Rules to combat money laundering are set to have an unintended consequence on gift cards, the Shopping Centre Council of Australia (SCCA) has warned, as ‘know your customer’ (KYC) checks could soon be required to use them.
Changes made in the Anti-Money Laundering and Counter-Terrorism Financing Act 2006, passed in 2024, designate “value transfer” services – such as gift cards – as purchases that require KYC checks.
These checks include requesting identification from the customer, something which the SCCA has warned will impose “significant cost, complexity and disruption on retailers, shopping centres and consumers”.
“These are low-value, low-risk products overwhelmingly used for birthdays, seasonal gifting and everyday consumer purposes. Applying heavy-handed KYC checks to them is impractical and unnecessary given the risk mitigation and control measures already in place,” SCCA CEO Angus Nardi said.
The act includes possible exemptions for transactions designated for retail services, but the Australian Transaction Reports and Analysis Centre (Austrac) issued guidance on October 16 stating that this would apply only to closed-loop cards redeemable with a narrow or defined set of retailers. The SCCA feels this should be expanded to include gift cards that work with a broader set of retailers.
“Most shopping centre gift cards simply will not qualify for the exemption as it stands, as they are redeemable almost anywhere eftpos, Visa or Mastercard are accepted,” Nardi added.
He said the “idea that someone buying a $50 Christmas gift card for a family member must provide formal identification simply doesn’t align with how Australians shop”, claiming the checks “misunderstand the nature and low-risk nature of these products”.
The SCCA said it has met with senior Austrac officials to outline the issue, risks the new rules would create for the sector, and submit a case for a new exemption for low-value, low-risk gift cards. The proposed model would allow gift cards below the existing “stored value card” thresholds, between $1000 and $5000, depending on whether they allow cash redemption, to be exempt from KYC requirements.
“We are concerned that many stakeholders may be unaware of how these changes could affect them,” Nardi said. “It reinforces the need for the government and Austrac to provide clarity quickly.”
“There is a clear path forward, and we respectfully hope that Austrac moves quickly to consider our exemption,” Nardi said. “We believe our proposed approach is a workable, evidence-based approach that protects consumers and protects against financial crime.”
The new regulations are set to be implemented in the retail industry on March 31.
- This story was originally published on Inside Retail Australia.
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