Anti-Money Laundering & Counter Terrorism Financing
New AML/CTF Rules
AUSTRAC has implemented the Anti-Money Laundering and Counter-Terrorism Financing Rules Amendment Instrument 2014 (No. 3), which sets new rules with respect to customer due diligence. The changes come into effect from 1 June 2014, include new obligations for reporting entities to:
- identify and verify beneficial owners of their customers;
- collect and verify the name of settlors of trusts that are customers;
- undertake enhanced requirements in relation to politically exposed persons;
- consider beneficial owners, politically exposed persons, the source of funds or wealth and the nature and purpose of the business relationship and control structures when identifying money laundering and terrorism financing risks associated with its customers; and
- undertake reasonable measures to update documents, data or information collected in relation to customer due diligence and identification of beneficial owners.
The changes apply to reporting entities as defined by the Anti-Money Laundering and Counter-Terrorism Financing Act 2006, which in the context of financial planning generally concern the AFS Licensee. There has been no change to the overall special AML/CTF program for reporting entities that provide Item 54 designated services, but the some of the obligations under that program have changed.
AUSTRAC’s supervisory approach
AUSTRAC is undertaking a supervisory approach to the new rules, and has released a draft policy document to explain its approach. According to this approach, AUSTRAC will not commence civil penalty procedures for failure to comply with the additional requirements in the ‘Assisted Compliance Period’ between 1 June 2014 and 1 January 2016. However, this exemption only applies under these specified circumstances:
- in respect of any person who becomes a customer between 1 June 2014 and 1 January 2016 who is assessed by the reporting entity to be of high risk, complies with the new obligations as soon as practicable;
- establishes a transition plan before 1 September 2014 which includes actions and time frames to:
- comply, as soon as practicable, with the obligations with respect to high-risk customers, and;
- achieve full compliance with the new obligations prior to 1 January 2016;
- obtains approval for the transition plan from the Board or similar governing body (the Board), or where no Board exists, the Chief Executive Officer or equivalent (the CEO). In the case of a designated business group, this approval must be obtained from the Board or CEO of each entity in the designated business group;
- sufficiently resources the implementation of the transition plan to enable the 1 January 2016 time frame to be met;
- regularly monitors and reports to the party which approved the transition plan (that is, either the Board or the CEO) on the implementation of the transition plan and, as necessary, takes appropriate action to ensure time frames do not unreasonably deviate from those set out in the approved plan;
- provides AUSTRAC with a copy of the transition plan and information on progress against that plan, upon request;
- complies, in respect of the whole or part of the entity’s provision of designated services, with the new obligations immediately if they reflect current practice or can be reasonably accommodated under existing systems.
FPA/FSC Anti Money Laundering updated Guidance Note and Customer ID Forms
The Financial Services Council (FSC) and the Financial Planning Association have released an updated Guidance Note assisting financial planners and product issuers to manage their customer identification obligations under Chapter 7 of the Anti-Money Laundering (AML) and Counter-Terrorism Financing Rules. Accompanying the Guidance Note are ten customer identification forms (for various customer types). These forms include fields to incorporate FATCA information from customers as required from 1 July 2014.
Access the forms and guidance note in the FPA Member Centre
(you will need your FPA Member ID).
We are always keen to hear your valuable feedback and suggestions. Please let us know if there are any policy issues or concerns that affect you.