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2004-2005-2006
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
ANTI-MONEY LAUNDERING AND COUNTER-TERRORISM
FINANCING BILL 2006
EXPLANATORY MEMORANDUM
(Circulated by authority of the Minister for Justice and Customs
Senator the Honourable Chris Ellison)
ANTI-MONEY LAUNDERING AND COUNTER-TERRORISM
FINANCING BILL 2006
General Outline
The Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) Bill (the
Bill) forms part of a legislative package that will implement the first tranche of
reforms to Australia's AML/CTF regulatory regime.
The reforms are a major step in bringing Australia into line with international best
practice to deter money laundering and terrorism financing that includes standards set
by the Financial Action Task Force (FATF). As international businesses are obliged
to take into account AML/CTF adequacy of foreign counterparts and jurisdictions, the
Bill will enable Australia's financial sector to maintain international business
relationships.
The Bill will cover the financial and gambling sectors, bullion dealers and
lawyers/accountants (but only to the extent that they provide financial services in
direct competition with the financial sector legal professional privilege will still
apply) who provide designated services listed in the tables in Clause 6. The second
tranche will cover real estate agents, jewellers, lawyers and accountants.
The Bill adopts a risk based approach to AML/CTF compliance, under which
principal obligations are set out, but businesses will have flexibility to develop
procedures according to different risks which they identify using their own AML/CTF
Programs.
The designated services in the tables in Clause 6 cover a wide range of financial
services including opening an account, accepting money on deposit, making a loan,
issuing a bill of exchange, a promissory note or a letter of credit, issuing a debit or
stored value card, issuing traveller's cheques, sending and receiving electronic funds
transfer instructions, making money or property available under a designated
remittance arrangement, acquiring or disposing of a bill of exchange, promissory note
or letter of credit, issuing or selling a security or derivative, accepting a contribution,
roll-over or transfer in respect of a member of a superannuation fund and exchanging
currency.
The Bill builds on existing obligations imposed under the Financial Transaction
Reports Act 1988 (FTR Act). However, the new regime will apply to a wider range of
businesses than the FTR Act and impose a wider range of obligations on them.
Persons who provide the designated services to a customer become reporting entities
(REs) who incur reporting obligations under the Bill. The obligations are set out in
the following dot points:
· Identification and verification. REs must verify a customer's identity before
providing a customer with a designated service. REs must carry out ongoing
due diligence on customers.
· Reporting. REs must report suspicious matters, certain transactions above a
threshold and international funds transfer instructions.
· Developing and maintaining an AML/CTF Program. REs must have and
comply with anti-money laundering and counter-terrorism financing programs
(AML/CTF programs), which are designed to identify, mitigate and manage
money laundering or terrorist financing risks a reporting entity may reasonably
face. Members of a designated business group (DBG) may enter into a joint
AML/CTF program with other members of that DBG.
· Record keeping. REs must make and retain certain records (and other
documents given to REs by customers) for 7 years.
The Bill includes provisions relating to correspondent banking, which prevent
financial institutions from entering into a correspondent banking relationship with a
shell bank or another financial institution that has a correspondent banking
relationship with a shell bank.
The Australian Transaction Reports and Analysis Centre (AUSTRAC) has an
enhanced regulatory role under the Bill. AUSTRAC will be required to advise and
assist REs in relation to their obligations and have regard to various factors including
competitive neutrality, economic efficiency and privacy in performing its functions.
To assist law enforcement agencies in carrying out relevant law enforcement and
security functions related to money laundering and terrorist financing, designated
government agencies will be able to access information held by AUSTRAC, under
certain conditions in Part 11 of the Bill. Except as permitted by the Bill, an
AUSTRAC official, a customs officer or a police officer must not disclose
information or documents obtained under the Bill. REs must not disclose they have
formed an applicable suspicion or reported information to AUSTRAC under the
suspicious matter reporting requirements or that they have given further information
to a law enforcement agency in response to a request.
The Bill provides a civil penalty framework for non-compliance with regulatory
obligations under the Bill. It establishes offences for producing false or misleading
information or documents, forging a document for use in an applicable customer
identification procedure, providing or receiving a designated service using a false
customer name or customer anonymity and structuring a transaction to avoid a
reporting obligation. The AUSTRAC CEO is to monitor compliance by REs with
their obligations under the Bill, the regulations and the AML/CTF Rules. He or she
may give a remedial direction to a RE that has contravened a civil penalty provision
and may accept enforceable undertakings. The AUSTRAC CEO may require a RE to
carry out an external audit or a money laundering and terrorism financing risk
assessment.
The Bill will be implemented in stages over 24 months from Royal Assent to allow
businesses to meet their obligations in the most cost effective way.
The current legislative package is the product of extensive consultation with industry
and other interest groups that commenced in December 2003. The legislation
achieves a balance between the Government's law enforcement obligations and
industry's day-to-day operational reality.
The Bill represents a balanced and fair approach to ensuring that money laundering
and terrorist financing risk in Australia is identified, managed and mitigated. It
balances the needs of law enforcement agencies with the day-to-day realities of
businesses that are covered by the legislation.
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Financial Impact Statement
It is not possible to estimate the cost of preventing, detecting and deterring money
laundering and terrorist financing. It is also not possible to quantify accurately the
extent of money laundering and terrorism financing in Australia as the very nature of
these activities mean that they are hidden.
The International Monetary Fund stated in 1996 that the aggregate size of money
laundering in the world could be somewhere between two and five per cent of the
world's gross domestic product. For the Australian economy this is as much as $11.5
billion per year.
Benefits to be gained from implementing this legislative package are set out in the
Regulator Impact Statement (RIS). Implementing this legislative package will cause a
significant increase in available intelligence on money laundering and terrorism
financing as well as improving systems for sharing this information between domestic
and foreign law enforcement agencies. This information will aid in the detection and
prosecution of crime and the confiscation of criminal assets as well as protecting the
integrity and reputation of the Australian financial system.
There is likely to be a positive revenue outcome for the Commonwealth from enacting
the new legislation.
Regulatory Impact Statement
1 Problem
What is the problem being addressed?
The proposed Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF)
legislation is aimed at addressing up to an estimated $11.5B in money laundering per
year in Australia and the threat to national security caused by the financing of
terrorism.
The proposal also seeks to implement Australia's international obligations including a
commitment to bring our AML/CTF regime in line with the international standards as
set out by the Financial Action Taskforce on Money Laundering (FATF). The global
benchmark on money laundering and terrorism financing countermeasures has also
been progressively raised by a succession of other international standards and
legislation such as the US PATRIOT Act, the Third European Directive on Money
Laundering, Basel Committee guidance on Customer Due Diligence and the
Wolfsburg Group Principles on managing money laundering risk as well as
obligations under United Nations (UN) Conventions and UN Security Council and
General Assembly Resolutions.
Failure to meet the international standards will also be problematic for Australia's
financial services sector as the international financial services sector is obliged to take
into account adequacy of AML/CTF compliance when dealing with foreign
counterparts and jurisdictions. Failure of businesses to meet international standards
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puts at risk international business relationships, as well as the reputation of individual
companies and the Australian financial market in general.
The FATF Recommendations
The FATF is an inter-governmental body whose purpose is the development and
promotion of national and international policies to combat money laundering and
terrorist financing. The FATF was established in 1989 by the G7 and Australia was a
founding member.
The FATF Forty Recommendations on Anti-Money Laundering and Nine Special
Recommendations on Counter Terrorism Financing (the FATF Recommendations)
are an important matter of international concern and FATF regards its members as
bound to implement them. The FATF Recommendations also form part of broader
international financial sector standards and are recognised and used by the IMF and
the World Bank when they conduct assessments of a country's financial sector. A
report of Australia's assessment under the IMF Financial Sector Assessment Program
will be released later this year. On 29 July 2005, the United Nations Security Council
endorsed the FATF Recommendation in Resolution 1617.
The 2003 revised FATF Forty Recommendations are recognised as the international AML
standard and extended the scope of recommended AML measures to a wider range of
industries, including businesses and professions outside the financial sector.
Following the terrorist attacks on the United States of 11 September 2001, the FATF issued
eight Special Recommendations on Terrorist Financing. A ninth Special Recommendation
was added in 2004. The Special Recommendations build on the measures outlined in the
Forty Recommendations and are the recognised international counter-terrorist financing
(CTF) standard.
The Recommendations include measures to be taken under each country's criminal
justice and regulatory systems, preventive measures for financial institutions and
certain other businesses and professions, and measures to facilitate international
cooperation. Two key requirements of the Recommendations are:
· Expanded know your customer (or customer due diligence) obligations for
financial institutions requiring ongoing monitoring of customer activity.
· The extension of AML obligations, including customer due diligence,
suspicious transaction reporting and record-keeping obligations, to non-
financial businesses and professions such as casinos, real estate agents, dealers
in precious metals and stones, lawyers, accountants, and trust and company
service providers.
The FATF is currently in the process of assessing member compliance with the
revised Forty Recommendations and Special Recommendations on Terrorist
Financing. As a founding member of the FATF, Australia is committed to a process of
periodic peer assessment. Australia was among the first group of countries to be
evaluated and was last evaluated as part of the FATF Mutual Evaluations in 1996.
A mutual evaluation on-site visit to Australia, involving an assessment by officials
from other FATF member countries of our compliance with the FATF
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Recommendations, occurred in March 2005. The FATF presented and finalised its
report findings in October 2005.
Areas identified requiring improvement
The FATF Mutual Evaluation Report (MER) noted that Australia has extensive and
effective civil and criminal proceeds of crime confiscation schemes (§ 141 MER),
supported by comprehensive money laundering offences which are "well drafted and
very flexible... presenting the most appealing set of options for successful prosecution
possible" (§ 82, MER).
The FATF, however, also found that Australia has conducted only a low number of
money laundering prosecutions (§ 101, MER) and that the anti-money laundering
legislative framework for customer due diligence requirements under the FTRA "is
inadequate and fails to comply with the revised FATF requirements...substantial
amendments are required" (§328, MER).
A complete listing of Australia's FATF MER ratings are listed in the below table.
Please note:
· A Compliant (C) rating is a finding that the assessment criteria of the particular
Recommendations is fully observed.
· A Largely Compliant (LC) rating indicates that there are only minor shortcomings, with a
large majority of the assessment criteria being fully met.
· A Partially Compliant (PC) rating indicates that some substantive action has been taken which
complies with some of the assessment criteria.
· A Non-Compliant (NC) rating indicates that there are major shortcomings, with a large
majority of the assessment criteria not being met.
Table 1: Australia's MER Compliance ratings (October 2005)
Forty Recommendations Rating
1. ML offence LC
2. ML offence mental element and corporate liability LC
3. Confiscation and provisional measures C
4. Secrecy laws consistent with the Recommendations C
5. Customer due diligence NC
6. Politically exposed persons NC
7. Correspondent banking NC
8. New technologies & non face-to-face business NC
9. Third parties and introducers NC
10. Record keeping PC
11. Unusual transactions PC
12. DNFBP R.5, 6, 8-11 NC
13. Suspicious transaction reporting LC
14. Protection & no tipping-off C
15. Internal controls, compliance & audit NC
16. DNFBP R.13-15 & 21 NC
17. Sanctions PC
18. Shell banks PC
19. Other forms of reporting C
20. Other NFBP & secure transaction techniques C
21. Special attention for higher risk countries PC
22. Foreign branches & subsidiaries NC
23. Regulation, supervision and monitoring PC
24. DNFBP - regulation, supervision and monitoring PC
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25. Guidelines & Feedback PC
26. The FIU C
27. Law enforcement authorities LC
28. Powers of competent authorities C
29. Supervisors PC
30. Resources, integrity and training LC
31. National co-operation LC
32. Statistics LC
33. Legal persons beneficial owners LC
34. Legal arrangements beneficial owners PC
35. Conventions LC
36. Mutual legal assistance (MLA) C
37. Dual criminality C
38. MLA on confiscation and freezing C
39. Extradition C
40. Other forms of co-operation C
Nine Special Recommendations Rating
SR.I Implement UN instruments LC
SR.II Criminalise terrorist financing LC
SR.III Freeze and confiscate terrorist assets LC
SR.IV Suspicious transaction reporting LC
SR.V International co-operation LC
SR VI AML requirements for money/value transfer services PC
SR VII Wire transfer rules NC
SR.VIII Non-profit organisations PC
SR. IX Cash couriers PC
Why is government action needed to correct the problem?
The Interpretive Notes to the FATF Recommendations state that basic obligations
should be set out in law or regulation. These include key Recommendations dealing
with customer identification, record keeping and transaction reporting.
While industry understands the reputational risks of non-compliance with the
international standards, industry will not be able to implement all necessary
AML/CTF measures without legislative backing. It is also unlikely that customers
would comply with the requirements unless they were required to do so by law.
Any measures that Australia adopts that strengthen its anti-money laundering and
counter-terrorism financing framework, and contribute to stronger prevention world-
wide will be welcomed by the global community.
On 8 December 2003 the Minister for Justice and Customs issued a media release that
announced a review of Australia's AML/CTF policy and regulation:
"Senator Ellison said the Government will now proceed with a
fundamental overhaul of Australian legislation, including the Financial
Transaction Reports Act 1988, which will balance effective regulation
and a sensible approach to the impact of the new laws on industry and
small business... Australia will now commit to implementing FATF's
revised 40 Recommendations which will require a significant review of
Australia's anti-money laundering regime, including some new measures
intended to counter terrorist financing," Senator Ellison said."
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Identification of problems and risks
FATF released their revised 40+9 recommendations in June 2003. Banking sector
industry groups (the Australian Bankers Association and the then named International
Banking and Securities Association now AFMA) wrote to the Treasurer shortly
thereafter urging the Government to take immediate action to implement the revised
recommendations so that their members could maintain their international position.
The Minister for Justice and Customs first considered whether Australia's existing
laws (with some minor amendments) were sufficient to comply with the revised
recommendations. Ultimately the Minister concluded that it was necessary to
comprehensively review Australia's legislation. This decision was vindicated in
October 2005 when FATF released a report which evaluated Australia's compliance
with the recommendations. The findings of the evaluation clearly identify that
Australia's AML/CTF regime requires far reaching review.
2 Objectives
What are the objectives of government action?
The policy objective behind this is to ensure that Australia implements the most
effective and proportionate measures to deter, detect and disrupt money laundering
and the financing of terrorism.
Effective money laundering and terrorist financing controls are required to:
Provide a disincentive to crime by reducing its profitability. Robust systems of
controls make it difficult for criminals to introduce their ill-gotten gains into the
financial systems and permit the detection, interception and confiscation of
criminal funds make it harder for individuals or groups to profit from their
crimes.
Provide a disincentive to crime by reducing the pool of money available to
finance future criminal activity. Robust systems of controls to detect, intercept
and confiscate criminal funds make it harder for individuals or groups to fund
their next crime.
Aid the detection and prosecution of crime. The intelligence provided from
money laundering and terrorist financing controls may provide leads, which can
be crucial in disrupting terrorism, money laundering and linked offences, in
convicting criminals and in identifying assets to assist civil recovery effort.
Protect the integrity of the financial system and reputation of Australian
business. The internationally competitive position of Australian business
depends upon its reputation for integrity, good governance and honest dealing.
Avoid economic and competitive distortions. Legitimate businesses are
disadvantaged when competing against businesses controlled by criminals who
may be willing to accept lower rates of return or even losses to maintain the
appearance of being legitimate investments.
The proposed legislation is intended to update Australian legislation in line with the
FATF 40 + 9 Recommendations, ensuring that Australia is in line with international
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best practice for preventing money laundering and terrorist financing. The proposed
legislation seeks to implement other Australia's international obligations and matters
of international concern including
the United Nations Convention Against Corruption (UNCAC) 2003,
the United Nations Convention Against Transnational Organised Crime
(UNTOC) 2000 (the Palermo Convention),
the Convention on Laundering, Search, Seizure and Confiscation of the Proceeds
of Crime 1990,
the International Convention for the Suppression of the Financing of Terrorism,
United Nations General Assembly Resolutions 51/210, and
United Nations Security Council Resolutions1267, 1269, 1373, 1456 and 1617.
Is there a regulation/policy currently in place? Who administers it?
Australia's existing financial reporting regulation is the Financial Transaction Reports
Act 1988 which is administered by the Australian Transaction Reports and Analysis
Centre (AUSTRAC).
3 Options
Assessment of regulatory forms for their suitability
There are three options for implementing reforms to Australia's AML/CTF system:
retain the status quo; update the existing legislative framework; or, develop a new,
more robust legislative framework.
Retaining the status quo (the do nothing option) is an inappropriate option as
Australia's compliance with the relevant international conventions would remain
inadequate. Australia's systems would remain unable to respond to the significant
technological shift in the operation and composition of the financial system since the
introduction of the existing legislative framework (1988) and the increased risk of
terrorism financing in today's climate.
Updating the existing legislative framework should also be dismissed as a feasible
option. This legislative system is designed around cash dealing and significant
changes would be required to bring it in line with international standards and today's
financial markets which are growing more dependent on electronic commerce and
non-face-to-face business relationships. An additional obstacle would be broadening
the coverage of the existing legislation, which is essentially based on cash transactions
through the banking system, to cover other sectors such as insurance, superannuation,
bullion dealers and gambling services. This problem would be increased when it
came time to include real estate agents and jewellers.
It was therefore decided to develop a new, more robust legislative framework which
has ultimately resulted in a legislative package consisting of the AML/CTF Bill 2006
(the Bill), the AML/CTF (Transitional Provisions and Consequential Amendments)
Bill 2006 (the Transitional Bill) and a draft indicative set of AML/CTF Rules (the
Rules).
8
Development of this legislative package has been an iterative process between the
Attorney-General's Department (AGD), the Australian Transaction Reports Analysis
Centre (AUSTRAC), law enforcement agencies and industry. Since the
announcement of the legislative review in December 2003 there has been a series of
meetings between Government agencies and industry to discuss the nature and form
of the proposed legislation.
Earlier consultation was based around high level principles set out in a series of Issues
Papers which were released for several weeks for public comment. These Issues
Papers proposed a range of feasible policy options including self-regulatory and co-
regulatory approaches. In submissions made in response industry groups made it clear
that, although they may assist in developing operational guidelines and standards for
compliance it was not appropriate for them to undertake a regulatory function.
The consultation process throughout 2004 and early 2005 established that the
legislative obligations needed to respond flexibly to a range of different operational
needs across a range of different business sectors and be able to respond to both small
and large business. It was ultimately agreed that the implementation of the
obligations should be based on an assessment by the affected business of the risk of
money laundering and terrorist financing posed by the services offered and the
customer base. A risk based regulatory approach is common across other jurisdictions
which have implemented the FATF Recommendations including the United States
and the United Kingdom and has been endorsed by the Third European Union
Directive on Monday laundering and terrorist financing.
