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December 17, 2013

Review of AML/CTF Act

The Government has announced a review of Australia’s anti-money laundering and counter-terrorism financing (AML/CTF) laws: Terms of reference and Issues Paper.

The AML/CTF Act, Rules and Regulations together cover more than 13,800 businesses, including domestic and foreign owned banks, money transfer businesses (known as remittance dealers) and casinos.

Two topics related to the AML/CTF regime are not covered in this review: potential enhancements to the existing customer due diligence measures and the AUSTRAC supervisory levy are the subject of separate reviews.

The review will consider issues such as whether designated non-financial businesses and professions (such as lawyers, accountants, real estate agents, trust and company service providers and high value dealers) and the services they provide should be regulated under the regime.

It will also consider changes in technology such as the development of online identity verification systems.

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Posted 17th December 2013 by David Jacobson in Anti-money laundering, Financial Services

December 12, 2013

Indicators of potential money laundering/terrorism financing activity

AUSTRAC's 2013 typologies report includes 23 real-life case studies showing how legitimate services offered by Australian businesses have been exploited for criminal purposes, including for drug trafficking, child exploitation, fraud and tax evasion.

The list below features some of the major indicators to identify potential money laundering or terrorism financing activity which appear within the case studies of the report:
• A group of individuals undertaking large structured foreign exchange transactions on multiple occasions
• A large number of individuals conducting domestic electronic transfers and direct deposits to linked company bank accounts
• Account activity inconsistent with customer profile
• Customer receives international funds transfers declared as loans from a foreign lender
• Customer undertakes consistent high-volume gaming chip ‘cash outs’ which are claimed to be winnings, an activity that appears unlikely given the comparatively low amounts of funds withdrawn by the customer for gaming purposes
• High-value cash deposits to pay for international funds transfers
• High-volume account activity involving significant amounts of cash funds
• High volume of cheques cashed
• International funds transfers to a high-risk jurisdiction
• Large cash deposits into an online betting account
• Multiple customers conducting international funds transfers to the same overseas beneficiary
• Multiple customers conducting international funds transfers under the guidance or instruction of another individual (i.e. use of ‘third parties’)
• Outgoing funds transfers sent to overseas entities matched by incoming funds transfers, in similar amounts, from different entities located in the same countries
• Opening and use of business accounts to transfer funds to Australian and offshore casinos
• Regular or multiple cash deposits below the AUD10,000 reporting threshold (i.e. structured cash deposits)
• Sudden increase in purchase of properties inconsistent with customer’s established transaction/wealth profile
• Third-party cash deposits made at branches distant from the branch at which the account is held
• Third-party cash deposits made by unidentifiable persons or by evasive customers with incomplete identification
• Use of multiple large cash payments for mortgage payments.

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Posted 12th December 2013 by David Jacobson in Anti-money laundering, Financial Services

October 14, 2013

Use of concession cards as identification

AUSTRAC has issued a draft AML/CTF Rule amending the definition of "primary non-photographic identification document" by replacing the term "pension card" with the new term "concession card".

The amendment removes any doubt over whether health care cards are within the scope of the definition, as the Social Security Act 1991 defines concession cards as:
(a) a pensioner concession card; or
(b) a health care card; or
(c) a seniors health card.

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Posted 14th October 2013 by David Jacobson in Anti-money laundering, Financial Services

August 21, 2013

ATMs in non-casino gaming machine premises

From 1 February 2014 a $250 a day ATM withdrawal limit applies for gaming venues (other than casinos): section 14 of the National Gambling Reform Act.

Section 39 imposes the $250 limit which is indexed.

It is the responsibility of ATM owners to comply.


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Posted 21st August 2013 by David Jacobson in Anti-money laundering, Financial Services

May 21, 2013

AML/CTF customer due diligence review

The Attorney-General's Department has released a consultation paper seeking views on possible enhancements to Australia's anti-money laundering and counter-terrorism financing (AML/CTF) customer due diligence (CDD) regime.

The AML/CTF Act and Rules set a minimum baseline for reporting entities to know their customers and beneficial owners.

Potential reforms discussed in the paper include:
• amend the AML/CTF Rules to explicitly require reporting entities to identify and take reasonable steps to verify the identity of beneficial owners for all categories of customer that are legal persons or legal arrangements, and clarify that the term ‘beneficial owner’ means the natural person(s) (individual(s)) who ultimately owns or controls a customer.
• where a customer is acting on behalf of a person amend the AML/CTF Rules to explicitly require a reporting entity to take appropriate steps to determine whether the customer is conducting a transaction on behalf of another person or third party, and accordingly identify the beneficiaries and the destination of the transaction.
• amend the AML/CTF Rules to explicitly require a reporting entity to identify and verify the settlor of a trust.
• amend the AML/CTF Rules to define the meaning of “politically exposed person”, require reporting entities to introduce appropriate risk-based controls to identify whether their customer (and beneficial owners) may be a foreign, domestic or international organisation PEP, include provision for the conduct of explicit enhanced CDD measures where the customer is a PEP, and prescribe specific measures to be taken to perform a range of enhanced CDD measures for high-risk situations.
• amend the AML/CTF Rules to include an explicit requirement that Part A of a reporting entity’s AML/CTF program must include appropriate risk-based systems and controls to ensure that the reporting entity has a reasonable understanding of the nature of the customer’s business or occupation.
• introduce a general obligation for reporting entities to keep CDD information up to date and relevant, and that risk-based systems be used to determine what CDD information should updated or verified and at what intervals.

