AUSTRAC calls this obligation Personnel Due Diligence (PDD). In SimpleAML, it's called Key Personnel Vetting — because the first step is determining who in your firm is considered Key Personnel for AML/CTF purposes, and who is not, before applying fit and proper checks where required.
Under Part B of your AML/CTF Program, you must have written procedures for assessing whether employees, contractors, and agents who perform AML/CTF-relevant roles are fit and proper persons for those roles.
This applies to anyone who:
For sole practitioners, this applies to you. Even if you are the only person in the practice, you must still document your own fit and proper assessment.
PDD is not a one-time check at hiring. Your AML/CTF Program must describe how you monitor staff on an ongoing basis and what triggers a reassessment if circumstances change.
AUSTRAC recognises that insider threat is a real risk in money laundering and terrorism financing. Staff with access to client records, compliance systems, and reporting processes can undermine your AML/CTF controls — either deliberately or through negligence.
The fit and proper requirement ensures that the people who assess client risk, verify identities, approve high-risk onboarding, and make SMR decisions have the integrity and competence to perform those functions.
This obligation extends to contractors and outsourced AML/CTF roles. If you engage an external AMLCO or compliance contractor, you remain responsible for ensuring adequate screening has occurred.
Failing to maintain PDD records is a breach of Part B of your AML/CTF Program. If a staff member facilitates money laundering and you cannot demonstrate that you performed appropriate screening and monitoring, AUSTRAC will treat this as a failure of your internal controls.
This can result in substantial penalties even if you were unaware of the staff member's conduct. There is also a professional indemnity risk — in the event of a compliance failure, insurers will examine whether appropriate personnel screening procedures were in place.
SimpleAML is designed to mirror AUSTRAC's expectation that every staff member is considered — even those who do not perform AML/CTF functions — creating a clear audit trail that shows who was assessed, what was determined, and what ongoing monitoring is in place.
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