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No. 3 of 2010 Rules/Other as made
These Rules amend the Anti-Money Laundering and Counter-Terrorism Financing Rules Instrument 2007 (No. 1) and Anti-Money Laundering and Counter-Terrorism Financing Rules Amendment Instrument 2007 (No. 5) and relate to the compliance reporting period and threshold transaction reporting requirements, respectively.
Administered by: Attorney-General's
Made 17 Dec 2010
Registered 20 Dec 2010
Tabled HR 08 Feb 2011
Tabled Senate 08 Feb 2011
Date of repeal 09 Apr 2013
Repealed by Attorney-General's (Spent and Redundant Instruments) Repeal Regulation 2013

 

 

 

                                                                                                                                          

 

 

 

 

 

 

 

 

Explanatory Statement – Amendment of Anti-Money Laundering and Counter-Terrorism Financing Rules Instrument 2007 (No. 1) and Anti-Money Laundering and Counter-Terrorism Financing Rules Amendment Instrument 2007 (No.5)

 

 

1.         Purpose and operation of Anti-Money Laundering and Counter-Terrorism Financing Rules (AML/CTF Rules) amending Chapter 11 and Chapter 19 of the AML/CTF Rules

 

Section 229 of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act) provides that the AUSTRAC Chief Executive Officer (AUSTRAC CEO) may, by writing, make AML/CTF Rules prescribing matters required or permitted by any other provision of the AML/CTF Act.

 

Amendments to Chapter 11

 

Section 47 (AML/CTF compliance reports) of the AML/CTF Act specifies that reporting entities must give the AUSTRAC CEO a report relating to the reporting entity’s compliance with the Act, regulations and AML/CTF Rules during the reporting period.  AML/CTF Rules may specify both the reporting period and the lodgment period. It is noted that the AML/CTF Rules follow the spelling as used in section 47 in respect to the word ‘lodgment’.

 

These amendments specify that the compliance reporting period for 2010 is a calendar year (1 January 2010 to 31 December 2010), and will continue as a calendar year thereafter. In this manner Chapter 11 need not be amended each year, unless there is a change from the calendar year requirement.

 

The amendments also specify that the lodgment period is now the first business day in January in the calendar year immediately following the reporting period and ending on 31 March of that calendar year.  

 

Amendments to Chapter 19

 

Division 3 of Part 3 of the AML/CTF Act deals with reports about threshold transactions.  A ‘threshold transaction’ is a transaction relating to the transfer of physical currency, where the transfer is $10,000 or more, or a transaction involving the transfer of money in the form of e-currency, where the total amount of e-currency which is transferred is $10,000 or more.

 

Section 43 of the AML/CTF Act provides that if a reporting entity commences to provide, or provides, a designated service to a customer that involves a threshold transaction, the reporting entity must give the AUSTRAC CEO a report about the transaction within 10 business days after the day of the transaction.

 

Chapter 19 (Reportable details for threshold transactions) of the AML/CTF Rules specifies what details must be included in a threshold transaction report (TTR) to the AUSTRAC CEO.

 

Chapter 19 was registered on 20 December 2007, and its commencement implemented in two stages: those reportable details about the customer making the threshold transaction commenced on 12 December 2008, while the reportable details regarding a person conducting the transaction who is not the customer (the ‘agent reportable details’), are due to commence on 1 January 2011.

 

As a result of consultation held with industry in 2009 – 10 in regard to Chapter 19, two substantive changes have been made to these AML/CTF Rules, comprising:

 

            (a)        amendments relevant to the treatment of multiple signatories to an                                  account, and

 

            (b)        amendments to the agent reportable details.

 

These changes are discussed below:

 

(a)        amendments relevant to the treatment of multiple signatories to an                                     account

 

Chapter 19 specifies the reportable details requirements for customers of a reporting entity who are not individuals, such as companies, partnerships and trusts.  The Item 3 designated service (allowing a transaction to be conducted in relation to an account) of table 1 of section 6(2) of the AML/CTF Act, specifies that a ‘customer’ is both ‘the holder of the account’ and ‘each other signatory to the account.’

 

AUSTRAC has required that reporting entities when submitting a TTR in such circumstances, should report both the ‘holder of the account’ and ‘each other signatory to the account.’

