening controls and patching processes, managing third‑party risks, and maintaining incident response and business continuity plans. ASIC also noted increasing insider threats and the importance of monitoring access controls and minimising system exposure.

CFR publishes better regulation roadmap and implementation plan

The Council of Financial Regulators, together with other agencies, has released a Better Regulation Roadmap outlining a coordinated program of regulatory reform across the financial sector. The roadmap brings together commitments made at the 2025 Economic Reform Roundtable and includes over 50 initiatives grouped under three themes: simplifying and removing duplication, enabling digital and data capability, and improving regulator engagement, consultation and guidance. It also links to the Regulatory Initiatives Grid, which tracks reforms expected to affect the sector over a two‑year horizon.

A central component is a data reform program led by APRA and ASIC to streamline data collection and improve information sharing across regulators. The program aims to reduce duplication and inconsistencies in regulatory requests, enhance coordination and transparency, and make greater use of existing data. The roadmap also contemplates further legislative reform, with regulators reviewing industry feedback to identify priorities for advice to the Federal Government.

ASIC highlights role of fintech and regtech in financial system innovation

ASIC has released research on fintech and regtech developments, finding that Australia is well positioned to benefit from accelerating innovation in financial services. The report, prepared by the Digital Finance Cooperative Research Centre, identifies increasing adoption of technologies such as AI across core financial activities, including credit underwriting, claims processing, portfolio management and disclosure. The research also points to Australia’s relative strengths in areas such as payments infrastructure and ‘buy now pay later’ services, alongside strong venture capital investment in fintech.

ASIC highlights need to accelerate financial innovation uptake

In a recent speech, ASIC Chair Joe Longo highlighted the rapid impact of emerging technologies on financial services and markets, noting that AI, automation and digital platforms are reshaping core functions across the sector. The remarks emphasised that, while Australia has strong foundations in areas such as payments infrastructure and certain fintech segments, it risks falling behind without greater adoption of new technologies. Key themes included the importance of principles‑based regulation to support innovation, the need for improved governance of emerging technologies, and continued collaboration between regulators and industry to facilitate the development and deployment of new financial market infrastructure and services.

Consultation on remake of Reserve Bank Regulations

The Treasury has consulted on the remake of the Reserve Bank Regulations 2026 (Cth), which will replace the current regulations due to sunset on 1 October 2026. The regulations support the operation of the Reserve Bank Act 1959 (Cth), including requirements relating to confidentiality and information sharing. The updated regulations retain the substantive framework of the existing 2016 instrument, with only minor drafting amendments. They continue to prescribe secrecy declarations for RBA board members and identify bodies with which RBA officials may share protected information. The consultation proposes expanding the list of permitted recipients of such information to include the Department of Home Affairs, the Australian Office of Financial Management, and the Australian Signals Directorate. Submissions closed on 27 May 2026.

Consultation on 2026–27 financial institutions supervisory levies

The Treasury has commenced consultation on proposed financial institutions supervisory levies for the 2026–27 financial year. The levies are imposed on regulated entities to recover APRA’s operating costs, as well as certain costs incurred by other Commonwealth agencies, including the Australian Taxation Office. The consultation paper outlines proposed levy settings for the coming financial year and seeks stakeholder feedback ahead of finalisation. Submissions close on 14 June 2026.

INSURANCE

APRA consults on changes to NCPD publication and scope

APRA has commenced consultation on proposed updates to the non‑confidentiality determination for the National Claims and Policies Database (NCPD), alongside changes to how NCPD statistics are published. The proposed determination would replace the existing framework underpinning the release of aggregated NCPD data and is accompanied by a revised publication format. The consultation also proposes expanding the scope of published data to include cyber insurance and management liability as separate product classes in future NCPD outputs. Submissions are due by 16 June 2026.

PRUDENTIAL

Updated guidance on large exposures framework

On 5 May 2026, APRA updated its frequently asked questions on Prudential Standard APS 221 (Large Exposures) and Reporting Standard ARS 221.0, clarifying the treatment of key exposure types. The guidance addresses measurement of exposures to structured vehicles, confirming that authorised deposit‑taking institutions (ADIs) must generally “look through” to underlying assets and calculate exposures on a proportional basis, subject to a 0.25 per cent Tier 1 Capital threshold.

