If our AML/CTF compliance officer is away for a period — for example, sick leave or annual leave — do we need to appoint someone else as the compliance officer? How does this work for a micro-business
Generally no formal replacement is needed for short absences (annual leave, illness), but the CO functions must continue to be covered, and AUSTRAC must be notified of any permanent replacement.
You don't need to formally designate a replacement compliance officer for short-term absences like annual leave or illness. However, the functions of the compliance officer role must continue to be covered while they're away.
Under section 26L of the AML/CTF Act, your business must always have someone fulfilling the AML/CTF compliance officer functions, and AUSTRAC must be notified of anyone you formally designate to the role. AUSTRAC's guidance confirms that during short absences, those functions can still be met without designating a new compliance officer. This is because the role focuses on overseeing and coordinating compliance rather than personally performing every compliance task. See AUSTRAC AML Compliance Officer page
Whether the functions are being adequately met during an absence depends on factors including:
- The length of the absence
- How effective the arrangements are for overseeing and coordinating compliance while the officer is away
- How effective the arrangements are for ensuring the business can still communicate with AUSTRAC
- The nature, size, and complexity of the business
For micro-businesses specifically: AUSTRAC explicitly recognises that smaller businesses with less complex risk profiles generally require less oversight and coordination than larger, more complex businesses. In practice, this means short absences typically pose less risk for a micro-business — provided reasonable handover arrangements are in place.
Practical guidance:
- Short absences (a few days to a couple of weeks): no formal change required if someone is available to handle day-to-day compliance matters and any AUSTRAC communications.
- Longer absences (extended leave, parental leave, long-term illness): formally designate a replacement compliance officer and notify AUSTRAC.
- Plan ahead: Even as a micro-business, identify at least one other eligible employee who could be designated as compliance officer if needed. This protects you if your compliance officer becomes ineligible or is absent for an extended period.
- Document your backup and handover arrangements within your AML/CTF program.