Skip to content.

Home

Allens Arthur Robinson

Funds Management - Real Estate & Superannuation

Client Update: Anti-money Laundering - February 2007

New AML Amendments Bill and Rules

In brief: The Federal Government has today introduced to Parliament the Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2007. AUSTRAC has also today released a new set of Draft AML/CTF Rules for consultation. The Policy Principles on the 15 month 'amnesty period' have also been released. Partner Peter Jones (view CV) and Senior Associate Judy Maguire look at what this will mean.

The Bill

The Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2007 (the Bill), which is intended to make technical amendments to the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (the Act) and implement some of the recommendations made by the various parliamentary committees who reported on the Act, is much as anticipated. Relevant amendments include:

  • requiring licensee arrangers to make suspicious matter reports;
  • permitting licensee arrangers, if they are members of a designated business group (DBG), to adopt the DBG's joint AML/CTF Program;
  • amending some of the absolute liability offences to strict liability;
  • allowing review by the Administrative Appeals Tribunal of decisions made by AUSTRAC, (except under sections 1761 and 2482 of the Act);
  • limiting the scope of certain designated services3 to accounts which are held with financial institutions but extending the scope of those designated services to include signatories/additional card holders; and
  • extending the definition of 'complete payer information' to include details of country and town, city or locality of birth. 

Return to top

The Draft AML/CTF Rules

The Draft AML/CTF Rules released today replace some of the Draft Rules released in July 2006 and deal with:

  • Customer identification procedures.
  • AML/CTF Programs.
  • Verification and re-verification of customers.
  • Customer identification carried out by another reporting entity.
  • Gambling services.

The Draft Rules on customer identification carried out by another reporting entity (under section 38 of the Act) are new and most likely to cause practical problems for reporting entities. The Draft Rules limit what had been anticipated would be the practical benefit of s38. Whereas that section provides that a reporting entity (the second reporting entity) can rely on a customer identification already carried out by another reporting entity (the first reporting entity), the Draft Rules restrict the application of the section to circumstances where the 1st reporting entity is a licensee arranger, or the first and second reporting entities are members of the same DBG.

In addition, before the second reporting entity can rely on the identification by the first reporting entity, it must have received a copy of that identification and have determined that it is appropriate to rely on that identification in the circumstances.

It appears that the Draft Rule on electronically based safe harbours for individuals has been relaxed. Originally, the benefit of the safe harbour only applied where the customer's name and address had been verified from two data sources, and the customer's date of birth had been verified from one data source, and the customer had a transaction history of three years. The Draft Rule now states that establishing that the customer has a three year transaction history will be sufficient verification by itself (although what exactly is meant by a transaction history is not clear). It is likely that this Draft Rule will change as a result of further consultation.

Although the AUSTRAC website does not indicate a timeframe for consultation on the new Draft Rules, it is understood that 2 March 2007 is a possible cut-off date for comments.

Return to top

The Amnesty period

The Policy (Civil Penalty Orders) Principles 2006 are now available on the AUSTRAC website. They provide confirmation that AUSTRAC will only apply for civil penalty orders against reporting entities in the 15 month period after each stage of the Act takes effect, if the AUSTRAC CEO is satisfied that the reporting entity has failed to take reasonable steps to comply. However they do not go as far as Senator Ellison's statement to the Senate on the second reading of the Act where he said that the amnesty would apply to criminal and civil proceedings against reporting entities. 

Significantly, the Policy Principles state that in making that decision the AUSTRAC CEO will take into account all relevant matters, and that these will include:

  1. whether the reporting entity has previously failed to take such steps;
  2. any steps that the reporting entity has taken to comply with its obligations under the Act;
  3. whether the reporting entity complied with any obligations it may have had under the Financial Transaction Reports Act 1988;
  4. any discussions and agreements that the reporting entity has had with staff of AUSTRAC; and
  5. any explanation given by the reporting entity to AUSTRAC.

How AUSTRAC will determine these factors is yet to be seen but item (d) raises the question whether the relevant staff of AUSTRAC will have authority to make representations/agreements that reporting entities can rely on.

Footnotes
  1. The decision to apply for a civil penalty.
  2. The decision to grant an exemption from or declare a modification to the Act. 
  3.  Items 18,19 and 20 of the list of designated services, all relating to debit cards.

Return to top

For further information, please contact:

Return to top

Bookmark with

What are these?

Recent Funds Management - Real Estate & Superannuation publications