A set of changes to anti-money laundering and counter-terrorism financing law, designed to streamline processes and reduce compliance costs, as well as strengthen parts of the regime, has kicked in.
Amendments that were legislated last November took effect on June 17, covering reliance on customer identification carried out by a third party, correspondent banking and tipping-off.
The reforms give financial institutions and other anti-money laundering reporting entities access to third party providers of customer due diligence services.
Under the old arrangements, if a person had bank accounts with multiple financial institutions each financial institution had to undertake customer due diligence on that person. This will no longer be necessary.
Now reporting entities can enter into third party customer due diligence arrangements with another reporting entity regulated by Austrac or a foreign equivalent of a reporting entity that is subject to equivalent AML/CTF obligations as those in Australia.
The new arrangement gives reporting entities a safe harbour from liability for isolated breaches of customer identification procedures by a third party, provided that the financial institutions has done adequate due diligence on the third party’s processes.
In other changes, the new law prohibits reporting entities from providing a designated service if customer identification procedures cannot be performed. This obligation applies regardless of whether it involves a one-off transaction or an ongoing business relationship.
The new law strengthens protections around correspondent banking by prohibiting financial institutions from entering into a correspondent banking relationship with another financial institutions that permits its accounts to be used by a shell bank.
And it requires banks to conduct due diligence before entering a correspondent banking relationship and to conduct ongoing due diligence that covers ownership, control and management structures of the correspondent bank, the nature of its business and the adequacy of its AML/CTF controls.
The new law expands cross-border reporting requirements. Under the old arrangements, travellers into and out of Australia must declare all cross-border movements of physical currency of $10,000 or more.
Now bearer negotiable instruments, such as travellers cheques, must also be declared at the border.
It expands exceptions to the prohibition on tipping-off to permit reporting entities to share suspicious matter reports and related information with external auditors.