Background

  • As we previously highlighted, the Attorney General’s Department has undertaken a review of the operation of the Anti-Money Laundering and Counter-Terrorism Financing regime within Australia (AML/CTF Regime), focusing on the AML/CTF Act 2006, the AML/CTF Regulations 2008, and the AML/CTF Rules Instrument 2007 (No. 1) (AML/CTF Rules).
  • The output of this AML/CTF Regime review was the Report on the Review of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 and Associated Rules and Regulations (Review).
  • The main objectives of the Review were to examine the operation of the AML/CTF Regime, the extent to which the policy objectives of the AML/CTF Regime remain appropriate, and whether the provisions of the AML/CTF Regime remain appropriate for the achievement of those objectives.
  • In short, it was recommended that the AML/CTF Rules should be simplified, rationalised and presented in a user-friendly format to improve accessibility and understanding of obligations.

New AML/CTF Rules

Jump forward to January 11th 2018 and the release of  Anti-Money Laundering and Counter-Terrorism Financing Rules Amendment Instrument 2018 (No. 1) (New AML Rules) which are now registered.

The following provides a summary of the main changes within the New AML Rules, including the impact of each change.

Know Your Customer

  • Expanding the exemption to the requirement to collect beneficial owner information to include subsidiaries of foreign companies.
  • Self attestation is available for lower risk customers in circumstances where customers do not have the usual identity evidence.
  • Expansion of the definition of Primary photographic identification document to include a national identity card issued for the purpose of identification, that contains a photograph and either the signature of the person in whose name the document is issued or a unique identifier of the person in whose name the document is issued.
  • Definition of ‘certified copy’ amended to include a document that has been certified as a true copy of an original document by a person in a foreign country who is authorised in that jurisdiction to administer oaths or affirmations or to authenticate documents.

Risk Assessment

  • Expanded risk assessment requirement to ensure that any risks arising from new designated services, delivery methods, technology, business relationships and/or customer control are considered, mitigated and then managed.

Part A Program

  • AUSTRAC Feedback: amended to require reporting entities to incorporate information on high ML/TF risk provided by AUSTRAC, or other relevant authorities, into their risk assessments, including any applicable guidance material disseminated or published by AUSTRAC.
  • Independent Reviews: clarity regarding “independence.” The person appointed to conduct the independent review must not have been involved in undertaking any of the functions or measures being reviewed, including the design, implementation, or maintenance of Part A Program or development of a reporting entity’s risk assessment or related internal controls. Engagement of external providers may need an additional pre-engagement step which documents the reasons for determining their independence.

Disclosure Certificates

  • Acceptance of disclosure certificates that are certified by an appropriate officer of the customer. An ‘appropriate officer’ in regard to the customer can be determined by the reporting entity in accordance with its risk-based systems and controls.
  • Note, however, the changes introduce an express requirement that a reporting entity must not rely on a disclosure certificate if it knows, or has reason to believe, that the information contained in the certificate is incorrect or unreliable.

Next Steps

Reporting entities should review the New AML Rules immediately and begin to work through these changes against their existing AML/CTF Programs.

Several of the changes will also have wider operational implications, including:

  • changes to existing Know Your Customer processes and procedures, including application forms and Ongoing Customer Due Diligence procedures;
  • increased monitoring responsibilities for the AML/CTF Compliance Officer, including the review and possible application of any industry trends and applicable guidance published by AUSTRAC; and
  • changes to the selection and appointment of third party service providers when engaging such providers to undertake external independent reviews.

It is unlikely that the New AML Rules will be the only output from the Review so expect further Rule changes over the next 12-18 months. Whilst a collective groan may be heard from reporting entities across Australia, the overall Review objectives are to simplify, rationalise and present the AML/CTF Rules in a user-friendly format which will (hopefully) assist reporting entities in the long run. 

How Can CompliSpace Help?

CompliSpace has been providing reporting entities with AML services since the commencement of the AML/CTF regime. Our services include the design and implementation of tailored AML/CTF Part A and B Programs, Part A Independent Reviews, more focused Part B and KYC file reviews and a range of in-house and group training sessions and workshops.

As part of our ongoing content update service, CompliSpace clients will be provided with draft updates to their existing Part A and B Programs over the next few weeks, along with implementation guidance and associated material.

For more information please contact Brooke Benson at brooke.benson@complispace.com.au or 1300 132 090.