Federal Court of Australia

Chief Executive Officer of the Australian Transaction Reports and Analysis Centre v Castra Licensee Pty Ltd [2026] FCA 709

ORDERS

THE COURT DECLARES THAT:

1.    By failing to give the AUSTRAC CEO a report relating to Castra’s compliance with the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) (Act), the regulations and the Anti-Money Laundering and Counter-Terrorism Financing Rules Instrument 2007 (No. 1) (Rules) within the lodgment period of 1 January 2024 to 1 April 2024 for the reporting period of 1 January 2023 to 31 December 2023, Castra contravened s 47(2) of the Act.

THE COURT ORDERS THAT:

2.    Castra pay to the Commonwealth of Australia a pecuniary penalty in the amount of $50,000 pursuant to s 175(1) of the Act.

3.    Castra pay costs in the amount of $15,000.

4.    In the event that the pecuniary penalty is not paid, the applicant has leave to relist the proceeding for the entry of judgment.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

(Delivered ex tempore, revised from the transcript)

LEE J:

A    INTRODUCTION

1    This is an enforcement proceeding under Pt 15 of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) (Act). The applicant, the Chief Executive Officer (CEO) of the Australian Transaction Reports and Analysis Centre (AUSTRAC), seeks a declaration that the respondent, Castra Licensee Pty Ltd (Castra), contravened s 47(2) of the Act by failing to give the CEO of AUSTRAC an Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) compliance report.

2    Castra admits that contravention. It failed to provide an AML/CTF compliance report within the lodgment period of 1 January 2024 to 1 April 2024 (for the reporting period of 1 January 2023 to 31 December 2023).

3    AUSTRAC also seeks a pecuniary penalty of $85,000 pursuant to s 175(1) of the Act and a lump sum costs order in the amount of $15,000. Castra does not oppose the making of a declaration or the imposition of some penalty, but submits that the penalty should be “nominal”, namely $1. Castra submitted that there should be no order as to costs “beyond what is strictly necessary”, and proposed an order that each party bear their own costs.

4    Many facts relevant to determining whether AUSTRAC is entitled to the declaratory relief and orders it seeks are agreed as between the parties.

B    PROCEDURAL BACKGROUND

5    At the commencement of the hearing, I was persuaded to grant leave pursuant to r 1.34 of the Federal Court Rules 2011 (Cth) (FCR) for the sole director of Castra, Mr Matthew Smith, to appear on behalf of the company notwithstanding the requirements of r 4.01(2) of the FCR. My reasons for granting leave are recorded in the transcript and unnecessary to rehearse in this judgment.

6    During the course of his submissions, Mr Smith helpfully addressed me on five matters, which can be identified as follows. First, that the penalty proposed by AUSTRAC was disproportionate and unsupported by authority. Secondly, that non-payment of an infringement notice issued by AUSTRAC was not an “aggravating factor”. Thirdly, that the financial position of Castra’s current parent company, Marathon Consolidated Pty Ltd (Marathon), was irrelevant. Fourthly, that “moderating factors” referred to in the High Court’s decision in Australian Building and Construction Commissioner v Pattinson [2022] HCA 13; (2022) 274 CLR 450, apply to Castra’s circumstances. The fifth submission was that costs should not be ordered against Castra.

7    I will address each of these submissions below after setting out the statutory framework, the facts, and the applicable principles.

C    STATUTORY FRAMEWORK

8    As the simplified outline in s 173 indicates, Pt 15 of the Act provides for a range of enforcement measures. These include pecuniary penalties being payable for contraventions of civil penalty provisions (Pt 15, Div 2), the issuance of infringement notices for certain contraventions (Pt 15, Div 3), the monitoring of compliance by reporting entities with their obligations under the Act (Pt 15, Div 4), the provision of remedial directions (Pt 15, Div 5), the acceptance of enforceable undertakings (Pt 15, Div 7), and the exercise of powers of questioning, search and arrest for cross-border movements of monetary instruments (Pt 15, Div 8).

9    In Chief Executive Officer of Australian Transaction Reports and Analysis Centre v TAB Limited (No 3) [2017] FCA 1296, Perram J observed that “the Act is a complex one” (at [5]), noting that it reposes in reporting entities “a degree of trust for the operation of the AML/CTF risk management system” and “deals severely with breaches of that trust” (at [4]).

10    Most relevantly to the contravention in this proceeding, s 47 of the Act provides:

47 AML/CTF compliance reports

Scope

(1)    This section applies if the AML/CTF Rules provide that, for the purposes of this section:

(a)    a specified period is a reporting period; and

(b)    a specified period beginning at the end of a reporting period is the lodgment period for that reporting period.

A period specified under paragraph (a) or (b) may be a recurring period.

Report

(2)    A reporting entity must, within the lodgment period for a reporting period, give the AUSTRAC CEO a report relating to the reporting entity’s compliance with this Act, the regulations and the AML/CTF Rules during the reporting period.

(3)    A report under subsection (2) must:

(a)    be in the approved form; and

(b)    contain such information as is required by the approved form.

    Civil penalty

(4)    Subsection (2) is a civil penalty provision.

…

(Notes omitted).

11    Section 175 of the Act provides the source of the Court’s power to make a civil penalty order and identifies the matters to which the Court must have regard in fixing penalty:

175 Civil penalty orders

(1)    If the Federal Court is satisfied that a person has contravened a civil penalty provision, the Federal Court may order the person to pay the Commonwealth a pecuniary penalty.

(2)    An order under subsection (1) is to be known as a civil penalty order.

Determining amount of pecuniary penalty

(3)    In determining the pecuniary penalty, the Federal Court must have regard to all relevant matters, including:

(a)    the nature and extent of the contravention; and

(b)    the nature and extent of any loss or damage suffered as a result of the contravention; and

(c)    the circumstances in which the contravention took place; and

(d)    whether the person has previously been found by the Federal Court in proceedings under this Act to have engaged in any similar conduct; and

(e)    if the Federal Court considers that it is appropriate to do so—whether the person has previously been found by a court in proceedings under a law of a State or Territory to have engaged in any similar conduct; and

(f)    if the Federal Court considers that it is appropriate to do so—whether the person has previously been found by a court in a foreign country to have engaged in any similar conduct; and

(g)    if the Federal Court considers that it is appropriate to do so—whether the person has previously been found by a court in proceedings under the Financial Transaction Reports Act 1988 to have engaged in any similar conduct.

Maximum pecuniary penalty

(4)    The pecuniary penalty payable by a body corporate must not exceed 100,000 penalty units.

…

(Emphasis in original).

12    Section 47(2) is an “infringement notice provision”. This is because it is a “designated infringement notice provision” under s 184(4) of the Act (see s 184(1A)(aaaa)).

