The Australian Government has released a draft guidance document to assist non-profit organisations (NPOs’) protect themselves from the risk of terrorism financing.

This guidance document is intended to:

• build awareness of the risk of being misused for the purpose of terrorism financing
• outline Best Practice Principles which NPOs can undertake to reduce this risk; and
• assist NPOs to understand and comply with legal requirements in relation to terrorism financing.

Comments can be made until 27 March 2009.

Austrac has given guidance to superannuation fund trustees who may not be able to comply with section 32 of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (the identification requirement) when making payment as a result of Victorian bushfires or north Queensland floods

AUSTRAC has indicated it will adopt a supervisory approach whereby it will not commence enforcement action against a trustee of a superannuation fund for breaching section 32 of the AML/CTF Act where the trustee provides an item 43 designated service by making a payment to a member who was adversely affected as a direct result of the Victorian bushfires or Queensland floods in the following circumstances:

a) the Australian Prudential Regulation Authority has determined an amount of preserved benefits or restricted non-preserved benefits is to be released on compassionate grounds pursuant to regulation 6.19A of the SIS Regulations

b) the trustee of the superannuation fund approves the early release of superannuation benefits pursuant to regulation 6.01(5) of the SIS Regulations.

Austrac has issued new forms and reporting guidance in the following areas:

• International funds transfer instructions
• Suspicious matters
• Threshold transactions
  

Lloyds TSB Bank has announced that it has reached a settlement for US$350 million with both the United States Department of Justice and the New York County District Attorney’s Office in relation to financial transfers that violated US sanctions.

The US Justice Department said Lloyds TSB had acknowledged “criminal conduct” and agreed to forfeit the funds in return for an end to its investigation.

Prosecutors said the bank faked records so clients in Iran, Libya and Sudan could do business with US institutions. (BBC News)

Lloyds TSB disclosed in its interim results for the first half of 2008 that it was in discussions regarding a resolution of the investigation and that it had provided £180 million in respect of this matter

The Office of Foreign Assets Control (OFAC) has confirmed to Lloyds TSB that the amount paid to the United States Department of Justice and the New York County District Attorney’s Office will be credited towards satisfying any penalty it imposes.

Entities which provided designated services between 1 January 2008 and 31 December 2008 must submit compliance reports to AUSTRAC between 1 January 2009 and 31 March 2009.

Whilst it is AUSTRAC policy that AML/CTF compliance reports be submitted electronically via AUSTRAC Online, AUSTRAC has released a sample form.

The 2008 report covers Parts A and B of AML/CTF programs, ongoing customer due diligence and reporting obligations, correspondent banking relationships (if applicable) and electronic funds transfer instructions. There are slightly fewer questions overall than in the 2007 report and AUSTRAC has revised some questions to take into account concerns raised by reporting entities about the wording of some questions in the 2007 report.

AUSTRAC has produced an instruction guide to assist reporting entities with completing the 2008 report.

Austrac has amended previously issued draft Rules and reissued them for a further period of consultation until 30 January 2009:

Draft AML/CTF Rules setting special circumstances for the applicable customer
identification procedure

These draft AML/CTF Rules provide that in specified circumstances a reporting entity may carry out the applicable customer identification procedure after commencing to provide certain designated services to a customer.

Draft AML/CTF Rules amending Chapter 1 of the Anti-Money Laundering and Counter-Terrorism Financing Rules Instrument 2007 (No. 1)

These draft AML/CTF Rules insert a definition of ‘accredited translator’ into Chapter 1 (Key terms and concepts) of the Anti-Money Laundering and
Counter-Terrorism Financing Rules Instrument 2007 (No. 1).

Draft AML/CTF Rules relating to applicable customer identification procedures
in certain circumstances – assignment, conveyance, sale or transfer of businesses

These draft AML/CTF Rules relate to customer identification procedures in certain circumstances relating to reporting entities involved in the assignment, conveyance, sale or transfer of businesses.

Draft AML/CTF Rules relating to premium funding loans for a general insurance policy

These draft AML/CTF Rules relate to insurance premium funding for general insurance, which involves a loan to a customer to buy insurance from an insurer, where the lender and the insurer are not the same entity. Reporting entities that provide insurance premium funding for general insurance are exempt from performing the applicable customer identification procedure under section 32 of the AML/CTF Act as a result of these Rules, unless the loan is cashed out or redeemed before the expiration of the term of the loan.

The AUSTRAC Typologies and Case Studies Report 2008 gives examples of money laundering typologies, methodologies and risk indicators.

The investigations highlighted within the report were initiated or supported by the financial transaction reports submitted to AUSTRAC by Australian entities.

The report includes 42 Australian case studies such as: money laundering executed via online betting; students who laundered money in order to receive tax concessions; the use of a money remitter in an attempted people-smuggling operation; the uncovering of a Russian bride scam; and the use of grandchildren's bank accounts in a money laundering and large-scale cocaine importation operation.

New obligations under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 took effect on 12 December 2008.

Here’s the Act consolidated to 12 December 2008.

Austrac Public Legal Interpretation No 8 deals with:

• the obligation to report cross-border movements of physical currency within the meaning of Part 4, Division 2 of the AML/CTF Act;
• the obligation to report cross-border movements of bearer negotiable instruments within the meaning of Part 4, Division 3 of the AML/CTF Act;
•  questioning and search powers in relation to cross-border movements of physical currency and bearer negotiable instruments under Part 15, Division 8 of the AML/CTF Act.

The PLI also confirms the cessation of the obligation to report under section 15 of the FTR Act.

AUSTRAC has developed a new risk assessment approach, the Compliance Risk Exposure Scoring Tool (CREST), to assist the agency in its risk-based supervision of regulated entities. CREST allows AUSTRAC to concentrate its supervisory resources on entities at most risk of money laundering or terrorism financing (ML/TF).

The ratings are grouped into four risk priorities: high, medium, low and minimum.

CREST risk ratings are internal to AUSTRAC. In certain cases involving on-site visits to entities, AUSTRAC may choose to disclose the entity’s CREST ratings on a confidential basis and on strict condition that the entity does not further disclose the rating.