Australian financial institutions are doing a good job of meeting their anti-money laundering obligations in areas that are straightforward but there is a "fundamental lack of knowledge" when matters become more complex, according to the AML regulator, Austrac.An Austrac director, Mark Godfrey, told delegates at a Finsia seminar in Sydney yesterday that financial institutions had little difficulty with customer identification procedures when the customer was an individual but it was a different story when the customer was a more complex entity.Godfrey said: "We see evidence of lack of knowledge about the difference between partnerships and companies. Information about whether a trust is involved may not be collected."There is a fundamental lack of knowledge about these things at the front-line."Godfrey ran through a litany of criticisms about the way financial institutions manage their AML programs.Transaction monitoring rules are not being tested to determine whether they need to be modified to meet changing circumstances. Many of the 50,000 suspicious matter reports that Austrac receives each year are incomplete. Organisations collect information and verify it from the same source. For example, a bank might use data from Australian Securities and Investment Commission's files to gather information about a company it is dealing with and then another unit in the bank will use the same data to verify the information."That is not going to pick up discrepancies," Godfrey said.Financial institutions are still accepting Post Office box numbers instead of actual addresses.Godfrey said Austrac wanted to see more regular reviews of AML programs. "Organisations involved in mergers or producing a lot of new products need to have more regular reviews."One of the things we see is the contractors that set up the AML program conducting the reviews. We expect the reviews to be done by people who are at arm's length."Godfrey said there was widespread misunderstanding about the purpose of suspicious matter reporting. "Organisations focus on suspected criminal activity, such as people smuggling or drug trafficking, but the SMR [suspicious matter report] obligation relates to any breach of the law."We are looking for reports that might relate to tax evasion, breaches of the companies' code or trade practices, or securities-dealing violations."He said Austrac came across AML plans that did not "line up" with the risk assessment of the organisation. This was usually the result of a third party implementing the program without making any effort to integrate it into the business.He said foreign banks were inclined to use AML programs developed in other markets, without tailoring them to local requirements. An area that is improving is corporate governance. "We see more organisations with management oversight of the AML program," Godfrey said.