13    Section 185(1) requires an infringement notice to, inter alia, “set out brief details relating to the alleged contravention of the infringement notice provision” (see s 185(1)(c)). It also requires an infringement notice to state a consequence of paying the penalty specified in the notice within the specified period. It states:

185 Matters to be included in an infringement notice

(1)    An infringement notice must:

…

(d)    contain a statement to the effect that neither criminal nor civil penalty proceedings will be brought in relation to the matter if the penalty specified in the notice is paid to the AUSTRAC CEO, on behalf of the Commonwealth, within:

(i)    28 days after the notice is given; or

(ii)    if the AUSTRAC CEO allows a longer period — that longer period;

14    That consequence is reinforced by s 188, which provides:

188 What happens if the penalty is paid

(1)    This section applies if:

(a)    an infringement notice relating to an alleged contravention of an infringement notice provision is given to a person; and

(b)    the penalty is paid in accordance with the infringement notice; and

(c)    the infringement notice is not withdrawn.

(2)    Any liability of the person for the alleged contravention is discharged.

(3)    Criminal proceedings, or section 175 proceedings, may not be brought against the person for the alleged contravention.

15    In circumstances where an infringement notice is not complied with, the CEO of AUSTRAC may take further enforcement action pursuant to s 189(b) of the Act. Section 189 relevantly provides:

189 Effect of this Division on criminal and civil proceedings

This Division does not:

…

(b)    affect the liability of a person to have:

(i)    criminal proceedings brought against the person for an alleged contravention of subsection 53(1), 74(2), (4), (6) or (8) or 76A(3), (5), (7) or (9); or

(ii)    section 175 proceedings brought against the person for an alleged contravention of an infringement notice provision;

if:

(iii)    the person does not comply with an infringement notice relating to the contravention; or

…

(v)    an infringement notice relating to the contravention is given to the person and subsequently withdrawn;

D    FACTS AND EVIDENCE

D.1    Agreed facts and admissions

16    The parties’ Statement of Agreed Facts and Admissions dated 8 May 2026 (SAFA) was admitted by consent as Exhibit A. Particularly given that I granted Mr Smith leave to appear on behalf of Castra, I am satisfied that I should accept the facts and admissions contained in the SAFA as representing Castra’s considered position. Annexure A to these reasons sets out [5]–[39] of the SAFA.

D.2    Further evidence

17    Both parties read affidavits and tendered documents. There was no cross-examination in relation to the affidavit evidence. AUSTRAC’s solicitor, Mr Gregory Wrobel, swore an affidavit dated 14 May 2026 (Wrobel Affidavit) annexing ASIC company searches of Castra and Marathon, a copy of Castra’s Australian Financial Services Licence, annual reports of Marathon, and communications between Castra and AUSTRAC concerning the contravention and related matters.

18    Mr Smith, on behalf of Castra, relied on an affidavit sworn 8 May 2026 (Smith Affidavit), which primarily recorded relatively uncontroversial matters relating to Castra’s financial position. He relevantly deposed to the following matters.

19    First, after summarising Castra’s financial position (which he noted was set out in the SAFA), that “Castra has no other income, assets, or financial resources from which the Infringement Notice could be met” (at [12]).

20    Secondly, that Castra was previously a “wholly owned subsidiary of Castra Group Pty Ltd” (Castra Group), a company in which Mr Smith held a majority beneficial interest, and that since 1 January 2025, “Castra has been a wholly owned subsidiary of Marathon” (at [14]–[15]).

21    Thirdly, that Marathon acquired Castra “for a nominal sum as part of an arrangement under which Marathon engaged [Mr Smith] and Mr Christopher Rockemer as employees” (at [16]).

22    Fourthly, that “Marathon has not injected capital into Castra following the acquisition, nor has Marathon guaranteed or agreed to meet any of Castra’s liabilities, including any liability arising from these proceedings or the Infringement Notice” (at [18]).

23    Mr Smith gave the following affidavit evidence concerning Castra’s capacity to pay the infringement notice:

D.    CAPACITY TO PAY

20.    In light of the matters set out above, I depose that:

a.    Castra has no meaningful financial capacity to pay the Infringement Notice of $18,780;

b.    Castra’s ongoing losses and minimal equity mean that payment of the Infringement Notice in full would be likely to result in the effective cessation of Castra’s remaining operations; and

c.    payment of the Infringement Notice would render Castra technically insolvent, having regard to its total net equity of $4,354 as at the end of FY2025.

21.    Since 16 September 2024, I have considered whether I am in a position to personally fund or loan funds to Castra for the purpose of meeting the Infringement Notice. I am not in a position to do so. During the period from approximately 10 January 2021 to 21 July 2025, I was engaged in matrimonial proceedings which were ultimately finalised. Those proceedings resulted in significant financial loss to me personally, including taking on additional personal debt to settle the matrimonial proceedings. I have no real property, savings, or investments remaining. My sole income is my salary from my employment with Marathon Consolidated Ltd. That personal debt remains outstanding and is being serviced from my salary. I have no personal financial resources available from which I could meet or contribute to payment of the Infringement Notice.

22.    I am willing to provide any further information requested by the Court or the parties in relation to Castra's financial position and capacity to pay.

24    None of this evidence was challenged by AUSTRAC, nor was it inherently incredible or contradicted by facts otherwise established on the evidence. Such evidence generally ought to be accepted: see Precision Plastics Pty Ltd v Demir [1975] HCA 27; (1975) 132 CLR 362 (at 370 –371 per Gibbs J, with whom Stephen and Murphy JJ agreed).

25    That said, Castra’s evidence in chief was, in some respects, notable for what it does not address. In particular, there was minimal evidence adduced demonstrating the appreciation of the seriousness of the contravention of the Act, nor was there evidence of mature reflection on the consequences. Instead, Mr Smith consistently downplayed Castra’s failure to comply with the Act, stating it was an “inadvertent technical reporting failure that caused no harm to any person” (T34.15–16; see also T34.19–20, T36.2–3, T51.47, T52.2).

D.3    Additional findings

26    Ultimately, it is only necessary for me to make additional findings concerning a confined number of matters arising from the further evidence.

27    Castra was aware of the infringement notice and advised by AUSTRAC on 1 October 2024 that a failure to pay could result in proceedings in which a very substantial pecuniary penalty may be sought.

28    I am not satisfied, on the whole of the evidence, that at the time the infringement notice was issued, it was impossible (or indeed impractical) for Castra to obtain sufficient funds to pay the penalty amount specified in the notice. Rather, the evidence supports the conclusion that the decision not to pay the infringement notice was a conscious one, made in circumstances where Castra’s attempts to procure withdrawal of the notice had proven unsuccessful.

29    That conclusion is fortified by Exhibit 1, which was an email sent by Mr Smith to AUSTRAC on 11 December 2025 (the day after this regulatory proceeding was commenced by AUSTRAC). That email was in the following terms:

As discussed, our position is that:

1.    We take our compliance reporting obligations seriously;

2.    This was an administrative oversight, for which we apologised to Austrac for;

3.    No ‘actual’ AML/CTF obligations have ever been breached and our answers in the compliance report is essentially “n/a” or “no”;

4.    Austrac failed to respond to our correspondence 20 September 2024;

5.    I confirm that our 2025 compliance report will be lodged in the week of 19 January 2026;

6.    The company’s revenues and the total dollar value of transaction value moved through our bank account in a year are less than the infringement notice (attached – you’ll note that we’ve taken it up in our accounts as a liability); and

7.    To resolve this matter, we can pay the infringement notice by 5pm AEST today.

Please advise your client’s position.