The FAQs also outline expectations for data frequency based on asset volatility, and the treatment of unidentified counterparties as exposures to an “unknown” counterparty where material. Further clarification is provided on trading book and settlement exposures, collateral recognition (including under Standardised Approach to Counterparty Credit Risk), and the treatment of government exposures and high‑quality liquid assets. APRA also discusses approaches to connected counterparties, including control and economic interdependence, and confirms that pragmatic assessment approaches are permissible within prescribed limits.

APRA withdraws external credit assessment institution guidelines for review

APRA announced on 7 May 2026 that it has temporarily withdrawn its Guidelines on Recognition of an External Credit Assessment Institution as part of a broader review of its prudential framework. The withdrawn guidelines, last updated in 2013, relate to the recognition of credit rating agencies for prudential purposes. APRA has not issued replacement guidance at this stage and has indicated that a further update will be provided once the review is complete.

Consultation on revised ADI licensing framework

APRA has released a consultation package proposing a revised licensing framework for locally incorporated ADIs. The proposals are intended to update the existing authorisation process and form part of Action 6 arising from the Council of Financial Regulators’ Review into Small and Medium‑sized Banks, which recommended making the ADI licensing framework more transparent and efficient. The draft framework sets out updated licensing criteria and guidance intended to streamline the application process and provide greater transparency on APRA’s expectations of new entrants. Submissions on the proposals are due by 31 July 2026.

Finalised three‑tiered approach to proportionality in banking framework

APRA has confirmed it will introduce a formal three‑tiered approach to proportionality within the banking prudential framework, following consultation earlier in 2026. The reforms include the creation of a new top tier of “Most Significant Financial Institutions” for banks with total assets above $300 billion, and an increase in the threshold for Significant Financial Institutions from $20 billion to $30 billion. APRA will also provide an automatic 12‑month transition period for entities moving into a higher tier, and may allow additional time for smaller institutions to comply with new requirements. The changes will take effect from 1 July 2026.

APRA highlights evolving risks in latest system risk outlook

APRA has released its latest System Risk Outlook, identifying heightened risks from geopolitical tensions, rapid adoption of AI, and increasing complexity in global markets. The report notes that Australian banks and insurers remain well capitalised with strong liquidity positions, and stress testing indicates the financial system can withstand severe but plausible shocks, including a global recession and funding stress.

Despite this resilience, APRA has intensified its supervisory focus and expectations around risk management. Key areas of concern include the pace of AI adoption relative to governance frameworks, rising cyber threats, and potential spillover risks from private credit markets and overseas developments. APRA indicated it will continue to monitor how regulated entities manage these risks and their preparedness for adverse scenarios.

Finalised class exemption for RSE ownership approvals

APRA has finalised a class exemption from the ownership and control provisions in the Superannuation Industry (Supervision) Act 1993 (Cth), removing the requirement for certain individuals to seek prior regulatory approval. Under the exemption, management employees and company secretaries with a direct controlling interest of less than 2 per cent in a registerable superannuation entity licensee will no longer need to apply to APRA before acquiring that interest. The change narrows the scope of the approval regime for low‑level ownership stakes.

APRA maintains macroprudential settings amid economic uncertainty

APRA has confirmed it will maintain its current macroprudential policy settings following its latest assessment of financial conditions and risks. Key settings remain unchanged, including the 3 percentage point mortgage serviceability buffer, the countercyclical capital buffer at 1 per cent of risk‑weighted assets, and limits allowing up to 20 per cent of new lending at debt‑to‑income ratios of six or more.

In reaching this decision, APRA noted ongoing uncertainty in the economic outlook, including pressures on household and business cashflows from higher interest rates and inflation. While housing price and credit growth have shown signs of moderation, business lending remains above historical averages and household indebtedness remains elevated. APRA observed that higher‑risk lending remains contained and that the banking system is well capitalised, with low levels of arrears and non‑performing loans. It indicated that existing settings continue to act as appropriate guardrails, but may be adjusted if risks to financial stability materialise.

SUPERANNUATION

ASIC updates stamp duty and portfolio holdings disclosure settings

ASIC has announced changes to disclosure requirements affecting superannuation funds and investment managers. Stamp duty will no longer be disclosed as a single annual transaction cost. Instead, amounts paid in a given year must be spread over the following seven years in fees and costs summaries within Product Disclosure Statements (PDS), via amendments to ASIC Corporations (Disclosure of Fees and Costs) Instrument 2019/1070.

