Australian Regulatory Compliance Review

AML and securities

The Anti-Money Laundering and Counter-Terrorism Financing Rules Amendment Instrument 2008 (No. 2) (pdf) sets out exemptions for entities Issuing or selling a security or derivative provided one of the following conditions apply:

• the service is a disposal of a security or derivative through an agent who is doing so in the course of carrying on a business of disposing of securities or derivatives in the capacity of agent;
• the transaction occurs on a prescribed financial market (ie a stock exchange);
• it is an issue of an interest in a managed investment scheme (including an option to acquire an interest in a managed investment scheme) where the managed investment scheme is quoted on a prescribed financial market and it is under a distribution reinvestment plan or an initial public offering.

AML record-keeping rule

New anti-money laundering and counter-terrorism financing rules have been made to update the record keeping obligations of reporting entities.

The Anti-Money Laundering and Counter-Terrorism Financing Rules Amendment Instrument 2008 (No. 1) set out the conditions under which a reporting entity may rely on the record of an applicable customer identification procedure (ACIP) carried out by another reporting entity.

The Explanatory Statement explains that:

"These AML/CTF Rules allow the second reporting entity to rely on the record of the ACIP which has been carried out by the first reporting entity, provided that the second reporting entity has access to that record in accordance with an agreement which is in place between the two reporting entities for the management of records. However, the second reporting entity may only rely on this agreement if it has first assessed that it is appropriate to rely on the first reporting entity’s ACIP having regard to the money laundering/terrorism financing risk relevant to the designated service which the second reporting entity is providing. That is, if the first reporting entity’s risk is different to the second reporting entity’s, it may not be appropriate to rely on the first reporting entity’s ACIP."

Anti-money laundering software in action

This report from Canada's Globe and Mail recounts how the alleged relationship between Eliot Spitzer (the former governor of New York who resigned in disgrace last month) and a high-priced call girl was uncovered by Mr. Spitzer's bank.

It reported "abnormal activity. ... what tweaked the software in Mr. Spitzer's case was not money moving from point A to point B. In fact it was the former governor's efforts in trying to conceal the transactions that triggered the alert...In Mr. Spitzer's case, three cash transactions amounting to more than $10,000 within a relatively short time frame set off alarms.."

In Australia, "if (Austrac) analysts determine that a Suspect Transaction Report (SUSTR) may be of interest to one of AUSTRAC's partner agencies, the report may be referred to the agency for further enquiries. In addition, suspect reports are made available (with appropriate restrictions) to partner agency users via the AUSTRAC TES system."

Draft AML/CTF Rules relating to the definition of 'loan'

Austrac has released draft AML/CTF Rules (pdf) which carve out from the definition of 'loan' in paragraph (g) in section 5 of the AML/CTF Act, certain products such as money market instruments, government or corporate bonds, debenture stock, bonds and debt instruments that may also be considered as another type of designated service under that Act.

The purpose of these draft AML/CTF Rules is to remove the potential dual application of two types of designated services applying to a particular transaction. One such instance is where a product or service is a ‘loan’ designated service as well as a ‘security’ or a ‘deposit-taker’ designated service.

One of the consequences of the potential dual application of different types of designated services (in a particular transaction) is that parties to the transaction are treated as reporting entities at different sides of the transaction or at different times.

A public consultation period is open from 17 April 2008 to 8 May 2008.

Austrac issues replacement declaration on managed investment schemes

The Austrac declaration relating to managed investment schemes has been updated.

This declaration instrument deals with section 28 of the AML/CTF Act applying to certain managed investment schemes' customers before 31 January 2008.

The declaration instrument replaces the draft AML/CTF Rules which were recently published  for comment. This declaration simplifies the intent and effect of those draft AML/CTF Rules; that is, to modify the application of section 28 (pre-commencement customers) so that for designated services covered by the AML/CTF Regulations, pre-commencement customers are those to whom a reporting entity commenced to provide a service prior to 31 January 2008. AUSTRAC intends to make this declaration on 11 April 2008.

Draft AML/CTF Rule: issuing or selling a security or derivative

A revised draft rule relating to item 35 of table 1 in section 6 of the AML/CTF Act has been released for further comment. The consultation period is open from 3 April 2008 to 10 April 2008.

AML/CTF compliance reporting

The first compliance reports (for the period from 13 December 2006 to 31 December 2007) are due by Monday 31 March.

