AUSTRAC is consulting on changes to the annual compliance report (ACR) to reflect ML/TF risk and ongoing compliance rather than implementation of AML/CTF programs of reporting entities (RE).

The proposed new form is in Appendix E of the consultation paper.

The form includes an attestation by the Board of the reporting entity that for the reporting period:

• An AML/CTF program has been maintained which complies with the requirements of the AML/CTF Act and Rules to identify, mitigate and manage the risks of money laundering and terrorism financing.
• Systems and controls are established to monitor and manage those risks, including adequate and timely escalation and reporting processes.
• Systems and controls have been assessed to manage those risks and the declarer has satisfied themselves that the systems and controls are operating effectively and are adequate having regard to the risks they are designed to control.

AUSTRAC is proposing to implement the proposed changes to take effect for the compliance reporting period of 1 January 2015 to 31 December 2015. The relevant compliance report lodgement period will be from Monday 4 January 2016 until 31 March 2016.

AUSTRAC does not intend to change either the reporting frequency or period for submission of the ACR.

The current ACR imposes the same regulatory burden on each reporting entity that completes it without taking into account ML/TF risk exposure. The ACR is the same for all reporting entities with no differentiation in the level or type of information requested.

AUSTRAC proposes to replace the current ACR with:

• an enhanced compliance report (ECR) that would be completed by reporting entities in both the higher and medium-risk categories.The ECR is similar in structure and format to the existing compliance report.
• an annual return (AR) for REs that represent a higher level of ML/TF risk.The AR will require a reporting entity to provide a comprehensive report on its business environment, ML/TF risk and the effectiveness of its AML/CTF program.

It is proposed that a reporting entity must lodge an AR and an ECR where it is either:
1.part of a corporate group (where a corporate group is defined by reference to section 50 of the Corporations Act 2001) that has finalised group annual earnings of $100 million or more (as at 1 July of the compliance report period), or
2.not part of a group and has total annual earnings of $100 million or more (as at 1 July of the compliance report period), or
3.part of a corporate group that has provided 25 million or more transaction reports or provided transaction reports with a total value of $5 billion or more (in the calendar year prior to the compliance report period), or
4.not part of a group and has provided 25 million or more transaction reports or provided transaction reports with a total value of $5 billion or more (in the calendar year prior to the compliance report period).

It is proposed that a reporting entity must lodge only an ECR where it is not covered in the above list.

It is proposed that a number of entities will be exempt from the requirement to lodge either an AR or ECR, including:
1.reporting entities, other than Remittance Network Providers (RNPs), currently subject to exemptions from the compliance report obligation – that is, reporting entities exempt from section 47 (by virtue of a rule or individual instrument), entities that are only item 54 providers, or entities that are only remittance affiliates
2.reporting entities that are exempt from Part 7 of the AML/CTF Act
3.reporting entities that have four or less employees (regardless of whether the employees are full-time, part-time or casual), other than in circumstances where that entity has annual earnings of $100 million or more or lodges transaction reports to the volume of 25 million or more or value of $5 billion or more.

RNPs will be required to lodge compliance reports.