The Attorney-General’s Department has released a consultation paper seeking views on possible enhancements to Australia’s anti-money laundering and counter-terrorism financing (AML/CTF) customer due diligence (CDD) regime.
The AML/CTF Act and Rules set a minimum baseline for reporting entities to know their customers and beneficial owners.
Potential reforms discussed in the paper include:
• amend the AML/CTF Rules to explicitly require reporting entities to identify and take reasonable steps to verify the identity of beneficial owners for all categories of customer that are legal persons or legal arrangements, and clarify that the term ‘beneficial owner’ means the natural person(s) (individual(s)) who ultimately owns or controls a customer.
• where a customer is acting on behalf of a person amend the AML/CTF Rules to explicitly require a reporting entity to take appropriate steps to determine whether the customer is conducting a transaction on behalf of another person or third party, and accordingly identify the beneficiaries and the destination of the transaction.
• amend the AML/CTF Rules to explicitly require a reporting entity to identify and verify the settlor of a trust.
• amend the AML/CTF Rules to define the meaning of “politically exposed person”, require reporting entities to introduce appropriate risk-based controls to identify whether their customer (and beneficial owners) may be a foreign, domestic or international organisation PEP, include provision for the conduct of explicit enhanced CDD measures where the customer is a PEP, and prescribe specific measures to be taken to perform a range of enhanced CDD measures for high-risk situations.
• amend the AML/CTF Rules to include an explicit requirement that Part A of a reporting entity’s AML/CTF program must include appropriate risk-based systems and controls to ensure that the reporting entity has a reasonable understanding of the nature of the customer’s business or occupation.
• introduce a general obligation for reporting entities to keep CDD information up to date and relevant, and that risk-based systems be used to determine what CDD information should updated or verified and at what intervals.
Currently reporting entities must have in place AML/CTF programs to identify, mitigate and manage risks that a designated service it provides may involve or facilitate money laundering or terrorism financing. Before providing a service, reporting entities are required to have appropriate CDD programs in place to:
• enable them to ‘know their customers’ (KYC)
• perform ongoing customer due diligence
• monitor transactions, and
• report suspicious matters to AUSTRAC.
