At-a-Glance Overview of IFTI
- Also known as: IFTI
- Meaning: An instruction to transfer money or property from Australia to another country, or into Australia from another country.
- Why it matters: It is a long standing AUSTRAC reporting concept for cross border transfers of any value, with a 10 business day reporting timeframe.
- Reform direction: IFTI reporting will be replaced by International Value Transfer Service reporting under transitional arrangements, with value transfer obligations commencing on 31 March 2026 and IVTS starting later.
- Key legal reference: AML and CTF Act section 46.
What is an international funds transfer instruction
AUSTRAC defines an international funds transfer instruction as an instruction to transfer money or property either from Australia to another country, or into Australia from another country.
AUSTRAC also explains there are two types of IFTIs.
- IFTI E: An electronic funds transfer instruction sent to or received from another country.
- IFTI DRA: An instruction to transfer money or property to or from another country under a designated remittance arrangement where the entity accepting the instruction from the customer, or the entity making the money or property available, is not a financial institution.
In plain English, an IFTI is the compliance term for a cross border transfer instruction, whether that instruction sits in the banking system or a remittance style arrangement.
How IFTI works in Australian law
The legal definition is set out in Division 4 of Part 3 of the AML and CTF Act. Section 46 provides the table that defines when an instruction is an international funds transfer instruction, including where it is accepted at or through a permanent establishment in Australia with funds made available overseas, or accepted overseas with funds made available in Australia.
A practical point that often gets missed is the idea of a funds transfer chain. The Act notes that, for reporting purposes, it is immaterial whether a person sent or received the IFTI as an interposed institution in a funds transfer chain, subject to Rules based exemptions.
This is one reason why IFTI reporting quality matters. The same transaction can involve multiple parties in a chain, and regulators use the reporting data to piece together movement of value.
IFTI reporting obligations
AUSTRAC’s core reporting guidance states that reporting entities must submit IFTI reports for transfers of funds of any value into or out of Australia, made electronically or under a designated remittance arrangement.
AUSTRAC’s dedicated IFTI guidance explains that an IFTI involves either an instruction accepted in Australia for money or property to be made available in another country, or an instruction accepted in another country for money or property to be made available in Australia. It also confirms the reporting timeframe, which is within 10 business days after sending or receiving the IFTI.
For Tranche 2 businesses, this does not automatically mean you will file IFTI reports. The key takeaway is that cross border payments evidence is highly visible to regulators and often becomes a key input to suspicious matter analysis. If your firm is dealing with a matter funded from overseas, you should expect to be asked, at least internally, whether the payment story is coherent and supported by evidence.
What changes under the AML and CTF Amendment Act 2024
The reforms are modernising how Australia treats transfers of value, including money, virtual assets and other property.
The Department of Home Affairs overview explains that the Amendment Act streamlines existing concepts of funds transfer and designated remittance arrangements into a single value transfer chain, designed to facilitate the passage of key information regardless of the technology used. It also introduces International Value Transfer Service reporting to replace IFTI reporting. It confirms that value transfer obligations commence on 31 March 2026, while IVTS obligations commence later, with transitional rules preserving IFTI reporting for a period to allow technical changes.
AUSTRAC’s reform summary reinforces this by stating that International Value Transfer Service reporting will replace IFTI reports, with the reporting obligation lying with the reporting entity closest to the Australian customer. AUSTRAC also notes IVTS reporting will start after 2026 under transitional arrangements.
This matters for Tranche 2 planning because many firms build client onboarding and funds verification processes around what bank documents show today. The reform direction means regulators will increasingly expect a consistent narrative that links the customer to the transfer and explains the purpose and legitimacy of the movement of value.
Examples of IFTI in real life
Example 1: Incoming overseas payment for a property purchase
A buyer receives funds from an overseas bank into Australia to fund a deposit. The bank transfer sits in the IFTI reporting ecosystem. Your role as a professional service provider is to understand source of funds and document the story clearly.
Example 2: Outgoing payment to an overseas counterparty
A business in Australia sends funds to an overseas supplier using an Australian bank. That instruction is an IFTI E in AUSTRAC terms.
Example 3: Remittance style transfer outside the traditional bank model
A remittance provider accepts an instruction and uses a designated remittance arrangement to make money available overseas. AUSTRAC describes this as an IFTI DRA where the relevant accepting or paying entity is not a financial institution.
Best practices for Tranche 2 firms when cross border funds are involved
- Capture the payment narrative in plain English. Who paid, who received, why now, and how it fits the matter.
- Link funds evidence to customer risk. The same IFTI backed bank record can be low risk or high risk depending on third parties, complexity, and plausibility.
- Be prepared to escalate. Where the story is inconsistent, or information is missing, treat it as a risk indicator, not merely an admin issue.
- Future proof templates. Add language that recognises Australia is moving from IFTI reporting towards IVTS reporting and value transfer chains.
Common challenges
- Confusing proof of transfer with proof of legitimacy.
- Rushing matters with overseas funding and leaving gaps in the file narrative.
- Treating cross border payments as routine without considering higher risk jurisdictions, third party payers, or complex layering.
How Tranche 2 Consultants can help
Tranche 2 Consultants can help you map when cross border funds create enhanced due diligence triggers, update your funds verification and file note templates to match the value transfer direction, and train staff to ask the right questions without delaying legitimate matters.
Final Notes on IFTI
International funds transfer instruction is a core reporting concept that sits behind much of AUSTRAC’s visibility of cross border value movement. Even where Tranche 2 firms do not report IFTIs, your client files will regularly rely on the same payment evidence. Getting the narrative and evidence right now also positions you well for the shift to value transfer chains and IVTS reporting under the Amendment Act.
“Bookmakers sit at a natural convergence point for cash, speed and anonymity. AUSTRAC’s focus reflects the reality that wagering platforms can be misused as value transfer mechanisms if risk controls are not actively applied.”
