Time is nearly up to address changes to the AML/CTF Rules.
AUSTRAC has introduced changes to the AML/CTF Rules (New Rules), which require "reporting entities" to implement enhanced customer identification procedures from 1 June 2014.
The New Rules require significant changes to your processes addressing (1) know your customers requirements (KYC), and (2) money laundering/terrorism financing (ML/TF) risks. This includes requiring you to:
- identify, verify, review and update information about the beneficial owners of customers, which will involve amending procedures to: review the parties to a trust deed, identify major shareholders and understand the customer's management structure;
- determine whether a customer or beneficial owner is a politically exposed person (PEP), and to conduct the associated due diligence or risk management processes;
- assess ML/TF Risk, taking into account the purpose of the transaction, including who is ultimately funding or benefiting from it, and the sources of those funds; and
- review and update information already collected about customers.
Don't be alarmed that the New Rules are already in place. AUSTRAC has adopted a supervisory approach to implementation, under which it will not take non-compliance action provided you have taken reasonable steps to comply.
Reasonable steps will include whether:
- you comply with the New Rules as soon as practicable for all high risk customers; and
- develop a transition plan before 1 November 2014 with actions and timelines for compliance prior to 1 January 2016.