These reports are mandatory and will be important guidance for Austrac on the success of its education program and to identify compliance difficulties.

In his address to the Australian Bankers' Association Anti-Money Laundering Forum (text) (pdf) (slides) (pdf) on 14 March the Acting Austrac CEO discussed the issue of backcapture of customer identification:

Some entities have indicated that they were not fully compliant with the 'know your customer' (KYC) provisions as at 12 December 2007, but advise that they will be fully compliant at some future date prior to expiry of the 15-month period – i.e. prior to 12 March 2009.

So an important issue that has arisen in this context, is to clarify a reporting entity’s obligation, in respect of the capture of know your customer (KYC) information for new customers who are provided with a designated service after 12 December 2007, but before the reporting entity has reached full compliance.

Our response has been to remind reporting entities that the Minister’s Policy Principles do not alter the commencement dates that were within the AML/CTF Act itself. The Act sets down the legal requirements, which include that all new customers were to be identified in accordance with the AML/CTF Act provisions from 12 December 2007. To avoid the possibility of enforcement action – including civil penalty orders, a reporting entity must by 12 March 2009, at the very latest, have undertaken KYC procedures on all customers for which there is a legal requirement from 12 December 2007. This applies regardless of the date during the 15-month period at which the reporting entity reaches full compliance. This means that the reporting entity which is delayed in achieving compliance, will need to backdate its data capture for these new customers to cover the period from 12 December 2007 to the date that full compliance is achieved.

However, he  observed that:

AUSTRAC has advised reporting entities that are concerned with our approach to backcapture, that it is open for them to make confidential and case-by-case submissions on alternative approaches, that the entity may consider are practical and cognisant of their commercial circumstances, and which would be acceptable to AUSTRAC in terms of reasonable steps to meet compliance...

should an entity elect to continue customer identification that is based on systems and processes applicable prior to the AML/CTF Act coming into effect, then we would generally take the view that reasonable steps had been taken. Though the previous system for customer identification under the Financial Transaction Reports Act 1988 is limited to 'account-based customers', if these processes were also applied to customers seeking other designated services under the AML/CTF Act, then we would also generally take the view that in those circumstances, reasonable steps had been taken.

Complying businesses will already be looking ahead to 12 December 2008 when the final obligations covering ongoing customer due diligence and the new reporting requirements on suspicious matters, international funds transfer instructions and threshold transactions come into force.

Financial Action Task Force Report on Terrorist Financing

The Financial Action Task Force (FATF) is an inter-governmental body whose purpose is the development and promotion of national and international policies to combat money laundering and terrorist financing.

The FATF has released a study (pdf) examining the means used by terrorists to raise funds and the wide variety of methods used to move money within and between organisations. The adaptability and opportunism shown by terrorist organisations suggests that all the methods that exist to move money around the globe are to some extent at risk.

The study identifies four areas which could be the focus of efforts to further strengthen counter-terrorist financing efforts:
(1) action to address jurisdictional issues including safe havens and failed states,
(2) outreach to the private sector to ensure the availability of information to detect terrorist financing,
(3) building a better understanding across public and private sectors and
(4) enhanced financial intelligence to exploit the value of financial investigation as a tool in fighting terrorism.

UK review of risk-based approach to AML

The UK  Financial Services Authority (FSA) has published a review of UK firms' implemention of anti-money laundering risk management procedures (pdf).

The review is useful as it gives examples of both good practice and poor practice and compares the risk assessment of large, medium and small firms.

Austrac reporting reminder

All reporting entities under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act) must submit a compliance report to the Australian Transaction Reports and Analysis Centre (AUSTRAC) by 31 March 2008.

Austrac issues generic customer identification form

Austrac has issued a generic customer identification form (pdf) for reporting entities as an example of what they may choose to use under 'safe harbour' to identify and verify customers of designated services.

The procedure may only be used where the relationship with the individual is deemed by the reporting entity to present a medium or lower money laundering or terrorism financing risk.

Austrac issues draft AML managed investment rule

Austrac has issued draft AML/CTF Rules (pdf)to allow customers who acquired interests in a managed investment scheme between 12 December 2007 and 30 January 2008, to be treated as pre-commencement customers under the AML/CTF Act, so that the identification procedures requirements do not apply to them.

A public consultation period is open until 10 March 2008.

See here for background

Austrac publishes AML/CTF enforcement manual

Austrac has published a manual (pdf) outlining its policies on the use of its enforcement powers under the Financial Transaction Reports Act 1988 (FTR Act ) and the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act).

