The Commonwealth Government has announced a 2 stage AML/CTF review reform project in response to the 84 recommendations made by the Statutory Review of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 puiblished earlier this year.
The plan proposes that the AML/CTF reforms be implemented in two phases. The consultation, design and final implementation for these reforms will continue through to 2019.
It is anticipated that a transition period will apply in relation to any changes made to AML/CTF obligations under Phase 1 and Phase 2. This transition period will give existing and new reporting entities time to develop and adopt new processes and procedures, including the upgrading of systems and to avoid regulatory fatigue.
Phase 1
Phase 1 will include development of legislative proposals by the first half of 2017 for the following de-regulatory reforms:
CDD measures – deregulatory relief and other measures, including:
• amending the term ‘in the course of carrying on a business’ under Tables 2 and 3 of section 6
• allowing for the use of self-attestation and disclosure certificates
• improving the usability of the reliance provisions
• narrowing the definition of a designated remittance arrangement
Provisions of the Financial Transactions Reports Act 1988 that impose obligations on insurance intermediaries and general insurance providers, (but not motor vehicle dealers) will be repealed.
The AML/CTF Act will also be strengthened as follows:
• Reporting entities will be prohibited from providing service if CDD cannot be performed.
•Reporting entities will be required to conduct specific enhanced CDD measures at the time of pay out where the beneficiary or beneficial owner of a life insurance policy is a politically exposed person and a higher ML/TF risk is identified.
•Reforms will be introduced to strengthen the reporting regime for the cross-border movement of value.
•Digital currencies will be regulated under the AML/CTF regime.
A cost-benefit analysis of the regulatory options for regulating lawyers, accountants, high-value dealers, real estate agents and trust and company service providers under the AML/CTF Act will be completed by June 2017.
Phase 2
An exposure draft of Bill and Rules will be released for public comment in first half of 2018 for reforms to:
• merge and streamline AML/CTF program requirements
• clarify record-keeping requirements
• simplify and streamline transaction reporting obligations
• expand the range of businesses that can form a ‘corporate group’ for AML/CTF purposes, and
• streamline and simplify correspondent banking obligations.
A model for applying AML/CTF regulation to high-risk designated services provided by offshore service providers will also be developed.
