The 31 March deadline for the submission of your section 47 anti-money laundering and counter-terrorism financing (AML/CTF) compliance reports to AUSTRAC is fast approaching. This year, you will notice a new question, No 23, being asked: “Have you amended your AML/CTF program to meet the customer due diligence requirements that came into effect on 1 June 2014?”

This question relates to the additional (and extensive) customer due diligence requirements (CDD) that were implemented on 1 June, 2014 under the AML/CTF Act and Rules. All reporting entities were expected to be fully compliant by 31 December 2015.

A summary of the CDD amendments to the Rules is outlined below.

CompliSpace has also prepared a checklist to assist you in implementing the new requirements. Please click here to request this checklist.

Summary of Amendments to the Rules:

Chapter 1: Key terms and concepts

  • New definitions: of senior managing official, Australian Government Entity, reasonable measures, beneficial ownership, politically exposed persons (PEPs).
  • PEP: enhancements to the procedures to be applied once a person is determined to be a PEP

Chapter 4: Customer identification

  • Expanded application: this Chapter now applies to both Part A and B of your Program.
  • Additional Risk Factors: reporting entities are now required to consider the expanded customer types, source of funds and wealth.
  • Settlor of Trusts: new requirement to collect and verify the full name of the settlor of the trust unless an exception applies (such as the settlor contribution being under the $10,000 threshold or where the settlor is deceased).
  • Beneficial Owner: new procedures to require collation identification and verification of each beneficial owner. Reporting entities may assume the customer and beneficial owner are the same unless safe harbour provisions or exceptions apply.
  • PEPs: new procedures for the identification and verification of PEPs, including requirements to include appropriate risk management systems in the AML/CTF program to determine whether a customer and/or beneficial owner is a PEP either before providing a designated service or as soon as practicable afterwards. Additional requirements apply to foreign PEPs and those domestic PEPs and international organisation PEPs that are considered high ML/TF risk.

Chapters 8 & 9: Part A of a standard AML/CTF program, or Part A of a joint AML/CTF program

  • Additional Risk Factors: reporting entities are now required to understand the nature and purpose of their business relationships with customers and consider the control structure of any non-individual customers such as trusts and companies.

Chapter 15: Ongoing Customer Due Diligence

  • Expansion of ongoing CDD requirements: to reflect the requirements applying to both customers and the beneficial owners of those customers (including PEPs).  Know Your Customer requirements in relation to beneficial owners.
  • Additional Enhanced CDD program: compulsory application to foreign PEP customers (or customers with foreign PEP beneficial owners) and additional measures to undertake when ECDD applies to customers and beneficial owners.
  • Additional Record keeping and updating requirements: reporting entities are required to take reasonable measures to records and information collected during customer and beneficial owner identification procedures.

Chapter 30: Disclosure Certificates

  • Circumstances and Procedures for the use of disclosure certificates.

See our previous article for more information about compliance with the CDD requirements.

How can CompliSpace help?

CompliSpace provides a range of AML/CTF services, including AML/CTF training and Independent Reviews. We also have a unique AML/CTF Program offering, designed to ensure ongoing compliance with the continually changing AML/CTF Act and Rules.

If you have questions about your compliance, or the submission of your AML/CTF compliance reports to AUSTRAC, contact the CompliSpace team.