Money laundering, terrorism financing and proliferation financing definitions

Money laundering

Money laundering has a specific meaning under section 5 of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (the Act). It means conduct that amounts to an offence against Division 400 of the Criminal Code Act 1995, or a corresponding offence against a state, territory or foreign law.

In general, it can occur when a person deals with money or property and any of the following apply, the: 

• money or property has been wholly or partly derived from crime
• money or property is used in crime
• value of the money or property is grossly out of proportion to the person’s income and expenditure over a reasonable period and the person can't demonstrate that it didn't come from unlawful activity (known as ‘unexplained wealth’).

Money laundering typically involves hiding, disguising or legitimising the true origin and ownership of money or property used in or derived from crime.

It’s a key enabler of serious crimes such as:

• child exploitation
• drug and sex trafficking
• scams
• fraud
• terrorism
• the proliferation of weapons of mass destruction.

Terrorism financing

The financing of terrorism (terrorism financing) has a specific meaning under section 5 of the Act.

It includes conduct that amounts to an offence against any of the following:

• section 102.6 (getting funds to, from or for a terrorist organisation) or Division 103 (financing terrorism) of the Criminal Code Act 1995
• section 20 or 21 of the Charter of the United Nations Act 1945 (dealing with frozen assets, or making an asset available to a person, prescribed under targeted financial sanctions)
• a corresponding offence against a state, territory or foreign law.

Criminal actors use a wide variety of methods to fund terrorist activities that pose a threat to national and international security. The funds that facilitate terrorist activity can come from both legitimate and criminal sources.

Examples include funding:

• the purchase of weapons, vehicles and explosives for a terrorist organisation
• activities to prepare for a terrorist act
• to generally support any terrorist organisation.

The Commonwealth government provides a list of organisations currently listed as terrorist organisations under the Criminal Code. 

The Department of Foreign Affairs and Trade also has a Consolidated List of all persons and entities listed under Australian sanctions laws, including those relating to terrorism.

Proliferation financing

Proliferation financing enables the spread of weapons of mass destruction (WMDs).

It involves providing money, assets, services or transactions that help obtain nuclear, chemical or biological weapons or related materials.

Proliferation financing has a specific meaning under section 5 of the Act and the Anti-Money Laundering and Counter-Terrorism Financing (Proliferation Financing) Regulations 2026.

In general, this means conduct involving: 

• dealing with money, assets or value that supports any step in illicitly developing, producing, acquiring, transferring or using nuclear, chemical or biological weapons
• financing, arranging or helping with the export or import of goods, technology or services that are banned or controlled under UN sanctions or Australian autonomous sanctions – for example, supplying export sanctioned goods to Iran or the Democratic People’s Republic of Korea (DPRK)
• providing financial services, funds or other assets to people or entities involved in WMD programs or activities that support them
• dealing with defence, strategic or dual‑use goods, technology or software that could be used in a WMD program
• helping another person carry out transactions that breach UN sanctions, Australian autonomous sanctions, or laws that relate to prevention of WMD proliferation.

The definition includes conduct that is an offence under several laws. We group them below for clarity.

1. Offences involving UN sanctions

Conduct that is an offence against section 27 of the Charter of the United Nations Act 1945, including targeted financial sanctions, where the conduct breaches a provision of either:

• Charter of the United Nations (Sanctions—Democratic People’s Republic of Korea) Regulations 2008
• Charter of the United Nations (Sanctions—Iran) Regulations 2025.

2. Offences involving Australian autonomous sanctions

These are the specific offences against section 16 of the Autonomous Sanctions Act 2011 that are prescribed in the Autonomous Sanctions Regulations 2011 for the DPRK and Iran. They include contraventions of:

• regulation 12 – certain sanctioned supplies for Iran
• regulation 13 – certain sanctioned services to the DPRK or Iran
• regulation 13A – sanctioned commercial activity for the DPRK
• regulation 14 – making assets available to designated persons or entities linked to DPRK or Iran WMD programs or UN sanctions breaches
• regulation 15 – dealing with controlled assets owned or controlled by designated persons or entities linked to those programs or breaches
• any conditions attached to an authorisation granted under those sanction laws.

Paragraph (b) of the proliferation financing definition in section 5 of the AML/CTF Act also includes conduct that amounts to any other offence of, or contravention of regulations made under, the Autonomous Sanctions Act 2011 where the sanctions address WMD proliferation.

This relates specifically to sub-regulation 6A(1) of the Autonomous Sanctions Regulations 2011, which allows the Foreign Minister to impose targeted financial sanctions against persons or entities that contribute to the proliferation of WMDs.

3. Offences under specific WMD‑related Commonwealth laws

This includes conduct that deals with assets, funds or services in a way that contravenes the following laws:

• Chemical Weapons (Prohibition) Act 1994 and Crimes (Biological Weapons) Act 1976 (implements criminal offences for violations of a UN treaty banning the activity related to biological and toxin weapons)
• Comprehensive Nuclear Test Ban Treaty Act 1998 (prohibits the causing of any nuclear explosion at any place within Australian jurisdiction or control)
• Nuclear Non‑Proliferation (Safeguards) Act 1987 (regulates nuclear material in Australia)
• Weapons of Mass Destruction (Prevention of Proliferation) Act 1995 (prohibits supplying or exporting goods, or providing services, that could contribute to a WMD program).

4. Corresponding offences under other jurisdictions

The definition also includes conduct that amounts to a corresponding offence under state or territory law or foreign law, where the offence addresses the same kind of conduct as the Commonwealth offences above.

5. Prohibited imports and exports under Part XIII of the Customs Act 1901

This includes offences involving prohibited exports or imports under the:

• the following sections of the Customs (Prohibited Exports) Regulations 1958:
  • Division 2A of Part 3 (exports to countries or persons subject to autonomous sanctions, and controlled assets)
  • regulation 13CO – export of certain goods to the DPRK
  • regulation 13CQ – export of certain goods to Iran
  • relevant provisions of Division 4A of Part 3 (export of defence and strategic goods), or
• the following sections of the Customs (Prohibited Imports) Regulations 1956:
  • regulation 4Y – imports of goods from the DPRK (with limited exceptions for food and medicine)
  • regulation 4Z – imports of goods from Iran relating to nuclear material, equipment or ballistic missile programs.

To learn how proliferation financing risks arise in practice, see our Proliferation financing in Australia national risk assessment 2022.

Related pages

• Reforms guidance