• Motor Vehicle Dealers

    Some services provided by motor vehicle dealers are attractive to criminals wanting to launder the proceeds of crime and to finance terrorism.

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Motor Vehicle Dealers

What are the ML/TF Risks?

Buying and selling high-value goods such as cars, motorcycles and other motor vehicles are attractive to criminals because such transactions can avoid interaction with the financial sector.

Cars and other motor vehicles can be purchased by criminals using illicit cash or a combination of credit and illicit cash. Where credit is obtained for the purchase, the loan can be repaid early using illicit cash and the vehicles can then be resold. Any losses made by the criminal on the loan or as a result of a decrease in the cars’ resale value are accepted as the cost of laundering illicit proceeds.

The Money Laundering and Terrorist Financing (ML/TF) risks associated with motor dealers include:

  • High-risk red flags include significant or frequent use of cash to purchase valuable commodities and assets, which can then be resold to disguise the origin of illicit funds;
  • Criminals may also use cash to buy high-value goods such as motor vehicles and boats, then travel overseas with them to transfer value while avoiding detection by financial institutions; and
  • Organised crime groups may use cash to purchase high-value goods then on-sell them for cash, so they can disguise the origin of the funds and deposit the money into the financial system without raising red flags

Motor vehicle dealers must ensure the organisation conducts a comprehensive ML/TF risk assessment to identify, assess, mitigate and manage ML/TF risk exposures as a critical first step in complying with AML/CFT laws.

What are the AML/CFT obligations?

In developing responses to obligations under AML/CFT laws and regulations the following steps must be undertaken:

  • Conduct a Money Laundering and Terrorism Financing Risk Assessment;
  • Develop an AML Program that is proportionate to ML/TF Risks;
  • Establish effective Board and Senior Management oversight of the AML/CFT Program;
  • Appoint an AML Compliance Officer;
  • Establish a Customer Due Diligence (CDD) Program including collection and verification of know your customer (KYC) information including Enhanced and Ongoing CDD controls;
  • Implement a ML/TF Risk Awareness Training Program for staff;
  • Implement a monitoring program to identify unusual and possibly suspicious customer activity, transactions and behaviour;
  • Establish a process to report suspicions and other activity specified by AML/CFT law and regulation;
  • Establish Record-keeping controls; and
  • Maintain the ML/TF Risk Assessment and the AML Program as the business and risks change.

How can AML Accelerate help?

AML Accelerate, drawing on unparalleled expertise and real-world experience, has developed an AML/CFT Program Manual for the motor vehicle dealer industry.

Our solutions deliver all the foundational AML/CFT materials including a ML/TF Risk Assessment, an AML/CFT Program, CDD Standards, and an AML Operating Manual, which you can tailor to your specific needs, ensuring your AML/CFT controls are commensurate with your business.

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