30    Castra’s offer to “pay the infringement notice by 5pm AEST today”, when apparently perceived as necessary to do so immediately after the commencement of the proceeding, further undermines the cogency of its contention that its initial failure to pay the infringement notice resulted from a lack of any practical means of payment.

31    I accept, for present purposes, Mr Smith’s evidence that he was engaged in matrimonial proceedings between 10 January 2021 and 21 July 2025, and that those proceedings were resolved in or about July 2025, resulting in personal financial loss and the incurring of additional personal debt to effect settlement: Smith Affidavit (at [21]). That evidence was unchallenged; however, it is expressed at such a level of generality that it is of very limited assistance.

32    I also accept the unchallenged evidence as to Castra’s financial position, including that Castra operated at a loss during the 2023, 2024 and 2025 financial years, and that its financial position was relatively weak. But that is not the complete picture. Notably, Marathon had net profit after tax of $1.48 million in 2022: Wrobel Affidavit (at 151, Annexure 6), $968,000 in 2023: Wrobel Affidavit (at 151, Annexure 6), $2.387 million in 2024: Wrobel Affidavit (at 206, Annexure 7), and $1.52 million in 2025: Wrobel Affidavit (at 276, Annexure 8).

33    The evidence discloses that Castra provides wholesale financial services to the group of entities comprising Marathon and its subsidiaries (Group), which operates under an internal management structure. Importantly, the Group’s financial statements consolidate those of Marathon and its subsidiaries, including Castra. Marathon’s control over its subsidiaries is further reflected in the fact that both Mr Smith and Mr Rockemer hold office as the “Group Managing Director and CEO” and the “Group Executive Director and COO”, respectively: Wrobel Affidavit (at 268 Annexure 8). As the agreed facts indicate, these were the only two individuals involved in the contravention.

34    Importantly, Marathon did not have any involvement with Castra until the beginning of 2025 and did not have any involvement with, nor bear any responsibility for, the contravention. However, the evidence concerning Marathon is relevant to assessing the force of the evidence, given by Mr Smith, that Castra has no capacity to pay any substantial civil penalty. The reality is that Castra is part of a larger internally coordinated group. Within that group, Mr Smith has been the CEO of Marathon since the beginning of 2025, and “is available on a full-time basis as an Executive Director to manage the affairs of [Marathon]”: Wrobel Affidavit (at 146 Annexure 6). Mr Rockemer is also noted to be “available on a full-time basis as an Executive Director to manage the affairs of [Marathon]”: Wrobel Affidavit (at 145 Annexure 6).

35    The Director’s Report within Marathon’s 2025 Annual Report records that Mr Smith has an interest in 10,251 ordinary shares and that Mr Rockemer has an interest in 1,462 ordinary shares. Those shares are said to be held in entities in which each of Mr Smith and Mr Rockemer respectively has an interest: Wrobel Affidavit (at 269 Annexure 8).

36    Further, having regard to the “Chairman and Managing Director & CEO’s Review”, at least at the time of preparation of Marathon’s 2025 Annual Report, the controller of Castra stated that “[t]he year ahead presents strong growth potential across [its] core businesses” and that those businesses “have clear pathways for expansion, improved efficiency, and deeper customer engagement”: Wrobel Affidavit (at 262 Annexure 8).

37    Marathon’s 2025 Annual Report, in the section entitled “2025 Group Annual Highlights”, also records revenue of $82.1 million, being an increase of 12.3% year-on-year; operating profit of $2.8 million, being an increase of 23.8% year-on-year; net profit after tax of $1.5 million, being an increase of 351% year-on-year; and earnings per share of $2.23, being an increase of 140.6% year-on-year.

38    By reference to various entities within the Group, the report presents a picture of several opportunities for revenue growth and cost optimisation. It may be an overstatement that, as AUSTRAC submits, this is a “wealthy corporate group”; however, it is certainly a corporate group presented to its shareholders as being in a very sound financial position. The relevance of this to the fixing of penalty is a matter about which I received competing submissions.

39    As to the internal management structure of the Group and the provision of services by Castra, the following emerges from the evidence.

40    First, Castra’s principal activity is the “provision of wholesale financial services”.

41    Secondly, the principal activities of the Group include “the provision of wholesale financial services”.

42    Thirdly, prior to Marathon’s acquisition of Castra, “Castra … provided ASIC Agent services to the Group for the period to 31 December 2024. These transactions were on commercial terms and conducted at arm’s length”. It will be recalled that, as of 1 January 2025, Castra became a wholly owned subsidiary of the Group.

43    Fourthly, in the Marathon 2024 financial statements and reports, Mr Smith reported the following:

Moving forwards, myself and fellow Executive Director Christopher Rockemer have been appointed as Key Management Personnel of the Company. The retention of the Executive Directors ensures that the day-to-day operations of the Company will incur no significant interruptions. As part of the move to Internal Management, 100% of the shares in Castra Licensee Pty Ltd, which holds an AFSL (an associated Entity of Myself) was acquired in Marathon. In the near future I will update investment Partners with our new email addresses. I look forward to launching Marathon's new Corporate Image and Branding shortly at the AGM.

44    Fifthly, in the Marathon 2025 financial statements and reports, it was stated that:

the Board has resolved to operate under an internal management structure. The Investment Management Agreement with Castra Capital Pty Ltd ceased by mutual agreement. Executive Director Matthew Smith and Christopher Rockemer have been appointed as Key Management Personnel of the Company. As part of the transaction, the Company acquired 100% of the shares in Castra Licensee Pty Ltd (an associated entity of Matthew Smith) which owns and operates an AFSL. The Group continued to engage in its principal activities, the results of which are disclosed in the attached financial report.

45    Sixthly, Marathon acquired Castra for $2,000, which Mr Smith describes as “a nominal sum”, following which Marathon engaged him and Mr Christopher Rockemer as “employees”: Smith Affidavit at ([16]).

46    Seventhly, before Marathon acquired Castra on 1 January 2025, Castra had, during the 2023 and 2024 financial years, acted as Marathon’s registered agent while owned by Castra Group. Castra also holds Australian Financial Services Licence No. 455364.

47    As to the particular roles of Mr Smith and Mr Rockemer, the evidence reveals the following. Mr Smith is the sole director and secretary of Castra, and the Managing Director and Group CEO of Marathon. Mr Rockemer is the Executive Director and Group Chief Operating Officer of Marathon. Mr Smith represents Marathon on Castra’s Board and, as record in Marathon’s 2025 financial statements and reports:

was a mutual director of … Castra … and the Group at any time during the financial year. Mr Smith had responsibility for planning directing and controlling the activities of the Group, directly or indirectly during the financial year through his roles with … Castra Licensee Pty Ltd and involvement in subsidiaries within the Group.