This regulatory approach would be included in a legislative framework that set out the
regulatory objectives and parameters in legislation (the AML/CTF Bill 2006 (the
Bill). Detailed guidance on how these objectives could be achieved would be set out
in subordinate legislative instruments known as the "AML/CFT Rules" (the Rules)
which would be developed in close consultation with industry. Several working
groups were established and met throughout 2005 and 2006 to draft an indicative set
of Rules that achieved the objectives of the legislation but had minimal impact on
industry. These Rules will continue to be refined and augmented throughout the life
of the regulatory regime so that industry will have an ongoing role in determining the
extent of the obligations under the regulatory regime.
As a further step towards minimising the compliance burden it was decided to
approach the new legislation in two tranches, with the first tranche covering the
financial services sector where they provide designated services and those businesses
already subject to some anti-money laundering regulation as cash dealers under the
Financial Transaction Reports Act1988. This includes banks, credit unions, building
societies, insurance companies, money remitters, bureaux de change, and trustees and
extends to casinos, TABs wagering service providers and bullion dealers.
The second tranche will cover real estate agents, jewellers, and a range of non-
financial transactions provided by accountants and lawyers. The second tranche will
focus more closely on the small business sector and will be developed once
implementation of the first tranche has commenced.
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4 Impact analysis (costs and benefits) of each option
Who is affected by the problem and who is likely to be affected by its proposed
solutions?
The issues of money laundering and terrorism financing have the potential to affect all
Australians.
Terrorism financing is an integral component of terrorism activity. Any act of
terrorism could have a far reaching impact on wide sections of the community and the
Australian economy.
Obligations under the AML/CTF Bill are imposed when entities provide designated
services. Entities providing any of the designated services listed in Tables 1-4 of
clause 6, Part 1 of the Bill are referred to as reporting entities. The services covered
by the Tables in clause 6 are separated into financial service, bullion, gambling
services and prescribed services (i.e. a service specified in the regulations).
Financial services providers
The list of financial services covered by Table 1 of clause 6 of the Bill is extensive but
these businesses will only have obligations when they provide designated services (for
example when accepting a deposit, supplying goods by way of lease, providing a
issuing a debit card, issuing or selling a security or derivative and accepting
contributions to a superannuation fund). The business types likely to be affected by
the Bill include banks, insurance providers, superannuation funds, finance and leasing
providers, stockbrokers, and remittance dealers. In addition, accountants and lawyers
will also be affected to the extent that they provide financial services (they are not
captured for providing advice and services relating to other aspects of their business).
Due to the distributional role that financial planners play in the financial sector
industry has requested that they be subject to customer identification obligations
under the Bill when they make arrangements for a person to receive a designated
service. To maintain efficiency in the distribution of financial products the financial
planning industry will have obligations limited to customer identification, record
keeping and suspicious matter reporting.
Bullion dealers
Any entity that buys or sells bullion, where the transaction is in the course of carrying
on a business, will be affected by the Bill.
Gambling service providers
Business types likely to be affected by the Bill include casinos, bookmakers, online
gambling service providers, and pubs and clubs (in their capacity as providers of
electronic gaming machines). The Bill excludes lottery type games such as instant
scratchies, keno, powerball and lotto.
The Bill will extend customer identification obligations to these sectors only to the
extent that the value of the winnings paid out reach a certain threshold. The current
threshold being negotiated with industry is AUD10,000.
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Service providers to be prescribed
The Bill contains a provision allowing the inclusion of other designated services in the
regulations so that the Government is able to place AML/CTF obligations on
providers of new products or services or to include products or services specifically
designed to otherwise avoid coverage.
Obligations under the FTRA
Many of the reporting entities under the first tranche have existing obligations as cash
dealers under the FTRA which will be similar to those that they will incur as reporting
entities providing designated services. The following table illustrates the incremental
burden on affected sectors which are covered under both existing legislation and
under the proposed new regime. It is clear that the proposed legislation builds on
existing requirements.
Existing Proposed
requirem
requirements ents
AML/CT
F Bill &
FTRA Rules
Customer identification
Ongoing customer due
diligence
Record keeping
Suspicious matter reporting
Transaction monitoring
Threshold transaction
reporting
International funds transfer
instructions
AML/CTF programs
Correspondent banking
Some obligations of the new legislation may also be currently undertaken by some
businesses despite them not forming part of the requirements of the FTRA. These
obligations may be part of good business practice or requirements under other
legislation.
Customers of reporting entities
Customers of reporting entities will be indirectly affected by the obligations imposed
by the Bill. However, the impact will be significantly reduced due to the fact that
existing customers of that reporting entity will be exempted from the identification
requirements of the Bill.
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All new customers of a reporting entity will be required to verify their identity. For
new customers of banks and some other financial institutions this will impose similar
requirements as currently imposed under the FTRA. Customer identification and
verification obligations will be new for new customers in the other sectors.
How will each proposed option affect existing regulations and the roles of
existing regulatory authorities?
The AML/CTF Bill will replace the FTRA. In doing so AUSTRAC's role will
expand to encompass a regulatory role with responsibility for monitoring and
enforcing compliance with obligations under the Bill.
Identify and categorise the expected impacts of the proposed options as likely
benefits or likely costs
The task of accurately quantifying the extent of money laundering and terrorism
financing in Australia has proven to be difficult due to the fact that our current system
is not robust enough to be able to identify the extent of the problem. It is also
inherently problematic to quantify the economic benefit of deterring, detecting, and
preventing money laundering and terrorism financing.
The very nature of money laundering means that there is very little reliable data on the
extent and impact of the crime. Unlike a burglary, theft or assault, the crime of
money laundering is not visible there are no immediate victims to report the crime.
Without reports or prosecutions the magnitude of the problem can only be estimated.
This difficulty is supported by international experience in several jurisdictions
including the United States and the United Kingdom. Officers from the US Treasury
have confirmed that there has been no formal cost benefit analysis done of AML/CTF
legislation. The FATF confirm the difficulty and state that "it must be said that
overall it is absolutely impossible to produce a reliable estimate of the amount of
money laundered and therefore the FATF does not publish any figures in this regard".
The most recently released study of the problem in Australia was the AUSTRAC
report Estimates of the Extent of Money Laundering In and Throughout Australia by
John Walker Consulting Services (1995). This study also highlights the difficulties in
reaching conclusive results:
Assembling all the estimates of the extent of money laundering is an interesting exercise, as it
demonstrates the wide range of opinions held by those who are regarded as experts in the field.
A range of between $1000 and $4500 million would appear to be a sensible interpretation of the
information provided in these sets of estimates, with perhaps some confidence that the most
likely figure is around $3500 million, since this figure lies within all three estimate ranges.
There is no doubt that the estimates contained in this report cannot be used in isolation with
absolute confidence.
Therefore, the extent of money laundering according to the Walker report can be best
estimated to be $3.5B, and up to an estimated $4.5B.
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The International Monetary Fund has stated in 1996 that the aggregate size of money
laundering in the world could be somewhere between two and five percent of the
world's gross domestic product. For the Australian economy this equates to as much
as $11.5B per year.
It is perhaps even more problematic to accurately quantify the benefit of stopping a
terrorism attack. Despite an ongoing threat, effective policing, monitoring and
surveillance help to minimise the risk of a terrorism attack, and it is difficult to derive
a probability of such an attack occurring. Attempting to measure the cost of a
potential attack is perhaps more difficult and would depend on a number of variables
including the location, casualties, property damage, infrastructure damage etc in
conjunction with intangible effects such as loss of confidence and productivity.
Despite the difficulty in quantifying the benefits of the proposed legislation, there are
clearly benefits to be gained from preventing money laundering and terrorism
financing as outlined under Objectives above.
Establishing an accurate measure of the likely costs of the proposed AML/CTF
regime is also an extremely difficult task for several reasons:
The AML/CTF obligations are designed to apply flexibly according to the
affected business's assessment of risk. Several businesses will be entitled to
exemptions from some obligations under the Bill and many will offer products
the value of which will fall below applicable thresholds. Finally obligations
under the legislation will be implemented according to a phased program which
permits those obligations which are most costly for industry to be implemented
24 months after commencement. The degree of in built flexibility in the
regulatory regime makes it hard for firms to estimate up front the costs they will
face.
It is difficult to then aggregate and analyse survey results due to the wide variety
of firms that are affected by the proposals and the numerous different approaches
that firms might take to implementation. This variety again limits our ability to
audit responses. It also means that for any one type of firm there is a limited
amount of evidence about costs. This increases the level of uncertainty
surrounding them.
Some of the aspects of the proposed AML/CTF regime are already undertaken by
some entities as part of their obligations under the FTRA and/or as part of their
fraud protection measures. It is difficult to know whether estimated costs for the
proposed legislation include some costs otherwise attributable to pre-existing
measures.
5 Consultation
Who are the main affected parties?
The main affected parties are those that provide services identified in the tables 1, 2
and 3 of clause 6 of Part 1 of the AML/CTF Bill. The parties likely to be affected by
the Bill include the financial services industry, gambling service providers, bullion
dealers, and accountants and lawyers to the extent that they provide financial services.
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Consultation with affected parties has taken place over nearly three years through:
Issues papers - from 24 January 2004, the Attorney General's Department
progressively released five industry-specific issues papers outlining anti-money
laundering regulatory options. 46 submissions were received in response.
On 24 June 2004, the Minister for Justice and Customs released a paper outlining
the Australian Government's Policy Principles on implementing the FATF's new
anti-money laundering and counter-terrorism financing standards. The exposure
Bill and sample AML/CTF Rules released in December 2005 reflected the key
principles in the Policy Principles Paper.
Industry and public consultation in 2004 - From January 2004 until mid 2005 the
Department conducted a series of presentations to a wide range of industry
groups based on the Issues Papers and the Policy Principles. Dozens of bilateral
meetings took place and public consultation forums were held in Sydney and
Melbourne.
Roundtable meetings 2005 - the Minister for Justice and Customs, Senator the
Hon Chris Ellison, held a series of round table meetings with industry from July
to September 2005. Industry sectors involved in the round table meetings
included representatives of the financial services sector and the gambling sector
as well as the accounting and legal professions.
Ministerial Advisory Group - The Minister for Justice and Customs established a
Ministerial Advisory Group involving representatives of selected industry
associations for high level discussion of AML/CTF implementation options for
Australian industry as a whole and for each of the affected industry sectors. The
Group, which also included representatives from Treasury, the Australian
Transaction Reports and Analysis Centre (AUSTRAC) and the Office of Small
Business, met on 11 March, 24 June and 2 December 2004.
The Advisory Group was later reconstituted in January 2006 following the release
of the exposure draft Bill to include other affected sectors. The reconstituted
Advisory Group has since met on four more occasions.
Systems working groups - At the third meeting of the Ministerial Advisory Group
it was agreed that a Systems Working Group be established to examine key
implementation issues arising from proposed AML/CTF reforms. The work of
the Group informed preparation of the exposure Bill.
Additional and more specialised working groups were formed in January 2006
following the release of the exposure draft Bill to cover issues specific to the draft
legislation.
An exposure draft Bill was released for a period of four months consultation in
December 2005. A revised exposure draft Bill and draft Rules were released for
a further period of three weeks public consultation in July 2006. The two public
consultation periods resulted in over 200 submissions
14
Draft documents and explanatory information have also been publicly available
on the AGD website.
Senate Legal and Constitutional Committee the exposure draft Bill was referred
to the Committee in February 2006. Submissions were called for and public
hearings were held and a report handed down on 13 April 2006.
A continuous program of meetings between the Department, AUSTRAC and affected
industry sectors has taken place throughout the process to ensure that all views and
opinions have been given due consideration.
What are the views of those parties?
Submissions from industry illustrate that there is general agreement from industry
regarding:
The broader need for AML/CTF reform: numerous submissions recognised the
need for a robust anti-money laundering and counter-terrorism financing regime
and supported both FATF's Recommendations and the Australian government's
commitment to addressing money laundering and terrorism financing risks.
The risk-based framework of the legislation: several submissions noted that the
best way to address AML/CTF reforms was by incorporating a risk-based
approach, and supported the Government's commitment to ensuring that a risk-
based approach was reflected in the new laws.
The extent of the consultation process: the consultation process conducted by the
Minister for Justice and Customs, the Department and AUSTRAC has been
widely acknowledged and supported.
6 Conclusion and recommended option
Provide a brief summary of the assessment of each option
The do nothing option
The existing AML/CTF regime is incapable of addressing up to an estimated $11.5B
in money laundering per year in Australia. Equally, the existing FTRA (enacted in
1988) is now outdated and is not sufficiently robust and flexible to counter the threat
to national security caused by the financing of terrorism.
In October 2005 Australia was evaluated on its existing AML/CTF regime and was
found to be significantly non-compliant with approximately half of the FATF
Recommendations. Australia remains one of the least compliant countries assessed to
date in the current round of FATF evaluations. The system implemented by the
FTRA is clearly lagging behind international best practice and is at risk of
jeopardising Australia's financial market reputation.
The mutual evaluation process is enhanced by the FATF's policy for dealing with
members not in compliance with its recommendations. The measures contained in
15
this policy represent a graduated approach aimed at reinforcing peer pressure on
member governments to take action to tighten their anti-money laundering systems.
The policy starts by requiring the country to deliver a progress report at plenary
meetings and, as a final measure, the FATF membership of the country in question
can be suspended.
Failure to meet the international standards will be problematic for Australia's
financial services sector as the international financial services sector is obliged to take
into account adequacy of AML/CTF compliance when dealing with foreign
counterparts and jurisdictions. Failure of businesses to meet international standards
puts at risk international business relationships, as well as the reputation of individual
companies and the Australian financial market in general.
Retaining the existing anti-money laundering and counter-terrorism financing regime
is not a viable long-term solution.
New legislation option
The legislative package of the Bill, the Transitional Bill and the Rules implements a
new and robust AML/CTF system in Australia. The legislative package implements a
risk-based approach to AML/CTF regulation which achieves the regulatory objectives
with minimal burden and impact on affected sectors.
The proposed legislation replaces an outdated regime with a regulatory system more
attuned to a modern and dynamic financial market characterised by increased
electronic commerce and non-face-to-face transactions.
Importantly, the proposed legislation takes steps to improve Australia's compliance
with international standards and preserve Australia's financial market reputation.
What is the preferred option(s)?
Implementation of the regulatory system established by the legislative package
follows international best practice and generates the greatest net benefit for the
community taking into account all impacts.
Briefly outline the main assumptions that the conclusion rests upon
A risk based approach to regulation has been endorsed by the "Report of the
Taskforce on Reducing Regulatory Burdens on Business". The benefits from a more
risk based approach are as follows:
i. industry can focus on real risks allowing for better risk mitigation and better
cost benefit;
ii. industry have the flexibility to adapt to risks that change over time;
iii. there is less inconvenience to the majority of customers who are not
criminals;
iv. the purpose of AML/CFT tools is clearer which achieves more "buy-in" from
industry and staff;
v. there is no single blueprint for the criminal to discover and avoid;
vi. industry is required to engage with AML/CFT more thoughtfully and to bring
their expertise to bear on the issues
vii. recognises that industry is best place to assess their own individual exposure
to money laundering/terrorist finance risk
16
Why is this option preferred and others rejected?
The do nothing and update options were rejected as they would have been
ineffective in meeting international best practice. The existing system is based on
cash dealing and does not lend itself to extended coverage and the changing financial
market environment. The existing system is based on a prescriptive regulatory
framework making it difficult to tailor obligations to business efficiency.
The preferred option updates Australia's AML/CTF systems in line with international
best practice. The preferred option recognises industry's experience and knowledge
and builds on core business practice. It shifts the management of money laundering
and terrorism financing risk to the business sector and allows business to adapt the
obligations to the risks they face, thereby minimising costs and maximising
operational efficiency.
7 Implementation and review
How will the preferred option be implemented?
The obligations of the legislation will be progressively phased in over a three year
period to reflect the complexity of, and resources required for, each part of the Bill.
Upon Royal Assent certain parts of the Bill will become active. Other parts will
become active at periods of six, 12 and 24 months after Royal Assent. The
implementation schedule has been negotiated and designed by industry
representatives and government agencies and incorporates the concept of a
prosecution-free period. The prosecution-free period affords businesses an
additional 12 months to become compliant with that active part of the legislation so
long as they are making best endeavours to comply.
The implementation schedule for the obligations of the Bill is as follows:
End of
Implementation
Obligation Part of the Bill prosecution-
Date free period
1 Jan 2007 Royal Assent (estimated)
1 Jan 2007 31 Dec 2007
Records of transactions, Parts 1, 4, 5, 6, 9,
records of funds transfer 10 (Div 2 & 4), 11
instructions, and various 17, 18 (except
administrative Parts s204A), and all
exemption
provisions
1 July 2007 30 June 2008
Reporting obligations of Parts 3 (Div 5), 8,
reporting entities, 10 (Div 5)
correspondent banking,
record-keeping requirements
1 Jan 2008 31 Dec 2008
Identification procedures, Parts 2 (except
AML/CTF Programs, record- Div 6), 7, 10 (Div
keeping requirements 3)
1 Jan 2009 31 Dec 2009
Identification procedures, Parts 2 (Div 6), 3
17
reporting obligations of (Div 2, 3, &4),
reporting entities s204A
Is the preferred option clear, consistent, comprehensible and accessible to users?
Yes. The legislative package will be enhanced and clarified through guidelines to be
issued by AUSTRAC. The guidelines will be developed with the assistance of
industry bodies and will assist industry to understand their obligations and provide
guidance on meeting the requirements of the legislation. An Explanatory
Memorandum to the Bill will also clarify the intent of the Bill.
The risk based regulatory approach implemented by the legislative package depends
on a strong partnership and ongoing dialogue between regulated sectors, AUSTRAC
and government policy makers which will be achieved through the continuation of
standing consultative bodies comprising stakeholder representatives.
The new AML/CTF regime will also be explained to the wider community through a
public education campaign.
Is it sufficiently flexible to adapt to various situations and circumstances?
Yes. The legislation is risk-based which allows all business (large or small, and
regardless of industry) to put in place systems that suit their business size and level of
money laundering and terrorism financing risk.
The framework of the legislation is established in the Bill, however the legislative
detail is set out in the Rules which can be amended to adapt to changing situations and
circumstances.
What is the impact on business, including small business, and how will
compliance and paper burden costs be minimised?
A number of steps have been taken to minimise the burden on legitimate business.
