AML/CTF customer due diligence rules relaxed

Austrac has published draft amendments to its customer identification rules, allowing financial institutions to collect information from sources other than the customer.

Austrac's anti-money laundering and counter-terrorism financing rules currently require that information used to identify a customer must be sourced from the customer.

The regulator has bowed to industry submissions that they be allowed to collect information from other sources.

It conceded that this approach was in line with the Financial Action Task Force recommendation on customer due diligence, which says that financial institutions must undertake measures "identifying the customer and verifying the customer's identity using reliable, independent source documents, data and information."

Austrac said the amendment would give financial institutions the flexibility to choose the most efficient and effective way of gathering information to verify a customer's identity.

It accepted that that there would be savings and other advantages for the industry in this approach.

The draft also extends customer due diligence exemptions currently in operation to politically exposed persons (high-risk customers, usually in prominent public positions) and beneficial owners (any individual or individuals who own more than 25 per cent of a customer account).

The draft amendments represent a relaxation of tighter customer due diligence rules that were introduced last year. Austrac is consulting on the draft until July 8.