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New AML/CTF Rules 2018 – Significant Changes

The much anticipate amendments to the AML/CTF Rules were registered on 11th January. These changes arise out of the the now not so recent Statutory Review.

If you would like assistance in understanding and implementing the changes AML Experts are able to assist.

New Rules

Explanatory Statement

 

Paraphrasing the Explanatory Statement the following are the key points:

Chapter 1 Definitions

Item 1

This item provides a revised definition of ‘certified copy’, which has been extended to include certifications made by a person in a foreign country who is authorised by law in that jurisdiction to administer oaths or affirmations or to authenticate documents.

Item 2

This item amends the definition of ‘primary non photographic identification document’ to make the definition inclusive.

Item 3

This item amends the definition of ‘primary photographic identification document’ by enabling unique identifiers other than a signature to be used on specified documents.

Item 4

This item amends the definition of ‘secondary identification document’ to make the definition inclusive.

Chapter 4 – Customer Due Diligence

Item 5

This item amends subparagraph 4.12.2 to expand the circumstances in which the requirements of paragraph 4.12.1 need not be applied.

Item 6

This item adds a new Part 4.15 to aid reporting entities in identifying customers that do not possess, and are unable to obtain, the necessary information or evidence of identity.

Chapter 8 & 9 – AML/CTF Programs

Item 7

This item amends Part 8.1 to require reporting entities to identify, mitigate and manage any ML/TF risk arising from new designated services, new methods of designated service delivery, new or developing technologies used for the provision of a designated service, and changes in the nature of the business relationship, control structure or beneficial ownership of their customers.

Item 8

This item amends Part 8.6 to provide reporting entities with additional information around the required timing and frequency of independent reviews of Part A of an AML/CTF Program, and clarifies that the person undertaking the review must not have been involved in undertaking any of the functions or measured being reviewed. Reporting entities must be able to demonstrate the independence of the reviewer.

Item 9

This item amends Part 8.7 to require reporting entities to take into account any applicable guidance material disseminated or published by AUSTRAC, as well as any feedback provided by AUSTRAC in respect of the reporting entity, that is relevant to the identification, mitigation, and management of ML/TF risk arising from the provision of a designated service by that entity, both when initially developing and subsequently updating Part A of an AML/CTF Program.

Chapter 9 AML/CTF Joint Programs

Item 10

This item amends Part 9.1 to require reporting entities in a designated business group to identify, mitigate and manage any ML/TF risk arising from new designated services, new methods of designated service delivery, new or developing technologies used for the provision of a designated service, and changes in the nature of the business relationship, control structure or beneficial ownership of their customers.

Item 11

This item amends Part 9.6 to provide reporting entities in a designated business group with additional information around the required timing and frequency of independent reviews of Part A of a joint AML/CTF Program, and clarifies that the person undertaking the review must not have been involved in undertaking any of the functions or measured being reviewed. The designated business group must be able to demonstrate the independence of the reviewer.

Item 12

This item amends Part 9.7 to require reporting entities in a designated business group to take into account any applicable guidance material disseminated or published by AUSTRAC, as well as any feedback provided by AUSTRAC in respect of the group, that is relevant to the identification, mitigation, and management of ML/TF risk arising from the provision of designated service(s) by that group, both when initially developing and subsequently updating Part A of a joint AML/CTF Program.

Chapter 30 – Disclosure Certificates

Item 13

This item amends Chapter 30 to further specify the contents of a disclosure certificate, and to require that certificates be certified by an appropriate officer of the customer. The reporting entity is provided with discretion to determine who is an ‘appropriate officer’ for this purpose, in accordance with its internal risk-based systems and controls. The amendments include 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 provided in the certificate is incorrect or unreliable.

Chapter 36 – Exemptions of certain designated services within a corporate structure

Item 14

This item amends Chapter 36 to extend the circumstances in which the exemption applies when a reporting entity is related to its customer in Chapter 36 of the AML/CTF Rules, to include partnerships where justified by the ML/TF risk.

However, the AML/CTF Act contains a definition of ‘partnership’ which includes ‘limited partnerships’. This type of partnership could be created and dissolved with relative ease and therefore be at odds with the policy intention of the amendment. Accordingly, a new paragraph has been inserted to exclude ‘limited partnerships’ from the scope of the exemption.

Paddy Oliver, Managing Director, AML Experts

Lawyer, AML Consultant, AUSTRAC Authorised Auditor

03 9636 3632

0431 174 124

poliver@amlexperts.com.au

Need to reduce your AML risk: the AML Experts can help you.

www.amlexperts.com.au

Paddy Oliver

poliver@amlexperts.com.au

Paddy Oliver leads the team at AML Experts. Paddy has extensive experience as a lawyer and compliance management consultant. Importantly for you, he is an AUSTRAC Authorised Auditor under the AML Act. That means AML Experts is your one-stop-shop for AUSTRAC compliance. Paddy can be contacted here.