News Index
06.05.2007
New Anti-Money Laundering (AML) legislation is here – how will this effect you?
In line with our commitment to ensure our customers are well informed on matters that may impact on them, and that they have access to the widest possible range of products and services, we will be:
- Providing information on the new AML legislation to ensure you are kept up to date on this important new development
- Releasing new AML products and services to ensure your compliance
- Providing Know Your Customer (KYC) information (see section below).
This news letter provides general information on AML, and over the ensuing months we will continue to provide important new details as they come to hand. Given the importance of the AML legislation, we have a specialist in place who is keeping abreast of developments, and we are developing the appropriate new services you will need for compliance.
News will be emailed out as a general broadcast, however if you wish to speak to our AML Specialists personally or receive more personal information please call the Help Desk and ask for Mark Ponniah or email aml@globalx.com.au.
If you believe another person in your organisation should also receive this information please let us know by using the above contacts – THIS ACT HAS SERIOUS REPERCUSSIONS and you should ensure the appropriate people are aware of this information.
WHAT IS AML?
Background Information!
It has been estimated that $4.5 billion is laundered annually in Australia.
The Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act), which received Royal Assent on 12 December 2006, aims to bring Australia in line with international anti-money laundering (AML) and counter terrorism standards.
The Australian Transaction Reports and Analysis Centre (AUSTRAC) is the national AML/CTF regulator with supervisory, monitoring and enforcement functions. AUSTRAC has just released most of the Rules associated with the AML/CTF Act - so we now know what is required for compliance.
Who is affected?
The AML/CTF Act is wide ranging - over 38, 000 organisations will have to comply.
The AML/CTF Act will be implemented as two tranches, and each tranche will be implemented in stages, with a fifteen month amnesty to follow the commencement of each stage.
The first tranche of the AML/CTF Act will apply to the following organisations:
- Financial sector including:
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- Banks; building societies; credit unions
- Lending, leasing and hire purchase companies
- Issuers of travellers’ cheques; foreign exchange dealers; remittance dealers
- Asset management companies; financial planners who arrange for the issue of products; life insurers; superannuation fund managers
- Custodial service companies; cash couriers, securities dealers.
- Lawyers and Accountants that provide financial services in competition to the financial sector
- Gambling Industry
- Bullion dealers
The second tranche will extend the AML reforms to include:
- Lawyers
- Accountants
- Trust and company service providers
- Real estate agents
- Jewellers
What is required?
The AML/CTF Act is not prescriptive – it is risk based. The rationale is that a risk based approach is likely to be more effective because individual organisations are best placed to assess their own risk and are, therefore, best able to mitigate the risk. The implication of a risk based approach is that every organisation has to assess their risk and implement an appropriate AML program.
In general, the AML/CTF Act requires reporting entities to:
- Know Your Customer (KYC) - Identify customer and verify customer details
- keep records
- establish and maintain an AML/CTF program
- perform ongoing customer due diligence and reporting
- report on cross border currency movements
- provide originator information for electronic funds transfers
- obligations relating to correspondent banking relationships.
What happens with non-compliance?
The AML Act contains both civil and criminal regimes for failure to comply with key obligations. The cost of non-compliance could be severe – for organisations the maximum penalty payable is $11,000,000 and for all others it is $2,200,000.
The overseas experience has seen some serious fall-out. In the UK, fines have ranged from ₤350,000 to ₤2 million (including Bank of Ireland, Royal Bank of Scotland and Abbey Bank) and in the USA, fines have topped $41 million (e,g, Riggs Bank).
We do not know as yet how AUSTRAC will approach AML/CTF. However, if AUSTRAC follows the UK and US lead, as some suggest they will, there will be prosecutions, including large and high profile cases.
KNOW YOUR CUSTOMER (KYC) REPORTING
For those organisations covered by the first tranche, the AML/CTF Act requires know your customer (KYC) procedures to be in place by December 2007. However, if you are going to be affected by the new legislation you are encouraged to begin the process as soon as possible, because you will eventually need to assess the risk of your current customers – SO WHY NOT START NOW AND BE AHEAD OF THE GAME!!!
We are committed to providing the best possible KYC solution. Our solution will do much more than meet the minimum KYC requirements set out in the Rules that accompany the AML/CTF Act. We have almost finalized our KYC product range and will be launching them shortly.