The risk-based framework of the proposed legislation is the primary means of
minimising this burden by providing business with the flexibility and opportunity to
structure their AML/CTF programs to the money laundering and terrorism financing
risked faced in their specific situation. Furthermore, business has played a direct role
in the development of the Rules which has helped to ensure that unnecessary
requirements have been avoided.
The implementation strategy negotiated and agreed with business should also
minimise the cost burden of the proposal. The staggered implementation means that
industry will be given more time to implement those elements of the legislation that
are more complex and resource intensive.
How will the effectiveness of the preferred option be assessed? How frequently?
The responsible Minister is required to cause a review of the operation of the
legislation within seven years of commencement. The effectiveness of the proposed
legislation will also be measured by the next mutual evaluation of Australia's
AML/CTF regime by FATF. This evaluation is not scheduled to take place for six to
eight years. However, it will be possible to self-assess Australia's compliance to
gauge improvements made under the proposed legislation.
18
Given the industry has a role in the development of the rules, at an operation level it is
reasonable to predict that the AML/CTF legislative package will undergo a period of
almost continual assessment, with changes made as the need arises.
The main intermediate, quantifiable benefits of the legislative package would be an
improvement in the intelligence available to law enforcement and prosecutors, with a
resultant increase in:
suspicious matter reports received from businesses newly included within the
regulated sector;
criminal convictions (for the predicate or money laundering offence) to which
these reports contributed;
the value of criminal assets confiscated and the cash forfeited to which these
reports contributed; and,
disruptions of criminal activity.
It is important to note that increases in the number of convictions and confiscation
orders against launderers or prosecution for breaches of the Regulations will not be
the strongest indicator of the proposals' success. The Government's objectives will
also be promoted by disrupting and deterring criminal activity, neither of which will
lead to convictions or confiscations. As with other law enforcement measures, it is
certainly not necessary that AML/CTF regulation be self-funding.
If the preferred option takes the form of regulation, is there a built-in provision
to review or revoke the regulation after it has been in place for a certain length
or time?
Yes. The responsible Minister is required to cause a review of the operation of the
legislation within 7 years of commencement. Given the nature of the problem, there
is no current intention to revoke the legislation at any time.
Abbreviations Used in the Explanatory Memorandum
AML Anti-Money Laundering
CTF Counter-Terrorism Financing
DNFBP Designated Non-Financial Business and Professions
FATF Financial Action Task Force
FTRA Financial Transaction Reports Act 1988
FATF SR (1-9) Refers to a Special Recommendation on Terrorist
Financing by the Financial Action Task Force. There
are Nine such recommendations, referenced by the
relevant number after the "FATF SR" abbreviation.
19
NOTES ON CLAUSES
Part 1--Introduction
Clause 1 Short title
This clause provides that the short title of the Act is the Anti-Money Laundering and
Counter-Terrorism Financing Act 2006.
Clause 2 Commencement
This clause provides the Commencement dates for particular provisions of the Bill.
Column 1 lists particular provisions either by reference to a Part or Division within a
Part, or in some instances, by reference to the clause numbers.
Column 2 provides the Commencement day for the relevant entry in Column 1. The
Commencement dates have been listed by reference to a period after the Bill receives
Royal Assent.
Column 3 has been inserted in order to allow for additional information, such as the
actual date of Commencement to be added at the appropriate time.
The approach taken in ordering commencement dates in items in the table in Clause 2
is to stagger commencement of respective Parts according to the degree of difficulty
in implementing the obligations imposed on reporting entities by particular Parts. On
the other hand Parts which provide powers and administrative framework for the
continuation of the Australian Transaction and Reports Analysis Centre (AUSTRAC)
will commence on Royal Assent so that appropriate arrangements with regard to them
can commence as soon as possible.
For example, the following Parts commence the day after the Bill receives Royal
Assent:
Part 1 Introduction
Part 4 - Reports about cross-border movements of physical currency and
bearer negotiable instruments
Part 5 - Electronic Funds Transfer Instructions
Part 6 - Register of Providers of Designated Remittance Services
Part 9 - Countermeasures
Part 10, Record-keeping requirements - Divisions 1, 2, 4 and 7
Part 11 - Secrecy and Access
Part 12 - Offences
Part 13 - Audit
Part 14 - Information gathering powers
Part 15 - Enforcement
Part 16 - Administration
Part 17 - Vicarious Liability
20
Part 18 - Miscellaneous
Schedule 1 - Alternative Constitutional Basis
The remaining provisions are to commence within 6 and 24 months of Royal Assent,
depending on the extent to which it is anticipated that business changes will be
required in order to achieve compliance with the Bill. Consultation between industry
and AUSTRAC has occurred to settle these Commencement times.
The following obligations are to commence 6 months from the day after Royal
Assent:
Part 3, Division 5 - Reporting obligations of reporting entities
Part 8 - Correspondent banking
Part 10, Division 6 Records about due diligence assessments of
corresponding banking relationships
The following obligations are to commence within 12 months of the day after Royal
Assent:
Part 2, excluding Division 6 Identification Procedures (excluding
requirements for ongoing customer due diligence)
Part 7 Anti-Money Laundering and Counter-Terrorism Financing programs
Part 10, Division 3 Record-keeping requirements (records of identification
procedures)
Part 10, Division 5 Records about anti-money laundering and counter-
terrorism financing programs
The following obligations are to commence within 24 months from the day after
Royal Assent to facilitate industry transition to the new requirements:
Part 2, Division 6 Ongoing Customer Due Diligence
Part 3, Divisions 1, 2, 3, 4 and 6 Reporting Obligations
Clause 3 Objects
This clause sets out the objects and purpose of the Bill and thereby indicates the
constitutional bases supporting the Bill. The objects of the Bill are to fulfil
Australia's international obligations and address matters of international concern
including the need to combat money laundering and terrorist financing.
Sub-clause 3(2) lists international Conventions and United Nations Security Council
Resolutions by which Australia is bound and which contain relevant international
obligations.
Sub-clause 3(3) lists relevant international instruments which reflect international
concern about money laundering and terrorist financing.
The Bill, which is intended to give effect to the FATF 40 Recommendations on
Money Laundering and to the FATF Special Recommendations on Terrorist
Financing, is supported by the external affairs power. The external affairs power is a
21
general purposive head of power under the constitution and is not confined to the
implementation of treaty obligations. It will support laws that give effect to a matter
of international concern, reflected in the outcome of an international negotiation such
as has produced the FATF Recommendations. As a proportionate response to
achieving the objectives of the FATF Recommendations the Bill is supported by the
external affairs power.
However the objects clause does not itself give the Bill its character with respect to a
head of power under the constitution. The actual operation and effect of the Bill will
do that. An objects clause is relevant to the construction of a provision and is useful
where a purposive power, like the external affairs power, is being relied upon in
spelling out the intended purposive basis.
The Bill relies for its general operation on the broad purposive external affairs power
but in addition it also relies on the heads of power set out in Schedule 1. This
approach has been adopted to ensure that the Bill does not go beyond power in
reliance on the purposive head of power and to ensure that the other heads of power
set out in Schedule 1 may also be relied upon.
Clause 4 Simplified Outline
This clause includes a table setting out a simplified outline or scheme of the Bill. In
brief the scheme is that financial institutions, or other legal or natural persons who
provide a designated service listed in column one of the tables in sub-clause 6(2) of
the Bill, to the customers listed in column two of the tables will be reporting entities
who thereby acquire responsibilities under the Bill.
In general terms reporting entities must carry out a procedure to verify a customer's
identity before (or in some special cases, after) providing a designated service.
Existing customers of reporting entities and certain services which are considered to
pose a low risk of money laundering or terrorist financing have modified
identification procedures.
Reporting entities must report to the AUSTRAC CEO suspicious matters, transactions
which exceed a certain threshold and international funds transfer instructions.
Cross-border movements of currency above a threshold must be reported to the
AUSTRAC CEO or a customs or police officer. Where requested, a person must
report cross border movements of Bearer Negotiable Instruments.
Electronic funds transfer instructions must include customer originator information.
Providers of designated remittance services must be registered with the AUSTRAC
CEO. Reporting entities must develop anti-money laundering and counter terrorism
financing programmes. Financial institutions are subject to restrictions as to entry of
correspondent banking relationships. Reporting entities must comply with certain
record keeping obligations.
22
Clause 5 Definitions
account - this term is used in the tables of designated services in clause 6 especially
at item 1 in table 1 (opening an account - see also the explanatory memorandum on
the definition of the term opening ). It is included to ensure that a designated service
that involves operation of an account includes accounts where the holder's interest is
not recorded in dollar terms but in the form of unit holdings such as in a cash
management trust or other trust as prescribed by the AML/CFT Rules (see
explanatory memorandum on the definition of the term AML/CFT Rules)
account provider - this term is defined in relation to the term account which is
separately defined (see explanatory memorandum for account ) and means a person
with whom an account is held. This term is used in items 1 and 2 in Table 1 in
clause 6.
acquiring the definition leaves the term to be read according to its ordinary
meaning and the words is taken to be are intended to extend the ordinary meaning.
The definition also provides that the term includes anything that under the regulations
is taken to be acquiring for the purposes of the Bill. This will enable regulations to be
made to capture activity designed to circumvent obligations under the Bill.
ADI - this is an abbreviation for the term authorised deposit taking institution . The
term has the same meaning as in section 3 of the FTRA. It is used in items 1, 2, 3, 4,
5, 17 and 24 of Table 1. It is also relevant to the definition of the term owner-
managed branch in clauses 5 and 12, to the owner managed branch exception to the
tipping off provision in sub-clause 123(8), to electronic funds transfer obligations
under clauses 8 and 9, and to record retention obligations in clause 109 and clause
110.
AFP member - defined as a member or special member of the Australian Federal
Police, this term is relevant to definitions of investigating officer , police officer and
is used in the secrecy and access provisions in Part 11.
agency - this term enables a Department of the Commonwealth, a State or Territory
to be referred to as an agency thereby enabling such Departments to be included in the
definition of the term designated agency in clause 5 (see explanatory memorandum on
designated agency). The term is also used in the definition of non-designated
Commonwealth agency and is relevant to the definition of official and government
body. The term is used in clause 126 regarding AUSTRAC authorising access to a
designated agency, and throughout Part 11 (Secrecy and Access)
allowing a transaction - this phrase is used in item 3 of Table 1 and refers to
allowing a transaction to occur. The term means that, irrespective of whether the
person had a discretion to provide the service, the obligations under the Bill will still
apply when the reporting entity provides the designated service.
AML/CTF Rules an abbreviation of Anti-Money Laundering/Counter-Terrorism
Financing Rules, the AML/CTF Rules are those made by AUSTRAC under clause
229 (see explanatory memorandum for clause 229).
anti-money laundering and counter-terrorism financing program - includes a
standard, joint or special anti-money laundering and counter-terrorism financing
program as provided in clause 83 (see explanatory memorandum on clause 83).
23
applicable customer identification procedure - this phrase is relevant to meeting
obligations under Part 2 in accordance with the anti-money laundering and
counter-terrorism financing program which a reporting entity must adopt and comply
with in accordance with Part 7 (see explanatory memorandum on Part 7). This term
has the meaning ascertained in Part B of an anti-money laundering and
counter-terrorism financing program that applies to, and has been adopted by the
reporting entity. If the designated service is provided under item 54 of table 1 the term
has the meaning provided in the term special anti-money laundering and counter-
terrorism financing program which term is defined in clause 86 (see explanatory
memorandum on clause 86).
approved - this term is used to refer to an approval by the AUSTRAC CEO in the
following sub-clauses: 41(3)(a), 43(3)(a), 45(3)(a), 47(3)(a), 50(6)(a), 53(8)(a),
59(2)(a), 65(4)(a), 76(2), 146(2), 244(1)(b) and 244(2)(b)
approved deposit fund this term is defined to have the same meaning as in the
Superannuation Industry (Supervision) Act 1993 (SIS Act) which is a fund that:
(a) is an indefinitely continuing fund; and
(b) is maintained by:
(i) an approved trustee; or
(ii) an RSA licensee that is a constitutional corporation; and
(c) is maintained solely for approved purposes.
The SIS Act defines the term approved purposes as including specified purposes
under the Income Tax Assessment Act 1936, the Superannuation Guarantee
(Administration) Act 1992, purposes approved by the rules of the superannuation fund
or otherwise approved by Australian Prudential Regulation Authority (APRA).
approved third party bill payment system this term is only used in sub-clause 67(1)
which provides that Part 5 (electronic funds transfer instructions) does not apply to an
instruction arising from the use of an approved third-party bill payment system.
Approved systems will be those prescribed by the AML/CTF Rules (see explanatory
memorandum on AML/CFT Rules). An example of a system that could be approved
by the Rules is B Pay .
arrangement - this broad and inclusive definition of the term arrangement is
incorporated into the definition at clause 10 of the term designated remittance
arrangement. Designated remittance arrangements are designated financial services
at items 31 and 32 in table 1 of sub-clause 6(2). The term designated remittance
arrangement also appears at items 3 and 4 of the table in clause 46. This table lists
types of international funds transfer instructions and items 3 and 4 include such
instructions given by a transferor entity under a designated remittance arrangement.
The term arrangement also appears in clauses 12, 109, 110 and 245.
ASIO - is defined as the Australian Security Intelligence Organisation this term is
relevant to definitions in clause 5 of ASIO Minister, ASIO official and designated
agency and to the provisions in Part 11, Division 4 (access to AUSTRAC information
by agencies).
ASIO Minister - is defined as the Minister responsible for administering the
Australian Security Intelligence Organisation Act 1979 and is relevant to provisions
24
in Part 11, Division 4 at paragraph 128(19) (access to AUSTRAC information by
IGIS officials).
ASIO official - is defined as either the Director-General of Security, or, a person
employed under paragraph 84(a) or 84(b) of the Australian Security Intelligence
Organisation Act 1979 and is relevant to provisions in Part 11, Division 4 (access to
AUSTRAC information by agencies) at sub-clauses 128(13) and (14) and at sub-
clause 128(19).
AUSTRAC is an acronym for Australian Transaction Reports and Analysis Centre
which is an agency continued under clause 209 (see explanatory memorandum for
clause 209). The definition is relevant to the definition of AUSTRAC CEO and
AUSTRAC information as well as to provisions in Parts 3, 4, 5, 6, 8, 11, 12, 13, 15, 16
and 18.
AUSTRAC CEO - is defined as the Chef Executive Office of AUSTRAC who is
appointed under Part 16, Division 3. This definition is relevant to definitions of
AUSTRAC , authorised officer and eligible collected information . The definition is
also relevant to provisions in Parts 3, 4, 5, 6, 8, 11, 12, 13, 14, 15, 16 and 18.
AUSTRAC information this definition is used mainly in Part 11 (Secrecy and
Access). This includes, but is broader than the term FTR information in the FTRA,
and includes not only all information received by the AUSTRAC CEO under this Bill
(including information obtained by an authorised officer see explanatory
memorandum on authorised officer ) or any other Commonwealth law or under a law
of a State or Territory but also information received from Commonwealth, State,
Territory and foreign governments or their agencies or authorities (as per the
definition in clause 5 of the term eligible collected information -see explanatory
memorandum on eligible collected information ) but also AUSTRAC's compilation
and analysis of any information received by it. It is not intended that public
information or information from public sources received by AUSTRAC becomes
subject to secrecy under the Bill but rather that the analysis made by AUSTRAC of
such information is subject to secrecy.
Australia this definition includes, when used in a geographical sense, the external
Territories of Australia, and is relevant to the definition of Australian Account and to
provisions in all Parts of the Bill.
Australian account this term is defined to mean an account held in Australia and
relates to the definition of Australia in this Part.
Australian Commission for Law Enforcement Integrity officer - this term is defined
to mean a member of staff of the Commission and is included because the
Commission is a designated agency (see explanatory memorandum for designated
agency )
Australian financial services licence the term is defined to have the same meaning
as in Chapter 7 of the Corporations Act 2001. The term is used in item 54 of table 1
in clause 6 (see explanatory memorandum for this item) and in Division 3 of Part 7
(AML/CTF programs).
Australian government body this term is defined as either the Commonwealth, a
State or a Territory, or an agency or authority of the Commonwealth, a State or a
25
Territory and is relevant to clause 123 (offence of tipping off) and clause 190(2)
(monitoring of compliance).
authorised officer the term is defined to mean the AUSTRAC CEO or a person
appointed by the AUSTRAC CEO under clause 145 of the Bill. Authorised officers
have powers under Parts 13, 14 and 15 of the Bill.
batched electronic funds transfer instruction - this phrase is relevant to clause 70
regarding required transfer information in relation to electronic funds transfer
instructions. The phrase enables several individual electronic transfer instructions
which have been accepted by an ADI or bank to be dispatched together in a single file
such that the complete payer information (see explanatory memorandum for this term
in clause 5 and clause 71) only needs to apply to the batch as a whole rather than to
each individual instruction (see explanatory memorandum for clause 70))
bearer negotiable instrument - the term is defined in clause 17 (see explanatory
memorandum on clause 17). It is defined in clause 17 in the singular and paragraph
23(b) of the Acts Interpretation Act 1901 provides that the singular includes the plural
beneficiary institution - this term is relevant to the provisions in Part 5 and is
explained in clauses 8 and 9 in terms of the different scenarios in which a funds
transfer instruction may be sent that is, a multiple-institution-person-to-person
electronic funds transfer instruction, a same institution person-to-person electronic
funds transfer instruction, a multiple -institution same-person electronic funds
transfer instruction, or a same-institution same person electronic funds transfer
instruction (see explanatory memorandum for clause 8 and 9).
bet - this term is used in items 1 - 4 of table 3 in clause 6
bill of exchange the term is defined to have the same meaning as in section 51(xvi)
of the Constitution but does not include a cheque. The reference to the constitutional
meaning is a mechanism to enable the meaning of the term to incorporate continuing
judicial interpretations of the term. When used in the Bill the term can be understood
to include an unconditional order in writing addressed by one person to another,
signed by the person giving it, requiring the person to whom it is addressed to pay on
demand or at a fixed or determinable future time a sum certain in money to or to the
order of a specified person or to bearer.
borrow - this term has its ordinary meaning corresponding with loan.
building society the definition of this term includes a society registered or
incorporated as a co-operative housing society or similar under either State or
Territory law, or, the law of a foreign country or part of a foreign country. This
definition is relevant to the definition of financial institution and also to clauses 6 to
10 inclusive.
bullion the definition states that bullion includes anything, that under the
regulations, is taken to be bullion for the purposes of the Bill. The term bullion
therefore has its ordinary meaning and the words is taken to be are intended to extend
the ordinary meaning. The definition is not affected by any other definition in the
Bill.
