![]() |
Home
| Databases
| WorldLII
| Search
| Feedback
Macquarie Journal of Business Law |
![]() |
NEIL JENSEN[*]
The implementation of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) heralded Australia’s long anticipated adoption of modern and robust legislation to deal with the increasing and dangerous problems of money laundering and terrorism financing not only in Australia, but globally. It was a journey which began in the late 1980s, and continues to this day. As part of the journey, the Australian Transaction Reports and Analysis Centre (AUSTRAC), the organisation entrusted to implement the new legislation, has acquired new regulatory powers, in addition to its role as a specialist financial intelligence unit. AUSTRAC has embraced these challenges diligently, collaboratively and intelligently. It continues to provide guidance and support to regulated entities, industry and law enforcement, national security and revenue partner agencies. It is a journey which AUSTRAC has just begun.
The introduction of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) (AML/CTF Act) provides Australia with a “principles-based” legislative response to the Financial Action Task Force’s (FATF) 40 + 9 Recommendations and the 2005 Mutual Evaluation Report (MER) of Australia. This new legislative framework not only aims to create an environment hostile to money laundering and terrorism financing in Australia, but also aims to ensure the increased competitiveness and security of financial markets in general, both now and in the future. Its guiding principles provide a risk-based framework of governance aimed at achieving the overall objectives of the AML/CTF Act, which are to combat financial crime and terrorism financing in Australia. The framework is also designed to enable the Australian Transaction Reports and Analysis Centre (AUSTRAC), and the regulated sector, to be responsive to the changing environment and techniques used in money laundering and terrorism financing.
Implementation of the AML/CTF Act is to be introduced over two years. The AML/CTF Act builds upon existing obligations under the Financial Transaction Reports Act 1988 (Cth) (FTR Act) but it also applies to a wider range of industries and businesses in response to the global standards. These businesses are defined as ‘reporting entities’, and they are required inter alia to implement an AML/CTF program which identifies, minimises and manages the risk of any of their products and/or services being utilised for money laundering and terrorism financing.
In response to industry consultation, the Australian Government has given AUSTRAC the dual role under the AML/CTF Act of both AML/CTF industry regulator and financial intelligence unit (FIU). This is a unique world approach to implementing the FATF’s 40 + 9 Recommendations as these roles and functions have been separated in many countries. In its role as an FIU, AUSTRAC’s primary responsibility is to provide intelligence obtained from transaction reports to designated partner agencies and certain international counterparts. As Australia’s AML/CTF regulator, AUSTRAC’s primary responsibility is to ensure reporting entities comply with their obligations under the AML/CTF Act.
AUSTRAC’s approach to industry regulation promotes ‘voluntary compliance’ guided by persuasion or education, and applies the themes of consistency, proportionality and accountability. The AML/CTF regulatory environment adopted by AUSTRAC is one in which a general preference is to initially engage in a collaborative approach with reporting entities by negotiating voluntary rectification and promoting and encouraging deterrence, as opposed to moving quickly to formal intervention and statutory sanctions. The policies, actions, regulatory toolkit and guidance notes AUSTRAC has developed and applied to date are focused on collaboration.
In expanding AUSTRAC’s role as the AML/CTF regulator, the principles of the AML/CTF Act have been utilised to further Australia’s response to the FATF’s 40 + 9 Recommendations. This is aimed at ensuring an increased competitiveness and security of our financial markets both now and into the future. It is also aimed at enabling AUSTRAC (and the regulated sectors) to be responsive to the changing environment and techniques used in the processes of money laundering and terrorist financing and prosecute and penalise those involved in such criminal activities.
INTRODUCTION
The acts of money laundering and terrorism financing inconspicuously and innocuously pervades the very fabric of modern society. They enable those involved or seeking to involve themselves in criminal activity with an avenue to finance their criminal objectives. Both money laundering and terrorism financing are financial crimes with far reaching consequences. Such activities enable criminals to either profit from, or to cause widespread damage through, their illegal activities. Money launderers and terrorism financiers use the legitimate financial system to destabilise economies, and ultimately disrupt society through a variety of methods which may not be immediately evident as money laundering or terrorism financing.
It is difficult to quantify the extent and reach of money laundering and terrorism financing. In Australia the figure has been estimated at between AUD 2.8 to AUD 6.3 billion with the most likely figure being in the vicinity of AUD 4.5 billion dollars.[1] While the effects of terrorism financing are often difficult to directly calculate, it is clear that such activities undermine and impose substantial costs that may have devastating effects on nation states or the global economy. It is also clear that the social and economic costs[2] of an act of terrorism are significantly higher than the cost of Australia’s AML/CTF program.
