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New AML/CTF obligations to take effect from 12 December 2008

From 12 December 2008, financial services providers will have two new obligations under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act).

These obligations relate to reporting requirements and ongoing customer due diligence.

Reporting Obligations

From 12 December 2008, reporting entities will need to report suspicious matters and, if applicable, threshold transactions and international funds transfer instructions to AUSTRAC.

Threshold transaction reports (TTRs)

  • A reporting entity must submit a TTR to AUSTRAC if it provides a designated service to a customer which involves the transfer of physical currency or e-currency of AUD10,000 or more (or the foreign currency equivalent).
  • A TTR must be submitted within 10 business days of the threshold transaction taking place.

Suspicious matter reports (SMRs)

  • A reporting entity must submit an SMR to AUSTRAC if it forms a suspicion at any time while dealing with a customer on a matter that may be related to an offence, tax evasion, or proceeds of crime, they must submit an SMR to AUSTRAC. Offences include money laundering, terrorism financing, operating under a false identity or any other offence under a Commonwealth, State or Territory law.
  • An SMR must be submitted within 3 business days of forming the suspicion. If the suspicion relates to the financing of terrorism, the SMR must be submitted within 24 hours of forming the suspicion.

International funds transfer instruction (IFTI) reports

  • A reporting entity must submit an IFTI report to AUSTRAC if it entity sends or receives an instruction to or from a foreign country for a transfer of money or property (either electronically or under a remittance arrangement).
  • An IFTI report must be submitted within 10 business days of sending or receiving the instruction.

Sample report forms and explanatory guides available in AUSTRAC Online

  • AUSTRAC has published sample report forms and educational materials for each report type, which can be accessed via the 'resources' tab if you have an AUSTRAC Online account.

Ongoing customer due diligence (OCDD)

For 12 December 2008, reporting entities (excluding Australian Financial services licence holders who only arrange designated services) will need to incorporate ongoing customer due diligence systems and processes into their existing AML/CTF programs.

Such systems and controls are based on the nature, size and complexity of the reporting entity's business and the money laundering or terrorism financing (ML/TF) risks faced.

Mandatory component one: collecting and verifying additional KYC information

  • A reporting entity must collect and verify information about the customer's identity (‘know your client information’ (KYC)) before it provides a designated service to a customer.
  • It must also determine when it may be necessary to collect further KYC information, or update or verify existing KYC information. This must be included in reporting entities' AML/CTF programs.

Mandatory component two: transaction monitoring program

  • The transaction monitoring program must be included in Part A of a reporting entity's AML/CTF program. It should be able to detect complex, unusual large transactions and unusual patterns of transactions, which have no apparent economic or lawful purpose.
  • It is up to reporting entities to decide on the most appropriate form of transaction monitoring for their business.

Mandatory component three: an enhanced customer due diligence program

  • Part A of a reporting entity's AML/CTF program must include an enhanced customer due diligence program. This should be applied when the reporting entity determines there is high ML/TF risk, or a reportable suspicious matter has arisen.
  • When applying the enhanced customer due diligence program, the reporting entity must consider issues including whether to analyse, verify, re-verify, clarify, update, or obtain any KYC information about a customer, analyse and monitor the customer's transactions, clarify the nature of the customer's ongoing business with the reporting entity, and/or report a suspicious matter to AUSTRAC.

For further information:

AUSTRAC New Release: www.austrac.gov.au

AUSTRAC information sheets available under AML/CTF Obligations tab at: www.austrac.gov.au