AUSTRAC has available to it various enforcement powers under both the FTR Act and the AML/CTF Act. Under the AML/CTF Act Austrac has power to:
• Pursue civil penalty orders (via the Federal Court);
• Seek injunctions to restrain conduct in breach of a civil penalty provision;
• Accept enforceable undertakings in relation to certain matters;
• Issue remedial directions in certain circumstances;
• Require external audits relating to risk management and compliance to be undertaken;
• Require a money laundering and terrorism financing risk assessment;
• Issue infringement notices for certain contraventions;
• Exercise various information-gathering powers; and
• Execute monitoring warrants.

AML checklist for small business

Austrac has produced an AML/CTF checklist for small business.

Although the AML/CTF Act does not differentiate between the size of regulated entities, Austrac may consider the issue when deciding whether reasonable steps to comply have been taken in the context of its Policy (Civil Penalty) Principles.

AML and managed investment schemes

Austrac has announced that it is anticipated that regulations will take effect from late January 2008, designed to ensure that companies who carry on a business of issuing or selling interests in managed investment schemes are providing a designated service under item 35 of table 1 in section 6 of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006. The regulations will commence immediately upon being registered.

UPDATE 30 January 2008: The Anti-Money Laundering and Counter-Terrorism Financing Regulations 2008  wre made on 25 January 2008.

AML/CTF draft rule: over-the-counter derivatives market

Austrac has issued draft AML/CTF Rules exempting certain types of transactions relating to the over-the-counter derivatives market (pdf).

These draft AML/CTF Rules relate to the exemption from the AML/CTF Act of transactions relevant to the over-the-counter derivatives market in Australia relating to the wholesale price of electricity, gas or renewable energy certificates.

A public consultation period is currently open from 16 January 2008 to 31 January 2008.

AML Rules update

Austrac makes AML/CTF Rules dealing with operational implementation of the AML/CTF Act.

The current rules are:

• Anti-Money Laundering and Counter-Terrorism Financing Rules 2006
  This Instrument contains AML/CTF Rules relating to the Register of Providers of Designated Remittance Services.
• Anti-Money Laundering and Counter-Terrorism Financing Rules Instrument 2007(No. 1)
  This Instrument contains the majority of the registered AML/CTF Rules. The current compilation comprises matters including AML/CTF compliance reports (reporting and lodgment periods), monetary thresholds for certain designated services in tables 1 and 3.
• Anti-Money Laundering and Counter-Terrorism Financing Rules Instrument 2007 (No. 2)
  This Instrument contains AML/CTF Rules relating to paragraph (e) of the definition of 'correspondent banking relationship' in section 5 of the AML/CTF Act.
• Anti-Money Laundering and Counter-Terrorism Financing Rules Amendment Instrument 2007 (No. 4)
  This Instrument amends Anti-Money Laundering and Counter-Terrorism Financing Rules Instrument 2007 (No. 1) and contains AML/CTF Rules relating to ongoing customer due diligence, international funds transfer instruction reportable details, suspicious matter reportable details.
• Anti-Money Laundering and Counter-Terrorism Financing Rules Amendment Instrument 2007 (No. 5)
  This Instrument amends Anti-Money Laundering and Counter-Terrorism Financing Rules Instrument 2007 (No. 1) and contains AML/CTF Rules for threshold transaction reportable details.

Draft AML/CTF Rules

• relating to customer identification procedures - takeovers,schemes of arrangement, business disposals and business assignments
• same-person and person-to-person electronic funds transfer instructions

Austrac AML draft rules and guidance notes release schedule

Austrac has announced that the following draft rules and guidance notes will be released for comment by January/February 2008:

1. Draft guidance note – suspicious matter reporting obligations
2. Draft guidance note – gambling sector
3. Draft guidance note – record-keeping obligations
4. Draft AML/CTF Rules – definition of ‘loans’ in section 5 of the AML/CTF Act
5. Draft AML/CTF Rules resulting from approved applications for exemptions from specified provisions of the AML/CTF Act or the Act

AML stage 2 starts: case studies and privacy issues

To coincide with AML stage 2 which starts on 12 December, Austrac has released its Typologies and Case Studies Report 2007 which identifies some key money-laundering methodologies and gives 51 case studies, highlighting:

• what crime or civil proceeding was involved
• the type of customer involved in perpetration of the offence
• the industry category through which transactional activity was conducted
• the specific method through which the offenders perpetrated transactional activity
• the location through which the transactional activity was facilitated
• the specific designated service
• the red flag activity contained within each case example.

