Money laundering’s impact on business and human rights

Money laundering isn’t just a financial crime — it’s a business-critical issue with far-reaching consequences, including the violation of fundamental human rights. From child exploitation to human trafficking, illicit financial flows often fund some of the world’s most horrific abuses.

For business leaders, understanding the connection between money laundering and human rights is no longer optional. It’s essential for meeting regulatory obligations, protecting brand integrity, and ensuring ethical operations across global markets.

What is money laundering?

Money laundering is the process of disguising illegally obtained funds to make them appear legitimate. Criminal activities such as fraud, drug trafficking, tax evasion, human trafficking, child exploitation, and arms trading all generate illicit funds that must be “cleaned” before entering the legal financial system.

Recent amendments to Australia’s AML/CTF laws, significantly broaden compliance obligations. The Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2024 extends the regime to include additional high-risk sectors identified by the Financial Action Task Force (FATF), such as real estate, legal services, accounting, and virtual asset service providers (VASPs) (Parliament of Australia). These reforms introduce stricter requirements for customer due diligence, enhanced record-keeping, and more rigorous reporting of suspicious activities.

AUSTRAC’s official media release dated 31 March 2025 confirms that the revised “tipping off” offence now targets disclosures that could prejudice an investigation, with penalties of up to AU$39,000 or two years in prison. These reforms aim to modernise Australia’s regulatory framework, aligning it with international standards and enhancing the ability to detect and disrupt illicit financial activities.

Under Section 400 of the Criminal Code Act 1995 (Cth), money laundering includes not only concealing or possessing criminal proceeds but also “dealing with” them—whether through transactions, banking, imports/exports, or asset transfers. While the financial sector is a well-known channel for laundering, criminals also exploit other industries such as real estate, gambling, luxury goods, and art to move and disguise illicit funds.

Together, these legislative updates reflect a broader effort to strengthen compliance requirements across diverse sectors, helping businesses and regulators better prevent financial crime and its associated harms.

How serious is the problem?

According to the International Monetary Fund (IMF) and World Bank, an estimated 2–5% of global GDP—equivalent to nearly $3 trillion USD—is laundered annually.
United Nations

In Australia, AUSTRAC has issued more than $2 billion in fines to banks over the past three years alone.

High-profile cases include:

• Commonwealth Bank, fined $700 million in 2018 for AML failures.
• National Australia Bank, referred to AUSTRAC in 2023 for alleged AML/CTF breaches.
• Westpac, which paid $1.3 billion in penalties in 2020 for over 23 million AML/CTF breaches, including transactions linked to child exploitation in the Philippines and APAC region.
  These incidents demonstrate how AML compliance failures in Australian companies can directly contribute to serious criminal activity and human rights abuse.

The human rights impact of money laundering

How does money laundering affect human rights? When companies—knowingly or not—facilitate money laundering, they may also be enabling child trafficking, forced labour, sex slavery, and corruption. This is especially true in Asia-Pacific (APAC), where vulnerable populations, including children, are frequently exploited by organised crime. Corporate negligence in AML compliance often fuels this cycle. The human cost is unquantifiable. But the ethical obligation is clear: businesses must take responsibility for preventing financial crime and protecting human rights.

AML Laws and the legislative framework