Anti-Money Laundering (AML) Compliance for Offshore Payments

Does paying offshore staff make your business subject to AML law?

No, not by itself. Paying offshore staff does not make an Australian or New Zealand business an AML reporting entity: the AML duties sit with the bank or payment provider moving the money. Sanctions law, however, applies to you directly, and since 1 July 2026 Australian accountants, lawyers and real estate agents are regulated in their own right.

The practical consequence is that most businesses meet AML law as the subject of checks rather than as the one running them. Your bank or payment provider will want to know who the payee is, why you are paying them and where the money comes from, because that is customer due diligence in practice. A named individual, a written contract and a consistent payment trail answer those questions before they are asked.

What AML checks do banks and payment providers apply to offshore payments?

Customer due diligence on you, on the payee and on the payment itself. Expect questions about the relationship, the purpose and the source of funds, plus screening of the payee against sanctions lists. Since the 2026 reforms, providers are also assessing money laundering, terrorism financing and proliferation financing risk in their AML/CTF programs, and in New Zealand international wire transfers must carry the required sender and recipient information. A payment that arrives with a named payee, a written contract and a matching invoice or payslip clears those checks quickly; a payment to a third party or an unexplained account does not.

What changed in 2026 for AML compliance in Australia and New Zealand?

Several changes landed within four months of each other, which is why compliance questions are spiking now. In Australia, most AML/CTF Amendment Act reforms started on 31 March 2026, and funds transfers and remittance arrangements merge into a single value transfer chain. International value transfer service reporting, which replaces International Funds Transfer Instruction reports, is deferred until 2029. In New Zealand, the AML/CFT Amendment Act 2026 bans ordering institutions from sending international wire transfers without the required originator and beneficiary information, and from 1 July 2026 the Department of Internal Affairs became the sole supervisor, replacing the Reserve Bank and the Financial Markets Authority.

Do sanctions laws apply to offshore payments?

Yes, and this is the AML-adjacent rule that applies to every business, not just regulated ones. DFAT states that Australian sanctions laws bind all Australian persons and entities regardless of location, and that "asset" is defined broadly to include payments. Paying directly or indirectly to or for the benefit of a designated person, or paying to settle a designated person's liabilities, can breach the law.

The offence is strict liability for a body corporate, but a company that can show it took reasonable precautions and exercised due diligence has a defence. That is why documentation matters. For a standard hire in the Philippines or South Africa the risk is low, since neither is among the higher-risk jurisdictions DFAT names (North Korea, Iran, Myanmar, Russia, South Sudan, Syria and Yemen). The Philippines left the FATF grey list in February 2025 and South Africa in October 2025, and neither was among the jurisdictions added at the June 2026 plenary.

What if your business is itself a reporting entity?

Then the AML duties are yours, and offshore staff need a defined place inside them. From 1 July 2026, lawyers, conveyancers, accountants, real estate professionals, trust and company service providers and dealers in precious metals and stones that provide designated services must enrol with AUSTRAC, normally by 29 July 2026, adopt an AML/CTF program, appoint a compliance officer, complete customer due diligence, report suspicious matters and keep records for seven years in most cases. A suspicious matter report is due within 3 business days, or 24 hours for terrorism financing. In New Zealand, these professions have been covered by the AML/CFT Act for some years.

AUSTRAC's core obligations factsheet does not carve out outsourcing, so treat responsibility as staying with you. In practice, that suggests offshore staff handle supporting work such as collecting identity documents, data entry, file preparation and record keeping, while the compliance officer keeps decisions on risk ratings and suspicious matters. Restrict access to anything touching a suspicious matter report, since tipping off is an offence. This article is general information, not legal advice: confirm your obligations with an AML adviser.

How does Pear Tree structure offshore payments?

Through a registered local entity rather than ad hoc transfers. Pear Tree routes engagements through a legally registered entity in the professional's home country under an Employer of Record or Contractor of Record arrangement, with the worker paid in local currency under local law. That gives your bank a named payee, a contract and a documented trail, which is what its checks look for.

How can you keep offshore payments clean?

Pay the named individual or their registered local entity, not a third party. Keep the contract, the invoice or payslip and the payment record together for every payment, since in Australia that file is also the evidence behind a sanctions due diligence defence. Screen new payees against the sanctions lists before the first payment and again when lists change. Treat requests to pay a different person, a different country or a virtual asset account as a trigger to stop and check, because virtual asset services are now inside both countries' AML frameworks.

The bottom line for AU and NZ businesses

AML law will not make you a regulator just because you hired offshore, but sanctions law applies to every payment, and the 2026 reforms make providers ask more questions and make professional services firms regulated themselves. Pear Tree, with offices in Sydney, Auckland, Hawke's Bay, Cebu, Manila and Cape Town, has placed talent with 750+ Australian and New Zealand businesses on a direct-hire model with a documented, compliant payment structure.

About the author

Nick, Co-Founder of Pear Tree, leads sales, partnerships and business development. Pear Tree connects Australian and New Zealand businesses directly with vetted offshore professionals from the Philippines and South Africa, with no agency middleman.