ASIC has also introduced class order relief to align portfolio holdings disclosure for internally managed private debt with externally managed arrangements. This addresses confidentiality concerns where current rules require disclosure of asset values by issuer or counterparty, even for single exposures. The changes follow ASIC’s 2025 review of investment disclosure settings. ASIC will separately review Regulatory Guide 97 Disclosing fees and costs in PDSs and periodic statements during 2026.

Consultation on reforms to superannuation performance test

The Treasury has launched consultation on options to strengthen the annual superannuation performance test, seeking feedback on proposed changes aimed at refining how fund performance is assessed. The proposals include adjusting benchmarks for emerging and alternative assets, incorporating greater focus on risk‑adjusted returns, and introducing more regular benchmark reviews. The Treasury is also considering extending the performance test to a broader range of superannuation products.

The performance test, introduced to assess fund performance and fees, is intended to hold trustees accountable for member outcomes. The current review is directed at ensuring the test remains objective and fit for purpose, while supporting long‑term stability and investment decision‑making within the superannuation system. Submissions close on 19 June 2026.

Parliament passes legislation enabling victims to access offenders’ superannuation

The Parliament has passed legislation allowing victims and survivors of child sexual abuse to access the superannuation of offenders to satisfy civil compensation claims. The reforms enable courts to order the early release of an offender’s superannuation where required to meet damages awarded to victims. The measure is intended to address situations where offenders hold limited assets outside superannuation, preventing victims from recovering compensation despite successful legal claims. The new framework allows superannuation to be accessed in defined circumstances, subject to court oversight and existing superannuation safeguards.

TAXATION

Tax relief measures for small businesses

The Federal Government has announced a package of business tax relief measures as part of the 2026–27 Budget, aimed at supporting investment, cash flow and growth among small businesses. The measures form part of a broader $3.5 billion tax relief program targeting the sector. Key reforms include making the $20,000 instant asset write‑off permanent, introducing a permanent two‑year loss carry‑back for eligible companies from 1 July 2026, and implementing loss refundability for start‑ups. The package also expands venture capital tax incentives and introduces a $250 tax offset for sole traders from 2027–28. Additional measures include expanded rollover relief to assist small businesses transitioning between structures, alongside broader initiatives to reduce regulatory burden, improve access to credit and support business resilience.

Government introduces first tranche of tax reform legislation

The Federal Government has introduced the first tranche of legislation to implement its tax reform agenda, combining personal tax changes with housing‑related measures. The bills propose a new Working Australians Tax Offset, providing an annual offset of up to $250 from the 2027–28 income year, and a $1,000 instant tax deduction from 2026–27 to simplify work‑related deductions.

The legislation also foreshadows significant reforms to capital gains tax (CGT) and negative gearing. From 1 July 2027, the 50% CGT discount would be replaced with an inflation‑based discount for new gains, alongside a minimum tax on real capital gains, with existing investments largely grandfathered. Negative gearing for residential property would be limited to new builds for investments acquired after 7:30pm AEST on 12 May 2026.

AML/CTF

AUSTRAC steps up supervision of virtual asset providers

The Australian Transaction Reports and Analysis Centre (AUSTRAC) has commenced targeted supervisory campaigns across Australia’s virtual assets sector, coinciding with the rollout of expanded anti‑money laundering and counter‑terrorism financing (AML/CTF) reforms. The reforms introduce the internationally recognised concept of virtual asset service providers (VASPs), replacing the narrower “digital currency exchange” classification. The revised framework extends AML/CTF obligations to a broader range of activities, including custody and brokerage services, reflecting the increasing complexity of the virtual assets sector.

The campaigns focus on VASPs, including over‑the‑counter crypto‑to‑cash services and domestic exchanges. The regulator is engaging directly with selected entities to assess how effectively they are managing AML/CTF risks, with a particular focus on business models, channels and governance arrangements. The campaigns also examine readiness for forthcoming reforms, including expanded regulatory coverage of crypto‑related services.

AUSTRAC releases updated snapshot of financial crime risks

AUSTRAC has released updated national risk snapshots highlighting increasing complexity in Australia’s money laundering, terrorism financing and proliferation financing (ML/TF) landscape. The updates indicate that traditional channels for financial crime persist, but are being reshaped by technology, globalisation and more sophisticated criminal behaviour.

The reports identify growing use of legitimate financial services, corporate structures, trade flows and professional facilitators to obscure illicit activity, often within low‑value or routine transactions. Emerging technologies, including AI and virtual assets, are also identified as amplifying risks by enabling more scalable and sophisticated criminal techniques.

