Austrac toughening up
Australia's anti-money laundering regulator Austrac signalled in its 2009 annual report, released yesterday, that it was getting tough with financial institutions and other regulated entities that did not comply with AML/CTF legislation.
The Anti-Money Laundering and Counter-Terrorism Financing Act was passed in 2006 but has had a phased introduction and its final obligations did not take effect December 12 last year.
Since then Austrac has started to shift its emphasis from education to enforcement. Regulated entities must meet customer identification, reporting and record keeping requirements and provide information on the movement of cash and other forms of payment into and out of Australia.
At June 30, 81 per cent of regulated entities reported that they had compliance programs in place.
Austrac applied its enforcement power to compel a number of entities to supply information about their businesses, enabling the agency to determine whether to take further action.
The agency investigated a number of financial institutions and other regulated entities regarding breaches of their Financial Transaction Reports Act and AML/CTF Act obligations.
Austrac received a legally enforceable undertaking from one institution to rectify breaches and comply with AML/CTF obligations.
Austrac did not name the institution but in August the Australian Prudential Regulation Authority reported in August that it had accepted an enforceable undertaking from Mega International Commercial Bank Company, headquartered in Taipei, in relation to the operation of its Australian branch.
APRA said that as a result of a review of the bank's activities in Australia, it became concerned that Mega ICBC had failed to meet various prudential standards and other requirements relating to the Australian branch's systems of governance, risk management and internal control.
Mega ICBC has acknowledged APRA's concerns and admitted that its practices fell seriously short of acceptable banking practice. As a result, the bank has undertaken to complete a substantial program of remedial action to rectify shortcomings in its current operations.
The remedial program included a temporary cessation of account-opening activity until otherwise agreed by APRA, an overhaul of the branch's risk management and internal control systems, and a review of the suitability of senior management in Australia.
Heads of the bank's branch offices in Sydney and Brisbane were replaced.
Austrac received almost 20 million transaction reports from regulated entities in 2008/09, an increase of 10 per cent.
Austrac information contributed to 1,193 Australian Taxation Office cases during the year, leading to tax assessments worth $131 million.
There were 32,400 reports of suspicious matters, up 12 per cent.
Austrac supervisory staff issued 1140 requirements for remedial action and 490 recommendations are conducting on-site and desk reviews of compliance, and twice the level from the year before.