The Privacy Commissioner, Karen Curtis, has reminded businesses to carefully consider their privacy obligations when collecting personal information for AML/CTF purposes.(More)

AUSTRAC AML/CTF Regulatory Guide

AUSTRAC has issued the AUSTRAC Regulatory Guide (the Guide) to provide non-binding advice to industry (primarily reporting entities and cash dealers) to help it understand and comply with the:

• Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act)
• Anti-Money Laundering and Counter-Terrorism Financing Rules (AML/CTF Rules).

The Guide also provides non-binding advice in relation to the:

• Financial Transaction Reports Act 1988 (FTR Act)
• Financial Transaction Reports Regulations 1990 (FTR Regulations)

AML customer information

The Attorney-General's Department has developed a public awareness campaign to inform the Australian community about why Australia has introduced new AML/CTF laws and how these laws may affect them.

The campaign materials and resources will assist businesses affected by the new laws to communicate AML/CTF changes to their customers.

The most likely area of customer reaction will be changed customer identification procedures.

AML update: education and training resources

From 12 December 2007, businesses which deliver services outlined under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (including financial services), need to have in place an anti-money laundering and counter-terrorism financing program.

To assist businesses, AUSTRAC has published an e-learning course and industry resources (including case studies for training purposes).

There are specific presentations for:

• Banking

• Financial Planners

• Gambling

• Mutual Societies

• Providers of Designated Remittance Services

• Superannuation

In addition to the new obligations, businesses are required to complete a Compliance Report.

The report covers the reporting period from 13 December 2006 to 31 December 2007 and must be submitted to AUSTRAC by 31 March 2008.

Austrac online

Austrac has released information on a new internet-based system called AUSTRAC Online.

AUSTRAC Online is designed to assist businesses with their regulatory and reporting obligations under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act) and the Financial Transaction Reports Act 1988 (FTR Act).

Features included in the initial release of AUSTRAC Online will:

• streamline (automate) the introduction of new businesses, known as 'reporting entities', to AUSTRAC
• provide businesses with a tailored AML/CTF compliance report based on their business type or industry sector and the designated services they provide
• allow providers of designated remittance services to register, update their registered details or request removal from the register
• provide links to e-learning and AML/CTF-related news.

This system will be available in December 2007.

Updated Anti-Money Laundering Rules

The Anti-Money Laundering and Counter-Terrorism Financing Rules Instrument 2007 (No. 1) have been updated.

The latest compilation of the AML/CTF Rules comprises 14 chapters.

They relate to a number of matters including:

• 'designated business group' definition
• correspondent banking
• customer identification
• AML/CTF programs
• gambling services
• AML/CTF compliance reports (reporting and lodgement periods)
• electronic funds transfer instructions (involving use of a credit card)
• 'approved third-party bill payment system' definition
• certain monetary thresholds relating to specified items in tables 1 and 3.

Links to draft rules still being consulted on can be found here.

Austrac releases 2006-07 Annual Report

Austrac has released its 2006-07 Annual Report (pdf).

The report considers Austrac's results in 5 main areas:

• Deterring money laundering, serious crime and tax evasion
• Targeting money laundering, serious crime and tax evasion
• Advice on the effectiveness of the FTR Act
• Contribution to international efforts directed at the suppression of money laundering,major crime and tax evasion
• Privacy and security

Anti-money laundering: suspicious matter reports

Austrac has released draft AML/CTF Rules relating to information required to be included in a suspicious matter report under subsection 41(3) of the AML/CTF Act.

A public consultation period is currently open from 29 October 2007 to 9 November 2007.

AML/CTF update podcast

I enjoyed getting the opportunity recently to give a presentation on anti-money laundering at the 2007 Ultradata Client Conference. It was a good audience and I learned a lot about Ultradata's software solutions to support anti-money laundering compliance programs.

In this month's podcast I give an overview of the anti-money laundering compliance obligations which start on 12 December 2007 and look at what's involved in the first compliance report which must be lodged with AUSTRAC by 31 March 2008.

I discuss the topic in 3 parts:

• how do you develop a cost-effective compliance program
• understanding the new rules
• maintaining compliance

It runs for 11 minutes, 40 seconds.