AUSTRAC updates statement of expectations for AML/CTF reforms

AUSTRAC has updated its regulator statement of expectations following changes to AML/CTF obligations that took effect on 31 March 2026, with further obligations to apply to newly regulated businesses from 1 July 2026. The update outlines expectations for both existing and new reporting entities, emphasising a risk‑based approach to managing ML/TF risks. Entities are expected to identify, document and mitigate risks proportionately, rather than applying uniform controls across all customers.

AUSTRAC also clarified its approach where guidance is not prescriptive, indicating entities should develop and document their own reasonable positions, supported by advice where appropriate. For 2026–27 financial year, supervisory focus will include assessing implementation progress, engagement with newly regulated sectors, and enforcement action for failures to enrol or suspected involvement in money laundering.

AUSTRAC updates transaction reporting from 1 July 2026

AUSTRAC has outlined changes to transaction reporting that will apply from 1 July 2026 as part of the AML/CTF reforms. The changes include new threshold transaction report and suspicious matter report forms, designed to improve data quality and streamline reporting through AUSTRAC Online. The updated forms reflect both an expansion of the industries subject to AML/CTF obligations and changes to the information AUSTRAC collects. Newly regulated businesses will be required to use the new forms from the commencement of their reporting obligations on 1 July 2026.

Existing reporting entities enrolled by 30 March 2026 will be able to transition to the new forms at any time between 1 July 2026 and 30 March 2029. AUSTRAC has released preview versions of the forms, along with training and guidance materials, to support businesses in preparing for the changes.

AUSTRAC highlights terrorism financing risks in non‑profit sector

AUSTRAC has released an assessment of terrorism financing risks facing Australia’s non‑profit organisation (NPO) sector, noting that while the overall risk remains low, vulnerabilities persist and require active management. The report focuses on how certain NPO activities can be exploited to divert funds to extremist causes, particularly where organisations operate overseas or in high‑risk regions. AUSTRAC identified risk factors including weak governance, limited oversight of overseas partners, use of cash or informal value transfer methods, and inadequate monitoring of how funds are ultimately applied. The assessment also notes that most Australian NPOs operate legitimately and contribute positively to communities, but that a small number may be unknowingly exposed to misuse.

DISPUTES AND ENFORCEMENT

ASIC Chair reflects on enforcement record and future challenges

In his final appearance before the Parliamentary Joint Committee on Corporations and Financial Services, ASIC Chair Joe Longo outlined the regulator’s enforcement record over the past five years and the challenges ahead. He pointed to a significant increase in investigations and penalties, with ASIC now pursuing court action across all levels of the judiciary and securing hundreds of millions of dollars in civil penalties.

Mr Longo identified funding pressures on ASIC’s enforcement capability, particularly the declining balance of the Enforcement Special Account, as a key risk to sustaining current enforcement levels. He also noted broader system constraints, including prosecutorial capacity, which affect the ability to bring complex matters efficiently. Looking forward, the statement emphasised the need to balance enforcement with proactive regulation, reduce regulatory complexity, and invest in data, technology and AI to keep pace with rapid change in financial markets.

In a 7 May 2026 keynote address at the 2026 Financial Counselling Australia Conference, Mr Longo highlighted the central role of public accountability in maintaining confidence in the financial system. The speech emphasised that visible enforcement action, rather than behind‑the‑scenes regulation, is critical to ensuring trust in financial markets and institutions.

Longo outlined ASIC’s recent shift towards a more proactive and enforcement‑focused approach, including increased litigation activity, expanded use of compulsory information‑gathering powers, and a greater willingness to test legal boundaries. He noted that ASIC is currently undertaking more investigations and securing higher total penalties than in previous years, with enforcement activity occurring across multiple courts. The speech also identified emerging regulatory priorities, including financial hardship practices, misconduct in superannuation and credit, and risks associated with scams and new technologies. ASIC indicated it will continue to focus on systemic harm, including through forthcoming work on debt management, small business lending and superannuation‑related misconduct.

AFCA introduces call recording across complaint handling

The Australian Financial Complaints Authority (AFCA) has introduced call recording across its case‑handling teams as part of measures to improve the accuracy and efficiency of complaint resolution. Calls involving relevant AFCA staff are recorded to create reliable records of discussions and reduce the risk of misunderstandings during investigations. Call recording is being implemented in stages. All customer service calls are currently recorded, with recording to extend from July 2026 to calls involving case workers, ombudsmen and specialist teams.

