Following amendments to anti-money laundering and counter-terrorism financing law last November, Austrac has published proposed changes to its rules for public consultation.
The rule changes cover correspondent banking, customer identification and verification, reliance on customer identification carried out by another reporting entity and gambling services. The consultation period runs until March 11.
Last year’s changes, in the Anti-Money Laundering and Counter-Terrorism Financing and Other Legislation Amendment Act, give financial institutions and other anti-money laundering reporting entities access to third party providers of customer due diligence services.
Under previous arrangements, if a person had bank accounts with multiple lenders it was expected that each financial institution would undertake customer due diligence procedures on that person. This is longer be necessary.
The reform gives reporting entities a “safe harbour” from liability for third party customer due diligence breaches.
In other changes, the bill prohibits reporting entities from providing a designated service if customer identification procedures cannot be performed.
It strengthens protections around correspondent banking by prohibiting financial institutions from entering into a correspondent banking relationship with another financial institution 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.
The bill expands cross-border reporting requirements. Under current arrangements, travellers into and out of Australia must declare all cross-border movements of physical currency of A$10,000 or more.
The bill expands this requirement so that, in addition to physical currency, bearer negotiable instruments, such as travellers cheques, must also be declared at the border.
Austrac’s proposed rule changes set out factors that must be considered when carrying out due diligence on a correspondent bank, including the adequacy and effectiveness of the bank’s AML/CTF controls and the comprehensiveness of its customer due diligence records.
The rule changes also prescribe procedures that allow a reporting entity to rely on customer identification procedures undertaken by a third party. These cover documentation of the responsibilities of each party and an assessment of the money laundering and terrorism financing risks in the jurisdiction in which the other party operates.
The rules emphasise that responsibility for such arrangements sits with senior management and that reporting entities must assess their agreements regularly.