Here's a selection of my slides

| View | Upload your own

Austrac releases final form of compliance reports

The Australian Transaction Reports and Analysis Centre (AUSTRAC) has issued the final forms of the first compliance report which reporting entities must complete by 31 March 2008: there are 2 forms, one for financial services and one for gambling services.

Under subsection 47(2) of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act) reporting entities are required to periodically provide reports to the Australian Transaction Reports and Analysis Centre (AUSTRAC) regarding their compliance with the AML/CTF Act, regulations and AML/CTF Rules.

The report covers the period 13 December 2006 to 31 December 2007.

The compliance reports can be completed and submitted via AUSTRAC Online, an information portal which will be launched in December 2007.

Austrac issues guidance on designated business groups takeovers and mergers

Austrac has issued scenarios relating to designated business groups when customer identification procedures are deemed to have been carried out. The scenarios cover takeovers and mergers after 12 December 2007 and their effect on customers for AML identification purposes.

Reserve Bank updates international financial sanctions list

The Reserve Bank of Australia, following a directive from the Australian Government under the Banking (Foreign Exchange) Regulations 1959, currently administers financial sanctions against certain individuals associated with the former government of the Federal Republic of Yugoslavia and the Government of Zimbabwe.

The updated Financial Sanctions List (xl spreadsheet) now contains 82 names.

Any transactions involving the transfer of funds or payments to, by the order of, or on behalf of any person listed in the Annex are prohibited without prior approval from the Reserve Bank.

(via ozrisk)

UPDATE 13 December: The Reserve Bank has added Burma to the sanctions list (Media release)

Impact on small business privacy obligations of anti-money laundering laws

The Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act) amends the Privacy Act 1988 (the Privacy Act) so small businesses that will be reporting entities for the purposes of AML/CTF, will also be subject to the Privacy Act in regard to their obligations under the AML/CTF Act. This includes small businesses that may be exempt from obligations under the Privacy Act in terms of other business activities they undertake.

The Privacy Commissioner has issued a FAQ brochure (PDF) for affected small businesses and has suggested they consider applying the NPP obligations to all their business activities.

Employment screening

The Anti-Money Laundering and Counter-Terrorism Financing Act 2006 requires organisations affected by the Act to have an employee due diligence program for employees involved in the provision of designated services.

AS 4811—2006 Australian Standard Employment Screening may be a useful base for such a program.

The objective of the screening process is to reduce the risk of a potential security breach and to ensure the integrity, identity and credentials of personnel within an organization.

Employment screening, for the purpose of this Standard, is the process of verifying, with the consent of the individual, the identity, integrity and credentials of an entrusted person and should apply to any individual that is, or will be, entrusted with resources and/or assets.

Austrac anti-money laundering update

Austrac has released draft AML/CTF Compliance Reports for the financial services industry and gambling services for public comment. The first reports are due by 31 March 2008.

In the first information for the "public", Austrac has also issued information for travellers including reporting physical currency and reporting bearer negotiable instruments (BNIs).

Current guidance notes are listed here.

AML customer identification record-keeping requirements

Section 114 of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 deals with record-keeping requirements where customer identification procedures have been carried out by one reporting entity on behalf of another.

Under draft AML/CTF Rules issued by Austrac subsections 114(2), 114(3) and 114(5) of that Act do not apply to a designated service which is, or is to be, provided in circumstances described in paragraphs 114(1)(a), 114(1)(b) and 114(1)(c), if the second reporting entity has access to records of identification procedures made by the first reporting entity in accordance with subsection 112(2), under an agreement between the first reporting entity and the second reporting entity for the management of such records.

A public consultation period is currently open from 24 September 2007 to 8 October 2007.

Draft AML/CTF Rules for designated remittance arrangements

Austrac has released draft AML/CTF Rules for designated remittance arrangements.

These draft AML/CTF Rules describe conditions under paragraph 10(1)(c) of the AML/CTF Act relating to a designated remittance arrangement.

A public consultation period is currently open from 5 September 2007 to 18 September 2007.

New draft AML/CTF Rules

Austrac has released 2 new sets of draft rules for further consultation:

Draft ongoing customer due diligence rules

The previous draft has been revised taking into account comments received. A public consultation period for this revised draft is currently open from 24 August 2007 to 14 September 2007.