 

Industry has stated that this position presents difficulties for corporate account holders who have many signatories to an account, some of which may number several hundred and therefore should be reported in regard to any transaction conducted by a signatory on such an account.

 

The amendments ensure that a signatory conducting a transaction who is not the account holder (that is, the person at the counter) is reported, but information on any other signatory is only reportable when requested by AUSTRAC. 

 

 

 

 

(b)        amendments to the agent reportable details

 

Chapter 19 of the AML/CTF Rules due to come into effect on 1 January 2011, was developed to capture details in regard to:

 

            (a)        a person who is an individual and is conducting the transaction, but                    the individual is not the customer;

 

            (b)        a person who is conducting the transaction on behalf of a non-                           individual entity (such as a business); and

 

            (c)        a person who is conducting the transaction on behalf of a non-                           individual entity acting on behalf of the customer (such as a courier                       business).

 

These AML/CTF Rules therefore emphasise details regarding the non-individual entity (business) rather than the individual conducting the transaction.

 

As a result of an AUSTRAC review of the requirements of agencies which use AUSTRAC information, the focus of the agent reportable details is now on the individual in the context of three scenarios:

 

            (a)        where the person is conducting the transaction as an individual;

 

            (b)        where the person is conducting the transaction as an individual and that              individual is an employee acting on behalf of the customer, for                              example, in circumstances where the individual may be depositing                                     takings on behalf of the customer; and

 

(c)        where the person conducting the transaction is an individual who is acting on behalf of a non-individual entity which is not the customer.

 

In these scenarios the reportable details to be provided in a TTR relate primarily to the individual conducting the transaction, rather than any non-individual entity which they may be representing.

 

Structure of Anti-Money Laundering and Counter-Terrorism Financing Rules Amendment Instrument 2010 (No.3)

 

Anti-Money Laundering and Counter-Terrorism Financing Rules Amendment Instrument 2010 (No.3) makes amendments to two Instruments, Anti-Money Laundering and Counter-Terrorism Financing Rules Instrument 2007 (No.1) which contains Chapter 11 and the Chapter 19 AML/CTF Rules that relate to non-agent reportable details and which commenced on 12 December 2008, and Anti-Money Laundering and Counter-Terrorism Financing Rules Amendment Instrument 2007 (No.5) which contains the version of Chapter 19 that will come into effect on 1 January 2011.

 

Anti-Money Laundering and Counter-Terrorism Financing Rules Instrument 2007 (No.1) also contains the version of Chapter 19 that will come into effect on 1 January 2011 but as a ‘Note’.  Advice supplied to Rules by the Office of Legislative Drafting and Publishing, stated that the ‘Note’ of Anti-Money Laundering and Counter-Terrorism Financing Rules Amendment Instrument 2007 (No.1) cannot be amended as it is not legally in force and is only included in that instrument as a reference.  As a result, to legally amend the version of Chapter 19 due to come into effect on 1 January 2011, Anti-Money Laundering and Counter-Terrorism Financing Rules Amendment Instrument 2007 (No.5) must be amended.

 

Anti-Money Laundering and Counter-Terrorism Financing Rules Amendment Instrument 2010 (No.3) (other than the machinery amendments to Chapter 11), therefore repeals the Chapter 19 which is currently in force by amending Anti-Money Laundering and Counter-Terrorism Financing Rules Instrument 2007 (No.1), and inserting a new Chapter 19 which does not contain agent reportable details and which will commence on the day after registration and continue in force until 30 September 2011.  The Instrument then amends Anti-Money Laundering and Counter-Terrorism Financing Rules Instrument 2007 (No.1) which repeals the Chapter on 1 October 2011 and inserts on the same date, the version of Chapter 19 which, in addition to the customer details, will contain the agent reportable details.

 

2.         Notes on sections

 

Section 1

 

This section sets out the name of the instrument, i.e. the Anti-Money Laundering and Counter-Terrorism Financing Rules Amendment Instrument 2010 (No.3).

 

Section 2

 

This section specifies that Schedule 1 and Schedule 2 of the Instrument commence on the day after it is registered, while Schedule 3 commences on 1 October 2011.