26
business the definition is intended to ensure that when the term is used in the Bill
that it will be given a broad interpretation for example when it is used in the phrase (in
the course of carrying on a business) (see various items in the tables of designated
services in clause 6 of the Bill for example items 6 to 13 inclusive.
business day this term is defined because numerous clauses in the Bill require
certain actions to take place within a certain number of business days from the
happening of a particular event.
civil penalty order the term means an order under clause 175 whereby the Federal
Court may order a person to pay the Commonwealth a pecuniary penalty (see
explanatory memorandum on clause 175).
civil penalty provision the term means a provision declared by the Bill to be a civil
penalty provision. Division 2 of Part 15 contains provisions dealing with the operation
of civil penalty provisions. There are civil penalty provisions contained throughout
the Bill.
commence to provide a designated service this definition covers instances in which
a service is provided over a period of time (eg holding an account for a customer), as
well as those provided at a point in time (eg facilitating a one-off transaction for a
customer). Reporting entities pick up obligations under Parts 2, 3, 7 and 10 when they
commence to provide , or provide a designated service (see explanatory
memorandum on provide , designated service and reporting entity ).
Steps taken preparatory to the provision of a designated service are not considered to
be part of commencing to provide the service.
commercial goods carrier this term is defined as a person who, in the normal
course of business carries goods or mail for reward. This definition is relevant to
clause 53 (reports about the movements of physical currency into or out of Australia
see explanatory memorandum for clause 53).
commercial passenger carrier this term is defined as a person who, in the normal
course of business carries passengers for reward. This definition is relevant to clause
53 (reports about the movements of physical currency into or out of Australia see
explanatory memorandum for clause 53).
Commonwealth place this term is defined as either a Commonwealth place as
defined by the Commonwealth Places (Application of Laws) Act 1970, or, a place in a
Territory which is owned by the Commonwealth. This definition is relevant to
Schedule 1 of the Bill (alternative constitutional basis). Commonwealth place is
defined in the Commonwealth Places (Application of Laws) Act 1970 to mean a place
(not being the seat of government) with respect to which the Parliament, by virtue of
section 52 of the Constitution, has, subject to the Constitution, exclusive power to
make laws for the peace, order, and good government of the Commonwealth.
Commonwealth Royal Commission this term is has the same meaning as defined
under the Royal Commissions Act 1902. The Royal Commissions Act defines this
term as, any commission of inquiry issued by the Governor-General by Letters of
Patent in the pursuance of this Act or of any other power, and includes the members
of the commission, or a quorum thereof, or the sole Commissioner, sitting for the
27
purposes of the inquiry. This definition is relevant to the definition of designated
agency clause 22 of the Bill (officials of designated agencies).
company has the same meaning as in the Income Tax Assessment Act 1997 which
provides that it means a body corporate, or any other unincorporated association or
body of persons, but does not include a partnership or a non-entity joint venture.
complete payer information this term is defined to have the meaning in clause 71
(see explanatory memorandum for clause 71).
compliance record - a compliance record is one that relates to the obligations of the
reporting entity under this Bill, the regulations or the AML/CTF Rules as well as any
record, copy or extract retained under Part 10 by the reporting entity. The term is used
in clause 148 in relation to the search powers of an authorised officer.
Constitutional corporation this term means a corporation to which paragraph
51(xx) of the Australian Constitution applies. This definition is relevant to Schedule
1 of the Bill.
contribution - this term is defined in the Retirement Savings Accounts Act 1997
(RSA Act - in relation to retirement savings accounts) to include a deposit into an
account held at an authorised deposit-taking institution or a prescribed financial
institution and a payment of a premium to a life insurance company. The definition
extends the ordinary meaning of the word contribution in relation to the RSA Act but
where the word contribution is used elsewhere in the Bill not in relation to the RSA
Act it has its ordinary meaning.
controller - this term is defined in clause 13. It is relevant to item 5 and 10 in table 3.
control test - the control test is used to determine whether an individual is in control
of a company, or trust. This provision is relevant to determining whether a company
or trust is a resident of a particular country in accordance with clause 14. The control
test is also used to assess whether a corporation is affiliated with another corporation
for the purpose of determining whether it is a shell bank in accordance with clause 15.
correspondent banking this term is relevant to Part 8 of the Bill and only relates to
obligations of reporting entities within table 1 of sub-clause 6(2) (table 1 deals with
designated services provided by financial institutions). The term is defined to mean a
relationship for the provision of banking services by one financial institution to
another where the financial institutions are in different countries. AML/CTF Rules
may specify the types of relationships not covered by the definition and may also
specify services which are or are not banking services. For example, AML/CTF
Rules may specify that exchange of SWIFT keys are not banking services, or that
certain wholesale banking services may be excluded from the definition of
correspondent banking relationship.
country this term is defined to include both Australia and any foreign country, and
is relevant to all Parts of the Bill.
credit card This terms is defined to have the same meaning as section 63A of the
Trade Practices Act 1974 which defines credit card as an article that is of a kind
described in one or more of the following paragraphs:
28
(a) an article of a kind commonly known as a credit card;
(b) a similar article intended for use in obtaining cash, goods or services on
credit;
(c) an article of a kind that persons carrying on business commonly issue to
their customers or prospective customers for use in obtaining goods or services
from those persons on credit;
(b) or an article that may be used as an article referred to in paragraph (a), (b) or
(c).
custodial or depository service - see explanatory memorandum for providing a
custodial or depository service. This term is used in item 46 of table 1.
customer clause 6 provides that the customer is the person to whom the designated
service is provided by the reporting entity. The customer is specified in column 2 for
every entry in column 1 of the tables in clause 6. The definition further clarifies that
the term explicitly includes a prospective customer. This definition is relevant to the
definition of applicable customer identification procedure , non-reportable
transaction and receives a designated service , as well as provisions throughout the
Bill.
Customs officer means either a Chief Executive Officer of Customs, or, an officer
of customs as defined under the Customs Act 1901. The Customs Act defines this as a
person:
(a) employed in the Customs; or
(b) authorised in writing by the CEO under this Act to perform all of the functions of an
officer of Customs; or
(ba) who from time to time holds, occupies, or performs the duties of an office or position
(whether or not in or for the Commonwealth) specified in writing by the CEO under
this Act for the purposes of this paragraph, even if the office or position does not
come into existence until after the CEO has specified it;
and includes:
(c) in relation to a provision of a Customs Act--a person:
(i) authorised in writing by the CEO under this Act to perform the functions
of an officer of Customs under that provision; or
(ii) who from time to time holds, occupies, or performs the duties of an office
or position (whether or not in or for the Commonwealth) specified in
writing by the CEO under this Act in relation to that provision, even if the
office or position does not come into existence until after the CEO has
specified it; or
(d) in relation to a power conferred by a provision of a Customs Act--a person:
(i) authorised in writing by the CEO under this Act to perform the functions
of an officer of Customs in relation to the exercise of that power; or
(ii) who from time to time holds, occupies, or performs the duties of an office
or position (whether or not in or for the Commonwealth) specified in
writing by the CEO under this Act in relation to the exercise of that
power, even if the office or position does not come into existence until
after the CEO has specified it.
This definition is relevant to the definition of investigating officer as well as the
provisions of Parts 4, 11, 12, 15 and 18.
29
damage this term is defined in relation to the damage of data and includes damages
by erasure of the addition of data. This definition is relevant to the provisions at
clause 156 of the Bill regarding compensation for damage of electronic equipment.
See the explanatory memorandum for clause 26 and also for the clause 5 definition of
data.
data - this term is defined to mean information in any form or any program and is
relevant to the definition of data storage device and the monitoring warrant
provisions of Part 13. It is also relevant to the definition of damage in clause 5.
data storage device - this term is relevant to the monitoring warrant provisions of Part
13. See also explanatory memorandum for data.
debit card This terms is defined to have the same meaning as section 63A of the
Trade Practices Act 1974 which defines a debit card as:
(a) an article intended for use by a person in obtaining access to an account that is
held by the person for the purpose of withdrawing or depositing cash or
obtaining goods or services; or
(b) an article that may be used as an article referred to in paragraph (a).
debit card account - this term is relevant to clause 50 regarding a request to obtain
information about the identity of holders of foreign credit cards and foreign debit
cards.
derivative is defined to have the same meaning as in section 761D of the
Corporations Act 2001 which is an arrangement with the following conditions:
(a) under the arrangement, a party to the arrangement must, or may be required
to, provide at some future time consideration of a particular kind or kinds to
someone; and
(b) that future time is not less than the number of days, prescribed by regulations
made for the purposes of this paragraph, after the day on which the
arrangement is entered into; and
(c) the amount of the consideration, or the value of the arrangement, is ultimately
determined, derived from or varies by reference to (wholly or in part) the
value or amount of something else (of any nature whatsoever and whether or
not deliverable), including, for example, one or more of the following:
(i) an asset;
(ii) rate (including an interest rate or exchange rate);
(iii) an index;
(iv) a commodity.
designated agency this term is used in Part 11 which deals with access by agencies
to AUSTRAC information. The definition lists certain Federal, State and Territory
agencies which will thereby have access to AUSTRAC information under Part 11.
The definition also enables regulations to be made prescribing additional agencies to
be designated agencies. The list of agencies includes all those agencies which
currently have access under the FTRA as well as some additional agencies where
ministers responsible for particular pieces of legislation have indicated that access to
AUSTRAC information would enhance the administration of that particular
legislation (these include APRA, the Division of Treasury responsible for the
30
administration of the Foreign Takeovers and Acquisitions Act 1975 and the
Immigration Department). The 2005 FATF report of the evaluation of Australia's
compliance with the FATF Recommendation 31 commented that there is scope to
improve co-operation/co-ordination between AUSTRAC, ASIC and APRA also to
enhance co-operation at the policy level.
designated business group This term is used to enable associated business entities to
share customer identity information, have a joint AML/CTF program in clause 85,
allow a member of the designated business group to lodge group compliance reports
in clause 47, and for a member of the designated business group to discharge various
record keeping obligations in Part 10. The term is used in sub-clause 207(3) to exempt
a disclosure made to another member of a designated business groups from tipping off
provisions. A member of a designated business group does not have to be a reporting
entity. Sub-clause 161(6) prohibits a member of a designated business group being
appointed an external auditor.
designated remittance arrangement - this term has the meaning given in clause 10
(see explanatory memorandum for clause 10). This term is used in items 32 and 33 of
table 1.
designated service - the definition of this term is in clause 6 and the designated
services are those listed in the items in the tables in clause 6. It is relevant to the
definition of reporting entity (see explanatory memorandum for clause 6).
Director-General of Security - this means the Director-General of Security holding
office under the Australian Security Intelligence Organisation Act 1979. The term is
used in the Secrecy and Access provisions within Part 11.
disclose - this term means divulge or communicate and is used in Part 11.
disposing of - the definition leaves the term to be read according to its ordinary
meaning. The definition also provides that the term includes anything that under the
regulations is taken to be disposing of for the purposes of the Bill. This will enable
regulations to be made to capture activity designed to circumvent obligations under
the Bill. The term disposing of has its ordinary meaning and the words is taken to be
are intended to extend the ordinary meaning. This term is used in items 33 and 34 of
table 1.
e-currency - this term, which is broadly defined, is used in clause 5 in the definitions
of money and threshold transaction , and in clause 19 with regard to the conversion of
e-currency for the purposes of threshold transaction reporting. Regulations and
AML/CTF Rules can be made extending the definition in order to keep pace with
future technology and commercial developments.
electronic communication this term is defined to have the same meaning as in the
Criminal Code. Section 476.1 of the Criminal Code defines electronic
communication to mean a communication of information in any form by means of
guided or unguided electromagnetic energy.
31
electronic funds transfer instruction - this term is used in Part 5, and in the record
keeping provisions in Division 4, Part 10. The phrase is defined to include the four
types of electronic funds transfer instruction, a multiple-institution person-to-person
electronic funds transfer instruction a same-institution person-to-person electronic
funds transfer instruction, a multiple-institution same-person electronic funds transfer
instruction or a same-institution same-person electronic funds transfer instruction.
These terms are defined in clause 8 and 9.
eligible collected information - the term is defined to mean information obtained by
AUSTRAC CEO under the Bill or under other Commonwealth, State or Territory
laws or as a result of requests by AUSTRAC to a government body or obtained by
AUSTRAC under Part 13, 14 or 15. Eligible collected information is a smaller class
of information than AUSTRAC information (see explanatory memorandum on the
term AUSTRAC information); but it is included within the definition of AUSTRAC
information . The definition of the latter term also includes AUSTRAC's analysis and
compilation of eligible collected information. Apart from its inclusion in the
definition of AUSTRAC information the term is also used in clauses 208 and 212
which sets out AUSTRAC's functions.
eligible gaming machine venue - this term has the same meaning provided in
clause 13 (see explanatory memorandum for clause 13).
eligible place - The term eligible place is defined to include places appointed for
examination of goods on landing, licensed warehouses and appointed ports, airports,
wharfs or boarding stations (where the appointment and licensing is pursuant to the
Customs Act 1901). This term is used in sub-clause 199(9) (see explanatory
memorandum on sub-clause 199(9) which provides that police or customs officers
may enter eligible places to determine whether there is any currency for which a
report under clause 53 is required (clause 53 deals with reports about movements of
physical currency into or out of Australia see explanatory memorandum on clause
53).
embarkation area the term is defined to mean a section 234AA place within the
meaning of the Customs Act 1901. Section 234AA provides that the CEO of the
Australian Customs Service may designate places which may be used by Customs
officers for the purpose of exercising Customs Act powers of questioning, examining
and holding embarking or disembarking passengers. The term is used to define the
point at which a person is taken to have moved physical currency out of Australia in
sub-clause 57(3). This is relevant to the clause 53 requirement that a person must not
move an amount of Australian currency which is not less than $10,000 into or out of
Australia without lodging a report in respect of the movement. The term is also used
in clause 199 in relation to the questioning and search powers of customs and police
officers, and in clause 200 to require a person who is in an embarkation area for the
purpose of leaving Australia to declare (where requested by a police or customs
office) whether he or she is holding Australian or foreign currency and has given a
clause 53 report etc.
engage in conduct the term is defined in exactly the same words as in clause 4.1 of
the Criminal Code, which is contained within Chapter 2 of the Criminal Code.
32
(Chapter 2 contains the General Principles of Criminal Responsibility applying to all
Commonwealth criminal offences).
evidential burden - the definition of this term is that given by sub-section 13.3(6) of
the Criminal Code which is contained in Chapter 2 of the Criminal Code (Chapter 2
contains the general principles of criminal responsibility which apply to all
commonwealth criminal offences). The term appears in sub-clause 53(7) in relation
to exemptions from the clause 53 requirement and in sub-clause 82(5) in relation to
the exceptions to the requirement in clause 82. The term is also used in notes located
after various clauses which contain offences together with exceptions to the offences
(for example the note following paragraph 237) states "Note: a defendant bears an
evidential burden in relation to a matter in sub-clause (4) (see subsection 13.3(3) of
the Criminal Code)."
examiner of the Australian Crime Commission - this term has the meaning it has in
the Australian Crime Commission Act 2002. That Act provides that examiner means
a person appointed under subsection 46B(1) of that Act. Subsection 46B(1) provides
that an examiner is to be appointed by the Governor-General by written instrument.
The term is used in clause 22 which provides that, amongst other things, the term
official of a designated agency or non-designated Commonwealth agency includes a
person who is an examiner of the Australian Crime Commission.
exempt financial market operator issue this term is used where the operator of a
financial market makes available a security or derivative in the course of operating the
financial market and it has the meaning given by Chapter 7 of the Corporations Act
2001. The term is used in item 35 of table1.
exempt legal practitioner service - this is defined as a service that under the
AML/CTF Rules will be exempt for the purposes of this Bill. This definition is
relevant to items 46 and 47 of table 1 (the tables in clause 6 list activities that are
designated services).
external auditor - this term refers to a person authorised under clause 164 to be an
external auditor. The term is relevant to provisions in Part 13, Division 7.
factoring the definition leaves the term to be read according to its ordinary
meaning. The definition also provides that the term includes anything that under the
regulations is taken to be factoring for the purposes of the Bill. This will enable
regulations to be made to capture activity designed to circumvent obligations under
the Bill. The words is taken to be are intended to extend the ordinary meaning. The
definition is not affected by any other definition in the Bill. The term refers to the
practice whereby a `person' (a legal or a natural person), the factor, advances money
to another person in exchange for taking on that person's debts.
false customer name this term is defined to mean any name by which a person is
not commonly known. A person may be commonly known by more than one name.
The term is used in clauses 139 and 140.
FATF Recommendations this term is an abbreviation of the Financial Action Task
Force Recommendations and is defined as including the Recommendations and
Special Recommendations (or the amendments thereof) as adopted by the Financial
Action Task Force on Money Laundering (FATF) at its plenary and special plenary
33
meetings on 20 June 2003, 31 October 2001 and 20-22 October 2004. These
Recommendations are referred to in the objects of the Bill in clause 3.
Federal Court this term is defined as the Federal Court of Australia. Enforcement
proceedings under Part 15 of the Bill are to be conducted in the Federal Court. The
Federal Court is also given jurisdiction to determine damages under sub- clause
156(3) (see explanatory memorandum for clause 156).
financial institution - the term is defined to include an ADI (see explanatory
memorandum on definition of ADI ), bank, building society or credit union and any
person specified in AML/CTF Rules. Allowing the rules to specify additional persons
as financial institutions allow flexibility to encompass any new institution that may
provide similar services to a financial institution.
financing of terrorism offence is defined as an offence against section 102.6
(Getting funds to, from or for a terrorist organisation) and Division 103 (Financing
terrorism) of the Criminal Code, an offence against sections 20 (dealing with freezable
assets) and 21 (giving an asset to a proscribed person or entity) of the Charter of the
United Nations Act 1945 (CotUNA) and offences in a State, Territory or foreign
country which correspond to those offences.
foreign country this definition extends the meaning of the term foreign country to
include parts of countries, colonies, territories, protectorates, regions under protection,
jurisdiction or control of a foreign country or a region whose international relations
are the responsibility of a foreign country.
foreign exchange contract this term is defined to include any contract involving
the sale, purchase or exchange of currency. The contract can relate to any currency.
foreign intelligence agency this term is defined as any government body
responsible for intelligence gathering for a foreign country or security in a foreign
country. This term is related to the provisions in clause 133 regarding the
communication of AUSTRAC information to a foreign intelligence agency.
foreign law enforcement agency this term is defined as any government body
responsible for law enforcement in a foreign country, or part of a foreign country.