Draft Anti-Money Laundering and Counter-Terrorism Financing Rules for reportable details relating to threshold transaction reports

These draft AML/CTF Rules relate to information required to be included in a threshold transaction report under subsection 43(3) of the AML/CTF Act. A public consultation period is currently open from 24 August 2007 to 14 September 2007.

Expansion of AML/CTF Act: Tranche 2

The Attorney-General's Department has released draft provisions setting out expanded designated services which will be covered by the second tranche of the AML/CTF legislation.

Sectors which will be affected by the second tranche legislation are:

• real estate agents in relation to buying and selling of real estate
• dealers in precious metals and stones engaged in transactions above a designated threshold
• lawyers, notaries, other independent legal professionals and accountants when preparing for or carrying out certain transactions
• trust and company service providers when they prepare for or carry out for a client the transactions listed in the Glossary to the FATF Recommendations.

These service providers would be subject to the same obligations as the existing service providers eg customer identification and AML/CTF Compliance program.

The draft provisions are open for public comment by 7 September 2007.

AML/CTF Rules amended

On 28 June 2007 the Anti-Money Laundering and Counter-Terrorism Financing Rules Amendment Instrument 2007 (No. 1) was registered, adding an eleventh chapter setting out the reporting and lodgment periods for compliance reports.

The first reporting period begins on 13 December 2006 and ends on 31 December 2007. The report must be lodged within 3 months of the end of the reporting period.

AUSTRAC releases further AML definitions

Anti-Money Laundering And Counter-Terrorism Financing Rules Amendment Instrument 2007 (No. 2) provides definitions of 'approved third-party bill payment system' and identifies the transfer instructions under subparagraph 70(a)(i) of the AML/CTF Act to which the tracing information requirement applies.

AUSTRAC issues draft identification threshold rules

Table 1 of Section 6 of the AML/CTF Act lists the designated services regulated by the Act.

AUSTRAC has issued draft AML/CTF Rules relating to certain threshold amounts in respect of items 17, 25, 26 and 50 of table 1 in section 6.

It is proposed that, unless an entity's own procedures require otherwise,the identification procedures in Division 4 of Part 2 of the Act will not apply to certain cheques less than $5000, travellers cheques less than $1000 and certain currency exchanges of less than $1000.

A public consultation period is open until 26 July 2007.

AUSTRAC releases draft customer due diligence rules

AUSTRAC has released amended draft ongoing customer due diligence rules (pdf).

A public consultation period is open until 19 July 2007.

AML/CTF compliance reports rules

The Anti-Money Laundering and Counter-Terrorism Financing Rules Amendment Instrument 2007 (No. 1) were made on 22 June 2007 and registered on 28 June 2007.

They relate to AML/CTF compliance reports and specify the reporting and lodgment periods for such reports.

The first reports will be for the period beginning on 13 December 2006 and ending on 31 December 2007. The lodgment period is the period of 3 months beginning at the end of the reporting period.

AUSTRAC releases indicative AML compliance report questions for consultation

The AML/CTF Rules to be made under section 47(1) of the AML/CTF Act will specify the reporting period(s) and the lodgement period within which compliance reports are required to be submitted to AUSTRAC.

Subsection 47(3) requires reports to be in the approved form and to contain any such information as required by the form.

AUSTRAC has released indicative AML compliance report questions to provide reporting entities with information as to the types of questions that will be contained in the first AML/CTF compliance report under the AML/CTF Act, regulations and Rules, and to seek feedback. The questions are indicative of the types of questions AUSTRAC may ask, though AUSTRAC has said it does not envisage that there will be major changes to the following questions for the forthcoming AML/CTF compliance report.

The AML/CTF compliance report is based on key elements of the AML/CTF Act, regulations and the Rules. The report is structured with questions grouped under section headings as follows:

1. Introduction/information
2. Correspondent Banking
3. Electronic Funds Transfer Instructions
4. Anti-money laundering and counter-terrorism financing programs
    a. AML/CTF programs Part A
    b. AML/CTF risk awareness training program
    c. Employee due diligence
    d. Compliance
    e. Independent Review
    f. AML/CTF programs Part B - Customer Identification Procedures

Anti-money laundering FAQ's

AUSTRAC has released information about AML/CTF compliance reports for reporting entities.

The Attorney-General has released FAQ's about the AML/CTF Act for customers.

The Australian Government has announced a $12.7 million public awareness campaign to inform the community about why Australia has introduced new AML/CTF laws and what the Government will do to support business and the community in the period in which the new laws are being implemented.

