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Client Update: Anti-money Laundering – 7 December 2007

Application of the AML/CTF Act to managed investment schemes

In brief: Partners Anna Lenahan (view CV) and Peter Jones and Senior Associate Judy Maguire look at the exemption of managed investment funds under the current anti-money laundering and counter-terrorism legislation. 

A representative of the Australian Transaction Reports and Analysis Centre (AUSTRAC) confirmed today that AUSTRAC's position in regard to the application of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) (the AML/CTF Act) to managed investment schemes is as follows:

The wording of paragraph (b) of item 35 in table 1 of section 6 of the AML/CTF Act gives rise to an unintended effect of exempting an issue of unit(s) in a managed investment scheme from the AML/CTF Act.

The Attorney-General's Department has advised that it is examining possible responses to this issue and will provide advice to the government on this matter as soon as practicable. At this stage, an issue of unit(s) in a managed investment scheme does not fall within the AML/CTF Act.

  

During the lengthy consultation that preceded the commencement of the AML/CTF Act, the policy intent to regulate the activities of managed investment schemes generally was made very clear. Since then AUSTRAC has indicated that it intends to exempt listed managed investment schemes from the AML/CTF Act. A draft rule to that effect is under consideration. Nevertheless, based on the above statement from AUSTRAC, the current position is that the issue of units in both listed and unlisted managed investment scheme is still exempt from the AML/CTF Act.

AAR will continue to monitor the treatment of both listed and unlisted managed investment schemes under the AML/CTF Act.

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