A number of new AML/CTF Rules were published yesterday. They are binding, and can result in penalties such as fines and enforceable undertakings if they are not followed.
A summary of the key changes are summarised below.
Part A Program Requirements
New Part 8.9 (Standard Programs) and Part 9.9 (Joint Programs) of the AML/CTF Rules now require Reporting Entities to include within Part A of their AML/CTF Program:
(1) The obligations that apply to the Reporting Entity under sections 41 (Suspicious Matters), 43 (Threshold Transactions), 45 (International Funds Transfers) and 47 (Annual Compliance Reporting) of the AML/CTF Act (reporting obligations); and
(2) A summary of the systems and controls the Reporting Entity has designed to ensure compliance with the reporting obligations of the Reporting Entity.
In relation to the latter obligation, Reporting Entities have discretion in how they detail the description of the systems and controls which they have put in place. However, they must be an ‘appropriate’ response to the money-laundering/terrorism-financing risk (ML/TF) which the Reporting Entity has identified.
Exemptions Extended to Issuing or Selling a Security or Derivative in Foreign Financial Markets
Chapter 21 of the AML/CTF Rules provides an exemption from the AML/CTF Act in regard to the item 35 designated service (issuing or selling a security or derivative), where such transactions take place on domestic financial markets such as the ASX.
The amendments to Chapter 21 now extend the exemption from domestic financial markets to foreign financial markets. However, this will only be applicable if the foreign financial market uses a proprietary system (a system for the electronic trading, clearing and settlement of transactions relating to securities or derivatives) to undertake the transaction, and it is not reasonably practicable for the Reporting Entity to identify the customer through the use of that system.
Indication that Stapled Securities also Fall within this Exemption
Amendments to Chapter 21.4 of the AML/CTF Rules also indicate that ‘stapled securities’ are intended to be covered under the exemption relating to managed investment schemes trading on financial markets.
Warrants
Finally, Chapter 67 provides an exemption from the applicable customer identification procedure with regards to certain types of warrants, in some circumstances. This has been introduced following industry concerns regarding the duplication of customer identification that occurs at the time when the warrant was purchased, and then later at the time of the warrant reset.
If you have any questions about how these changes affect you, or if you are interested in undertaking an independent review of your AML/CTF Program that will provide you with detailed recommendations aimed at enhancing your program and ensuring compliance with the AML/CTF Act, Rules and Guidance Notes, please contact James Cozens on +61 2 9299 6105 or james.cozens@complispace.com.au.
CompliSpace will also be running a free webinar on AML/CTF Part A Program Design – Tips and common mistakes. The webinar details are below:
With the 2011 Annual Compliance Reporting window now open, and AUSTRAC having already committed to 7,000 site or desk reviews in 2012, it is likely that Part A of your AML/CTF Program is going to come under AUSTRAC scrutiny at some point in 2012.
We have guided many of our clients through the tricky AUSTRAC review process, as well as undertaking numerous Independent Reviews each year.To assist you through this potential minefield, please join us for a 45 minute webinar to gain a valuable insight into:
- A summary of the current Part A requirements using a working example;
- Key changes to Part A Programs as a result of AML/CTF Act and Rule changes;
- The crucial link between AML/CTF Programs and Enterprise Risk Management; and
- What AUSTRAC will be looking for as part of a Desk or Site Review
Date: Friday, February 10, 2012
Time: 1:30 PM – 2:15 PM AEDT
Space is limited.
Reserve your Webinar seat now at:
https://www3.gotomeeting.com/register/366418342
Filed under: ALL, Financial Services Updates Tagged: | AML/CTF, Austrac, Part A Program Design