48    Mr Smith’s email banner also refers to Marathon as holding Castra’s Australian Financial Services Licence number, stating: “AFS License No. 455364. This email was sent by Marathon Consolidated and its affiliates”.

49    Mr Rockemer was delegated responsibility by Castra for giving AUSTRAC the AML/CTF compliance report and corresponded with AUSTRAC in respect of the infringement notice, identifying himself as an authorised contact.

50    One of the curiosities of the evidence is that condition 5(b) of Castra’s Australian Financial Services Licence required it, as licensee, to have either total assets or adjusted assets that exceeded total liabilities or adjusted liabilities, as shown in the licensee’s most recent balance sheet lodged with ASIC: Wrobel Affidavit (at 112–113 [9]). As I have already noted, the Group’s finances are accounted for on a group-wide basis, including profits and losses between the individual entities, rather than separately accounting for each entity.

51    The SAFA establishes each element of the admitted contravention. Castra was a reporting entity. The reporting period and lodgment period applied. Castra was required to give the CEO of AUSTRAC the AML/CTF compliance report within the lodgment period. No exemption applied. Castra failed to lodge the report within time.

52    It is clear that the admitted contravention arose from the conduct of Castra’s senior management. Castra has demonstrated cooperation and engaged in remediation, notwithstanding my conclusion that it chose not to pay the infringement notice by the due date.

53    I have already referred to the absence of evidence going directly to remorse or a subjective understanding of the seriousness of the contravention. Although Mr Smith was not cross-examined, it is apparent from his submission that only a nominal $1 penalty should be imposed (and the manner in which his submissions were advanced) that he regards the breach as technical, and sees AUSTRAC’s pursuit of a pecuniary penalty as regulatory overreach.

54    Certainly, the material one commonly sees in civil penalty cases evidencing recognition of the seriousness of the contravention, and detailed evidence on oath as to why that recognition has led to a resolve that contraventions not occur in the future, has not been adduced.

55    I have no doubt that Mr Smith’s willingness belatedly to raise monies to pay the infringement notice involved a recognition that something had to be done to resolve the regulatory proceeding, but it is difficult for me to accept, as Mr Smith submitted, that this demonstrated remorse as that concept is usually understood.

56    Having found these facts, it is appropriate to now consider penalties.

E    THE RELEVANT PRINCIPLES CONCERNING PECUNIARY PENALTIES

57    The legal principles concerning pecuniary penalties are well established following the decision of Pattinson and do not require significant exposition. I summarised them in some detail in Australian Securities and Investments Commission v GetSwift Ltd (Penalty Hearing) [2023] FCA 100; (2023) 167 ACSR 178 (at [34]–[48]) and Chief Executive Officer of the Australian Transaction Reports and Analysis Centre v Crown Melbourne Ltd [2023] FCA 782; (2023) 168 ACSR 421 (at [89]–[101]).

58    The primary (if not sole) purpose of a civil penalty is to promote the public interest in compliance by deterrence of further contraventions: Pattinson (at 457 [9] per Kiefel CJ, Gageler, Keane, Gordon, Steward and Gleeson JJ). Deterrence includes both specific deterrence, directed to the contravener, and general deterrence, directed to others who may be minded to contravene.

59    Section 175(4) of the Act provides that the maximum pecuniary penalty per contravention is 100,000 penalty units for a body corporate. At the relevant time, 100,000 penalty units equated to a maximum penalty of $31.3 million (see s 4AA of the Crimes Act 1914 (Cth)). That maximum penalty, while important, is “but one yardstick that ordinarily must be applied” and must be treated “as one of a number of relevant factors”: see Pattinson (at 472 [53]) quoting Australian Competition and Consumer Commission v Reckitt Benckiser (Australia) Pty Ltd [2016] FCAFC 181; (2016) 340 ALR 25 (at 63 [155]–[156]).

60    Section 175(3) of the Act identifies mandatory matters to which the Court must have regard in determining the pecuniary penalty. I deal with them in the next section. Those matters overlap with, and are supplemented by, the familiar “French factors” as explained by French J in Trade Practices Commission v CSR Limited [1990] FCA 762; (1991) ATPR 41-076 (at 152–53 [52]).

F    FACTORS RELEVANT TO PENALTY

F.1    The nature and extent of the contravening conduct

61    It is common ground that Castra committed one contravention of s 47(2) of the Act on 2 April 2024, and that the contravention was of limited scope. The contravention was not deliberate in the sense of being an intentional breach of the Act or the Rules; rather, it resulted from issues with Castra’s internal recordkeeping systems and oversight: SAFA (at [34]–[35]).

62    Since 2011, the AUSTRAC online “portal” has been designed to limit access and visibility of AML/CTF compliance reports to persons with “administrator access”, given the importance of the information required under the report. Mr Rockemer did not have such access and therefore could not see whether the report had been lodged. Mr Smith did not check the portal or lodge the AML/CTF compliance report: SAFA (at [34]).

63    I accept AUSTRAC’s submission that, while inadvertent, the contravention arose from a failure on Mr Smith’s part to understand Castra’s reporting obligations and the way in which AUSTRAC’s online portal functioned. The delegation to Mr Rockemer in those circumstances was, at the very least, imprudent.

F.2    The nature and extent of any loss or damage suffered

64    In broad terms, I accept that the objects of the Act are undermined when reporting entities fail to comply with their obligations, even if that failure is inadvertent. Such non-compliance undermines AUSTRAC’s ability optimally to facilitate the purposes and objects of the Act.

65    There is no suggestion that any substantial loss or any identifiable and substantial damage flowed from the contravention. Nor is there any allegation that Castra engaged in underlying money laundering or terrorism financing conduct, or any other breach of the Act: SAFA (at [27]).

F.3    The circumstances in which the contravention took place

66    The agreed facts and the additional findings set out above explained in considerable detail the circumstances in which the contravention took place. The contravention arose from senior management conduct. Castra delegated responsibility to Mr Rockemer, but ultimate responsibility lay with Castra itself and with Mr Smith, its sole director, secretary and AML/CTF Compliance Officer: SAFA (at [33]).

67    The contravention is properly characterised as serious, but that does not detract from the fact that it was not engaged in for the purpose of procuring any specific financial benefit, did not result in any direct loss, and was the result of inadvertence.

F.4    Other factors

68    While I have had regard to the matters in s 175(3)(d)–(g), I am satisfied that they do not assume significance in this case. Both parties accept that Castra has not previously been found by the Court in proceedings under the Act to have engaged in similar conduct: SAFA (at [28]). There is no other previous finding of similar conduct which bears upon the assessment of penalty.

G    CONSIDERATION of castra’s submissions

G.1    Whether AUSTRAC’s proposed penalty is disproportionate

69    Mr Smith submitted that the proposed pecuniary penalty is disproportionate because it is more than four and a half times the amount of the infringement notice.

70    This submission somewhat misunderstands the enforcement regime provided for in Pt 15 of the Act. The issue of an infringement notice pursuant to Div 3 of the Act operates as one of a series of remedial responses that can take place if there is a reasonable belief that a contravention has occurred. The infringement notice could be issued in these circumstances given s 47(2) of the Act is a “designated infringement notice provision”.