 

Section 3

 

This section contains the Schedules which amend Anti-Money Laundering and Counter-Terrorism Financing Rules Instrument 2007 (No.1) and Anti-Money Laundering and Counter-Terrorism Financing Rules Amendment Instrument 2007 (No.5) as follows:

 

Schedule 1

 

This schedule amends Chapter 11, repeals Chapter 19 and inserts a new Chapter 19 which specifies the customer reportable details that must be supplied by a reporting entity.  This Chapter 19 does not specify the agent reportable details requirements which will commence on 1 October 2011.  

 

Chapter 11

 

1.         This item inserts a new heading for Chapter 11.

 

 

3.         Notes on paragraphs

 

Paragraph 11.2

 

This paragraph has been amended to specify that the reporting period is now a calendar year on an ongoing basis.   The paragraph has also been amended to remove the inadvertent placing of the ‘privacy notice’ in this paragraph.

 

Paragraph 11.3

 

This paragraph specifies that the lodgment period is the period beginning on the first business day in January in the calendar year immediately following the reporting period and ending on 31 March of that calendar year.  

 

Paragraph 11.4

 

This paragraph inserts a definition of ‘the first business day in January’.

 

 

Chapter 19

 

4.         Notes on paragraphs

 

Paragraph 19.1

 

This paragraph specifies that these AML/CTF Rules have been made under section 229 of the AML/CTF Act for the purposes of paragraph 43(3) of that Act.

 

Paragraph 19.2

 

This paragraph specifies the reportable details that must be supplied by a reporting entity to the AUSTRAC CEO regarding a customer making a threshold transaction.  The paragraph covers individuals, non-individuals and signatories who may be undertaking a transaction but who are not the account holder.  In the case of signatories, only the details of the signatory conducting the transaction are required.

 

Amendments have been made to the cheque reporting provisions to allow reporting entities to report the sum total of a cheque, bank cheque and bank draft, where the individual amounts cannot be ascertained (19.2(7)(f)).

 

Amendments have been made to the e-currency provisions to more closely align these provisions with the definition of ‘e-currency’ in the AML/CTF Act (19.2(8)(b)(i) and (ii)).

 

Paragraph 19.3

 

This paragraph relates to subparagraph 19.2(2) which specifies the details which must be reported in regard to the signatory who is conducting the transaction. Paragraph 19.3 specifies that in these circumstances the AUSTRAC CEO may request further details of any other signatories to the account and also specifies that persons other than the AUSTRAC CEO may request further information in regard to an individual transaction that involves signatories. 

 

Paragraph 19.4

 

This paragraph specifies the contact details that must be contained in a threshold transaction report regarding the person who made that report.

 

Schedule 2

 

This Schedule repeals section 2(c) of Anti-Money Laundering and Counter-Terrorism Financing Rules Amendment Instrument 2007 (No.5).

 

Schedule 3

 

This schedule repeals Chapter 19 and inserts a new Chapter 19 which specifies the agent reportable details requirements, in addition to the customer reportable details that must be supplied by a reporting entity.   

 

Paragraph 19.1

 

This paragraph specifies that the Chapter commences on 1 October 2011.

 

Paragraph 19.2

 

This paragraph specifies that these AML/CTF Rules have been made under section 229 of the AML/CTF Act for the purposes of paragraph 43(3)(b) of that Act.

 

Paragraph 19.3

 

This paragraph specifies the reportable details that must be supplied by a reporting entity to the AUSTRAC CEO regarding a customer making a threshold transaction.  The paragraph covers individuals, non-individuals and signatories who may be undertaking a transaction but who are not the account holder.  In the case of signatories, only the details of the signatory conducting the transaction are required.

 

Amendments have been made to the cheque reporting provisions to allow reporting entities to report the sum total of a cheque, bank cheque and bank draft, where the individual amounts cannot be ascertained (19.3(7)(f)).

 

Amendments have been made to the e-currency provisions, to more closely align these provisions with the definition of ‘e-currency’ in the AML/CTF Act (19.3(8)(b)(i) and (ii)).