Money laundering has been on the Government’s agenda in Australia since the 1980s when a number of royal commissions uncovered links between tax evasion, fraud, organised crime and money laundering techniques.[3] Concurrently, there was growing concern within the international community about the threat posed by money laundering to the world’s financial institutions and the banking system. These issues led Australia to subsequently introduce appropriate federal legislation in the 1980s: the Proceeds of Crime Act 1987 (Cth); the Mutual Assistance in Criminal Matters Act 1987 (Cth) and the Cash Transaction Reports Act 1988 (Cth) (later renamed the FTR Act).
The FTR Act was the primary mechanism for Australia’s anti-money laundering initiatives. The legislation was enacted to address the growing concerns of the potential impact of money laundering in Australia, with a focus on detecting tax evasion and other serious criminal activity.
To deter money laundering and terrorism financing, the primary aims of the FTR Act were to facilitate the administration and enforcement of taxation and other laws.[4] This was demonstrated in practice by:
The Cash Transaction Reports Agency (CTRA), established in 1989, was given the primary responsibility for monitoring and analysing suspicious transactions and large cash transactions which had been reported to it. It was subsequently renamed the Australian Transaction Reports and Analysis Centre (AUSTRAC) in 1991 to reflect the broadening of the agency’s functions to include the receipt and analysis of international wire transfers. A major focus of AUSTRAC was on monitoring and identifying transactions of interest and reporting them to relevant law enforcement and revenue agencies, and ensuring cash dealers’ compliance in relation to the reporting and identification requirements under the FTR Act.
Prior to the attacks in the United States of America on the World Trade Center in New York and the Pentagon building in Arlington, Virginia on 11 September 2001, terrorism financing was considered ancillary to counter-terrorism initiatives. However, in the weeks following the attacks, the international efforts to subsequently freeze the funds of known terrorist organisations throughout the world[5] heightened the need for a more focused response by Australia to the issue of terrorism financing.[6] Hence, Australia implemented a multi-faceted response to the issues of increased terrorism risk. This resulted in the expansion of AUSTRAC’s mandate on money laundering to extend to transactions related to terrorism financing.
Throughout the 1990s and into the 2000s, AUSTRAC operated primarily as an FIU and became recognised and respected globally as an innovative and technologically advanced leader in the fight against money laundering. With its significant database of over 70 million transaction reports, AUSTRAC has been able to develop technology solutions to monitor, evaluate, analyse and interrogate its data holdings. Resultant extensive intelligence has been provided to AUSTRAC’s domestic and international partner agencies. This intelligence in many cases has initiated or been of vital importance in many of the criminal and taxation investigations and enquiries. Over the past five years more than 6,000 law enforcement investigations, and half a billion dollars in tax assessments and penalties, have resulted directly from AUSTRAC’s intelligence products. Assistance with technological solutions, such as the building of the Canadian FIUs Information Technology System[7] and ‘FIU in the box’[8] which was developed by AUSTRAC and implemented in a number of South Pacific nations FIUs - has enhanced the capability of Australia’s international counterparts. In 2005, during a visit to Australia, the Financial Crimes Enforcement Network (FinCEN) Director, William Fox, said: “AUSTRAC is the gold standard among financial intelligence units. We, and others throughout the world, consider AUSTRAC to be a model of how a financial intelligence unit should work”.[9]
During this time much effort was also invested by AUSTRAC in fostering relationships with cash dealers and building partnerships with law enforcement, national security, revenue collection, and social justice agencies.
Subsequent to Australia’s introduction of the FTR Act and other initiatives to combat money laundering, the FATF was established in 1989 at the Group of 7 Summit in Paris.[10] The FATF defines its aims as “…development and promotion of policies, both at national and international levels, to combat money laundering and terrorist financing…and working (sic) to generate the necessary political will to bring about national legislative and regulatory reforms in these areas”.[11]
Initial membership of the FATF comprised the Summit participants, namely, Canada, France, Germany, Italy, Japan, United Kingdom, United States and the Commission of the European Communities. It also included eight additional countries: Australia, Austria, Belgium, Luxembourg, Netherlands, Spain, Sweden and Switzerland.
In 1990 the FATF issued 40 Recommendations to guide the development of a comprehensive plan of action to combat money laundering worldwide. The 40 Recommendations were completely revised in 1996 and 2003. The FATF issued 8 Special Recommendations to address the issues of terrorism financing in 2001 following the September 11 terrorist acts in the United States.[12] The FATF then issued a ninth Special Recommendation on terrorism financing in October 2004. Collectively, these recommendations are known as the “40 + 9 Recommendations”. Australia’s involvement in the development of the FATF 40 Recommendations assisted to ensure the Recommendations were generally consistent with the FTR Act and Australia’s AML program.