71    I accept that the discretion to issue an infringement notice was exercised on behalf of AUSTRAC (that follows from the use of “may” in s 184(1) of the Act (see also s 33(2A) of the Acts Interpretation Act 1901 (Cth)).

72    To that extent, the infringement notice was a considered regulatory response. But the fact that AUSTRAC initially proceeded by way of infringement notice is, in and of itself, of limited relevance in now fixing penalty, particularly where the notice was not paid and Castra’s liability for the contravention was not discharged.

G.2    Whether non-payment of the infringement notice is an aggravating factor

73    Mr Smith submitted that non-payment of the infringement notice is not an aggravating factor. This submission also involves a degree of misapprehension. Very recently in Forrest v Commonwealth Director of Public Prosecutions [2026] FCAFC 69, albeit in a different context, I referred (at [36]) to the distinction between using post-offence conduct to assess the offender and using it to assess the offence. The orthodox approach is that post-offence conduct may bear upon the assessment of remorse and the weight to be given to a plea. It may also be relevant to whether later pleas, viewed in their surrounding context, evince contrition or remorse to the extent for which a person relying on contrition and remorse contends. It is not to be used to characterise the nature of the offending conduct or to increase its objective seriousness.

74    Obviously enough, criminal law analogies only go so far. But AUSTRAC relies on non-payment of the infringement notice to provide context to Castra’s present assertions as to cooperation and contrition, in circumstances where I have found that the failure to pay the infringement notice was a conscious decision. That use of the evidence in this way is legitimate.

75    As I have already found, the cooperation of Castra arose in a meaningful way only after AUSTRAC carried through with commencing regulatory proceedings. This point need not be repeated, and the facts speak for themselves. It is enough to say that prior non-payment of the infringement notice does not aggravate the original contravention, but the circumstances of non-payment are of relevance to assessing the weight to be given to the evidence of cooperation and contrition (and to the extent of the need for specific deterrence).

G.3    Whether marathon’s financial position is irrelevant

76    This matter was the subject of extensive debate before me, but in my view, the legal position is clear. As Hill J recently stated in Australian Competition and Consumer Commission v Emma Sleep GmbH (Penalty) [2026] FCA 493 (at [140]–[141]):

The bare fact that a contravener has a parent company is not relevant to an assessment of penalty: see Australian Competition & Consumer Commission v Fila Sport Oceania Pty Ltd (Administrators Appointed) [2004] FCA 376 at [36] (Heerey J). However, the size of a parent company may be of relevance when the parent bears some responsibility for the subsidiary’s conduct, or where it is relevant to the subsidiary’s capacity to meet a pecuniary penalty: Schneider Electric (Australia) Pty Ltd v Australian Competition and Consumer Commission [2003] FCAFC 2; (2003) 127 FCR 170 at [49] (Merkel J, with Black CJ agreeing and Sackville J agreeing on this point); Australian Securities and Investments Commission v Ultiqa Lifestyle Promotions Ltd (In Liq) (No 2) [2022] FCA 1228 at [45](2)-(3) (Downes J); Samsung Electronics at [66].

If a contravener is part of a much larger, internally coordinated and wealthy corporate group, it is appropriate to take account of this corporate structure in assessing deterrence: Australian Securities and Investments Commission v Westpac Banking Corporation (Omnibus) [2022] FCA 515; (2022) 407 ALR 1 at [128] (Beach J); Chief Executive Officer of the Australian Transaction Reports and Analysis Centre v Crown Melbourne Limited [2023] FCA 782; (2023) 168 ACSR 421 at [199] (Lee J); Australian Securities and Investments Commission v HCF Life Insurance Company Pty Limited (Penalty) [2025] FCA 454 at [94] (Jackman J).

77    Mr Smith placed particular emphasis on Schneider Electric (Australia) Pty Ltd v Australian Competition and Consumer Commission [2003] FCAFC 2; (2003) 127 FCR 170. It is useful to observe that Schneider was a case with little relationship to the present circumstances. The contravener was a subsidiary of a large international public company, the parent was not involved in the contraventions, and Schneider did not put in issue its capacity to pay any penalty that might be imposed. In Schneider (at [49] per Merkel J, with Black CJ agreeing and Sackville J agreeing on this point) it was stated:

deterrence is one of the primary objects of a pecuniary penalty under s 76 of the TPA. In that context, the size of the contravening corporation is relevant because… that object would not be achieved where a small penalty is imposed on a large corporation. While Schneider did not challenge the potential relevance of its size, it challenged the primary judge's reliance on it being a subsidiary of a large international public company, contending that his Honour erred in stating that the size of the parent cannot be ignored when assessing the penalty that should be imposed on the subsidiary.

78    The above illustrates the caution needed when extrapolating from observations in other cases, which go to the circumstances of that case, as rules of universal application. Ultimately, unlike in Schneider, Castra squarely put in issue its capacity to pay any substantial penalty. It is therefore necessary to assess whether the submission that the contravener has no practical ability to pay a penalty should be examined by reference to the whole of the evidence, not merely the affidavit evidence of Mr Smith.

79    Mr Smith asks me to accept two related (but logically and temporally distinct) propositions. First, that Castra had insufficient ability to raise funds to pay the infringement notice when first issued; and secondly, that Castra has insufficient access to funds to pay any substantial pecuniary penalty.

80    Like any other facts, those propositions require the Court to feel an actual persuasion of their existence on the whole of the evidence. A party bearing the onus will not succeed unless the whole of the evidence establishes a reasonable satisfaction on the preponderance of probabilities sufficient to sustain the relevant issue: Axon v Axon [1937] HCA 80; (1937) 59 CLR 395 (at 403 per Dixon J). In this way, the facts proved must form a reasonable basis for a definite conclusion affirmatively drawn of the truth of which the tribunal of fact may reasonably be satisfied: Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298 (at 305 per Dixon CJ).

81    I have already rejected the notion that the infringement penalty could not have been paid within time, and I am far from persuaded that Castra has established that it now lacks access to funds to pay any substantial pecuniary penalty. I also reject the broader contention that Marathon’s financial position is not relevant within the meaning of ss 55 and 56 of the Evidence Act 1995 (Cth). The evidence concerning Marathon which I have summarised, including as to the nature of the Group, its overall financial position and the common involvement of Mr Smith and others, directly bears upon the ability of Castra to pay a penalty. To proceed otherwise would be both naïve and artificial.

82    To be clear, I do not treat Marathon as liable for Castra’s contravention. Marathon did not own Castra at the time of the contravention and bears no responsibility for it. The relevance of the Marathon evidence is confined: it bears on the factual assessment of Castra’s asserted incapacity to pay and upon deterrence in light of Castra’s present position within a larger, internally coordinated corporate group.

83    There is a further consideration in this regard, and that is one which has even further relevance following the decision of the High Court in Pattinson.

