AUSTRAC Refuses Registration Renewal for Raiyyan Exchange Over AML Failures

Australia’s financial intelligence regulator, the Australian Transaction Reports and Analysis Centre (AUSTRAC), has refused to renew the registration of independent remitter Yellow Sands Trading Pty Ltd, which operated under the business name Raiyyan Exchange, effectively barring the company from providing money transfer services anywhere in Australia with immediate effect.

AUSTRAC’s decision followed the identification of serious and systemic deficiencies in the company’s internal controls for identifying, managing and mitigating the risks of money laundering and terrorism financing. The regulator said the weaknesses posed an unacceptable risk to the integrity of Australia’s financial system, warning that businesses which fail to meet their anti-money laundering obligations create vulnerabilities that are attractive to criminal exploitation. The refusal highlights the tough enforcement approach Australia continues to take to protect its financial sector from illicit activity.

Serious deficiencies in AML compliance

The action against Raiyyan Exchange underscores the requirement for all remittance providers operating in Australia to maintain a strong and fully compliant anti-money laundering and counter-terrorism financing (AML/CTF) framework. AUSTRAC found multiple and significant failings that demonstrated Raiyyan Exchange did not have the basic capability to properly identify, assess and manage its money laundering and terrorism financing risks, as required under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act).

Under the legislation, remittance providers are required to implement comprehensive AML/CTF programs, including effective customer due diligence, transaction monitoring, and risk-based controls tailored to the specific nature of money transfer services. AUSTRAC concluded that Raiyyan Exchange failed to adequately design and implement these measures, leading directly to the refusal of its registration renewal. This outcome removes the business entirely from the regulated sector and prevents it from continuing to operate.

The remittance sector is widely recognised as being particularly exposed to organised crime due to the high volume of transactions, the cross-border movement of funds and the frequent use of cash. Detective Superintendent Peter Faux of the NSW Police Force State Crime Command’s Organised Crime Squad said law enforcement agencies are well aware of these vulnerabilities and work closely with AUSTRAC to detect and investigate both registered and unregistered remittance providers suspected of criminal conduct. This collaboration signals that the shortcomings identified at Raiyyan Exchange were viewed as more than simple administrative failures, instead representing a serious potential channel for criminal funds to move into or out of Australia.

Acting AUSTRAC CEO Katie Miller has previously warned that weak compliance frameworks effectively operate as an “open invitation” for criminals seeking to exploit regulatory gaps for money laundering and terrorism financing.

Risks linked to offsetting arrangements

A key area of concern in the remittance industry is the use of offsetting arrangements, which are central to the business models of many alternative remittance providers, including Raiyyan Exchange. These arrangements, commonly known as hawala or hundi, enable the transfer of value across borders without the physical movement of funds, relying instead on the settlement of obligations between dealers in different countries.

While such systems can support financial inclusion and legitimate commercial activity, AUSTRAC’s National Risk Assessment on Money Laundering 2024 identified offsetting arrangements as presenting an elevated risk of money laundering and terrorism financing.

The primary concern lies in their lack of transparency and limited transactional visibility.

Offsetting arrangements can be manipulated to disguise the true value of illicit transfers, conceal the identities of those involved and circumvent reporting thresholds under the AML/CTF Act. For example, a remittance provider may accept criminal proceeds in Australia and instruct an overseas counterpart to pay a beneficiary, rather than sending a traceable wire transfer. The debt between the two providers is later settled through separate or complex mechanisms, severing the link between the original deposit of criminal funds and the final payout. This structure requires reporting entities to closely monitor both sides of every transaction, an obligation that AUSTRAC determined Raiyyan Exchange failed to fulfil, leaving it exposed to criminal misuse.

AUSTRAC’s regulatory authority

The refusal to renew the registration of Yellow Sands Trading Pty Ltd, trading as Raiyyan Exchange, illustrates AUSTRAC’s willingness to exercise its full regulatory powers to protect Australia’s financial system. Under the AML/CTF Act, AUSTRAC has the authority to refuse, suspend or cancel the registration of a remittance provider that does not meet the required standards, particularly in relation to AML/CTF controls.

Unlike a civil penalty, which typically involves significant financial sanctions, refusing registration is an existential regulatory action that permanently strips a business of its legal right to operate in its core line of business. AUSTRAC said the decision sends a clear warning to the broader industry that failure to meet mandatory AML/CTF obligations will attract severe consequences, including the loss of the ability to operate.

By working closely with law enforcement agencies, AUSTRAC aims to create a hostile environment for organised crime. Maintaining strict oversight of the remittance register ensures that only businesses capable of demonstrating effective and genuine compliance are allowed to conduct cross-border transfers, reducing systemic risk and protecting the community from the impacts of serious financial crime.

Ongoing enforcement to protect the financial system

The action against Raiyyan Exchange forms part of AUSTRAC’s ongoing enforcement strategy to address the continued exploitation of regulated sectors by organised crime. Money laundering remains a major threat to Australia’s security and economic wellbeing, with remittance services and casinos historically identified as high-risk channels for laundering criminal proceeds.

By targeting fundamental weaknesses in AML/CTF programs, AUSTRAC seeks to close the gaps criminals are most likely to exploit. This includes expectations that remittance providers conduct rigorous customer due diligence, apply enhanced scrutiny to high-risk jurisdictions and submit suspicious matter reports in a timely manner.

Ultimately, AUSTRAC has made clear that compliance with AML/CTF obligations is not optional. The refusal to renew Raiyyan Exchange’s registration sends a strong message across the sector that effective compliance is non-negotiable and must be treated as a core safeguard against the misuse of financial services for money laundering and terrorism financing.

By fLEXI tEAM