A key role of the FATF has been to conduct mutual evaluations of countries throughout the world in order to impartially evaluate the effectiveness and efficacy of anti-money laundering and counter-terrorism financing (AML/CTF) frameworks and initiatives. Ranking countries against the FATF’s 40 + 9 Recommendations, a mutual evaluation aims to highlight areas of compliance, partial compliance and notably, where improvement is necessary within each country in comparison to the set international standards.
Australia has been the subject of three mutual evaluations, with the first in 1992 and the second in 1996. In 2005 the FATF conducted its third mutual evaluation of Australia. This evaluation was the first to measure Australia’s compliance with the revised FATF 40 + 9 Recommendations. The Third MER[13] was published in October 2005 and highlighted a number of strengths in Australia’s system. In addition, it identified a number of areas in which work was necessary to ensure Australia’s full compliance with the FATF’s Revised 40 + 9 Recommendations.
A table of findings from the FATF MER has been included in Appendix 1.
Many of the findings in the MER echoed what had already been identified by the Australian Government’s own review of the AML/CTF initiatives in Australia. The review, announced by the Minister for Justice and Customs on 8 Dec 2003,[14] focused on Australia’s AML/CTF system in the light of the revised FATF standards.
While the FTR Act had last been updated by the Proceeds of Crime Act 2002 (Cth), and by the Suppression of the Financing of Terrorism Act 2002 (Cth), the review clarified that in order for Australia’s financial industry to maintain its internationally respected position, urgent action to implement the revised recommendations was necessary. Further, interpretative notes to the FATF Recommendations clearly stated that basic AML/CTF obligations were required to be set out in law or by regulation.[15]
Comprehensive consultation with the relevant industry sectors was undertaken to establish a number of in-principle agreements regarding the approach to reforms for Australia’s AML/CTF program. From January 2004, the Attorney-General’s Department has progressively issued five industry-specific “Issues Papers” outlining AML/CTF regulatory options. These “Issues Papers” and the 46 submissions received in response to them formed the basis of a paper outlining the Australian Government’s policy principles[16] on implementing the FATF’s AML/CTF standards.
From January 2004 until mid-2005, the Attorney-General’s Department, supported by AUSTRAC, also conducted a series of presentations to a wide range of industry groups based on the issues papers and the policy principles. Numerous bilateral meetings took place and public consultation forums were held in Sydney and Melbourne. Further, the Minister for Justice and Customs established a Ministerial Advisory Group comprising representatives of selected industry associations to engage in high level discussion of AML/CTF implementation options for each of the affected industry sectors. This advisory group, which also included representatives from the Attorney-General’s Department, Treasury, AUSTRAC and the Office of Small Business, met on a number of occasions throughout the development of the legislation.
The Minister also conducted a series of round table meetings with industry between July and September 2005. These meetings included the financial services sector, the gambling sector and the accounting and legal professions, and highlighted industry concerns and approaches in progressing AML/CTF legislation.
On 11 October 2005, the Government announced it would proceed with a package of reforms, which would be implemented in a two tranche approach. On 16 Dec 2005, the Government released the Anti-Money Laundering and Counter-Terrorism Financing Exposure Draft Bill 2005 (Cth) and sample AML/CTF Rules for a four month public consultation period.
The Exposure Draft Bill was referred to the Senate Legal and Constitutional Committee in February 2006. Submissions were called for and several public hearings were held by the Senate Committee. On 9 May 2006, a report resulting from the submissions and the public hearings was tabled in Parliament.[17]
It was noted in the report that “…during the course of the inquiry, the committee learned that most industry groups have been largely satisfied with the extent and nature of their ongoing engagement with the Minister and/or the Department in terms of preliminary discussion and a consultation process”.[18]
During the consultation process with industry it was clearly articulated that industry preferred AUSTRAC to take carriage of the dual role as regulator and FIU. This ultimately was captured in the legislative package and constituted a unique and innovative approach to implementing the FATF’s Recommendations.