Currently reporting entities must have in place AML/CTF programs to identify, mitigate and manage risks that a designated service it provides may involve or facilitate money laundering or terrorism financing. Before providing a service, reporting entities are required to have appropriate CDD programs in place to:
• enable them to ‘know their customers’ (KYC)
• perform ongoing customer due diligence
• monitor transactions, and
• report suspicious matters to AUSTRAC.

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Posted 21st May 2013 by David Jacobson in Anti-money laundering

March 15, 2013

AML/CTF and privacy

Businesses that are reporting entities under the AML/CTF Act are authorised by section 35A of the Act to disclose personal information of individuals for identity verification purposes.

If your business is considered to be a reporting entity for the purposes of the AML/CTF Act, it will have obligations under the Privacy Act including the requirement to comply with the National Privacy Principles, even if it is otherwise exempt from the Privacy Act.

For example, businesses with a turnover of $3 million or less are usually exempt from the Privacy Act.

But all small businesses that are reporting agencies for AML purposes are covered by the Privacy Act regardless of their annual turnover.

If your business falls into this category, the Privacy Act will only apply to personal information collected and disclosed handled for AML/CTF purposes, such as identity verification.

What do you need to do?

  • You should only collect the minimum amount that is necessary to meet 'Know Your Customer' obligations.
  • NPP 1 requires businesses to take reasonable steps to tell individuals why they are collecting their personal information, including whether it is required by a law, as well as how they will handle it.
  • In addition, organisations are required by NPP 5 to make available a privacy policy that provides anyone with general information on how personal information might be handled by that organisation.
  • There may be times however when it might not be appropriate to inform a customer that you have collected personal information, particularly in regard to suspicious transactions. Businesses need to consider the prohibitions in the AML/CTF Act against 'tipping off' customers concerning suspicious matters information.
  • Personal information collected for AML purposes must be kept secure.
  • NPP 4 also requires that organisations take reasonable steps to destroy or permanently de-identify personal information when it is no longer required.
  • Reporting entities also need to take reasonable steps to ensure that personal information is accurate and up-to-date.
  • AML information should not be used for by reporting entities for other purposes (eg marketing).

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Posted 15th March 2013 by David Jacobson in Anti-money laundering, Privacy

November 21, 2012

Austrac AML/CTF introductory training

Austrac offers some free basic but helpful e-learning courses on its website.

If you are new to this area or want to refresh your knowledge these courses are a good place to start.

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Posted 21st November 2012 by David Jacobson in Anti-money laundering

November 2, 2012

Gambling reforms and ATM limits

The National Gambling Reform Bill 2012 and associated Bills have been introduced into the House of Representatives.

The Bills require:
• new machines manufactured or imported from end of 2013 be capable
of supporting precommitment;
• all gaming machines are part of a state-wide precommitment system,
and display electronic warnings, by 2016, with longer implementation
timelines for small venues; and
• a $250 a day ATM withdrawal limit for gaming venues (other than

The ATM withdrawal limit will apply on and after 1 May 2013 in relation to any automatic teller machine that is on any gaming machine premises, except casinos.

The Anti-Money Laundering Amendment (Gaming Machine Venues) Bill 2012 has been introduced in response to concerns from AUSTRAC about money laundering through gambling.

The bill aims to address these practices through requiring that payouts over $1,000 are made by cheque and are ‘threshold transactions’ under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 . The bill also requires that any cheques for winnings that are transferred into another name are also threshold transactions.

The Joint Select Committee on Gambling Reform has a new inquiry into the Bill.

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Posted 2nd November 2012 by David Jacobson in Anti-money laundering, Consumer Law, Financial Services

September 28, 2012

Austrac and Departing Australia Superannuation Payment

Austrac has published draft amendments to Chapter 41 of the AML/CTF Rules relating to the cashing out of low balance superannuation accounts for consultation.

The draft amendments extend the relief in the chapter to include the Departing Australia Superannuation Payment (DASP). Under DASP, temporary residents who leave Australia are entitled to cash out their superannuation benefits once they leave Australia. The draft amendments exempt reporting entities from undertaking customer identification on such persons, subject to certain conditions including:

  • the value of the interest is not greater than $5,000; and
  • no additional contributions are accepted from the member in relation to the member’s interest in the superannuation fund, ADF or RSA; and
  • the whole of the interest of the member in the superannuation fund, ADF or RSA is cashed out; and
  • the account in which the interest of the member was held, is closed as soon as practicable after the cashing out of that interest.

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Posted 28th September 2012 by David Jacobson in Anti-money laundering, Superannuation

September 12, 2012

Austrac Remittance Sector Register

Under the AML/CTF Act, it is an offence to provide designated remittance services if an individual or business is not registered with AUSTRAC.

Registrations are issued for a set period and businesses must reapply for registration every three years.

The Remittance Sector Register is currently available as a PDF document and can be downloaded here.

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Posted 12th September 2012 by David Jacobson in Anti-money laundering
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