In April 2016, the Attorney-General’s Department released its Report on the Statutory Review of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 and Associated Rules and Regulations (Report). This review, which commenced in December 2013, was conducted under section 251 of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) (AML/CTF Act).
The Report set out 84 recommendations in total, aimed at strengthening Australia’s AML/CTF regime and implementing a more efficient and effective regulatory framework.
In response to this, the Australian Transaction Reports and Analysis Centre (AUSTRAC) released a set of proposed amendments to the Anti-Money Laundering and Counter-Terrorism Financing Rules Instrument 2007 (No.1) (Cth) (AML/CTF Rules) on 24 April 2017. AUSTRAC anticipates that these amendments will provide regulatory benefits to industry.
The proposed amendments affect Chapters 1, 4, 8, 9, 15, 30 and 36 of the AML/CTF Rules. They do not involve any amendments to the AML/CTF Act itself.
Chapter 1: Definitions
It is proposed that:
- the definitions of ‘original primary photographic identification document’, ‘original primary non-photographic identification document’ and ‘original secondary identification document’ be amended to make those definitions inclusive, rather than exhaustive;
- the definition of ‘primary photographic identification document’ be amended to include national identity cards issued by foreign countries that include unique identifiers rather than signatures. This might include, for example, biometric identifiers; and
- the definition of ‘certified copy’ include documents certified by foreign equivalents of the persons specified in the definition.
Chapter 4: Customer Due Diligence
While the Report recommended that the safe harbour and simplified verification procedures in the AML/CTF Rules be rationalised into a single simplified customer due diligence procedure, this matter remains under consideration. However, it has been proposed that:
- the exemptions from the requirement to collect and verify information about beneficial owners in Rule 4.12.2 be expanded to apply to subsidiaries of foreign listed public companies; and
- new Part 4.15 be inserted to provide for alternative identification procedures, including self-attestation, for customers that a reporting entity is unable to identify using the usual customer identification procedure. These might include homeless persons, people living in remote areas, and people affected by natural disasters. Such procedures would only be able to be used in circumstances of low money laundering or terrorism financing risk (ML/TF risk).
Chapters 8 and 9: Standard and Joint AML/CTF Programs
It is proposed that these Chapters be amended to:
- require a reporting entity to identify, mitigate and manage ML/TF risk for new designated services, delivery methods and technologies, and changes in the nature of the business relationship, control structure or beneficial ownership of its customers;
- set out in detail the function and duties of the AML/CTF Compliance Officer. The responsibilities of the AML/CTF Compliance Officer detailed in the draft are reasonably extensive;
- require a reporting entity to be able to demonstrate the independence of any reviewer of PartA of its AML/CTF Program. For example, the reviewer must not have designed, implemented or managed the AML/CTF Program being reviewed, and must be able to make enquiries of any officer, employee, representative or agent of the reporting entity; and
- require a reporting entity to include in Part A of its AML/CTF Program procedures for it to incorporate information from AUSTRAC or other authorities (whether provided directly to the reporting entity or publicly available) on high ML/TF risks into its ML/TF risk assessment. This change imposes a substantial burden on reporting entities to continually monitor regulator guidance and incorporate it into its practices.
Chapter 15: Ongoing Customer Due Diligence
AUSTRAC proposes to amend this Chapter to require a reporting entity to apply its enhanced customer due diligence program where the reporting entity provides an item 39 designated service (that is, making a payment under a life policy) to a domestic or international organisation politically exposed person, and a high ML/TF risk has been identified.
The current requirement that a disclosure certificate be signed or otherwise authenticated by certain officers of the customer would be replaced with a provision allowing a reporting entity to accept a disclosure certificate certified by an appropriate officer of the customer, such as a director, company secretary, treasurer or AML/CTF Compliance Officer of the customer.
It is proposed that a reporting entity and a customer will be characterised as related, such that the AML/CTF Act will not apply to a designated service provided, when the reporting entity and the customer are in a partnership (other than a limited partnership) together.
Industry has until 22 May 2017 to make submissions on the draft amendments to the AML/CTF Rules.