Following this initial consultation period, a markedly revised Draft AML/CTF Bill and Rules were released on 13 July 2006 for a second public consultation period. This draft Bill and Rules resulted from the demand for a less prescriptive and more risk-based legislative package. The revised AML/CTF Bill was introduced into the Commonwealth Parliament on 1 November 2006, and was again referred to the Senate Legal and Constitutional Legislation Committee for further inquiry and review. Public hearings on the Bill were held during November 2006, with the Committee reporting on its inquiry on 28 November 2006.[19]
The Bill passed through both Houses of Parliament in early Dec 2006 and the Anti-Money Laundering and Counter-Terrorism Act 2006 received Royal Assent on 12 Dec 2006.[20]
The AML/CTF Act allows a risk-based approach to AML/CTF minimising the extent of prescription in the legislation. More accurately, the legislation is principles-based and those guiding principles provide a risk-based framework of governance in achieving the overall objectives of the AML/CTF Act. The overarching objectives of the legislation are to combat money-laundering and terrorism financing in Australia and are outlined in s 3 of the AML/CTF Act.
The objectives include:
The guiding principles used to meet these objectives are set out in s 212 of the AML/CTF Act and include:
Underpinned by the principles is the framework of governance adopted in the AML/CTF Act, which has its foundation in a risk-based regulatory approach. In the context of AML/CTF, that risk-based framework:
Implementation of the AML/CTF Act is to be undertaken over two years.[21] The implementation schedule for obligations arising from the AML/CTF Act are set out in Appendix 2.
The AML/CTF Act builds upon existing obligations under the FTR Act, but also applies to a wider range of businesses. For example, the FTR Act applied to banks and other ‘cash dealers’, but the AML/CTF Act applies to the services of a greater range of financial services, bullion and gambling entities. Obligations are based on specific activities, known as ‘designated services’. Designated services are listed in section 6, Table 1 of the AML/CTF Act.
Financial institutions or businesses which provide designated services have obligations under the AML/CTF Act and are referred to as ‘reporting entities’. Those obligations are set out under the Act and include:
Each reporting entity with obligations under the AML/CTF Act is required to identify the level of AML/CTF risk posed by its products, services and business activities. In broad terms, AML/CTF risks are related to:
A reporting entity is required to implement an AML/CTF program to minimise and manage the risk of their products and/or services being utilised for ML/TF.[22] The AML/CTF program can be implemented using a risk-based approach, but must take into account the nature, size and complexity of the business and the risk that business might reasonably face of money laundering and terrorism financing. The program must also be applicable to all areas of a business which provide designated services.
The AML/CTF program adopted should comprise two parts – Part A and Part B.[23]
Part A of an AML/CTF program should include, amongst other things:
Part B of an AML/CTF program should include, amongst other things:
In order to assist businesses in designing and implementing their AML/CTF programs, the AUSTRAC CEO has made AML/CTF Rules[24] to provide greater detail regarding the requirements of Part A and Part B of an AML/CTF program.
Minimum standards have been identified within the AML/CTF Rules to assist reporting entities in identifying low and medium risk customers prior to providing a designated service. These minimum requirements include (for individuals) collecting the customer’s full name, the customer’s date of birth and the customer’s residential address. Businesses must also have in place as Part B of an AML/CTF program a verification process for identification information. For a low-risk individual customer, at a minimum, the customer’s full name and either the customer’s date of birth or the customer’s residential address must be verified using reliable and independent documentation, reliable and independent electronic data or a combination of the two. Additional identification and verification requirements exist for companies, partnerships, trustees, incorporated and unincorporated associations, registered cooperatives, government bodies and high risk customers.
Under the AML/CTF Act, AUSTRAC has a dual role of industry regulator and FIU. As an FIU, AUSTRAC’s primary responsibility is to provide intelligence from information gained from transaction reports to designated partner agencies.[25] Information is also provided to certain international counterparts such as Italy’s UIC/SAR, Lebanon’s SIC, Singapore’s STRO and the US’s FinCEN.[26]
AUSTRAC’s regulatory approach is one which promotes ‘voluntary compliance’ guided by education and persuasion, consistency, proportionality and accountability. AUSTRAC’s objectives for industry supervision of the AML/CTF regime are to promote ‘good practice’ ML/TF risk management and regulation across industry, rather than adopting a prescriptive approach to industry regulation. This market-oriented approach has the benefits of placing a compliance burden on industry that is not excessive, designed to promote a level playing field and contributing to an economic climate that remains conducive to innovation, competition and efficiency.
In implementing the regulatory requirements of the AML/CTF Act, AUSTRAC has adopted a phased approach to its deliverables. This phased approach generally accords with the implementation timeline of the legislation from late 2006 until Dec 2008.
The AML/CTF regulatory environment adopted by AUSTRAC is one in which a general preference for negotiating voluntary rectification and promoting deterrence is encouraged, as opposed to moving quickly to formal intervention and statutory sanctions. AUSTRAC has encouraged similar treatment of like entities, and has tailored its regulatory approach to distinctive groups so that it can more intensively supervise high risk entities. It has acknowledged that remedies are required that fit their purpose and are commensurate with the gravity of the problem being addressed, while also being realistic and practical. Ultimately, as a regulator, AUSTRAC has adopted measures to ensure that compliance and enforcement activity is conducted professionally, objectively, fairly and reasonably.
