Over the past year or so, a number of amendments and additions have been made to the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (“the Act”) and to the Anti-Money Laundering and Counter-Terrorism Financing Rules Instrument 2007 (No. 1) (“the Rules”).
The commencement of the US Foreign Account Tax Compliance Act (“FATCA”) will also require significant changes to your account opening procedures if you will be a participating Financial Institution.
In light of this, now might be a good time to review your Anti-Money Laundering (AML) Program and to consider what changes will be required to comply with FATCA.
Are you recorded on the Reporting Entities Roll?
From June 2011, all providers of designated services under the Act have been required to write to AUSTRAC for the purpose of being recorded on AUSTRAC’s “Reporting Entities Roll”. Registration with AUSTRAC should be made within 28 days of providing a designated service. Details of the roll’s content and of the obligation to register are contained in the Act and through the Rules. Once registered, there are ongoing obligations to update AUSTRAC of changed details. Failure to be properly registered and comply with notification requirements has civil penalties attached.
In addition, for the purpose of AUSTRAC’s supervisory cost recovery levy, earnings details need to be provided to AUSTRAC on an annual basis where the earnings exceed certain thresholds (the thresholds will depend on whether the entity is a foreign entity or part of a group).
Are you involved in the Remittance Sector?
A tiered approach has now been taken regarding remittance services. The Act and Rules distinguish between:
- remittance network providers;
- affiliates of remittance network providers; and
- independent remittance dealers.
Registration obligations apply to remittance providers depending on the relevant activity. Independent remittance dealers must have registered with AUSTRAC by 30 April 2012, while remittance network providers have until 31 October 2012 to do so. The provision of registrable remittance network services is a new designated service and arises when a non-financier operates a network of persons by providing a platform or operating system (however described) where persons in the network provide designated remittance arrangements by means of the platform or operating system. Providers of such a remittance network service will be regulated under the Act and must ensure that compliance arrangements are in place to satisfy the obligations of being a designated services provider.
Significant expansions have been made to Part 6 of the Act, which deals with the Remittance Sector Register (previously called the Register of Providers of Designated Remittance Services). This Part now provides for the inclusion of registrable remittance network services. Significant additions have also been made to the Rules, including in relation to the registration of remittance sector businesses with AUSTRAC as well as to the reporting of suspicious matters to AUSTRAC in relation to transactions on registered remittance networks.
Are you using the best methods to verify your customers’ identities?
Division 5A of Part 2 of the Act now allows for verification of a customer’s identity by using a credit reporting agency, providing that certain requirements concerning disclosure and consent are met. These amendments provide an express ability to refer to information from a credit reporting agency to verify the identity of a customer, which is helpful. However, you need to be careful that the disclosure and consent provisions are satisfied before doing so.
Are you aware of the additional reporting obligations?
Part A of AML/CTF programs must now include the reporting obligations that apply to the relevant reporting entity in relation to suspicious matters, threshold transactions, international funds transfer instructions and compliance reports, as well as any appropriate systems and controls to ensure compliance with their reporting obligations (under Parts 8.9 and 9.9).
Additionally, the Rules concerning threshold transactions have been amended to expand the reporting requirements required in relation to threshold transactions.
Are you aware of increased requirements for Ongoing Customer Due Diligence?
Chapter 15 has been amended to proscribe, rather than merely recommend, what must be done in relation toenhanced due diligence actions. Additionally, enhanced due diligence must be undertaken where a party to a transaction is present or incorporated in a prescribed foreign country.
Are you going to assign, convey, transfer sell or restructure all or part of your business?
The Rules dealing with customer identification on sale or transfer of a business have been amended. For example, Chapter 28 has been amended to exclude transfer of business under the Financial Service (Business Transfer and Group Restructure) Act 1999 (Cth). Transfers under this Act are regulated under the new Chapter 66.
How will you change your account opening processes to deal with FATCA?
If you will be a Participating Foreign Financial Institution under FATCA, you will be required to identify whether the holder of a “financial account” is a US person or substantially owned by a US person (this may also require you to obtain documentation as to the person’s status). These obligations commence on the effective date of your FFI Agreement (which is likely to be 1 January 2013). You should be reviewing your account opening procedures now to deliver what changes will need to be made in order to comply with these obligations.