84    In Australian Competition & Consumer Commission v High Adventure Pty Ltd [2005] FCAFC 247; (2006) ATPR 42-091, the Full Court dealt with an appeal based on the contention that the penalty was manifestly inadequate. One of the reasons for imposing what the Full Court regarded as a “very low” penalty was the primary judge’s view “that imposing an appropriate penalty would ruin the respondents”: High Adventure (at [10] per Heerey, Finkelstein and Allsop JJ). This led to the conclusion that “it [was] the desire of the [Commission] to ruin the respondents financially”: High Adventure (at [9], quoting the primary judge).

85    Apart from the fact that these conclusions were not justified by reference to the evidence, a further observation was made by the Full Court in the following terms (at [11] per Heerey, Finkelstein and Allsop JJ):

by focusing on the detriment to the respondents the judge ignored both the seriousness of the contravention as well as the need to fix upon an appropriate penalty by reference to the need to deter future contraventions. As the cases to which the judge was referred show, the principal, if not the sole, purpose for the imposition of penalties for a contravention of the antitrust provisions in Part IV is deterrence, both specific and general. This rule is so well entrenched that citation of authority is unnecessary. Moreover, as deterrence (especially general deterrence) is the primary purpose lying behind the penalty regime, there inevitably will be cases where the penalty that must be imposed will be higher, perhaps even considerably higher, than the penalty that would otherwise be imposed on a particular offender if one were to have regard only to the circumstances of that offender. In some cases the penalty may be so high that the offender will become insolvent. That possibility must not prevent the Court from doing its duty for otherwise the important object of general deterrence will be undermined.

86    Ultimately, in some cases, the penalty required by general deterrence may be higher than would be imposed if regard were had only to the circumstances of the particular contravener. In the present case, even if I had misgivings about the ability of a pecuniary penalty to be paid, including over time, that would not alter the conclusion I have reached as to the quantum of penalty. No lesser penalty that I propose to impose is sufficient to give proper effect to the need for general deterrence.

G.4    Whether the “moderating factors” in Pattinson directly apply to the circumstances

87    On this issue, Mr Smith is on firmer ground. Although I consider there is a real need for specific deterrence given the apparent lack of insight into the seriousness of the contravention, there is no dispute that the circumstances giving rise to the contravention arose in a particular context.

88    As I have already explained, Castra has since complied with its obligations under s 47(2) of the Act and has submitted AML/CTF compliance reports for the subsequent reporting periods: SAFA (at [39]). Despite a manifest lack of contrition, I think there is, in the circumstances, an unlikelihood that similar contravening conduct will be engaged in. That is an important matter going to specific deterrence and reduces the risk of future contraventions, which, as the High Court explained in Pattinson, informs the quantum of any pecuniary penalty.

89    However, that conclusion does not wholly eliminate the need for specific deterrence, nor does it answer the need for general deterrence. The contravention remains serious, and the reporting obligation should not be treated as merely technical.

H    THE FIXING OF PENALTY

90    Importantly, I accept that the contravention was not deliberate in the sense of an intentional breach of the Act and that it arose from a combination of circumstances which are unlikely to be repeated. I do not accept, however, that it amounted to a “technical system limitation” for which AUSTRAC was responsible.

91    Castra contacted AUSTRAC to seek guidance, offered to lodge the outstanding compliance report, and has since secured ongoing compliance. As I have already noted, those matters, together with the reduced risk of further contraventions, affect the need for specific deterrence. However, the need for specific deterrence is not eliminated given the conclusions I have reached as to the lack of insight into the seriousness of the contravention and the lack of real remorse.

92    There is a real need for general deterrence in matters of this type. As I mentioned previously, the maximum pecuniary penalty at the time of the contravention of $31.3 million is a “yardstick”. It is not of decisive practical importance in this case, but it indicates that Parliament regarded contravention of the relevant norm as serious and the statutory maximum also reflects the importance of compliance in the protection of the financial system generally.

93    It is in this context that the decision not to pay the infringement notice assumes significance. It is unnecessary to repeat the findings already made. The short point is that the only concrete step taken evincing an intention to pay the amount of the notice came when AUSTRAC followed through with its foreshadowed course of commencing proceedings.

94    To impose a penalty which is merely nominal, or which only reflects the amount in the infringement notice, would substantially undermine general deterrence in the circumstances of this case. Reporting entities should not be encouraged to ignore infringement notices and wait for AUSTRAC to devote resources to the commencement of proceedings in the expectation that, if proceedings are commenced, the contravening conduct will attract only a nominal penalty.

95    Fixing a pecuniary penalty requires identifying all factors relevant to the contravention and the circumstances of the contravener. Those factors must then be weighed. The court must ultimately make an evaluative judgment as to the appropriate penalty, having regard to its deterrent purpose.

96    Particularly given the unlikelihood of future contraventions and the mitigating matters to which I have referred, I do not accept that the penalty proposed by AUSTRAC is necessary to achieve the purposes of deterrence. But the penalty must be set at a level which operates as a real disincentive for other reporting entities to adopt the approach that characterised Castra’s conduct.

97    In all the circumstances, I consider the imposition of a pecuniary penalty in the amount of $50,000 to be appropriate. Stepping back and having regard to the whole of the circumstances, that is the appropriate penalty to achieve the purposes of the relief.

I    COSTS AND FORM OF ORDER

98    Castra submits that costs should not be ordered. It relies on two matters. First, it submits that no costs affidavit has been provided and seeks the provision of an affidavit detailing the costs to which it can respond. Secondly, it submits that no order for costs should be made because, after the commencement of proceedings, Castra made a written offer to pay the full amount initially sought by AUSTRAC on the basis that each party pay its own costs.

99    I do not accept the second contention. If Castra wished to resolve the controversy by payment of the amount in the infringement notice, it could have paid that amount during the currency of the infringement notice, sought an extension, or offered to pay it in some other way. The offer made after commencement of the proceeding does not justify depriving AUSTRAC of its costs.

100    I am satisfied that costs should be fixed in the amount of $15,000.

101    In AUSTRAC’s proposed orders, it sought payment of the pecuniary penalty within 30 days. For reasons I explained in Transport Workers’ Union of Australia v Qantas Airways Ltd [2025] FCA 971; (2025) 343 IR 59 (at [322]–[323]), I do not consider that orders in that form should be made. Upon an order for payment under this civil penalty regime, the pecuniary penalty has effect as a “civil debt payable to the Commonwealth”: see s 175(1) of the Act. The Commonwealth may enforce the civil penalty order as if the order were made to recover a debt due and is “taken to be a judgment debt”. As with the analogous provisions considered in Qantas, the appropriate course is to identify the amount of the penalty taken to be a judgment debt. The debt will either be discharged by payment, or it will not. If not, it can be enforced as a judgment, including by approaching the Court for the formal entry of judgment. The judgment will then accrue interest in accordance with the usual provisions of the Federal Court of Australia Act 1976 (Cth).