 

The agent reportable details are specified at 19.3(15). They apply in the following circumstances:

 

            (a)        a person who is an individual and is conducting the transaction, but                    the individual is not the customer (19.3(15)(a));

 

            (b)        where the person is conducting the transaction as an individual and that              individual is an employee acting on behalf of the customer, for                              example, in circumstances where the individual may be depositing                                     takings on behalf of the customer (19.3(15)(b)); and

 

            (c)        a person who is conducting the transaction on behalf of a non-                           individual entity which is not the customer (19.3(15)(c)).

 

19.3(17) specifies the details which must be reported by a reporting entity in circumstances where:

 

            (a)        the transaction involves a deposit carried out in non-face to face                                    circumstances, or

 

            (b)        where the person carries out a transaction relevant to the item 51                                   (collecting physical currency) or item 53 (delivering physical currency)                     designated services.

 

In respect to (a), this provision has been inserted into Chapter 19 in order to accommodate situations where a reporting entity may not know who conducted the transaction. Relevant situations include the use of an automated teller machine or night or express deposit facility.

 

In respect to (b), the intention is that reporting entities do not need to collect the details of the individual conducting the transaction when they are acting on behalf of a business such as a cash carrier. 

 

Where these circumstances apply, the reporting entity must supply AUSTRAC with a statement stating that one or the other is applicable in respect to the transaction.  However, there is still an obligation to supply the customer details under 19.3(1)-(14) in addition to the statement that 19.3(17)(a)(i) or (ii) is applicable.  Where a reporting entity is unable to ascertain whether the circumstances in 19.3(15) apply, the reporting entity can assume that the transaction was carried out by the customer.  

 

Paragraph 19.4

 

This paragraph relates to subparagraph 19.3(2) which specifies the details which must be reported in regard to the signatory who is conducting the transaction. Paragraph 19.4 specifies that in these circumstances the AUSTRAC CEO may request further details of any other signatories to the account and also specifies that persons other than the AUSTRAC CEO may request further information in regard to an individual transaction that involves signatories. 

 

Paragraph 19.5

 

This paragraph specifies the contact details that must be contained in a threshold transaction report regarding the person who made that report.

 

Paragraph 19.6

 

This paragraph supplies the definition of ‘non-face to face circumstances’ as used in subparagraph 19.3(17).

 

5.         Legislative instruments

 

These AML/CTF Rules are legislative instruments as defined in section 5 of the Legislative Instruments Act 2003.

 

6.         Likely impact

 

These AML/CTF Rules will have an impact on any reporting entity that is required to submit a compliance report or provides a designated service that involves a threshold transaction to a customer.

 

7.         Assessment of benefits

 

Chapter 11

 

These amendments provide certainty to industry in regard to the reporting and lodgment periods which reporting entities must observe.

 

Chapter 19

 

Division 3 of Part 3 of the AML/CTF Act provides for a reporting system in relation to threshold transactions. This system implements the requirements of the Financial Action Task Force, Recommendation 19 which provides that countries should consider the feasibility and utility of a system where banks and other financial institutions and intermediaries would report to a central agency all domestic and international currency transactions above a fixed amount. Reports about threshold transactions will result in improved financial intelligence which will help Australian law enforcement agencies combat money laundering and the financing of terrorism. Increased financial intelligence will also help the Australian Taxation Office to detect tax evasion and Centrelink to detect welfare fraud.

8.         Consultation

Chapter 11

 

As the amendments to Chapter 11 are machinery in nature, consultation has not been undertaken, as has been the case with previous amendments to Chapter 11.

Chapter 19

 

AUSTRAC has consulted with the Office of the Privacy Commissioner, the Australian Customs and Border Protection Service, the Australian Federal Police, the Australian Taxation Office and the Australian Crime Commission, in relation to these AML/CTF Rules.

 

AUSTRAC published a draft of each of these AML/CTF Rules on its website for public comment on four separate occasions – once in 2009 and three times in 2010 and held a consultative forum with industry in May 2010.

 

Chapter 19 was originally registered on 20 December 2007 and AUSTRAC consulted with the same government agencies as detailed above. In addition, the AML/CTF Rules were also published on the AUSTRAC website in 2007 for public consultation.

 

9.         Ongoing consultation

 

AUSTRAC will conduct ongoing consultation with stakeholders on the operation of these AML/CTF Rules.