The Australian Transaction Reports and Analysis Centre (AUSTRAC) and the Attorney-General’s Department have released a discussion paper Consideration of possible enhancements to the requirements for customer due diligence (here).  The discussion paper is designed to consider the proposed enhancement for customer due diligence requirements under the Anti-Money Laundering and Counter Terrorism Financing Act (Cth) 2006 (AML/CTF).

The proposals follow amendments by the Financial Action Task Force of international standards on AML/CTF obligations in relation to customer due diligence procedures.

The discussion paper considers whether Australia could benefit from adopting the international standard and seeks comment from industry on current practices and costs associated with additional compliance.  The potential reforms considered in the discussion paper include:

  1. Beneficial owners.  An explicit requirement to identify the beneficial ownership and control structure of customers.  Currentlythere is no obligation to understand a customer’s ‘control structure’or to collect information that binds a legal person or legal structure.The paper proposes to clarify the    term ‘beneficial owner’.
  2. Acting on behalf of another person. The current AML/CTF regimedoes not impose a requirement to determine whether a customeris acting on behalf of another person or entity.  The proposalsidentify situations where reporting entities should take steps toidentify beneficiaries and the destination of a specific transaction,including where a customer acts as an agent for another party.
  3. Enhanced Customer Due Diligence of Politically ExposedPersons.  Currently there is no obligation to conduct enhanced customer due diligence on those customers identified as PEP’s.The proposals aim to clarify the appropriate risk-based controlsand specific measures that should be implemented where acustomer has been identified as a PEP.
  4. Purpose of the business relationship.  The paper discusses thepossible introduction of a general obligation to ensure that entitiesunderstand the nature of a customer’s business or occupation. 

Submissions to AUSTRAC close on 30 September 2013.