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    AML/CTF – Urgent Action Required

    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:

    1. 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;
    2. determine whether a customer or beneficial owner is a politically exposed person (PEP), and to conduct the associated due diligence or risk management processes;
    3. 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
    4. 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:

    1. you comply with the New Rules as soon as practicable for all high risk customers; and
    2. develop a transition plan before 1 November 2014 with actions and timelines for compliance prior to 1 January 2016.
    To avoid action from AUSTRAC, ensure your business has either full implementation of the New Rules, or a Transition Plan in place, prior to 1 November 2014.

    If you require assistance, please contact either Jenny-Ellen Kennedy or Alice Herbon from our compliance team.