Australia: AML/CTF regime – the review continues
Australia's anti-money laundering and counter-terrorism financing (“AML/CTF”) regime has been the subject of significant change in 2014, with further changes expected in 2015. Australia is currently the president of both the Financial Action Task Force (“FATF”) and the G20 and has been working to address deficiencies which FATF had previously identified in Australian AML/CTF law.
New customer due diligence (“CDD”) rules, which govern reporting entities' customer identification and verification obligations, commenced on 1 June 2014. The changes included the introduction of a definition of 'politically exposed person', the expansion of the definition of 'beneficial owner' and a requirement that reporting entities identify beneficial owners of all customer types. Reporting entities must now determine whether any beneficial owner is a politically exposed person. While the Australian Transaction Reports and Analysis Centre issued a substantially revised Compliance Guide in September 2014, there remains uncertainty about the application and meaning of aspects of the new CDD rules.
Two separate reviews of Australia's AML/CTF regime are currently in progress: (i) a statutory review required under the AML/CTF Act; and (ii) a FATF mutual evaluation, which is not confined to evaluating technical compliance with FATF recommendations and will include an assessment of the effectiveness of Australia's AML/CTF regime. Numerous stakeholders in Australia have made submissions to the statutory review, highlighting concerns about uncertainty in the existing AML/CTF regime. The statutory review will not, however, cover the new CDD rules.
A further potential driver of change is the G20 High-Level Principles on Beneficial Ownership Transparency (the G20 Principles), which emerged from the G20 summit in Brisbane in November 2014. The G20 Principles include measures that G20 countries have given a 'high level' pledge to take to prevent the misuse, and ensure transparency, of legal persons and legal arrangements. They include commitments:
- to share appropriate information on the results of the countries' assessment of existing and emerging risks associated with different types of legal persons and arrangements with competent authorities, reporting entities and other jurisdictions;
- to consider establishing central registries of beneficial ownership of legal persons; and
- to consider facilitating access to beneficial ownership information by reporting entities.
The G20 Principles seem to support the view favoured in stakeholder submissions to the statutory review that Australia's AML/CTF regime should extend to designated non-financial businesses and professions identified by FATF which are not currently caught by the Australian AML/CTF regime.
The G20 Principles may lend weight to calls for:
- greater engagement by law enforcement agencies with reporting entities to assist them to understand key money laundering and terrorism financing trends;
- the Government to establish and maintain registers of trusts and politically exposed persons to facilitate CDD compliance; and
- the 'tipping-off' offence to be amended to permit sharing of suspicious matter information between certain reporting entities and foreign regulators.