This term is related to the provisions in clause 132 of the Bill regarding the
communication of AUSTRAC information to a foreign country.
funds transfer chain - this term is defined in sub-clause 64(2) (see explanatory
memorandum for clause 64). The phrase is relevant to obligations in Part 5
(Electronic funds transfer instructions).
game - this term is used in items 5, 6, 9 and 10 in table 3 of clause 6 and is also
relevant to items 11, 12, 13 and 14 in table 3 in clause 6. It is also used in the
definitions of gaming chip or token and gaming machine in this Part. The term has its
general meaning and is specifically defined to include an electronic game but not to
include a lottery. This will mean that activities similar in nature to lotteries will also
not be included, for example Keno and instant lottery tickets are regarded as covered
by the term lottery and therefore not captured by the definition of game. Other similar
activities would likewise not be captured by the definition.
gaming chip or token - these terms are relevant to items 7 and 8 of table 3 in clause 6.
34
gaming machine - this term is used in items 5, 6, 9, and 10 and in table 3 of clause 6
and relevant to items 11, 12, 13 and 14 in table 3 in clause 6. It is also relevant to
clause 13 (Eligible gaming machine venues).
government body - the term includes the government of a country, or part of a
country, or an agency or authority of a country, or part of a country. This term is used
in clause 5 in the definitions of e-currency, and eligible collected information, as well
as foreign intelligence agency, foreign law enforcement agency and public official.
The term also appears in paragraph 123(9) in relation to exceptions to tipping off, and
in clause 190 regarding the circumstances in which the AUSTRAC CEO is
empowered to provide an AUSTRAC compliance report to another government body.
guarantee the term has its ordinary meaning and includes anything that under the
regulations is taken to be a guarantee for the purposes of the Bill. This will enable
regulations to be made to capture activity designed to circumvent obligations under
the Bill.
IGIS this term is an abbreviation of Inspector-General of Intelligence and Security
and the term includes both the Inspector-General and APS employees assisting him.
The term is included because IGIS is a designated agency (see explanatory
memorandum on the term designated agency ).
IGIS official this term is an abbreviation of Inspector-General of Intelligence and
Security Official. This is defined as meaning either an Inspector-General of
Intelligence and Security holding office under the Inspector-General of Intelligence
and Security Act 1986 and APS employees assisting him. This term is used in
sub-clause 128(19) which relates to disclosure of AUSTRAC information by IGIS
officials.
Immigration Department - this term means the Department responsible for the
administration of the Migration Act 1958. The term is included because the
Immigration Department is a designated agency (see explanatory memorandum on the
term designated agency ).
incorporated the definition provides that incorporated includes formed so as to
ensure that a company is covered irrespective of the method by which a company is
incorporated, formed or otherwise created. To remove any potential ambiguity the
definition expressly states that the definition does not apply to the expression
unincorporated .
information obtained - this term is defined to ensure that it includes information
obtained as a result of the production of a document.
infringement notice - this refers to the infringement notice which may be issued by a
customs or police officer under clause 184 for suspected contravention of sub-clauses
53(3) or 59(4) (see explanatory memorandum on clauses 53 and 59). Provisions
regarding the matters to be included in such a notice, the amount of the penalty etc are
found in Part 15, Division 3 (see explanatory memorandum on Division 3 of Part 15).
Inter-Governmental Committee this definition refers to the Inter-Governmental
Committee established by section 8 of the Australian Crime Commission Act 2002.
The term is used in sub-clause 128(14) of the Bill (see explanatory memorandum on
sub-clause 128(14)).
35
international funds transfer instruction - this phrase has the meaning provided in
clause 43 which includes a table defining the term international funds transfer
instruction (see explanatory memorandum for clause 46).
investigating officer this definition lists persons who are an investigating officer
for the purposes of the Bill. That is, a taxation officer, an AFP member, a Customs
officer, or, an examiner or member of staff of the Australian Crime Commission.
This definition relates to clauses 49 and 122 of the Bill.
involves this definition clarifies that the term involves includes matter or matters
that relate to the subject matter.
issue the definition provides that, in relation to a security or derivative issue
includes grant or otherwise make available. The time when a derivative is issued is to
be worked out under subsection 761E(3) Corporations Act 2001 which provides that
the relevant time is when the person enters into the legal relationship that constitutes
the derivative.
joint anti-money laundering and counter-terrorism financing program - this term
has the meaning given by sub-clause 85(1) (see explanatory memorandum on
sub-clause 85(1)).
lease - this definition clarifies that when this term is used in relation to goods, it
includes hire. This term is used in item 10 of table 1 in clause 6 in relation to the
definition of designated services (see explanatory memorandum on item 10).
Life Insurance Actuarial Standard 4.02 this term is defined to mean Actuarial
Standard 4.02 made under section 101 of the Life Insurance Act 1995. The term is
used in the definition of life policy (see explanatory memorandum on life policy).
life policy the term is defined to have the same meaning as in sub-section 9(1)the
Life Insurance Act 1995 which provides that a life policy is:
(a) a contract of insurance that provides for the payment of money on the death of
a person or on the happening of a contingency dependent on the termination or
continuance of human life;
(b) a contract of insurance that is subject to payment of premiums for a term
dependent on the termination or continuance of human life;
(c) a contract of insurance that provides for the payment of an annuity for a term
dependent on the continuance of human life;
(d) a contract that provides for the payment of an annuity for a term not dependent
on the continuance of human life but exceeding the term prescribed by the
regulations for the purposes of this paragraph;
(e) a continuous disability policy;
(f) a contract (whether or not it is a contract of insurance) that constitutes an
investment account contract;
(g) a contract (whether or not it is a contract of insurance) that constitutes an
investment-linked contract.
Sub-section 9(2) of the Life Insurance Act 1995 specifically provides that a contract
that provides for the payment of money on the death of a person is not a life policy if
by the terms of the contract, the duration of the contract is to be not more than one
36
year and payment is only to be made in the event of death by accident; or death
resulting from a specified sickness.
However the definition of the term life policy in the Bill provides that it means a life
policy within the meaning of the Life Insurance Act 1995 except that it does not
include policies of no prescribed minimum surrender value or regular premium
policies with premiums less than $1,500 per annum or a greater amount specified in
the AML/CTF Rules or a single premium policy where the premium is not more than
$3000 or a greater amount specified in the AML/CTF Rules or a contract of consumer
credit insurance within the meaning of the Insurance Contracts Act 1984. The
prescribed minimum surrender value is to be determined by the Life Insurance
Actuarial Standard 4.02 as in force from time to time (see explanatory memorandum
on Life Insurance Actuarial Standard 4.02).
loan the definition is inclusive. In addition to its ordinary meaning the definition
makes it clear that any advance of money, provision of credit, satisfaction of another
person's debt or any transaction which in substance is a loan of money is covered by
the definition. However the definition specifically exempts goods sold or services
provided on credit within the meaning of the Trade Practices Act 1974 (in other
words the definition excludes goods or services sold or provided on trade credit). The
definition also enables AML/CTF Rules to be made exempting things from being a
loan for the purpose of the Bill. The term is used in item 6 of table 1 in sub-clause
6(2) (see explanatory memorandum on item 6).
make available - defined to include reducing the balance of a loan account. The
words made available and making available are used in paragraph 65(1)(d) and
sub-clauses 65(6) and 65(7) in the context of a beneficiary institution "making
available" funds to a customer in accordance with an international electronic funds
transfer instruction (see explanatory memorandum for international electronic funds
transfer instruction ).
member of the staff of the Australian Crime Commission - this phrase has the same
meaning as in the Australian Crime Commission Act 2002, and is used in clause
sub-paragraph 122(3)(f)(ii) and sub-clauses 128(14) and 132(7) (see explanatory
memoranda on these provisions).
modifications - The term includes additions, omissions and substitutions. This term is
relevant to sub-clause 155(8) and clause 248 (see explanatory memoranda on these
provisions).
money this broad inclusive definition of money removes any doubt that the term
not only includes physical currency but also money held in an account or on deposit,
irrespective of the currency denomination and includes e-currency (see explanatory
memorandum for e-currency).
money laundering the term is defined to mean conduct that amounts to offences
against Division 400 of the Criminal Code or corresponding State or Territory or
foreign country offences.
money laundering and terrorism financing risk assessment - this term is defined in
sub-clause 165(6) (see explanatory memorandum for clause 165).
37
monitoring powers - this term has the meaning provided in clause 148 (see
explanatory memorandum for clause 148). The term is used in Part 13.
monitoring warrant this term is defined as a warrant issued under clause 159 (see
explanatory memorandum for clause 159) of the Bill. The term is used in Part 13.
move physical currency into Australia this phrase has the meaning given by clause
58 (see explanatory memorandum for clause 58) and is used in clause 53.
move physical currency out of Australia - this phrase has the meaning given by
clause 57 (see explanatory memorandum for clause 57) and is used in clause 53.
multiple institution person-to-person funds transfer instruction this term has the
meaning provided in sub-clause 8(1) (see explanatory memorandum for clause 8) and
is used in Part 5.
multiple institution same-person funds transfer instruction - this term has the
meaning provided in sub-clause 9(1) (see explanatory memorandum for clause 9) and
is used in Part 5.
non-designated Commonwealth agency this is defined as an authority or agency of
the Commonwealth that is not a designated agency (see explanatory memorandum on
designated agency in clause 5). It is relevant to clause 129 (Access by non-designated
Commonwealth agencies to AUSTRAC information see explanatory memorandum
on clause 129). The definition is also relevant to clause 22 (Officials of designated
agencies etc see explanatory memorandum on clause 22).
non-reportable cross-border movement of physical currency - this term is defined as
a movement of physical currency into or out of Australia for which a report under
clause 53 (see explanatory memorandum on clause 53) is not required. This phrase is
relevant to the offence provision in clause 143 (conducting transfers so as to avoid
reporting requirements relating to cross-border movements of physical currency - see
explanatory memorandum on clause 143).
non-reportable transaction this is defined to be provision of a designated service
which is not a threshold transaction (see explanatory memorandum for threshold
transaction in clause 5) and is used in clause 142 (conducting transactions so as to
avoid reporting requirements relating to threshold transactions - see explanatory
memorandum on clause 142).
offence this definition is included to remove any doubt that the ancillary criminal
offence of being an accessory after the fact (which is provided for in section 6 Crimes
Act 1914) is included amongst the range of ancillary offences that apply to the
criminal offences contained in the Bill. The note following the definition of the term
offence indicates that the other ancillary offences contained in section 11.6 of Chapter
2 of the Criminal Code apply to the criminal offences in the Bill (Chapter 2 sets out
the General Principles of Criminal Responsibility which apply to all Commonwealth
criminal offences).
officer this definition clarifies that for the purposes of the Bill, a director of a
company, a partner of a partnership, and a trustee of a trust, are taken to be an officer.
This term is related to all Parts of the Bill.
38
official this definition clarifies that an official of a designated or non-designated
Commonwealth agency is defined in clause 22 (see explanatory memorandum on
clause 22). This term is used in Part 11 (secrecy and access).
opening - this term is defined in relation to an account and means creating the
account. It is immaterial whether the account number has been given to the holder of
the account or whether the person is able to conduct a transaction in relation to the
account. It is relevant to item 1 of table 1 and item 11 of table 3 (see explanatory
memoranda on these items).
ordering institution - this phrase is defined in terms of the four types of electronic
funds transfer instructions described in clauses 8 and 9 - multiple-institution
person-to-person electronic funds transfer instruction, a same-institution
person-to-person electronic funds transfer instruction, a multiple-institution
same-person electronic funds transfer instruction, or a same-institution same-person
electronic funds transfer instruction. See explanatory memorandum for clauses 8 and
9. See also explanatory memorandum for beneficiary institution and electronic funds
transfer instruction. This term is relevant to the requirements in Part 5.
owner-managed branch - this phrase has the meaning provided in clause 12 (see
explanatory memorandum for clause 12).
partnership the term is defined to have the same meaning as in the Income Tax
Assessment Act 1997 (ITAA). The definition in section 995-1 ITAA is as follows:
(a) an association of persons (other than a company or a limited partnership)
carrying on business as partners or in receipt of ordinary income or statutory
income jointly; or
(b) a limited partnership.
payee this phrase is defined in terms of the four types of electronic funds transfer
instructions described in clauses 8 and 9 - multiple-institution person-to-person
electronic funds transfer instruction a same-institution person-to-person electronic
funds transfer instruction a multiple-institution same-person electronic funds transfer
instruction or a same-institution same-person electronic funds transfer instruction. .
See explanatory memorandum for clauses 8 and 9. See also explanatory memorandum
for beneficiary institution and electronic funds transfer instruction. This term is
relevant to the requirements in Part 5.
payer - this phrase is defined in terms of the four types of electronic funds transfer
instructions described in clauses 8 and 9 - multiple-institution person-to-person
electronic funds transfer instruction, a same-institution person-to-person electronic
funds transfer instruction, a multiple-institution same-person electronic funds transfer
instruction, or a same-institution same-person electronic funds transfer instruction.
See explanatory memorandum for clauses 8 and 9. See also explanatory memorandum
for beneficiary institution and electronic funds transfer instruction. This term is
relevant to the requirements in Part 5.
penalty unit a penalty unit under section 4AA Crimes Act 1914 is currently worth
$110.
permanent establishment - this term has the meaning provided in clause 21 (see
explanatory memorandum for clause 21), and is used in sub-clause 6(6), clauses 36,
39
39, 42, 44, all the items in the clause 43 table, 64, 65, 66, 70, 80, 84, 100, 102 115,
118, 161, 202 and Schedule 1 paragraph 2(j)(ii) (see explanatory memoranda for these
provisions).
person - The term person is defined in clause 5 of the Bill to be an individual, a
company, a trust, a partnership, a corporate sole or a body politic. The term body
politic is included to make it clear that governments will be persons under the Bill.
The Bill places obligations on reporting entities which are defined as persons who
provide a designated service. This definition ensures that the specified entities are
persons for the purposes of the Bill.
physical currency this term is defined to mean all coins and printed money that are
designated as legal tender and circulate as and are customarily used and accepted as a
medium of exchange in the country of issue. Under this definition, this term refers to
both the currency of Australia or of a foreign country. This term is related to the
definitions of move physical currency into Australia, move physical currency out of
Australia, non-reportable cross-border movement of physical currency, send stored
value card, and threshold transaction (see explanatory memoranda for these
provisions). This term is included in Items 51-53 of Table 1 at clause 6 relating to the
definition of designated services. This term is also related to the provisions of Part 4
regarding reports about cross-border movements of physical currency and bearer
negotiable instruments and Part 15 which provides the enforcement provisions.
police officer the definition clarifies that the term includes both members of the
AFP or members of the police force or service of a State of Territory. This definition
is related to the definitions of AFP member and investigating officer. This term is
also related to the provisions in Part 4 regarding reports about cross-border
movements of physical currency and bearer negotiable instruments and Part 15 which
provides the enforcement provisions, as well as the miscellaneous provisions in
Part 18.
precious metal the definition lists those metals and alloys of them that are precious
metals for the purposes of the Bill. The term precious metal is only used once in the
Bill, namely in the definition of e-currency (see explanatory memoranda for
e-currency)
prescribed foreign country - this definition clarifies that the term means a foreign
country which is prescribed as such for the purposes of the Bill under the regulations.
The term is used in clause 102 (countermeasures - see explanatory memoranda for
clause 102).
printed money the term is defined as money in the form of a note made on any
material and is used in the definition of physical currency (see explanatory
memoranda for the definition of physical currency).
produce the definition of this term clarifies that in addition to its ordinary meaning
it also means permits access to the material or other item. This is to ensure that where
an item cannot be physically produced it is sufficient to permit access to it. An
example of its application would be where a document that a reporting entity was
required to produce was only available electronically. In this situation the obligation
40
to produce the document could be met by granting access to the electronic version of
it.
promissory note the term is defined to have the same meaning as in section 51(xvi)
of the Constitution which is a mechanism to enable incorporation of continuing
judicial interpretations of the term. The term is generally considered to mean an
unconditional promise in writing made by one person to another, signed by the maker,
engaging to pay on demand or at a fixed or determinable future time a sum certain in
money to or to the order of a specified person or to bearer.
property this term is broadly defined as any legal or equitable estate or interest in
real or personal property. For clarity the definition specifically includes a contingent
or prospective interest. Money is specifically excluded from this definition, as this is
specifically provided for under the definition of physical currency. This term is
related to the definition of threshold transaction and designated remittance
arrangement), as well as to the provisions in clause 46 (international funds transfer
instruction) and clause 142 (conducting transactions so as to avoid reporting
requirements relating to threshold transactions) (see explanatory memoranda for these
provisions).
provide the definition of this term clarifies that in addition to its ordinary meaning
it also means this includes supply, grant or confer. The term provide is relevant to
triggering requirements for reporting entities. Reporting entities pick up obligations
when they commence to provide, or provide a designated service (see explanatory
memorandum on provide, designated service and reporting entity).
providing a custodial or depository service - this phrase includes engaging in
conduct that under sub-section 766E(1) of the Corporations Act 2001, constitutes
providing a custodial or depository service within the meaning of Chapter 7 of that
Act. The conduct does not include that covered by sub-section 776E(3) of that Act, or
conduct specified in the AML/CTF Rules.
Sub-section 776E(1) states:
For the purposes of this Chapter, a person (the provider) provides a custodial or
depository service to another person (the client) if, under an arrangement between
the provider and the client, or between the provider and another person with whom
the client has an arrangement, (whether or not there are also other parties to any
such arrangement), a financial product, or a beneficial interest in a financial
product, is held by the provider in trust for, or on behalf of, the client or another
person nominated by the client.
Sub-section 776E(3) states:
However, the following conduct does not constitute providing a custodial or
depository service:
(a) the operation of a clearing and settlement facility;
(b) the operation of a registered scheme, or the holding of the assets of a
registered scheme;
(c) the operation of a regulated superannuation fund, an approved deposit fund
or a pooled superannuation trust (within the meaning of the Superannuation
Industry (Supervision) Act 1993) by the trustees of that fund or trust;
41
(ca) the operation of a statutory fund by a life company (within the meaning of
the Life Insurance Act 1995);
(d) the provision of services to a related body corporate;
(e) any other conduct of a kind prescribed by regulations made for the purposes
of this paragraph.
public official this definition provides the categories of person who are classed
under the Bill as public officials and is used in clause 121 regarding secrecy of
AUSTRAC information and AUSTRAC documents.
qualified accountant - the term is defined to mean a person who is a member of
CPA Australia, the Institute of Chartered Accountants in Australia or any body
specified in the AML/CTF Rules.
receives a designated service a customer of a designated service (as defined in
paragraph 6(1)(b) (see explanatory memorandum for clause 6), receives a designated
service when a reporting entity provides such a service to the person. The phrase is
used in item 54, table 1 and the offences at clauses 140 and 141 (see explanatory
memorandum on those provisions).