AFCA provides a privacy notice at the start of any recorded call, and callers may opt out by requesting that recording be stopped. Recordings are retained as part of internal case files and may be used for quality and training purposes. They are not generally shared between complainants and financial firms, although individuals may request access to their own recordings under applicable privacy processes.

AFCA releases latest systemic issues insights

AFCA has published Edition 8 of its Systemic Issues Insight Report, covering systemic issues identified and examples of better practice across the financial services sector in the first half of the 2025–26 financial year. AFCA reported that more than 180,000 consumers and small businesses benefited from systemic issue outcomes during the period. These outcomes included $1.9 million in financial remediation, as well as non‑financial remedies such as credit file corrections, improved claims handling oversight and changes to business processes to better identify and support vulnerable customers. The report includes case studies and practical examples intended to assist financial firms in strengthening governance, complaint handling and operational practices to prevent systemic issues from arising.

Federal Court finds Telstra Super breached complaint handling timeframes

The Federal Court has found that Telstra Super failed to comply with mandatory internal dispute resolution (IDR) requirements, including by not responding to a significant proportion of member complaints within required timeframes. The breaches concerned complaints made between October 2021 and January 2023. The Court found that around one third of complaints were not responded to within the 45‑day requirement, with some responses delayed by more than 100 days. In some cases, Telstra Super did not adequately explain the reasons for delay or inform members of their right to escalate complaints to AFCA.

The Court did not find breaches of the general obligation to provide services efficiently, honestly and fairly, or a failure to adequately resource complaint handling. The proceedings mark the first enforcement action brought by ASIC under the IDR regime introduced in October 2021.

ASIC appeals $7 million penalty in Cigno credit case

ASIC has appealed  a Federal Court decision imposing $7 million in civil penalties on Cigno Australia Pty Ltd, BSF Solutions Pty Ltd and their directors, following findings that they engaged in unlicensed credit activity and charged prohibited fees. The proceedings arise from a lending model that generated more than $90 million in unlawful fees, with the Court having previously found that the companies contravened the National Consumer Credit Protection Act 2009 (Cth) (NCCP Act) and that their directors were involved in those breaches.

ASIC’s appeal is directed at the adequacy of the penalty and raises two issues for determination by the Full Federal Court: whether a respondent can rely on legal advice in mitigation without disclosing it, and whether the “benefit obtained” from misconduct should be assessed by reference to profit or gross revenue. The appeal follows a series of earlier unsuccessful appeals by the respondents, including to the High Court, and a penalty decision delivered in April 2026.

Federal Court imposes $33.5 million penalty on Snaffle operator

The Federal Court has imposed a $33.5 million penalty on Walker Stores Pty Ltd (in liquidation) which traded as Snaffle (Snaffle) for contraventions of consumer credit laws involving widespread overcharging of customers. The Court found that, between September 2021 and February 2025, the company miscalculated interest on more than 38,000 credit contracts by applying interest to the total contract amount rather than the declining balance, resulting in consumers being charged almost $20 million in excess interest.

The Court also found that Snaffle’s pricing structure breached the 48% annual cost rate cap, with effective credit charges ranging from 88% to 103% in sample contracts. The conduct affected a large number of financially vulnerable consumers, including those reliant on Centrelink income. Snaffle has also been ordered to publish an adverse publicity notice and pay ASIC’s legal costs, with reasons for judgment to follow.

APRA disqualifies former Xinja chair under accountability regime

APRA has disqualified Lindley Edwards, former chair of Xinja Bank Limited (Xinja), from being an accountable person of any ADI for six years under the Financial Accountability Regime. The action follows APRA’s investigation into Xinja’s capital position in 2020, including undisclosed side agreements with investors that affected whether capital raisings qualified as Common Equity Tier 1 capital.

APRA found that Ms Edwards failed to meet her accountability obligations, including by not exercising due skill, care and diligence in relation to the capital raising, failing to ensure that APRA was informed of the side agreements, and not taking reasonable steps to ensure accurate classification and reporting of capital. The regulator also found she did not deal with APRA in an open and cooperative manner and did not put in place adequate controls to prevent issues affecting the bank’s prudential standing.

Equity Trustees sued over First Guardian onboarding failures

ASIC has commenced civil penalty proceedings against Equity Trustees Superannuation Limited (Equity Trustees), alleging failures in relation to the onboarding of the First Guardian Master Fund (First Guardian) as an investment option for members of NQ Super & Pension. Approximately $65 million was invested in the fund by around 2,700 members between June 2023 and March 2024.