102    Mr Smith foreshadowed that if a nominal penalty was not imposed, Castra would seek payment by instalments at a rate of $500 per month. The financial position relating to the ability of the contravening entity to pay is sufficiently opaque that I do not propose to deal with any such instalment application at this time. If Castra wishes to pursue an application to pay any amount by instalments, whether merged in a judgment or otherwise, that application should be based on proper evidence and with complete transparency as to assets, liabilities and access to potential financing.

103    For these reasons, the declaration of contravention will be made, and the orders will be that: (a) Castra pay to the Commonwealth a pecuniary penalty of $50,000 pursuant to s 175(1); (b) Castra pay costs in the amount of $15,000; and (c) in the event the pecuniary penalty is not paid, AUSTRAC has leave to relist the proceeding for the entry of judgment.

104    I will make orders accordingly.

Associate:

Dated: 10 June 2026

ANNEXURE A

B.    Parties and Background

B.1    AUSTRAC

5.    The AUSTRAC CEO is appointed pursuant to s 211 of the Act. He is charged with enforcing compliance with the Act and subordinate legislation, including the Anti-Money Laundering and Counter-Terrorism Financing Rules Instrument 2007 (No 1) (the Rules), and has brought this proceeding in that capacity.

B.2    Castra

6.    Castra is a company incorporated in Australia and a person within the meaning of section 5 of the Act. It is, and was at all material times, a reporting entity within the meaning of section 5 of the Act and a provider of designated services to customers within the meaning of section 6 of the Act, as outlined below (see paragraphs 14 to 19).

C.    Relevant obligations under the Act

7.    By operation of sub-section 47(1) of the Act and rules 11.2 and 11.3 of the Rules:

(a)    the period from 1 January 2023 to 31 December 2023 was a reporting period (Reporting Period); and

(b)    because 31 March 2024 was a Sunday, the period from 1 January 2024 to 1 April 2024 was the lodgment period for the Reporting Period (Lodgment Period).

8.    In the period from 1 January 2023 to 2 April 2024 (Relevant Period), section 5 of the Act provided that a person was a ‘reporting entity’ if they provided a ‘designated service’ within the meaning of section 6 of the Act.

9.    Throughout the Relevant Period, sub-section 47(2) of the Act required a reporting entity, within the Lodgment Period for the Reporting Period to give the AUSTRAC CEO a report relating to the reporting entity’s compliance with the Act, the regulations and the Rules during the Reporting Period (AML/CTF Compliance Report).

10.    Throughout the Relevant Period, a reporting entity was not required to give the AUSTRAC CEO an AML/CTF Compliance Report if sub-sections 47(5), 47(6), or 247(4) of the Act and rule 11.4 of the Rules applied to it.

11.    At all relevant times, Part 3A of the Act provided for the enrolment of persons who provided designated services and the maintenance of a register containing details of that enrolment as follows:

(a)    section 51C of the Act required the AUSTRAC CEO to maintain a role for the purposes of Part 3A of the Act, known as the reporting entities roll (Reporting Entities Roll);

(b)    section 51B of the Act required a person who commenced providing designated services, whose name was not entered on the Reporting Entities Roll, to apply under sub-section 51E(1) of the Act for enrolment as a reporting entity no later than 28 days after the day on which the person commenced providing the designated service;

(c)    sub-section 51E(1) of the Act provided that a person may apply in writing to the AUSTRAC CEO for enrolment as a reporting entity;

(d)    section 51D of the Act provided that if a person applied for enrolment under subsection 51E(1) of the Act and the person was not already entered on the Reporting Entities Roll, the AUSTRAC CEO was required to enter the person’s name and enrolment details on the Reporting Entities Roll; and

(e)    section 51F of the Act required a reporting entity to advise the AUSTRAC CEO of any changes to its enrolment details:

(i)    within 14 days of the change arising;

(ii)     in accordance with the approved form, or in a manner specified in the Rules.

12.    Rule 64.2 of the Rules specified that for the purposes of sub-section 51F(1) of the Act, a reporting entity was required to notify the AUSTRAC CEO of, among others, changes to the following enrolment details:

(a)    Chapter 63, Schedule, Part A, Item 4(a): a description of whether the person provides a designated service at or through a permanent establishment in Australia;

(b)    Chapter 63, Schedule, Part A, Item 8: the address of the registered office of the person;

(c)    Chapter 63, Schedule, Part A, Item 9: the full street address of the person’s principal place of business at which the person provides or proposes to provide a designated service, not being a branch of that person.

13.    Section 51F of the Act therefore required Castra to notify the AUSTRAC CEO if any of the above matters had changed.

D.    Castra’s contravention of section 47 of the Act

D.1    Relevant obligations under the Act

14.    On 10 July 2014, Castra (then known as Menninger Advisory Pty Ltd) applied for enrolment on the Reporting Entities Roll in accordance with sub-sections 51B(1) and 51E(1) of the Act by submitting an AUSTRAC Business Profile Form (ABPF) which declared that it had begun providing designated services on 10 July 2014.

15.     Castra’s ABPF declared that it was providing designated services in relation to financial instruments, namely, dealing in securities, derivatives or foreign exchange contracts and issuing or selling securities or derivatives. These designated services correspond to the following designated services under the Act:

(a)    Table 1, item 33: in the capacity of an agent of a person disposing of a security where the acquisition or disposal is in the course of carrying on a business of acquiring or disposing of securities in the capacity of agent; and

(b)    Table 1, item 35: issuing a security to a person where the issue is in the course of carrying on a business of issuing or selling securities or derivatives, the issue does not consist of the issue by a company of a security of the company or an option to acquire a security of the company, the issue does not consist of the issue by a government body of a security of the government body or of an option to acquire a security of the government body and the issue is not an exempt financial market operator issue.

16.    On 10 July 2014, in accordance with section 51D of the Act the AUSTRAC CEO entered Castra’s name and enrolment details on the Reporting Entities Roll.

17.    At no point from 10 July 2014 to date has Castra notified the AUSTRAC CEO in accordance with the requirements of section 51F of the Act that it has ceased providing designated services.

18.    At no point during the Reporting Period was Castra a member of a designated business group.

19.    The above designated services provided by Castra were not:

(a)    covered by item 54 of Table 1 in section 6 of the Act; or

(b)    only of the kind set out in items 31 and 32 of Table 1 in section 6 of the Act and provided by Castra as a registered remittance affiliate.

20.    As a result of the matters referred to at paragraphs 14 to 19 above, Castra admits that on 2 April 2024 (being the day after the last day of the Lodgment Period) it contravened sub-section 47(2) of the Act by failing to give an AML/CTF Compliance Report to the AUSTRAC CEO during the Lodgment Period (Contravention).

D.2    Infringement Notice

21.    On 16 September 2024, an AUSTRAC authorised officer issued Castra with an infringement notice for the Contravention (Infringement Notice) by sending a copy of the Infringement Notice to Castra’s registered address. The Infringement Notice required payment of $18,780 by no later than 21 October 2024 (Statutory Timeframe).

22.    Castra did not pay the Infringement Notice within the Statutory Timeframe and the Infringement Notice has not been withdrawn.