Stage 2 Anti-Money Laundering Act commences

Stage 2 of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 commenced on 12 June 2007.

The Act  provides that it will commence in stages: Stage 2 which commences on 12 June 2007 relates to AML/CTF compliance reports (Part 3, Division 5), correspondent banking (Part 8) and records about  correspondent banking (Part 10, Division 6) of the AML/CTF Act.

Chapters 1 to 3 of the AML/CTF Rules give details of the obligations required for compliance.

Reminder: I will conduct a 2007 update of my AML webseminar tomorrow. More information

AUSTRAC issues further draft AML/CTF rules

AUSTRAC has issued 2 draft AML/CTF Rules for public comment:

• the first relates to the definition of 'approved third-party bill payment system' in section 5 of the AML/CTF Act.
• the second prescribes credit card electronic funds transfer instruction under subparagraph 70(a)(i) of the AML/CTF Act, to which tracing information applies.

2007 AML Update web seminar

2007 AML Update Web Seminar:Wednesday 13 June 2007
at 11am -12 noon Australian Eastern Time

Under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 reporting entities must lodge AML/CTF compliance reports and develop, maintain and comply with anti-money laundering and counter-terrorism financing programs.

In our 60 minute live web seminar on 13 June 2007 David Jacobson will discuss recent changes which require review of your implementation plan to comply with the new laws,integrating the new rules and policies in your existing compliance program and how AUSTRAC will monitor your compliance.

You will learn about:

• the 2007 amendments to the Act
• the AML/CTF Rules
• AUSTRAC's Penalty Policy
• How to assess your current preparations
• implementation tips
• AUSTRAC powers
• AML compliance reporting
• dealing with AML breaches

More information

AUSTRAC argues there are business benefits in AML compliance

I recently discussed whether there is value in compliance? Do you really need to present a business benefits case to implement a compliance program required by law?

It's been commonly accepted that AML is one compliance program where implementation is an obligation (ie satisfying regulatory requirements) and cost with little business opportunity.

But in recent presentations, AUSTRAC has argued that regulated entities can create value by managing ML/TF risk:

• Investing in ML/TF risk management creates value by addressing the following risks of damage or destabilisation to vital Australian financial assets:

1. Sovereign risk – compromising Australia’s international standing as a safe financial centre with a sound institutional infrastructure.
2. Horizon risk – favouring potentially transient short-term gains over the entity’s long-term best interests.
3. Reputational risk – damaging the commercial value of the brand name.

• Substantially upgraded ‘Know Your Customer’ and increased record retention obligations are costs –but are also more than just burdens. In organisations which do not yet have tools to present a single customer view (eg are account based rather than customer based) the cost of the new KYC programs will have spin off marketing and cross-selling benefits.

What other benefits are there in an AML program that might represent cost savings?

• Although AML and fraud detection use different techniques, there may be fraud detection benefits especially in connection with "politically exposed persons".
• The program may be the basis for a consistent approach to a range of problems group-wide.

In any case, AML, like any other compliance obligation, requires careful implementation project plannning. If other benefits can be identified, all the better.

AUSTRAC releases AML/CTF compliance implementation tools

As we approach the 12 June 2007 start date for AML/CTF compliance reporting obligations, AUSTRAC has produced a Self Assessment Questionnaire (SAQ) to assist the financial services sector, bullion dealers and gambling establishments meet their obligations under the incoming anti-money laundering and counter-terrorism financing system.

The SAQ is a Word document which can be used as a checklist for your implementation progress and also to identify issues to add to your compliance program. It is not a form which needs to be lodged with AUSTRAC but AUSTRAC may have access to it and any supporting documentation if it conducts an audit of your compliance program.

AUSTRAC has also released five policies outlining its approach to education, monitoring, exemptions, enforcement and supervisory capability under the AML/CTF Act to help industry understand its approach.

AML archives

AUSTRAC releases AML draft guidance note on register of remittance services

AUSTRAC has released a draft guidance note to provide information and assistance to those reporting entities required to register with AUSTRAC as providers of registrable designated remittance services.

The note provides guidance on which entities need to register.

The public consultation period closes on 31 May 2007.

AUSTRAC releases AML compliance reporting date rules

The Australian Transaction Reports and Analysis Centre (AUSTRAC) has released draft Rules (pdf) setting out the reporting period and lodgement period for the first compliance report required by providers of financial services, bullion and gambling services captured under new