Register of Providers of Designated Remittance Services - this term is defined to
mean the register maintained under sub-clause 75(1) (see explanatory memorandum
on sub-clause 75(1)).
registrable designated remittance service - this term is defined as a designated
service (see explanatory memorandum on clause 6) that is covered by item 31 or 32 of
table 1 in clause 6, and is provided by a person at or through a permanent
establishment of the person in Australia and is not of a kind specified in the
AML/CTF Rules. The AML/CTF Rules will be able to exempt certain services from
this term.
registrable details this term is defined to mean such information as is specified in
the AML/CTF Rules.
remittance arrangement - this term has the meaning provided in clause 10 (see
explanatory memorandum on clause 10).
reporting entity - a reporting entity is a person (see explanatory memorandum on
person ) who provides any of the designated services set out in the tables in clause 6
(see explanatory memorandum under clause 6).
reporting entity business premises this definition is wider than the definition of
business premises in section 3 FTRA in that the definition in the Bill not only includes
business premises used for business operations but also includes premises used for the
storage of records relating to the business operations of the reporting entity.
Paragraph (b) of the definition provides that the term includes business premises of a
reporting entity or of an agent of a reporting entity which are used for storage of
electronic data. The definition includes premises partly used for business and partly
for other purposes.
required transfer information - this term is defined to have the meaning in clause 70
(see explanatory memorandum for clause 70). It is used in clauses 64, 65 and 115.
42
resident - this term is defined in clause 14 and is used in the geographical link
provisions in sub-clause 6(6) for designated and in clause 100 (geographical links for
correspondent banking relationships) and clause 102 (countermeasures) (see
explanatory memoranda for these provisions).
RSA the term is defined to have the same meaning as in section 8 of the Retirement
Savings Accounts Act 1997 (RSA Act) which is as follows:
(1) An RSA, or retirement savings account, is an account or a policy:
(a) that is described as an RSA; and
(b) that is provided by an entity that is an RSA institution at the time the
account is opened or the policy is issued; and
(c) that is capital guaranteed (see section 14); and
(d) that is held by a person who is an eligible person at the time the
account is opened or the policy is issued (see section 13); and
(e) that, at the time that it is opened or issued, satisfies:
(i) the requirements in section 15; and
(ii) any prescribed criteria; and
(f) that is opened or issued on or after 1 July 1997 or such later day as is
prescribed.
(2) However, an RSA, or retirement savings account, can only be provided
by a life insurance company as a policy.
Note: Section 16 provides that policy has the same meaning as in the Life
Insurance Act 1995.
RSA provider the term is defined to have the same meaning as in section 12 of the
Retirement Savings Accounts Act 1997.
same institution person-to-person funds transfer instruction this term has the
meaning provided in sub-clause 8(2) (see explanatory memoranda for sub-clause
8(2)).
same institution same-person funds transfer instruction- this term has the meaning
provided in sub-clause 9(2) (see explanatory memoranda for sub-clause 9(2)).
Secretary this term is defined as the Secretary of the Department and is used in
clause 223 (Secretary may require the AUSTRAC CEO to give information - (see
explanatory memoranda for clause 223).
security This term has the meaning given by section 92 of the Corporations Act
2001 (except that subsections 92(3) and (4) of that Act are to be disregarded.
Subsections 92(1) and (2) are as follows.
(1) Subject to this section, securities means:
(a) debentures, stocks or bonds issued or proposed to be issued by a
government; or
(b) shares in, or debentures of, a body; or
(c) interests in a managed investment scheme; or
(d) units of such shares;
but does not include:
43
(f) a derivative (as defined in Chapter 7), other than an option to acquire by
way of transfer a security covered by paragraph (a), (b), (c) or (d); or
(g) an excluded security.
Note: A derivative does not include an option to acquire a security by way of issue (see the
combined effect of paragraph 761D(3)(c), paragraph 764A(1)(a) and paragraph (d) of
the definition of security in section 761A).
(2) The expression securities, when used in relation to a body, means:
(a) shares in the body; or
(b) debentures of the body; or
(c) interests in a managed investment scheme made available by the body; or
(d) units of such shares;
but does not include:
(e) a derivative (as defined in Chapter 7), other than an option to acquire by
way of transfer a security covered by paragraph (a), (b), (c) or (d); or
(f) an excluded security.
Note: A derivative does not include an option to acquire a security by way of issue (see the
note to subsection (1)).
self-managed superannuation fund this term has the same meaning as in section
17A of the Superannuation Industry (Supervision) Act 1993 (SIS Act). Section 17A
is as follows.
17A Definition of self managed superannuation fund
Basic conditions--funds other than single member funds
(1) Subject to this section, a superannuation fund, other than a fund with
only one member, is a self managed superannuation fund if and only if it
satisfies the following conditions:
(a) it has fewer than 5 members;
(b) if the trustees of the fund are individuals--each individual trustee
of the fund is a member of the fund;
(c) if the trustee of the fund is a body corporate--each director of the
body corporate is a member of the fund;
(d) each member of the fund:
(i) is a trustee of the fund; or
(ii) if the trustee of the fund is a body corporate--is a director of the
body corporate;
(e) no member of the fund is an employee of another member of the
fund, unless the members concerned are relatives;
(f) no trustee of the fund receives any remuneration from the fund or
from any person for any duties or services performed by the trustee in
relation to the fund.
Basic conditions--single member funds
(2) Subject to this section, a superannuation fund with only one member
is a self managed superannuation fund if and only if:
(a) if the trustee of the fund is a body corporate:
(i) the member is the sole director of the body corporate; or
44
(ii) the member is one of only 2 directors of the body corporate, and
the member and the other director are relatives; or
(iii) the member is one of only 2 directors of the body corporate, and the
member is not an employee of the other director; and
(b) if the trustees of the fund are individuals:
(i) the member is one of only 2 trustees, of whom one is the member and the
other is a relative of the member; or
(ii) the member is one of only 2 trustees, and the member is not an employee
of the other trustee; and
(c) no trustee of the fund receives any remuneration from the fund or from any
person for any duties or services performed by the trustee in relation to the fund.
Certain other persons may be trustees
(3) A superannuation fund does not fail to satisfy the conditions specified in
subsection (1) or (2) by reason only that:
(a) a member of the fund has died and the legal personal representative of the
member is a trustee of the fund or a director of a body corporate that is the
trustee of the fund, in place of the member, during the period:
(i) beginning when the member of the fund died; and
(ii) ending when death benefits commence to be payable in respect of the
member of the fund; or
(b) the legal personal representative of a member of the fund is a trustee of the
fund or a director of a body corporate that is the trustee of the fund, in
place of the member, during any period when:
(i) the member of the fund is under a legal disability; or
(ii) the legal personal representative has an enduring power of attorney in
respect of the member of the fund; or
(c) if a member of the fund is under a legal disability because of age and does
not have a legal personal representative--the parent or guardian of the
member is a trustee of the fund in place of the member; or
(d) an appointment under section 134 of an acting trustee of the fund is in
force.
Circumstances in which entity that does not satisfy basic conditions remains a
self managed superannuation fund
(4) Subject to subsection (5), if a superannuation fund that is a self managed
superannuation fund would, apart from this subsection, cease to be a self
managed superannuation fund, it does not so cease until the earlier of the
following times:
(a) the time an RSE licensee of the fund is appointed;
(b) 6 months after it would so cease to be a self managed superannuation fund.
Subsection (4) does not apply if admission of new members
(5) Subsection (4) does not, except for the purposes of section 29J, apply if the
reason, or one of the reasons, why the superannuation fund would cease to be a
self managed superannuation fund was the admission of one or more new
members to the fund.
45
Extended meaning of employee in certain circumstances
(6) For the purposes of this section, a member of a fund, who is an employee of an
employer-sponsor of the fund, is also taken to be an employee of another person
(the other person), if the employer-sponsor is:
(a) a relative of the other person; or
(b) either of the following:
(i) a body corporate of which the other person, or a relative of the other
person, is a director;
(ii) a body corporate related to that body corporate; or
(c) a trustee of a trust of which the other person, or a relative of the other
person, is a beneficiary; or
(d) a partnership, where:
(i) the other person, or a relative of the other person, is a partner in the
partnership; or
(ii) the other person, or a relative of the other person, is a director of a
body corporate that is a partner in the partnership; or
(iii) the other person, or a relative of the other person, is a beneficiary of a
trust, if a trustee of the trust is a partner in the partnership.
Note 1: An effect of this subsection is that a fund will not be a self-managed
superannuation fund if a member is employed by an employer-sponsor
of the fund, and another member (who is not a relative) has a specified
interest in that employer-sponsor: see paragraph (1)(e). An example of
this would be where the employer-sponsor is a company of which
another member is a director.
Note 2: Another effect is that a fund will not be a self-managed superannuation
fund if its single member is employed by an employer-sponsor of the
fund in which the other trustee of the fund (who is not a relative) has a
specified interest: see subsection (2).
(7) Subsection (6) does not limit the meaning of the term employee.
Regulations
(8) For the purposes of this section:
(a) a member of a fund is taken to be an employee of a person belonging to a
class specified in the regulations for the purposes of this paragraph; and
(b) despite subsections (6) and (7) and section 15A, a member of a fund is not
taken to be an employee of a person belonging to a class specified in the
regulations for the purposes of this paragraph.
Meaning of relative
(9) In this section:
relative, in relation to an individual, means:
(a) a parent, child, grandparent, grandchild, sibling, aunt, uncle, great-aunt,
great-uncle, niece, nephew, first cousin or second cousin of the individual
or of his or her spouse or former spouse; or
(b) another individual having such a relationship to the individual or to his or
her spouse or former spouse because of adoption or remarriage; or
(c) the spouse or former spouse of the individual, or of an individual referred
to in paragraph (a) or (b).
46
Disqualified persons
(10) For the avoidance of doubt, subsection (3) does not permit a person, in the
capacity of legal personal representative of a disqualified person (within the
meaning of section 120), to be a trustee of a self managed superannuation fund.
send for clarity, when this term is used in relation to physical currency, as defined
in this Bill, it includes sending through the post. This term relates to the provisions in
clauses 57 and 58 regarding the movements of physical currency out of, and in to,
Australia (see explanatory memoranda on clauses 57 and 58).
service this term is defined as including any of the items included in the tables at
clause 6 (see explanatory memoranda on clause 6).
shell bank this term is defined in clause 15, and is related to provisions regarding
correspondent banking in Part 8 of the Bill.
signatory - the term is defined to the mean the person or one of the persons on whose
behalf an account provider conducts transactions on an account. The term is used in
the definition of the term opening in clause 5, in items 2, and 3 in table 1 in clause 6
and in items12 and13 in table 3 in clause 6 and in sub-clause 50(1) (see explanatory
memoranda on these clauses).
sinking fund policy This term is defined by reference to the Life Insurance Act
1995 which defines the term as a contract with the following features:
(a) the company issuing the policy undertakes to pay money on one or more
specified dates;
(b) neither the payment of that money nor the payment of premiums is
dependent on the death or survival of the person to whom the policy is issued
or of any other person.
special anti-money laundering and counter-terrorism financing program this
term has the meaning given by sub-clause 86(1) (see explanatory memoranda on
sub-clause 86(1)).
standard anti-money laundering and counter-terrorism financing program this
term has the meaning given by sub-clause 84(1) (see explanatory memoranda on
sub-clause 84(1)).
state of mind the state of mind of a person is defined to include the knowledge,
intention, opinion, suspicion, belief or purpose of the person and the person's reasons
for these. The term is used in clause 232 (civil liability of corporations) and 233 (civil
liability of persons other than corporations) (civil liability of corporations) (see
explanatory memoranda on clauses 232 and 233).
State/Territory Royal Commission this term is defined to mean a Royal
Commission or a commission of inquiry of a State or Territory and is included in the
list of agencies in the term designated agency in clause 5 (see explanatory
memoranda on designated agency).
47
stored value card - the term is defined to include a portable device that can store
monetary value other than in physical currency form. The ability for regulations to be
made specifying that the definition includes specific kinds of stored value cards
ensures that future technology developments will be captured by the definition.
subject to a requirement this term is defined to include subject to a prohibition and
is used in clauses 59, 66, 74, 123, 128, 131, 150, 158, 161, 162, 165, 199, 200 and
204. These clauses are all offence provisions (see explanatory memoranda on the
clauses).
subsidiary the term is defined to have the same meaning as in the Corporations Act
2001 (Corporations Act). Section 46 Corporations Act defines a subsidiary as
follows:
A body corporate (in this section called the first body) is a subsidiary of
another body corporate if, and only if:
(a) the other body:
(i) controls the composition of the first body's board; or
(ii) is in a position to cast, or control the casting of, more than one-half
of the maximum number of votes that might be cast at a general
meeting of the first body; or
(iii) holds more than one-half of the issued share capital of the first
body (excluding any part of that issued share capital that carries no
right to participate beyond a specified amount in a distribution of either
profits or capital); or
(b) the first body is a subsidiary of a subsidiary of the other body
superannuation fund the term is defined to have the same meaning as in the
Superannuation Industry (Supervision) Act 1993 (SIS Act) which states that
"superannuation fund" means:
(a) a fund that:
(i) is an indefinitely continuing fund; and
(ii) is a provident, benefit, superannuation or retirement fund; or
(b) a public sector superannuation scheme."
suspicious matter reporting obligation - this term has the meaning given by
sub-clause 41(1) (see explanatory memorandum on sub-clause 41(1))
taxation law the term is defined to have the same meaning as in the Taxation
Administration Act 1953 (TA Act) which defines the term as including the TA Act,
any other Act of which the Commissioner has the general administration, the A New
Tax System (Australian Business Number) Act 1999 and any other prescribed by
regulations.
taxation officer - this term is defined as either a Second or Deputy Commissioner of
Taxation, or a person appointed or engaged under the Public Service Act 1990 and
performing duties in the Australian Taxation Office who is appointed or engaged
under the Public Service Act 1990. The term is used in the definition of the term
investigating officer . The term is also used in paragraph 122(3)(g) (secrecy -
information obtained under clause 49) and clause 125 (access by the ATO to
AUSTRAC information) of the Bill (see explanatory memoranda for these
provisions).
48
threshold transaction The definition provides that a threshold transaction involves
the transfer of not less than $10,000 of physical currency or e-currency or of an
amount of money or property of a value specified in regulations. The term is used in
clauses 43 (reports of threshold transactions), and 142 (offence of conducting
transactions so as to avoid reporting requirements relating to threshold transactions).
The definition uses the terms transfer and transaction each of which has an extended
meaning (see explanatory memoranda on these terms).
tracing information - this term has the meaning given by clause 72 (see explanatory
memorandum on clause 72)
transaction the definition extends the ordinary meaning of the word transaction so
that it cannot be read as limited to transactions which have a commercial purpose or
nature. The term transaction is used in the definition of the term threshold
transaction and is also used in Part 3 of the Bill (reporting obligations of reporting
entities). This is to put beyond doubt that the term threshold transaction is to be
interpreted as including transactions of a non-commercial nature; for example a gift
would be covered by the term threshold transaction . When the term transaction is
used in Part 3, Division 2 (suspicious matters) and clause 43 (reports of threshold
transactions) a reporting entity will be obliged to report a transaction or activity of a
non-commercial nature (subject to other relevant requirements of the clauses being
met).
transfer the term is defined to include any act or thing that may reasonably be regarded as
the economic equivalent of transfer. This extended definition is to put beyond doubt that the
term covers alternative remittance arrangements where no money or property actually
changes hands. The extended definition of the term is relevant to the definitions of the terms
remittance arrangement and designated remittance arrangement in clause 10 and threshold
transaction in clause 5 (see explanatory memoranda on these terms).
transferor entity - this term has the meaning given by paragraph 10(3)(a) and is
relevant to a remittance arrangement (see explanatory memoranda on clause 10).
Treasury Department this term means the Department administered by the
Treasurer. The Department is listed in the definition of the term designated agency in
clause 5 (see explanatory memorandum on designated agency).
trust this term is defined as meaning a person in the capacity of trustee, or a trust
estate. This term is used in items 16, 20, and 42 in Table 1 within clause 6, and in
clauses 11 (control test), 14 (residency test), in relation to a trust or trustee as a
reporting entity. It is used in a note to clause 88 and in clauses 90 and 239. The term
also appears in definitions of account, officer, and person in clause 6 (see explanatory
memoranda on these provisions).
trustee the term is defined to have the same meaning as in the Income Tax
Assessment Act 1997 (ITA Act 1997). The ITA Act 1997 defines the term by
reference to the definition in subsection 6(1) of the Income Tax Assessment Act 1936
which defines trustee to include (in addition to every person appointed or constituted
trustee by act of parties, by order, or declaration of a court, or by operation of law):
49
(a) an executor or administrator, guardian, committee, receiver, or
liquidator; and
(b) every person having or taking upon himself the administration or
control of income affected by any express or implied trust, or acting in any
fiduciary capacity, or having the possession, control or management of the
income of a person under any legal or other disability.
trust estate the term is defined to have the same meaning in the ITA Act 1997.
Since the term is not itself defined in the ITA Act the purpose of this definition is to
give it its commonly understood meaning as referred to in the ITA Act.
ultimate transferee entity - this term has the meaning given by paragraph 10(3)(b)
and is relevant to a remittance arrangement (see explanatory memoranda on clause
10).
unincorporated association this term means an unincorporated association or a
body of persons, and as per the note following the definition of the term company in
clause 5 it is included in the definition of that term. This term is used in clause 238
(treatment of unincorporated associations see explanatory memorandum on
company and on clause 238).
unique reference number this term refers to the combination of letters, digits,
characters and symbols which used alone or in conjunction with any other information
in the transfer instruction enables the ordering institution to identify the payer. The
phrase is used in clause 71 (complete payer information) and in clause 72 (tracing
information) see explanatory memoranda on these provisions.
value the term is defined in relation to transferred property and is included for the
purpose of the definition in clause 5 of threshold transaction (see explanatory
memorandum on threshold transaction and transferred property). The term provides
that value in relation to transferred property means the market value of the property
and it provides that in working out the market value anything that would prevent or
restrict conversion of the property to money is to be disregarded.
warrant premises this term is defined in relation to monitoring warrants (see
explanatory memorandum on monitoring warrant ) to mean the premises to which the
warrant relates. This term is used in clause 155 (use of electronic equipment in
exercising monitoring powers) and in Division 5 of Part 13 regarding occupier's
rights and responsibilities.