ASIC alleges that Equity Trustees failed to obtain key information about First Guardian before approval, including its constitution, audited financial accounts and compliance plan audit, and permitted members to allocate 100% of their balances to the fund despite potential illiquidity. The regulator further alleges breaches of duties to act with care, skill and diligence, to act in members’ best financial interests, and to provide financial services efficiently, honestly and fairly. ASIC is seeking declarations, civil penalties and compensation for affected members.

ASIC appeals dismissal of proceedings against Nuix

ASIC has filed an appeal to the Full Federal Court following the dismissal of its proceedings against Nuix Limited (Nuix) in April 2026. The original case, commenced in September 2022, alleged breaches of continuous disclosure obligations, misleading or deceptive conduct in relation to statements about financial performance, and breaches of directors’ duties. The proceedings relate to disclosures made in connection with Nuix’s 2020 IPO, including statements regarding annualised contract value, a non‑statutory metric used to assess revenue growth and performance.

ASIC’s appeal is confined to the primary judgment dismissing its claims against the company, and does not extend to the Court’s findings regarding the directors. The regulator has indicated concerns that errors were made in the trial judge’s findings. The appeal is yet to be heard.

AUSTRAC orders AML audit of NSW club amid compliance concerns

AUSTRAC has directed Bankstown District Sports Club Ltd to appoint an independent auditor to assess potential weaknesses in its AML/CTF controls. The order follows concerns that the club may be vulnerable to exploitation by organised crime through its gambling operations. The audit will examine whether the club has an effective risk‑based AML/CTF program, has appropriately assessed risks across its operations, and has systems in place to detect and report suspicious activity. AUSTRAC highlighted that cash‑intensive gambling venues, particularly those involving poker machines, remain a key channel for laundering illicit funds.

OAIC finalises investigation into Property Lovers and fastproperty.ai

The OAIC has finalised a Commissioner‑initiated investigation into Property Lovers Pty Ltd (Property Lovers) and its fastproperty.ai platform, finding that the platform did not collect, use or disclose personal information during the relevant period. The investigation followed an earlier 2024 determination that related entities had scraped personal information to target individuals in breach of the Privacy Act 1988 (Cth).

The latest report examined whether Property Lovers had complied with that determination and clarified that the fastproperty.ai products and services did not contain personal information. Despite these findings, the OAIC noted it had received additional reports concerning the business’s conduct, including matters outside its jurisdiction. The regulator has referred those matters to other authorities for consideration, citing ongoing concerns about potential consumer harm.

Federal Court orders Westpac to pay $26 million for hardship failures

The Federal Court has ordered Westpac Banking Corporation (Westpac) to pay a $26 million civil penalty for failures in handling customer hardship requests over a period from 2017 to 2023. The Court found that Westpac did not respond to more than 200 hardship notices within required timeframes, with some customers receiving responses well after the deadline or not at all.

The failures affected customers of Westpac and its subsidiary brands, including St George, BankSA and Bank of Melbourne, who had sought assistance due to financial difficulty across products such as home loans, credit cards and personal loans. The Court characterised the conduct as serious and arising from inadequate systems and operational weaknesses, amounting to gross negligence.

Westpac admitted breaching its obligations under the National Credit Code and the NCCP Act, including requirements to respond to hardship notices and to provide services efficiently, honestly and fairly. The misconduct also resulted in some customers experiencing adverse credit reporting outcomes or debt recovery action. Westpac has paid more than $1.7 million in remediation to affected customers.

Federal Court penalises businesses for failing to pay AUSTRAC infringement notices

The Federal Court has imposed civil penalties on Castra Licensee Pty Ltd (Castra) and Princeton Securities (NSW) Pty Ltd (Princeton) after both failed to pay infringement notices issued by AUSTRAC for breaches of Australia’s AML/CTF reporting obligations. AUSTRAC issued infringement notices to both businesses in September 2024, each carrying a penalty of $18,780. Neither entity paid the notices, prompting AUSTRAC to commence civil penalty proceedings. The Court subsequently ordered Castra to pay a $50,000 penalty plus $15,000 in costs, and Princeton to pay $45,000 plus $5,000 in costs. Both businesses admitted liability, with the Court taking into account their respective levels of cooperation when determining the penalties.

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