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Client Update: Anti-money Laundering – 8 December 2006

Anti-Money Laundering and Counter-Terrorism Financing Bill 2006 passed by Federal Parliament

In brief: Partners Peter Jones(view CV) and Anna Lenahan(view CV) and Senior Associate Judy Maguire report on the latest developments involving the Anti-Money Laundering and Counter-Terrorism Financing Bill 2006. 

The Anti-Money Laundering and Counter Financing Terrorism Bill (the Bill) was passed yesterday by the Senate and may receive Royal Assent as early as 1 January 2007.1

The Bill was passed without amendment. The Federal Government did not follow the Senate Committee's recommendation to delay the implementation date by three months. However, the Government has indicated that it will allow a 15-month 'prosecution free' period during which it will not take enforcement action against reporting entities that are not in compliance with the legislation (which is three months longer than the 12-month period previously indicated).

The Minister for Justice and Customs, Senator Chris Ellison, indicated in the course of the Senate debate that the Government accepted some of the recommendations of the Senate Committee.

The Minister also indicated a Technical Amendments Bill will be introduced in the next sitting to address outstanding technical issues. That amending legislation is not intended to address significant policy matters.

The process of finalising the AML/CTF Rules is continuing. The Minister said that all AML/CTF Rules required for those provisions which commence the day after Royal Assent will be available on that date. All other Rules necessary for those provisions that will come into effect 12 months after Royal Assent will be finalised by 31 March 2007.2

The Australian Transaction Reports and Analysis Centre (AUSTRAC) is continuing to revise the existing draft rules3 to align them with the current drafting of the Bill. AUSTRAC has also said that it is drafting new rules and that further consultation with industry on the revised and new rules will take place in 2007.4

The obligations under the Bill will be introduced in stages over a two-year period. Some obligations however require immediate implementation, that is they will take effect the day after the Bill receives Royal Assent. These immediate obligations include:

  • electronic fund transfers must include certain information (and records about electronic fund transfers must be kept);
  • those record-keeping requirements which deal with transaction records, customer provided transaction documents and transferred ADI accounts;
  • registration of designated remittance providers; and
  • reporting cross-border movements of currency and bearer negotiable instruments.

Although, as indicated above, the Government has extended the prosecution free period to 15 months after each stage of the Bill commences, that amnesty will not apply to a reporting entity that is making no reasonable attempt to move towards compliance.

It is essential, therefore, that those businesses that are affected by the Bill start putting in place as a priority AML/CTF strategies to enable them to meet their AML/CTF obligations under the Bill.

AAR has already commented in detail on the Bill (and previous drafts of the Bill) and links to those articles (and our submissions to the Government and the Senate Committee) can be found at our dedicated AML/CTF website.

If your business operates in the financial services sector you need to assess your AML/CTF risk and start planning now for compliance with the Bill. AAR's team of AML experts will provide you with clear advice on the Bill and its ramifications for your business. 

Footnotes
  1. The estimated date for the Royal Assent is outlined in the Explanatory Memorandum to the Bill.
  2. The Minister said Rules related to designated business groups will be released by mid-January 2007. 
  3.  Which were released with the 2nd Draft Exposure Bill in July 2006.
  4. AUSTRAC has provided a likely time-frame for release of the outstanding Rules. 

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