Why firms can no longer treat cross-border payments as business as usual

What is emerging is not simply an added layer of compliance, but a deeper recalibration of how law firms understand risk, responsibility, and their role within an increasingly scrutinised global financial system.

Speaking at Lawyers Weekly’s recent AML Innovative webcast, Emma Rossouw, head of risk and compliance at Send Payments, unpacked the challenges created by the reforms and how law firms can adapt their approach to ensure effective and compliant implementation.

The scale of financial crime

The tightening of AML regulations around international payments reflects the growing recognition that financial crime is no longer a marginal or contained issue, but a global phenomenon operating across borders, industries, and regulatory regimes.

Drawing on speeches by AUSTRAC CEO Brendan Thomas, Rossouw pointed to estimates suggesting global money laundering activity may reach around US$2 trillion annually.

She stressed that this stark figure highlights the “enormous” scale of illicit financial flows moving through the international system, as well as the growing urgency of the regulatory response required to address them.

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While these crimes have a profound global impact, Rossouw also stressed their significant effect in Australia, noting that they cost the nation billions of dollars and place a substantial burden on the economy.

“Organised crime does have a major economic impact in Australia, so serious and organised crime, the estimates come out from 2023 to 2024, and that was, it cost Australia $82.3 billion, which is about 3.2 per cent of GDP. So it’s massive,” she said.

For law firms that may question why they must navigate extensive AML compliance requirements despite not being involved in wrongdoing, Rossouw emphasised that the reality of widespread financial crime is precisely why these safeguards are in place.

“So, yes, some of these things you might think I’m not dodgy. Why do I have to go through all of these requirements? It’s because of this reality,” she said.

Why cross-border payments are inherently higher risk

A central issue, Rossouw shared, behind the heightened focus on cross-border payments within AML reforms is the growing recognition that these transactions carry inherently higher risk.

“Transactions going cross-border mean that you introduce an additional risk factor, which is the other country. So normally, if you have transactions happening within your country, that is considered a lower risk because it’s easier to identify and verify the person,” she said.

“You’ve got access to domestic channels in which to do that. You can drive to the person’s house and see, like, hey, I know who you are.”

Rossouw further explained that involving another jurisdiction in a transaction adds multiple layers of complexity and uncertainty, as firms must navigate foreign regulatory environments where AML standards may differ widely in both strength and enforcement.

“When it goes cross-border, you’re dealing with another country, and that is the risk of whether this country has the same or adequate AML controls in place?” she said.

“Is there a heightened risk of terrorism financing? Is that country’s borders more porous, meaning that funds can move in and out more easily?”

Challenge or chance

Although the changes are significant and may force law firms to rethink how they manage international payments, Rossouw cautioned against viewing them purely as a regulatory burden.

Instead, she urged firms to see this moment as an opportunity to strengthen protections for both themselves and their clients.

“I think there are challenges, but I think it’s important also to see those challenges as opportunities,” she said.

“So opportunities to put in controls that really protect yourselves, protect your clients from being involved in money laundering, and just to set the scene.”

While acknowledging the inconvenience and cost that AML compliance measures may bring for firms, Rossouw stressed that they ultimately exist to prevent criminals from profiting through money laundering, terrorism financing, and other forms of financial crime rooted in harming others.

“One thing to remember is that money laundering, terrorism financing, and financial crime all have one thing in common, and that is they profit from harming someone,” she said.

“So when you think about the challenges, and yes, some of these requirements will bring in inconvenience, they will bring in costs because you have to put in systems just trying to bring it down to that one fact that these measures are intended to try to stop people from benefiting from harming someone.”

The new approach firms can’t ignore

While checklist-driven frameworks were once the universal approach to ensuring AML compliance, law firms are now being pushed to move beyond this rigid model as regulators increasingly set clearer, more dynamic expectations for what effective compliance should look like.

Rossouw shared that the central feature of modern AML regulation has now shifted decisively towards a risk-based approach, reflecting a broader evolution in how financial crime risk is assessed and managed.

“We’ve moved to a risk-based approach, and this is a model that is being implemented by almost every regulator around the world,” she said.

By moving away from checklist-based compliance, she noted that firms are no longer boxed in by rigid, one-size-fits-all rules that fail to capture real-world complexity, and instead are better positioned to identify critical red flags and avoid unknowingly facilitating money laundering.

“When you have a checklist approach, that means that it doesn’t allow for clients or transactions that don’t fit inside that neat box, which means you can often not offer services to clients who legitimately have a reason to do business with you,” she said.

“But it also means that you’re stuck to the set list of requirements, which means you might miss key information. That then means that you are actually unknowingly involved in facilitating money laundering.”

By contrast, Rossouw explained that the risk-based approach requires firms to assess risk dynamically and apply proportionate controls, leading to a far deeper, more contextual understanding of their clients, their transactions, and the jurisdictions involved.

“With the risk-based approach, the risk-based approach means you need to put in controls and measures that are proportionate to your business,” she said.

“That means you can really get an understanding about what clients you provide services to, what their requirements are, what they are coming to you to do, and understand the transaction.”