Clause 6 Designated services
Sub-clause 6(1) and General
Sub-clause 6(1). Sub-clause 6(1) provides that the tables in the remainder of clause 6
define designated services as itemised in the tables and defines who the customer is
for each of those itemised services. The terms designated services and customer are
defined in clause 5 by reference to the tables in clause 6 (note that the definition of
customer in clause 5 extends to a prospective customer).
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General.
The designated services are split into 4 tables (at sub-clauses 6(2), (3), (4) and (5).
table 1 covers financial services, table 2 covers buying and selling bullion, Table 3
covers gambling services and table 4 covers prescribed services provided in the
regulations. A person who provides a designated service to a customer becomes a
reporting entity (see explanatory memorandum on reporting entity) under the Bill and
thereby becomes subject to obligations created in later Parts of the Bill such as in Part
2 (Identification procedures etc).
Particular Recommendations within the FATF Forty Recommendations of June 2003
(FATF Recommendations) require countries to ensure that financial institutions incur
obligations contained in the FATF Recommendations. Other FATF
Recommendations extend these obligations to certain designated non-financial
businesses and professions (DNFBPs) but only when those businesses and professions
are carrying out specified activities.
The Bill does not cover the extension of the obligations to the DNFBPs with the
exception of casinos, and bullion dealers and lawyers and accountants where they
provide the financial services in table 1 in direct competition with the financial sector.
It is anticipated that extension to the remaining DNFBPs will be done by later
amending legislation. This staged approach to implementation of the FATF
Recommendations takes account of the fact that at the time of introduction into
Parliament, financial institutions already have obligations under the FTRA whereas,
with the exception of casinos, and bullion dealers, businesses and professions covered
by the DNFBP definition do not have FTRA obligations (subject to the limited FTRA
obligation on solicitors to report significant cash transactions (namely cash
transactions of not less than $10,000 in value).
Table 2 covers bullion dealers. Bullion dealers are a subset of the DNFBP category,
Dealers in Precious Metals and Precious Stones. Bullion Dealers have been covered in
this tranche of legislative reform because they already have obligations under the
existing FTRA.
Table 3 covers the first DNFBP category, Casinos, who already have obligations
under the FTRA.
Table 1 itemises the activities which FATF requires to be covered when carried out by
financial institutions. The Glossary to the FATF Recommendations defines financial
institutions to mean ...any person or entity who conducts as a business one or more of
the following activities or operations for or on behalf of a customer...; the definition
then lists 13 numbered activities or operations (some of which are supplemented by
footnotes numbered 5 to 9). Accordingly table 1 of the Bill covers all of the activities
in the FATF Recommendations Glossary definition of financial institutions (with the
exception of paragraph 9 of the definition which is covered in table 5) and will extend
to any person (see explanatory memorandum on person ) providing the designated
financial institution services itemised in the table to customers. The items in Table 1
equate to the activities listed in the Glossary but are described in terminology
appropriate to Australian law. The Glossary activity list is as follows:
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"Financial institutions" means any person or entity who conducts as a
business one or more of the following activities or operations for or on
behalf of a customer:
1. Acceptance of deposits and other repayable funds from the public. (This
also captures private banking).
2. Lending. (This includes inter alia: consumer credit; mortgage credit;
factoring, with or without recourse; and finance of commercial
transactions (including forfaiting)).
3. Financial leasing. (This does not extend to financial leasing
arrangements in relation to consumer products.)
4. The transfer of money or value. (This applies to financial activity in
both the formal or informal sector e.g. alternative remittance activity. See
the Interpretative Note to Special Recommendation VI. It does not apply to
any natural or legal person that provides financial institutions solely with
message or other support systems for transmitting funds. See the
Interpretative Note to Special Recommendation VII.)
5. Issuing and managing means of payment (e.g. credit and debit cards,
cheques, traveller's cheques, money orders and bankers' drafts, electronic
money).
6. Financial guarantees and commitments.
7. Trading in:
(a) money market instruments (cheques, bills, CDs, derivatives etc.);
(b) foreign exchange;
(c) exchange, interest rate and index instruments;
(d) transferable securities;
(e) commodity futures trading.
8. Participation in securities issues and the provision of financial services
related to such issues.
9. Individual and collective portfolio management.
10. Safekeeping and administration of cash or liquid securities on behalf of
other persons.
11. Otherwise investing, administering or managing funds or money on
behalf of other persons.
12. Underwriting and placement of life insurance and other investment
related insurance. (This applies both to insurance undertakings and to
insurance intermediaries (agents and brokers)).
13. Money and currency changing.
As with table 1, tables 2 and 3 relate to provision of a designated service and list
activities in terminology appropriate to Australian law.
Under the FATF Recommendations 12 and 16 the designated non-financial
businesses and professions are as follows (note that in the case of real estate agents,
legal practitioners, accountants and trust and company services providers the
recommendations only apply when they carry out specified activities listed below):
(a) Casinos (which also includes internet casinos).
(b) Real estate agents when involved in transactions concerning the buying
and selling of real estate
(c)Dealers in precious metals
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(d)Dealers in precious stones
(e) Lawyers, notaries, other independent legal professionals and accountants
when preparing for or carrying out transactions concerning the following:
· Buying and selling of real estate
· Managing of client money, securities or other assets
· Management of bank, savings or securities accounts
· Organisation of contributions for the creation, operation or
management of companies, and
· Creation, operation or management of legal persons or
arrangements, and buying and selling of business entities.
FATF requires the obligations on lawyers and accountants to apply to professionals
who are sole practitioners, partners or employed professionals within professional
firms but not to "in-house" professionals who are employees of other types of
businesses, nor to professionals working for government agencies. This is because
their employer client may already be subject to money laundering measures.
f) "Trust and Company Service Providers" refers to all persons or businesses
that are not covered elsewhere under the FATF Recommendations, and
which as a business, provide any of the following services to third parties:
· acting as a formation agent of legal persons;
· acting as (or arranging for another person to act as) a director or
secretary of a company, a partner of a partnership, or a similar
position in relation to other legal persons;
· providing a registered office; business address or
accommodation, correspondence or administrative address for a
company, a partnership or any other legal person or
arrangement;
· acting as (or arranging for another person to act as) a trustee of
an express trust;
· acting as (or arranging for another person to act as) a nominee
shareholder for another person.
Sub-clause 6(2) Table 1 (Financial Services)
As a general proposition designated services are limited to services provided to a
designated customer in the course of carrying on the core activity of a business and do
not capture activities which are peripheral to the core activity of the business. Some
particular items in Table 1 specifically limit the designated service in this manner
where it would be possible for the service to be provided in a non-commercial
manner. For example item 6 limits making of a loan to where the loan is provided in
the course of carrying on a loans business so that loans provided for non-commercial
purposes, for example within a family, are excluded, and also loans made by a
business whose core activity is not the provision of a loan are not captured. However
some business may have more than one core activity and whether an activity is a core
activity of the business will be determined by the circumstances in each case.
Items 1-3 - these items implement paragraph 1 of the FATF Glossary definition of
financial institution acceptance of deposits and other repayable funds from the
public. These services can only be provided by an ADI, bank, building society, credit
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union or a person specified in the AML/CTF Rules. (See the explanatory memoranda
for ADI , account and account provider and AML/CTF Rules in clause 5).
Item 1- in the capacity of account provider, opening an account this item includes
creating an account for a customer, where the provider of the service is an account
provider. The customer is the account holder. It is immaterial whether the account
number has been given to the holder of the account, or whether the account holder or
any signatory to the account can conduct a transaction in relation to the account (see
the definition of opening in clause 5). Steps taken by the financial institution which
are preliminary to the opening of the account (such as processing the customer's
application) are not covered by this item. Where a financial institution issues an
account access card to a customer prior to performing the applicable customer
identification procedure (see explanatory memorandum on this term) then the
account will be regarded as having been opened but not available for use by the
customer. It is anticipated that AUSTRAC will make AML/CTF Rules limiting the
period of time after issue of such an access card within which the account provider
must perform the applicable customer identification procedure.
Item 2 - in the capacity of an account provider for a new or existing account,
allowing a person to become a signatory to the account this item ensures that
allowing a person to become a signatory to a new or existing account is captured as
the provision of a designated service. This is to ensure that the provision of an account
to a signatory, rather than the account holder, does not enable a person to evade the
requirements of the Bill. The customer in this instance is the signatory to the account.
This item in effect provides that a reporting entity who enables a person to become a
signatory to an account will incur the obligations provided by later Parts of the Bill
(such as identification). This means that the reporting entity will in effect have
similar obligations to those which a cash dealer has under section 18 of FTRA to
block an account with respect to each signatory to the account if the cash dealer does
not have the account information in relation to that account at the end of the
infringement day (the terms cash dealer , account information and infringement
day are defined in the FTRA).
Item 3 - in the capacity of an account provider for a new or existing account,
allowing a transaction to be conducted in relation to an account this item relates to
ongoing activity on an account which has been opened at some earlier point in time
where the account provider is an ADI, bank, building society, credit union or person
specified in the AML/CTF Rules. The customer in this item is the account holder and
each other signatory to the account (see also explanatory memorandum on account ,
account provider , ADI and allowing a transaction ).
Items 4 and 5 general these items also implement paragraph 1 of the FATF
Glossary definition of financial institution (paragraph 1 - acceptance of deposits and
other repayable funds from the public. footnote 5 to paragraph 1 states that this
also captures private banking). These services can only be provided by an ADI, bank,
building society, credit union, or a person specified in the AML/CTF Rules.
Item 4 accepting money on deposit (otherwise than by way of deposit to an
account) this covers deposit taking that is not account related (for example a term
deposit). The customer is the person in whose name the deposit is held.
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Item 5 in the capacity of deposit-taker for a deposit, allowing a transaction to be
conducted in relation to the deposit- this captures transactions conducted on a deposit
made previously (see explanatory memorandum on the clause 5 definition of
allowing a transaction ). This item relates to deposits taken by a financial institution
which are not a deposit to an account with that institution (item 3 relates to deposits
taken by a financial institution which are a deposit to an account with that institution).
The customer is the person in whose name the deposit is held
Item 6 making a loan this item implements paragraph 2 of the FATF Glossary
definition of financial institution this item is specifically limited to where the loan
is made in the course of carrying on a loans business. One result of this limitation is
that the item does not cover loans made between family members. Another result is
item 6 is limited to businesses where lending is a core activity. This would also mean
for example that Centrelink pension schemes would not be covered insofar as these
are in the nature of a loan because Centrelink is not in the business of loan making.
Some businesses may have more than one core activity and whether an activity is a
core activity of the business will be determined by the circumstances in each case.
The term loan is defined in clause 5 by an inclusive definition (see explanatory
memorandum especially as to this item covering loans provided by way of credit
cards or letters of credit).
Item 7 in the capacity of lender or assignee for a loan allowing the borrower to
conduct a transaction in relation to the loan this item covers the borrower making
transactions in relation to the loan where the loan was made in the course of carrying
on a loans business. It covers transactions made where the loan is still held by the
original lender or where it has been assigned to another party (there is a separate item
item 56 dealing with guaranteeing a loan). The customer is the borrower. See
explanatory memorandum on allowing a transaction .
Item 8 factoring a receivable - this item implements paragraph 2 (see footnote 6 to
paragraph 2 of the FATF Glossary definition of financial institution) see also
explanatory memorandum to definition of term factoring in clause 5. The customer
is the person whose receivable is factored. (The Australian Dictionary of Banking
and Finance, published by Law Book Information Services in 1997, defines a
receivable as claims held against customers and others for money, goods or services. )
Item 9 forfaiting - this item covers forfeiting a bill of exchange or a promissory
note in the course of carrying on a forfeiting business. The item implements footnote
6 of paragraph 2 of the FATF Glossary definition of financial institution . (The
Australian Dictionary of Banking and Finance, published by Law Book Information
Services in 1997, defines forfeiting as a fixed interest trade financing technique
whereby an exporter who receives a term bill of exchange or promissory note for the
supply of goods and services discounts the bill with a financial institution [the
forfaiter] after having accepted the bill on a without recourse basis. In doing so the
exported passes all risks and responsibility for collection to the forfeiter in exchange
for immediate cash payment. Forfaiting is common in European trade. ) The
customer is the person whose bill or note is forfaited.
Item 10 supplying goods by way of lease under a finance lease - this item
implements paragraph 3 of the FATF Glossary definition of financial institution. The
phrase finance lease has its ordinary meaning. The term finance lease is defined in
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The Australian Dictionary of Banking and Finance, published by Law Book
Information Services in 1997 as a contract under which the lessor purchases a capital
item and leases it to the lessee, who assumes liability for the maintenance, repairs,
insurance and ongoing costs of the item. Regular lease rental payments are made
with a residual or lump sum payment at the end of the lease period. The item does
not capture operating leases. The term operating lease is defined in The Australian
Dictionary of Banking and Finance, published by Law Book Information Services in
1997, as a short term arrangement where the lessor leases the same asset to
successive lessees in return for lease rentals. To comply with footnote 7 to paragraph
3 this item will not extend to goods acquired by a consumer (within the meaning of
section 4B of the Trade Practices Act 1974 which are goods of a kind ordinarily
acquired for personal, domestic or household use or consumption or commercial road
vehicles). The customer in this item is the lessee.
Item 11 in the capacity of a lessor allowing a lessee to conduct a transaction in
relation to a finance lease - this item implements paragraph 3 of the FATF Glossary
definition of financial institution. The term finance lease is defined in The
Australian Dictionary of Banking and Finance, published by Law Book Information
Services in 1997 as a contract under which the lessor purchases a capital item and
leases it to the lessee, who assumes liability for the maintenance, repairs, insurance
and ongoing costs of the item. Regular lease rental payments are made with a
residual or lump sum payment at the end of the lease period. The item does not
capture operating leases. The term operating lease is defined in The Australian
Dictionary of Banking and Finance, published by Law Book Information Services in
1997, as a short term arrangement where the lessor leases the same asset to successive
lessees in return for lease rentals. The phrase finance lease has its ordinary meaning.
To comply with footnote 7 to paragraph 3 this item will not extend to goods acquired
by a consumer (within the meaning of section 4B of the Trade Practices Act 1974). It
is not intended that this item include an operating lease. See explanatory
memorandum on allowing a transaction .
Item 12 - supplying goods to a person by way of hire-purchase this item
implements paragraph 3 of the FATF Glossary definition of financial institution. The
phrase hire-purchase has its ordinary meaning. This item covers the supply of goods
by way of hire-purchase in the course of carrying on a business of supplying goods,
except when the goods are acquired by a consumer (within the meaning of the section
4B of the Trade Practices Act 1974). The customer in this item is the person.
Item 13 in the capacity of the supplier of goods to a person by way of a hire-
purchase agreement allowing the person to conduct a transaction in relation to
hire-purchase agreement this item implements paragraph 3 of the FATF Glossary
definition of financial institution. The phrase hire-purchase agreement has its
ordinary meaning. This item covers allowing a person to conduct a transaction in
relation to a hire-purchase agreement for the supply of goods where the supply of the
goods was in the course of carrying on a business of supplying goods, except when
the goods are acquired by a consumer (within the meaning of section 4B of the Trade
Practices Act 1974). The customer in this item is the person. See explanatory
memorandum on allowing a transaction .
Item 14 in the capacity of account provider for an account providing a cheque
book, or similar facility that enables the holder of the account to draw a cheque to
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on the account - this item captures an account held with an ADI or bank which has a
cheque facility attached to the account. It is to be distinguished from items 15 and 16
which also relate to accounts with cheque facilities. The customer is the holder of the
account (see explanatory memorandum for definition of account ). The item
implements paragraph 5 of the Glossary definition of financial institution .
Item 15 - in the capacity of building society or credit union providing a cheque
book, or similar facility, that enables the holder of the account with the building
society or credit union to draw a cheque on an account held by the building society
or credit union - this item captures an account held with a building society or credit
union which has a cheque facility attached to the account. It is to be distinguished
from items 14 and 16 which also relate to accounts with cheque facilities. The
customer is the holder of the account with the building society or credit union (see
explanatory memorandum for definition of account ). The item implements
paragraph 5 of the Glossary definition of financial institution .
Item 16 in the capacity of trustee or manager of a trust, providing a cheque book,
or similar facility that enables the holder of a beneficial interest in the trust to draw
a cheque on an account held by the trustee or manager of the trust - this item
captures an account held by the trustee or manager of an account which has a cheque
facility attached to the account which can be used by the holder of a beneficial interest
in the trust. It is to be distinguished from items 14 and 15 which also relate to
accounts with cheque facilities. The customer is the holder of the holder of the
beneficial interest in the trust. This item covers a cheque facility issued by a cash
management trust in relation to units held in the trust (see explanatory memorandum
for definition of account ). The item implements paragraph 5 of the Glossary
definition of financial institution .
Item 17- issuing a bill of exchange or promissory note, or letter of credit to a
person, where the bill, note or letters is issued by an ADI or a bank or a building
society or a credit union or a person specified in the AML/CTF Rules- this item
implements paragraphs 5 and partly implements 7(a) of the Glossary definition of
financial institution . The terms bill of exchange and promissory note , are defined
in clause 5 (see explanatory memoranda on those terms). Letter of credit has its
ordinary meaning. The customer is the person.
Item 18- issuing a debit card that enables the holder of an account to debit the
account - this item captures an account held with an ADI or bank which has a debit
card facility attached to the account. It is to be distinguished from items 19 and 20
which also relate to accounts with debit card facilities. The customer is the holder of
the account (see explanatory memorandum for definition of account and debit card
). The item implements paragraph 5 of the Glossary definition of financial institution
.
Item 19 in the capacity of a building society or credit union issuing a debit card
that enables the holder of an account with the building society or credit union to
debit an account held by the building society or credit union - this item captures an
account held with a building society or credit union which has a debit card facility
attached to the account. It is to be distinguished from items 18 and 20 which also
relate to accounts with cheque facilities. The customer is the holder of the account
with the building society or credit union (see explanatory memorandum for definition
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of account and debit card ). The item implements paragraph 5 of the Glossary
definition of financial institution .
Item 20- in the capacity of the trustee or manager of a trust issuing a debit card that
enables the holder of a beneficial interest in the trust to debit an account held by the
trustee or manager of the trust - - this item captures an account held by the trustee
or manager of an account which has a debit card facility attached to the account which
can be used by the holder of a beneficial interest in the trust. It is to be distinguished
from items 18 and 19 which also relate to accounts with debit card facilities. The
customer is the holder of the holder of the beneficial interest in the trust. This item
covers a debit card facility issued by a cash management trust in relation to units held
in the trust (see explanatory memorandum for definition of account and debit card).
The item implements paragraph 5 of the Glossary definition of financial institution.