23.    As a result of the matters referred to at paragraphs 21 and 22 above, Castra’s liability for the Contravention has not been discharged.

E.    Facts relevant to relief

24.    Castra committed one contravention of sub-section 47(2) of the Act on 2 April 2024 (being the day after the last day of the Lodgment Period).

E.1    Loss or damage suffered

25.    AML/CTF Compliance Reports are a critical component of the financial intelligence relied on by AUSTRAC and partner agencies in identifying and disrupting serious crime. AML/CTF Compliance Reports support AUSTRAC’s ability to monitor reporting entities’ compliance with the Act and Rules and to identify risks which may warrant regulatory intervention.

26.    Failure to lodge AML/CTF Compliance Reports within the Lodgment Period hinders AUSTRAC’s ability to execute its statutory functions. More specifically, it hinders AUSTRAC’s ability to:

(a)    engage directly with reporting entities where responses in the compliance report raise a concern in relation to their compliance with specific obligations;

(b)    engage directly with reporting entities where responses in the compliance report raise concerns regarding a reporting entity’s understanding of their obligations;

(c)    assess thematic areas of concern or risk within like industry cohorts;

(d)    determine if there are outlier responses within industry groups and sub-groups that may give rise to a compliance concern;

(e)    provide advice and feedback to industry in relation to compliance behaviour;

(f)    act as a point of reference and validation against other disclosure and reporting information that AUSTRAC receives such as through voluntary means, transaction reporting or information received from partner regulators; and

(g)    assess whether there are any money laundering or terrorism financing risks arising from reported conduct.

27.    These proceedings do not make any allegations that Castra engaged in any underlying money laundering or terrorism financing conduct, nor any other breaches of the Act, other than the alleged Contravention.

E.2    Prior contraventions

28.    Castra has not previously been found by the Federal Court in proceedings under this Act to have engaged in any similar conduct.

E.3    Castra’s size and financial position

29.    Throughout the Relevant Period, Castra was incorporated in Australia.

30.    From 23 April 2014 to 31 December 2024, Castra was a wholly owned subsidiary of Castra Group Pty Ltd (ACN 160 992 450) (Castra Group).

31.    Since 1 January 2025 to present, Castra has been a wholly owned subsidiary of Marathon Consolidated Ltd (ACN 601 539 324) (Marathon). Marathon is a consolidated entity comprising a group of subsidiary companies (Group), one of which is Castra. Castra provides wholesale financial services to the Group, which operates under an internal management structure. The Group’s financial statements consolidate those of Marathon and its subsidiaries, including Castra.

32.    The table below sets out relevant financial results of Castra during the period from Financial Year (FY) 2023, FY2024 and FY2025.

E.4    Board and senior management involvement

33.    The Contravention arose from the conduct of Castra’s senior management. Castra delegated responsibility for giving the AUSTRAC CEO the AML/CTF Compliance Report to Mr Christopher Rockemer. However, Castra accepts that the ultimate responsibility to provide the AML/CTF Compliance Report lay with Castra itself and its sole director and secretary, Mr Matthew Smith. Mr Smith was at all relevant times the AML/CTF Compliance Officer.

34.    AUSTRAC was advised that the failure to lodge the AML/CTF Compliance Report was not a result of a deliberate intention to contravene the Act or the Rules. Rather, it was the result of issues with Castra’s internal recordkeeping systems and oversight. Since at least 2011 the AUSTRAC online portal has been deliberately designed to limit access and visibility of AML/CTF Compliance Reports to persons with “administrator access”, given the importance of the information required under the report. Mr Rockemer did not have “administrator access” and was therefore unable to see if Castra’s AML/CTF Compliance Report had been lodged and Mr Smith himself failed to check the AUSTRAC online portal or lodge the AML/CTF Compliance Report.

E.5    Cooperation with AUSTRAC, contrition and remediation

35.    Castra has engaged constructively with AUSTRAC in relation to responding to the allegations raised in its Concise Statement. In particular, Castra has:

(a)    continued to work cooperatively with AUSTRAC on matters relating to AUSTRAC’s ongoing supervisory role and in the conduct of the proceeding; and

(b)    following the commencement of the proceeding:

(i)    communicated with AUSTRAC in relation to multiple without prejudice meetings and participated in such meetings;

(ii)    sought to resolve the matter and sought AUSTRAC’s view on the appropriate amount of a civil penalty; and

(iii)    admitted to the Contravention at an early stage.

36.    On 30 September 2024, Mr Rockemer emailed AUSTRAC to:

(a)    obtain guidance on how to seek withdrawal of the Infringement Notice;

(b)    explain that AUSTRAC’s reminder emails had been caught in Castra’s anti-virus software;

(c)    explain that AUSTRAC’s system only allows the primary account holder to submit the AML/CTF Compliance Report and as such any other subsequent accessor cannot see the prompt to lodge the AML/CTF Compliance Report;

(d)    sought remediation of the issue by seeking how to submit the AML/CTF Compliance Report;

(e)    provided assurance that Castra’s failure to submit the AML/CTF Compliance Report during the Relevant Period would not re-occur; and

(f)    advise that rectification of the anti-virus software issues had been completed.

37.    On 1 October 2024, Ruth Hawkins of AUSTRAC responded to Mr Rockemer’s email of 30 September 2024 advising:

(a)    AUSTRAC had received Castra’s request for withdrawal of the Infringement Notice;

(b)    AUSTRAC was considering Castra’s request for withdrawal;

(c)    the Infringement Notice remained in force and payment was still due on 21 October 2024;

(d)    if Castra chose not to pay the penalty amount by the due date, AUSTRAC may commence civil penalty proceedings in the Federal Court of Australia seeking a pecuniary penalty of up to $31,300,000 and other orders for the alleged breach;

(e)    AUSTRAC was considering Castra’s request and would provide it with a response by 21 October 2024;

(f)    in the event the Infringement Notice is withdrawn after payment, AUSTRAC would provide a refund of the full amount in accordance with s187(4)(b) of the Act.

38.    On 10 October 2024, Peter Soros, a delegate of the AUSTRAC CEO and an authorised officer pursuant to s 145 of the Act, wrote to Castra advising:

(a)    he had determined not to withdraw the Infringement Notice;

(b)    a reporting entity is required by section 51F of the Act to inform AUSTRAC of any changes of enrolment details, including contact details and authorised contacts for the reporting entity, within 14 days of the change taking place and it appeared that Castra did not do so;

(c)    he would not withdraw the Infringement Notice because Castra failed to comply with its other AML/CTF Act obligations;

(d)    the Infringement Notice remained in force and payment was due by 21 October 2024; and

(e)    if the amount was not paid by 21 October 2024, AUSTRAC may take further enforcement action against Castra pursuant to section 189(b) of the Act.

39.    Since the Relevant Period, Castra has complied with its obligations under sub-section 47(2) of the Act. Castra has submitted an AML/CTF Compliance Report for the subsequent reporting period from 1 January 2024 to 31 December 2024 and the reporting period from 1 January 2025 to 31 December 2025.

…

(Footnotes omitted).