AUSTRAC has announced proposed changes to the annual reporting regime for reporting entities.

Recap: who is a reporting entity?

Reporting entities are subject to the AML/CTF Act.  Reporting entities include people who provide financial accommodation in the course of carrying on a business (designated services).  Some of the most common designated services include making a loan in the course of carrying on a business of making loans, and opening an account as an ADI account provider.

Reporting entities must be enrolled on the reporting entities roll, maintained by AUSTRAC.

What is changing?

Prior to the change, all reporting entities regardless of size must lodge a standard annual compliance report by 31 March each year (in respect of the previous calendar year).  The compliance report asks questions about the compliance of the reporting entity in respect of AML/CTF in the previous year.

AUSTRAC have released a consultation paper which proposes to increase annual reporting requirements for larger reporting entities, and reduce these for smaller reporting entities.  The consultation paper recognises the regulatory burden of the current annual reporting regime on reporting entities.

Broadly, the proposals for consultation are as follows.

  1. Large reporting entities must lodge both an Annual Return (AR) and an Enhanced Compliance Report (ECR).  Large reporting entities are entities to which any of the following applies.
    1. As at 1 July in the relevant compliance year, having annual earningsof $100 million or more, or being part of a corporate group thathas annual earnings of$100 million or more.
    2. Having, or being part of a corporate group that has provided, 25million or more transaction reports, or provided transaction reportswith a value of $5 billion or more, in the previous calendar year.Transaction reports are required when reporting entities makeinternational funds transfers or pays or receives more than $10,000in cash.
  2. Reporting entities falling outside of 1 must lodge an ECR only. The ECR is similar in structure and format to the existing compliance report.
  3. If the entity has four or less employees and is not a large reporting entity by virtue of its transactions (see above) the entity will not have to lodge an AR or ECR.

Comments may be made on the paper until 31 October 2014.