Under the AML/CTF Act, primary responsibility for ML/TF risk management and statutory compliance rests with the financial, bullion and gambling sectors at the level of each reporting entity’s board and senior management. Well managed and suitably prudent entities will be arranging to implement sound ML/TF risk management systems without waiting for guidance from AUSTRAC as the AML/CTF regulator.
In conducting monitoring and enforcement, AUSTRAC is mindful of promoting a number of key factors, including, for example:
In the first 15 months from each of the staggered commencement dates, AUSTRAC will facilitate compliance by reporting entities through awareness raising, education, advisory visits and inspections. In that period civil penalty action will only be initiated where a reporting entity has failed to take reasonable steps towards compliance with its obligations.
AUSTRAC’s monitoring activities will include onsite inspections, desk reviews, annual consultations, thematic studies, systematic data gathering and liaison with other regulators to coordinate regulatory oversight. Monitoring of entities will be undertaken using a risk-based approach to ensure a level playing field in relation to compliance, and monitoring will take place according to the staggered implementation timetable. In other words, as obligations come into effect, compliance with those obligations will be monitored.
The type of monitoring conducted (for example onsite visits or desk top assessments) as well as the frequency and the focus of the monitoring will be determined by AUSTRAC. This will be carried out having regard to the potential impact of the identified risk on the integrity of the financial system and the likelihood of that impact materialising in practice.
The AML/CTF Act provides AUSTRAC with increased monitoring and information gathering powers. For example, if AUSTRAC wished to access the premises of a cash dealer under the FTR Act, a notice had to be issued to the business requesting access. However, the business was not compelled by the legislation to grant that access. This is no longer the case with the introduction of the AML/CTF Act. If an entity refuses to grant access, AUSTRAC can now enter the premises under a monitoring warrant issued by a magistrate for the purposes of exercising its monitoring powers.[27]
AUSTRAC’s monitoring powers enable an authorised officer to search the reporting entity’s premises for any:
During the search of a premises, AUSTRAC may:
Under s 150 of the AML/CTF Act an authorised officer entering premises, either by consent or under a monitoring warrant, can ask the occupier of the premises questions and ask them to produce relevant documents, with civil and criminal penalties existing for non-cooperation.
AUSTRAC’s formal policies for enforcement are outlined in two documents: AUSTRAC’s Enforcement Policy and Enforcement Manual.[30] AUSTRAC is committed to ensuring that decisions relating to enforcement are based on fact, with due regard for process and natural justice.
It is expected that the large majority of reporting entities will be well intentioned, open to negotiation, and willing to comply with AUSTRAC’s rectification recommendations. In the case of the few which may prove to be unresponsive and/or recalcitrant, AUSTRAC will look to take formal enforcement action. It is expected that formal enforcement action will be relatively infrequent, particularly in the early years of the AML/CTF Act and Rules, and particularly for entities prepared to deal with the regulator in an honest, open and cooperative manner.
AUSTRAC has developed a regulatory toolkit to assist reporting entities in complying with their obligations under the AML/CTF Act. For the most part these have been developed in partnership with industry, and this work will continue. This includes the following:
AML/CTF Rules[31]
The following instruments containing AML/CTF Rules have been made and registered:
1 Anti-Money Laundering and Counter-Terrorism Financing Rules Instrument 2007 (No. 1)
This Instrument contains the majority of the registered AML/CTF Rules. The current compilation comprises matters including:
• suspicious matter reportable details, and
• threshold transaction reportable details.
2 Anti-Money Laundering and Counter-Terrorism Financing Rules Instrument 2007 (No. 2)
This Instrument contains AML/CTF Rules relating to paragraph (e) of the definition of 'correspondent banking relationship' in section 5 of the AML/CTF Act.
3 Anti-Money Laundering and Counter-Terrorism Financing Rules
This Instrument contains AML/CTF Rules relating to:
There will be ongoing consultation with industry on the drafting of any new Rules.
Guidance Notes[32]
The following Guidance Notes have been published and are available from the AUSTRAC website:
AUSTRAC will continue to assist industry and reporting entities with further Guidance Notes.
Self Assessment Questionnaire (SAQ)[33]
The SAQ contains questions for organisations that allow a self-assessment of the systems, procedures and organisational arrangements in place for the effective management of AML/CTF risks. The SAQ assists the reporting entity to assess their own levels of risk, compliance, preparedness and effectiveness.
