AUSTRAC has called on financial institutions to improve financial inclusion by balancing their due diligence processes for customer identification with a “flexible and compassionate approach”.
On Friday, AUSTRAC issued guidance to banks and superannuation funds with advice on how to support people from diverse backgrounds and in challenging circumstances access financial services.
Financial institutions require customers to provide proof of identity to open accounts but “some members of the community cannot access traditional forms of documentation to prove their identity,” AUSTRAC said.
Its guidance covers Aboriginal and Torres Strait Islander people, people in remote communities, people in prison or recently released from prison and trans and gender diverse people whose documentation may not reflect their identity.
It also covers people fleeing domestic violence and people evacuating their home because of a natural disaster, who may not have had the opportunity to gather documents before leaving.
AUSTRAC chief executive Nicole Rose said: “Having flexible customer identification procedures in place is essential to ensure that members of the community can access financial services so that temporary of systemic barriers do not prevent people from gaining this access.”
Rose said the Anti-Money Laundering and Counter-Terrorism Financing Rules Instrument 2007 provides financial institutions with the flexibility to use alternative identification.
The guidance says financial institutions should apply a risk-based approach to different customer types. They must document any alternative procedures and monitor customers for changes in their risk profile.
Alternative documents can include referee statements, government correspondence that shows the person’s name, an indigenous organisation membership card and, as a last resort, self-attestation.