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AML/CTF Bill becomes law
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The long awaited Anti-Money Laundering and Counter-Terrorism Financing Bill 2006 (the Bill) was passed by Parliament on 7 December 2006. 
 
This Bill represents the first tranche of Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) reform, aimed at financial institutions, gambling services and bullion dealers. The second tranche of AML/CTF reform is to bring accountants, lawyers, real estate agents and jewellers into the AML/CTF regime. 
 
What does this mean for me? 
Obligations under the legislation arise where a person or entity is a reporting entity. Although the first tranche of AML/CTF legislation is aimed at financial institutions, any business will become a reporting entity where it provides a designated services listed in section 6 of the Bill.  
 
Financial planners 
Financial planners will become reporting entities under Item 54 in s6 of the Bill where they provide a designated service:

“in the capacity of holder of an Australian financial services licence, making arrangements for a person to receive a designated service (other than a service covered by this item).”
Acquiring or disposing of a security, a derivative or a foreign exchange contract on behalf of a person for whom you are acting as an agent in the course of carrying on a business is a designated service under Item 33 of s6 of the Bill. 
 
Designated services which could be relevant to members 
In addition to the designated services which would be exclusively provided by financial institutions are those which could also be provided by members. 
 
These include: 
 
Item 46  
Providing a custodial or depository service, where the service is provided in the course of carrying on a business of providing custodial or depository services  
 
Item 47  
Providing a safe deposit box or similar facility where the service is provided in the course of carrying on a business of providing sage deposit boxes or similar facilities 
 
Item 51  
Collecting physical currency or holding physical currency collected from or on behalf of a person in the course of carrying on a business of collecting or holding physical currency and where the physical currency is not collected as consideration for the supply of goods or services. 
 
Item 52  
Preparing a pay-roll on behalf of a person, in whole or in part from physical currency collected, where the service is provided in the course of carrying on a business of preparing pay-rolls.  
 
Physical currency is defined as ‘coin and printed money (whether of Australia or of a foreign country) that (a) is designated as legal tender; and (b) circulates as, and is customarily used and accepted as, a medium of exchange in the country of issue. 
 
What are my obligations if I am a reporting entity under the Bill? 
The legislation sets out a risk-based approach to regulation. On the basis of a risk assessment, a reporting entity must:
  • Identify a new customer prior to providing a designated service. Existing customers and customers of low risk services do not have to be identified unless a suspicion arises. 
     
  • Implement an Anti-Money Laundering Program which is required to identify, mitigate and manage the money laundering and/or terrorism financing risks identified for the reporting entity. An Anti-Money Laundering Program may be standard, special or joint. A financial planner may implement a special AML/CTF Program which is limited to performing customer identification procedures. Generally an AML Program is to be divided into Part A and Part B and must include: 
     
    Part A
       
    • An assessment of the risks associated with designated services provided, customers and jurisdictions in which designated services are provided. 
    • AML/CTF risk awareness training program 
    • Employee due diligence program 
    • Documentation of the AML/CTF Program and approval by CEO or Board 
    • A nominated AML/CTF Compliance Officer 
    • Regular independent review of AML/CTF Program by an independent external or internal party
     
    Part B
       
    • Applicable customer identification procedures
     
     
  • Report suspicious matters, cash transactions of $10,000 or more and International Funds Transfer Instructions
Penalties 
The legislation provides for civil penalties for non-compliance up to a maximum of $11million for a company and $2.2 million for an individual.