Regulatory Policies[34]
Regulatory Policies have been developed to provide reporting entities with further insight into AUSTRAC’s approach to its regulatory task. These policies include a Supervisory Framework outlining AUSTRAC’s guiding principles, statutory objectives and approach to working in partnership with other Australian regulators. Other policies developed include the Education, Exemptions, Monitoring and Enforcement Policies.
Regulatory Guide
The Regulatory Guide provides an overview of reporting entities’ obligations and includes links to other relevant information and guidance notes. Created through consultation with industry it is a complex, long term project which is envisaged to be an iterative document that will endure over a number of years.
Website materials[35]
Publication of materials for the public and industry on AUSTRAC’s website has continued. These include Frequently Asked Questions, a specialised Business Section, links to the AML/CTF Act, any consequential amendments to the AML/CTF Act, Rules and media releases. Latest additions include “AUSTRAC Online”- an information portal which provides a simple and effective means to access the latest AML/CTF information, and “e-learning” which will assist regulated entities better understand their obligations under the AML/CTF legislation. Information on the site will be regularly updated to reflect legislative and other changes.
Underpinning the support materials created by AUSTRAC, is an education strategy aimed to facilitate reporting entity compliance with the AML/CTF Act.
By implementing the Anti-Money Laundering and Counter-Terrorism Financing Act and expanding AUSTRAC’s role to incorporate responsibilities as the AML/CTF regulator, the Australian Government has demonstrated its commitment to a progressive legislative response to global AML/CTF issues. The full introduction of the AML/CTF legislative reforms will bring Australia closer to full compliance with the FATF’s 40 + 9 Recommendations. This in turn will ensure the increased competitiveness and security of our financial markets. It will also lead to a safer Australian society in general. It cannot be progressed by the Government alone, it must be a partnership between the Government, its agencies and the private sector to be most effective.
The author acknowledges the contribution to this paper by Monika Fratric, Ana Constantinou and Christine Bryant at AUSTRAC.
• A Compliant (C) rating is a finding that the assessment criteria of the particular recommendations are fully observed.
• A Largely Compliant (LC) rating indicates that there are only minor shortcomings, with a large majority of the assessment criteria being fully met.
• A Partially Compliant (PC) rating indicates that some substantive action has been taken which complies with some of the assessment criteria.
• A Non-Compliant (NC) rating indicates that there are major shortcomings, with a large majority of the assessment criteria not being met.
Forty Recommendations
|
Rating
|
ML offence
|
LC
|
ML offence – mental element and corporate liability
|
LC
|
Confiscation and provisional measures
|
C
|
Secrecy laws consistent with the Recommendations
|
C
|
Customer due diligence
|
NC
|
Politically exposed persons
|
NC
|
Correspondent banking
|
NC
|
New technologies & non face-to-face business
|
NC
|
Third parties and introducers
|
NC
|
Record keeping
|
PC
|
Unusual transactions
|
PC
|
DNFBP – R.5, 6, 8-11
|
NC
|
Suspicious transaction reporting
|
LC
|
Protection & no tipping-off
|
C
|
Internal controls, compliance & audit
|
NC
|
DNFBP – R.13-15 & 21
|
NC
|
Sanctions
|
PC
|
Shell banks
|
PC
|
Other forms of reporting
|
C
|
Other NFBP & secure transaction techniques
|
C
|
Special attention for higher risk countries
|
PC
|
Foreign branches & subsidiaries
|
NC
|
Regulation, supervision and monitoring
|
PC
|
DNFBP - regulation, supervision and monitoring
|
PC
|
Guidelines & Feedback
|
PC
|
The FIU
|
C
|
Law enforcement authorities
|
LC
|
Powers of competent authorities
|
C
|
Supervisors
|
PC
|
Resources, integrity and training
|
LC
|
National co-operation
|
LC
|
Statistics
|
LC
|
Legal persons – beneficial owners
|
LC
|
Legal arrangements – beneficial owners
|
PC
|
Conventions
|
LC
|
Mutual legal assistance (MLA)
|
C
|
Dual criminality
|
C
|
MLA on confiscation and freezing
|
C
|
Extradition
|
C
|
Other forms of co-operation
|
C
|
Nine Special Recommendations
|
Rating
|
SR.I Implement UN instruments
|
LC
|
SR.II Criminalise terrorist financing
|
LC
|
SR.III Freeze and confiscate terrorist assets
|
LC
|
SR.IV Suspicious transaction reporting
|
LC
|
SR.V International co-operation
|
LC
|
SR VI AML requirements for money/value transfer services
|
PC
|
SR VII Wire transfer rules
|
NC
|
SR.VIII Non-profit organisations
|
PC
|
SR. IX Cash couriers
|
PC
|
APPENDIX 2: IMPLEMENTATION TIMETABLE OF THE AML/CTF ACT 2006[37]
Part of the Act
|
Part Title
|
Division Titles
|
Date of Commencement
|
Part 1, Sections 1 and 2
|
Introduction
|
Commencement
|
12 Dec 2006
|
Part 1, Sections 3 to 26
|
Introduction
|
Designated Services and Definitions
|
13 Dec 2006
|
Part 4
|
Reports about cross-border movements of physical currency and bearer
negotiable instruments
|
|
13 Dec 2006
|
Part 5
|
Electronic funds transfer instructions
|
|
13 Dec 2006
|
Part 6
|
Register of providers of designated remittance services
|
|
13 Dec 2006
|
Part 9
|
Countermeasures
|
|
13 Dec 2006
|
Part 10, Divisions 1, 2, 4 and 7
|
Record-keeping requirements
|
Records of transactions, funds transfer instructions and exemptions
|
13 Dec 2006
|
Part 11
|
Secrecy and access
|
|
13 Dec 2006
|
Part 12
|
Offences
|
|
13 Dec 2006
|
Part 13
|
Audit
|
|
13 Dec 2006
|
Part 14
|
Information-gathering powers
|
|
13 Dec 2006
|
Part 15
|
Enforcement
|
|
13 Dec 2006
|
Part 16
|
Administration
|
|
13 Dec 2006
|
Part 17
|
Vicarious liability
|
|
13 Dec 2006
|
Part 18
|
Miscellaneous
|
|
13 Dec 2006
|
Schedule 1
|
Alternative constitutional basis
|
|
13 Dec 2006
|
Part 3, Division 5
|
Reporting obligations of reporting entities
|
AML/CTF compliance reports
|
12 June 2007
|
Part 8
|
Correspondent banking
|
|
12 June 2007
|
Part 10, Division 6
|
Record-keeping requirements
|
Records about due diligence assessments of correspondent banking
relationships
|
12 June 2007
|
Part 2, except for Division 6
|
Identification procedures etc
|
- Identification procedures for certain pre-commencement customers
- Identification procedures for certain low-risk customers
- Identification procedures etc
- Verification of identity etc
- General provisions
|
12 Dec 2007
|
Part 7
|
Anti-money laundering and counter-terrorism financing programs
|
|
12 Dec 2007
|
Part 10, Division 3
|
Record-keeping requirements
|
Records of identification procedures
|
12 Dec 2007
|
Part 10, Division 5
|
Record-keeping requirements
|
Records about AML/CTF programs
|
12 Dec 2007
|
Part 2, Division 6
|
Identification procedures etc
|
Ongoing customer due diligence
|
12 Dec 2008
|
Part 3, Division 1, 2, 3, 4 and 6
|
Reporting obligations of reporting entities
|
- Suspicious matters
- Threshold transactions
- International funds transfer instructions
|
12 Dec 2008
|
[*] Chief Executive Officer, Australian Transaction Reports and Analysis Centre (AUSTRAC); Research Fellow, Department of Business Law and Taxation, Monash University. This article is based on a presentation given at the Monash/Macquarie University Financial Services Reform Third Anniversary Conference, 13 July 2007.
[1] Walker, J. et al , ‘Money Laundering in and through Australia, 2004’, Report, Australian Institute of Criminology, August 2007.
[2] Abuza, Z., “Funding Terrorism in South East Asia: The Financial Network of Al Qaeda and Jemaah Islamiyah”, NBR Analysis, Vol 14(5), Dec 2003, p 4,
http://www.apgml.org/frameworks/docs/7/Z Abuzer - TF in SE Asia Dec03.pdf.
[3] These Commissions were set up inter alia to ascertain the extent of criminal activity and tax avoidance in certain industries. See, eg, the Australian Royal Commission of Inquiry into Drugs (Williams, AGPS, 1980); the Royal Commission of Inquiry into Drug Trafficking (Stewart, AGPS, Canberra, 1983) and the Royal Commission on the Activities of the Federated Ship Painters and Dockers Union (Costigan Report, 26 October 1984).
[4] Financial Transaction Reports Act 1988 (Cth),
http://www.comlaw.gov.au/ComLaw/Legislation/ActCompilation1.nsf/all/search/70C31AE547261470CA2573010082BFD7.
[5] See United Nations Security Council Resolution No 1373(2001)
http://www.un.org/News/Press/docs/2001/sc7158.doc.htm, European Union Council Common Position 2001/931 CFSP (Dec 2001) http://europa.eu/scadplus/leg/en/lvb/l33208.htm, Australian Government: Department of Foreign Affairs and Trade – Australia’s Terrorist Asset Freezing Regime http://www.dfat.gov.au/icat/freezing_terrorist_assets.html.
[6] In the USA a number of measures occurred, most notably, the formation of the Department of Homeland Security.
[7] This was built by Canadian technology experts who were based temporarily at AUSTRAC and shipping it back to Canada.
[8] “FIU in the box” is a computer system designed by AUSTRAC to assist developing FIUs in the collection, storage, analysis and dissemination of financial intelligence.
[9] AUSTRAC Media Release, “Australia and United States’ Financial Intelligence Units strengthen efforts in counter terrorist (sic) financing”, 18 November 2005.
[10] The “G7Summit" was formed in 1975 to provide an informal forum for coordination of economic policy among prominent industrialised nations. It comprised, Canada, France, Italy, Germany, Japan, UK and the USA.
[11] ‘What is the FATF?’,
www.fatf-gafi.org/document/57/0,3343,en_32250379_32235720_34432121_1_1_1_1,00.html.
[12] The ‘40 Recommendations’, www.fatf-
gafi.org/document/28/0,3343,en_32250379_32236930_33658140_1_1_1_1,00.html#40recs.
[13] ‘The Third Mutual Evaluation Report’, www.fatf-gafi.org/dataoecd/60/33/35528955.pdf.
[14] Minister for Justice and Customs, Media Release,
www.ag.gov.au/www/agd/agd.nsf/Page/Anti-moneylaundering_Mediareleases.
[15] The FATF Interpretative Notes,
www.oecd.org/document/53/0,3343,en_32250379_32236947_34261877_1_1_1_1,00.html.
[16] Policy Principles for Anti-Money Laundering Reform, June 2004,
http://www.ag.gov.au/agd/WWW/rwpattach.nsf/personal/7D725051B1171EE2CA256EAF00015A89/$FILE/Policy+0+Principles+Paper+for+Anti-Money+Laundering+reform.PDF.
[17] Enquiry into the Exposure Draft of the Anti-Money Laundering and Counter-Terrorism Financing Bill 2005, (April 2006) www.aph.gov.au/senate/committee/legcon_ctte/anti-money_laundering/index.htm.
[18] Inquiry into the Exposure Draft of the Anti-Money Laundering and Counter-Terrorism Financing Bill 2005, (April 2006) chapter 3.6,
www.aph.gov.au/senate/committee/legcon_ctte/anti-money_laundering/index.htm.
[19] Inquiry into the Anti-Money Laundering and Counter-Terrorism Financing Bill 2006, (November 2006), http://www.aph.gov.au/Senate/committee/legcon_ctte/aml_ctf06/index.htm.
[20] Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth), www.comlaw.gov.au/comlaw/legislation/act1.nsf/asmade/bytitle/AD9D7C024DC9E300CA257244001003BF?OpenDocument.
[21] The Policy (Civil Penalty Orders) Principles 2006 (Cth) set a period of 15 months following each provision’s commencement date during which the AUSTRAC Chief Executive Officer(CEO) may apply for a civil penalty order against a reporting entity for contravening a provision if the CEO is satisfied that the entity has failed to take reasonable steps to comply with the provision.
[22] AML/CTF Act s 83.
[23] AML/CTF Act s 84.
[24] www.austrac.gov.au/aml_ctf_rules.html (at 13 March 2008).
[25] AML/CTF Act s 212.
[26] The full names of the FIUs are: Italy-Ufficio Italiano dei Cambi/Servizio Antiticiclaggio, Lebanon-Special Investigation Fighting Money, Singapore- Suspicious Transaction Reporting Office and the United States- Financial Crimes Enforcement Network.
[27] AML/CTF Act s 147.
[28] Relevant AML/CTF Rules and regulations are yet to be drafted.
[29] Relevant AML/CTF Rules and regulations yet to be drafted
[30] www.austrac.gov.au/enforcement_policy.html
[31] www.austrac.gov.au/aml_ctf_rules.html.
[32] www.austrac.gov.au/guidance_notes.html.
[33] www.austrac.gov.au/saq.html.
[34] www.austrac.gov.au/policies.html.
[35] www.austrac.gov.au/index.html
[36] http://www.fatf-gafi.org/dataoecd/22/38/35509034.pdf.
[37] http://www.austrac.gov.au/faqs.html.
AustLII:
Copyright Policy
|
Disclaimers
|
Privacy Policy
|
Feedback
URL: http://www.austlii.edu.au/au/journals/MqJlBLaw/2008/5.html