Items 21 to 24 issuing a stored value card - these items implement part of
paragraph 5 of the Glossary definition of financial institution, namely the reference to
electronic money. The term stored value card which is used in items 21, 22, 22A
and 22B, is defined in clause 5 of the Bill to include a portable device capable of
storing monetary value in a form other than in physical currency. The definition also
enables regulations to be made to cover specified types of stored value cards. To
reduce compliance burdens on providers issuing stored value cards or increasing the
monetary value stored on such cards where all of the monetary value may be
withdrawn in cash items 21 and 22 respectively limit the designated service to issue
of, or increase in value of, a stored value card of not less than $1,000 (unless another
amount is provided by regulation). Similarly, in the case of issuing or increasing the
monetary value of a card where no part of the monetary value on the stored value card
can be withdrawn in cash (and hence is low-risk), the designated service has been
limited to the issue of (23) or increase on (24) a stored value card where the monetary
value stored or increase in value is not less than $5000 (or another amount that may
be specified on regulations). In each item the customer is the person who holds the
stored value card. See explanatory memorandum on stored value card. Centrelink's
single use Electronic Benefits Card is not intended to be covered by this item.
Items 25 and 26- issuing and redeeming a travellers' cheque - these items
implement parts of paragraph 5 of the Glossary definition of financial institution.
Item 25 makes the issuer of the traveller's cheque the reporting entity under the Bill
the seller of the traveller's cheque is not the reporting entity. For example an
American Express traveller's cheque sold to a customer by a bank is issued by
American Express and not by the bank. Similarly under item 26 if a customer cashes
the American Express traveller's cheque with a bank or a retail outlet it is the
redemption by American Express which is captured and not the cashing by the bank
or retail outlet and again American Express is the reporting entity. The customer is
the person to whom the traveller's cheque is issued or who cashes or redeems it.
Items 27 and 28 issuing and redeeming a money order, postal order or similar
order to a person- these items implement parts of paragraph 5 of the Glossary
definition of financial institution. For the sake of reducing compliance burden for
low risk products, the issue or redemption of a money order, postal order or similar
order has been limited to instances where such issue or redemption is not less than
$1000, or such other amount as may be specified in the regulations. The customer is
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the person to whom the money order, postal order or similar order is issued or who
cashes or redeems it.
Items 29 and 30 - in the capacity of ordering institution accepting an electronic
funds instruction from the payer (item 29) or in the capacity of beneficiary
institution, making money available to the payee as a result of an electronic funds
transfer instruction (item 30) these items implement paragraph 4 of the Glossary
definition of financial institution . They will cover the wire transfer services provided
by the formal remittance sector such as are provided by Western Union as well as by
banks. The customer in item 29 is the payer and in the case of item 30 is the payee.
Providers of these services have the usual responsibilities under other Parts of the Bill
that other reporting entities have but they also have specific obligations under Part 5
of the Bill. In brief, Part 5 requires funds transfer instructions to include appropriate
originator information and prevents a destination institution from making transferred
money available to the ultimate recipient if the originator information is not included.
See the explanatory memoranda on Part 5 and on beneficiary institution, electronic
funds transfer instruction, payer, payee and ordering institution.
Items 31 and 32 accepting money or property from a transferor entity to be
transferred under a designated remittance agreement or making money or property
available to an ultimate transferee entity as a result of a transfer under a designated
remittance arrangement - these items implement paragraph 4 of the Glossary
definition of financial institution. These items relate only to transfers occurring
under a designated remittance arrangement as required by footnote 8 of paragraph 4
of the FATF Glossary definition of financial institution. See the explanatory
memorandum on the definition of designated remittance arrangement in clause 10.
See also items 29 and 30 which deal with transfer of money or value in the formal
sector (as also required by footnote 8). The terms transferor entity and ultimate
transferee entity are also defined in sub-clause 10(3). The customer in the case of
item 31 is the transferor entity and in the case of item 32 is the ultimate transferee
entity.
Item 33- in the capacity of agent of a person, acquiring or disposing of a security or
derivative, or a foreign exchange contract, on behalf of a person where the
acquisition or disposal is in the course of carrying on a business of acquiring or
disposing of securities, derivatives or foreign exchange contracts in the capacity of
agent and the service is not specified in the AML/CTF Rules - this item implements
paragraph 7 of the Glossary definition of financial institution . The customer is the
person for whom the agent is acting. See explanatory memoranda on acquiring,
disposing of , derivative , foreign exchange contract and security .
Item 34 - in the capacity of agent of a person, acquiring or disposing of a bill of
exchange or promissory note or letter of credit on behalf of a person where the
acquisition or disposal is in the course of carrying on a business of acquiring or
disposing of bills of exchange, promissory notes or letters of credit in the capacity
of agent and the service is not specified in the AML/CTF Rules - this item
implements paragraph 7 of the Glossary definition of financial institution . It covers
the secondary market for trading of the specified financial products in item 17. The
customer is the person for whom the agent is acting. See explanatory memoranda on
acquiring, disposing of , derivative , bill of exchange and promissory note
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Item 35 issuing or selling a security or derivative to a person where the issue or
sale occurs in the course of carrying out a business of issuing or selling securities
or derivatives- Item 35 covers the secondary market for trading of the specified
financial products in item 33. This item does not capture an exempt financial market
operator issue, and does not apply in circumstances (if any) set out in AML/CTF
rules.
Item 36 in the capacity of issuer of a bearer bond, redeeming a bearer bond - this
implements part of paragraph 5 of the FATF Glossary definition of financial
institution (ie issuing or managing a means of payment).
Items 37 and 39 issuing/undertaking liability as the insurer under a life policy or
sinking fund policy, or in the capacity of insurer for a life policy or sinking fund
policy, accepting a premium in relation to a policy, or making a payment to a
person under the policy - these items implement paragraph 12 of the Glossary
definition of financial institution . The terms life policy and sinking fund policy are
defined in clause 5 (see explanatory memorandum). As per footnote 9 to paragraph
12 of the Glossary the item covers intermediaries such as agents and brokers.
Items 40 and 41 accepting a payment for a new pension or annuity, or making a
payment to a person by way of the pension or annuity, or paying an amount
resulting from the commutation of such a pension /annuity, or a payment of the
residual capital value - these items relate to providers of a pension/annuity and
trustees of a superannuation fund. Self-managed superannuation funds are specifically
excluded. The items are not intended to capture Centrelink pensions.
Items 42 and 43 accepting a contribution, roll-over or transfer in a
superannuation or approved deposit funds or in retirement savings accounts, or
cashing an interest held by a member of the fund -these items implement paragraph
11 of the Glossary definition of financial institution .
Items 44 and 45 accepting a contribution, roll over or transfer to a RSA, or
cashing an interest held by an RSA holder these are separate items reflecting the
statutory product under the Retirement Savings Account Act 1997.
Items 46 and 47 - providing a custodial or depository service or a safe deposit box-
these items implement paragraph 10 of the definition in the Glossary of financial
institution . The items are intended to capture such a service where it is provided in
the course of carrying on a business, where the service is not an exempt legal
practitioner service (defined in clause 5 as a service specified in AML/CTF Rules).
Item 48 and 49 guaranteeing a loan - this item implements paragraph 6 of the
definition in the Glossary of financial institution . The term guarantee is defined in
clause 5 (see explanatory memorandum on clause 5).
Item 50 currency exchange - this item implements paragraph 13 of the definition in
the Glossary of financial institutions.
Item 51 - collecting or holding physical currency this item captures services
provided in the course of carrying on a business of collecting or holding physical
currency where the physical currency was not collected by the provider of the service
as consideration for the supply of goods (within the meaning of section 95A of the
Trade Practices Act 1974).
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Items 52 and 53 - preparing a pay-roll, delivering physical currency- these items
capture the provision of these services in the course of carrying on a business of
preparing pay-rolls or delivering physical currency respectively. These items
implement paragraph 10 of the glossary definition of financial institutions.
Item 54 - in the capacity of licensed financial adviser, making arrangements for a
person to receive a designated service this item implements paragraph 8 of the
Glossary definition of financial institutions . The term financial advisor is defined
in clause 5 (see explanatory memorandum). It is intended to cover personal advice
given by a financial adviser as to the acquiring or disposal where the service provided
by the financial adviser does not also extend to acquiring or disposal of them.
Sub-clause 6(3) Table 2 (Bullion)
Items 1-2 Buying and selling bullion- these items cover the purchase and sale of
bullion in the course of carrying on a business.
Clause 6 Table 3 Clause 26
Sub-clause 6(4) Table 3 (Gambling Services)
This table deals with the provision of gambling services. Generally these services
will be provided by casinos and gambling houses, bookmakers, totalisator agency
boards, interactive gambling services and certain clubs. The trigger for incurring
obligations under the Bill is the provision of one of the gambling services listed in
Table 3, rather than the designation of the provider. Therefore Table 3 does not need
to name the different types of gambling service providers. This approach ensures
competitive neutrality in that it captures the activities concerned which could in fact
be provided by different types of gambling service providers.
Item 1- receiving or accepting a bet placed or made by a person, where the service is
provided in the course of carrying on a business - see explanatory memorandum on
bet . The customer is the person who placed the bet.
Item 2 - placing or making a bet on behalf of a person, where the service is provided
in the course of carrying on a business - see explanatory memorandum on bet . The
customer is the person who placed the bet.
Item 3 - introducing a person who wishes to make or place a bet to another person
who is willing to receive or accept the bet, where the service is provided in the course
of carrying on a business - see explanatory memorandum on bet . The customer is
both the person who wishes to make or place the bet and the person who is willing to
receive or accept the bet.
Item 4 - paying out winnings in respect of a bet where the service is provided in the
course of carrying on a business see explanatory memorandum on bet . The
customer is the person to whom the winnings are paid.
Item 5- in the capacity of controller of an eligible gaming machine venue, allowing a
person to play a game on a gaming machine located at the venue, where the service is
provided in the course of carrying on a business see explanatory memoranda on bet
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, controller and eligible gaming machine venue . The customer is the person who is
allowed to play the game.
Item 6 accepting the entry of a person into a game, where, the game is played for
money or anything else of value and the game is a game of chance or of mixed chance
and skill and the service is provided in the course of carrying on a business; and the
game is not played on a gaming machine located at an eligible gaming machine venue
see explanatory memoranda on eligible gaming machine venue game and gaming
machine . The customer is the person who is accepted into the game.
Items 7 - exchanging money for gaming chips or tokens, where the service is provided
in the course of carrying on a business see explanatory memoranda for gaming chips
or tokens and money . The customer is the person whose money is exchanged.
Item 8 exchanging gaming chips or tokens for money, where the service is
provided in the course of carrying on a business see explanatory memoranda for
gaming chips or tokens and money . The customer is the person whose gaming chips
or tokens are exchanged.
Item 9 - paying out winnings, or awarding a prize, in respect of a game, where the
game is played for money or anything else of value and the game is a game of
chance or of mixed chance and skill and the service is provided in the course of
carrying on a business and the game is not played on a gaming machine located at
an eligible gaming machine venue - see explanatory memoranda for game , gaming
machine and eligible gaming machine venue . The customer is the person to whom
the winnings are paid or the prize is awarded.
Item 10 in the capacity of controller of an eligible gaming machine venue, paying
out winnings, or awarding a prize, in respect of a game, where the game is played
on a gaming machine located at the venue and the winnings are paid out, or the
prize is awarded, by the controller as agent of the owner or lessee of the gaming
machine and the service is provided in the course of carrying on a business - see
explanatory memoranda for controller , eligible gaming machine venue , game and
gaming machine . The customer is the person to whom the winnings are paid or the
prize is awarded.
Item 11 - in the capacity of account provider, opening an account, where the
account provider is a person who provides a service covered by item 1, 2, 3, 4, 5, 6,
7, 8 or 9 and the purpose, or one of the purposes, of the account is to facilitate the
provision of a service covered by item 1, 2, 3, 4, 5, 6, 7, 8 or 9 and the service is
provided in the course of carrying on a business -see explanatory memoranda for
account , account provider , opening and for items 1, 2, 3, 4, 5, 6, 7 or 8 of this
table. The customer is the holder of the account.
Item 12 - in the capacity of account provider for a new or existing account, allowing
a person to become a signatory to the account, where the account provider is a
person who provides a service covered by item 1, 2, 3, 4, 5, 6, 7, 8 or 9 and the
purpose, or one of the purposes, of the account is to facilitate the provision of a
service covered by item 1, 2, 3, 4, 5, 6, 7 or 9 and the service is provided in the
course of carrying on a business - see explanatory memoranda for account ,
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account provider , signatory and for items 1, 2, 3, 4, 5, 6, 7 or 8 of this table. The
customer is the signatory to the account.
Item 13 - in the capacity of account provider for an account, allowing a transaction
to be conducted in relation to the account, where the account provider is a person
who provides a service covered by item 1, 2, 3, 4, 5, 6, 7 ,8, or 9; and the purpose, or
one of the purposes, of the account is to facilitate the provision of a service covered
by item 1, 2, 3, 4, 5, 6, 7,8, or 9 and the service is provided in the course of carrying
on a business - see explanatory memoranda for account , account provider and for
items 1, 2, 3, 4, 5, 6, 7 or 8 of this table. The customer is both the holder of the
account and each other signatory to the account: - see explanatory memorandum for
signatory .
Item 14 exchanging one currency (whether Australian or not) for another
(whether Australian or not), where the exchange is provided by a person who
provides a service covered by item 1, 2, 3, 4, 5, 6, 7, 8or 9 and the service is provided
in the course of carrying on a business - see explanatory memoranda for currency
and for items 1, 2, 3, 4, 5, 6, 7 or 8 of this table. The customer is the person whose
currency is exchanged.
Sub-clause 6(5) Table 4 (Prescribed services)
Item 1 providing a service specified in the regulations - this item allows for
additional designated services to be prescribed by regulation. The customer is the
person who, under the regulations, is taken to be the person to whom the service is
provided. This item will allow the Bill to keep pace with changes that may require
additional services to be included. Money launderers and terrorist financiers are
likely to seek products and services that evade AML/CTF regulation, and some
service providers may seek to offer services and products in such a way as avoid
AML/CTF requirements. The ability to prescribe additional designated services will
ensure that the legislation can be responsive to money laundering and terrorist
financing threats that may emerge in the future, but are not currently foreseen. The
inclusion of this clause is hoped to overcome the problems associated with the
existing FTRA in which changes to the way business was conducted meant that
certain product types and services did not meet the definition of cash dealer. This
clause will also allow changes to be made to keep pace with any revised of the FATF
Recommendations.
Sub-clause 6(6) Geographical links
This sub-clause sets out the intended geographical reach of the Bill. The sub-clause
provides that the Bill only applies to designated services provided to a customer
where:
(a) the service is provided at or through a permanent establishment of the person
in Australia, or
(b) the person providing the service is a resident of Australia and the service is
provided at or through a permanent establishment of the person in a foreign
country; or
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(c) the person providing the service is a subsidiary of a company that is a resident
of Australia and the service is provided at or through a permanent
establishment of the person in a foreign country.
Many of the obligations under the Bill have been limited to services provided through
permanent establishments in Australia. This has been done because FATF are
international obligations and it is expected that business operating overseas will be
required to comply with the foreign country's legislation dealing with the FATF
recommendations. Australian companies operating in countries where the FATF is
not complied with will have to exercise care in meeting there obligations under the
Bill. See explanatory memoranda on permanent establishment and resident .
Sub-clause 6(7)
This clause provides that the regulation under the Bill may amend an item in a table in
clause 6. This will allow the Bill to keep pace with business changes and changes in
the techniques used by money launderers and terrorist financiers. This clause will
also allow changes to be made to keep pace with any revision of the FATF
Recommendations.
Clause 7 Services provided jointly to 2 or more customers
This clause provides that if a designated service is provided jointly to two or more
customers then the service is taken to have been provided to each of those customers.
Clause 8 Person- to-person fund transfer instructions
This clause defines the phrases multiple-institution person-to-person electronic funds
transfer instructions and same-institution person-to-person electronic funds transfer
instructions which are used throughout Part 5 of the Bill (Electronic funds transfer
instructions).
Multiple-institution person-to-person electronic funds transfer instructions
Sub-clause 8(1) defines multiple-institution person-to-person electronic funds
transfer instructions . If a person (the payer) instructs a person (the ordering
institution ) to transfer money to a third person (payee) on the basis that the
transferred money will be made available to the payee by being credited to an account
held by the payee with a fourth person (the beneficiary institution) or being paid to
the payee by a fourth person (the beneficiary institution) and either the transfer is to
be carried out by means of electronic communication, or the transfer instruction is to
be passed on by means of an electronic communications the instruction is a
multiple-institution person-to-person electronic funds transfer instruction if both
the ordering institution and the beneficiary institution are one of the following:
(a) an ADI
(b) a bank
(c) a building society
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(d) a credit union or
(e) a person specified in the AML/CTF Rules, and
If there one or more persons are interposed between the ordering institution and the
beneficiary institution those interposed persons are to be disregarded in working out
the identities of the payer, the ordering institution, and the beneficiary institution. See
explanatory memoranda on ADI , Account , AML/CTF Rules , and transfer .
Same-institution person-to-person electronic funds transfer instructions
Sub-clause 8(2) defines same-institution person-to-person funds transfer instructions
. Where a person (the payer) instructs a person (the ordering institution) to transfer
money controlled by the payer to a third person (the payee) on the basis that the
transferred money will be made available to the payee by either being credited to an
account held by the payee with the ordering institution or being paid to the payee by
the ordering institution and the transfer is to be carried out by means of an electronic
communication it is a same-institution person-to-person funds transfer instructions if
the ordering institution is:
(a) an ADI
(b) a bank
(c) a building society
(d) a credit union or
(e) a person specified in the AML/CTF Rules;
For the purposes of the application of this Bill to making the money available to the
payee, the ordering institution may also be known as the beneficiary institution. See
explanatory memoranda on ADI , Account , AML/CTF Rules , electronic
communication and transfer .
Clause 9 Same-person electronic funds transfer instructions
This clause defines the phrases Multiple institution same-person electronic funds
transfer instruction and Same institution same-person electronic funds transfer
instruction which are used in Part 5 of the Bill (Electronic funds transfer
instructions).
Multiple institution same-person electronic funds transfer instruction
Sub-clause 9(1) defines multiple institution same-person electronic funds transfer
instruction . If a person (the payer) instructs a person (the ordering institution) to
transfer money controlled by the payer to a third person (the beneficiary institution)
on the basis that the transferred money will be made available to the payer by either
being credited to an account held by the payer with the beneficiary institution or being
paid to the payer by the beneficiary institution and either the transfer is to be carried
out by means of electronic communications or the transfer instruction is to be passed
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on wholly or partly by means of one or more electronic communications it is a
multiple institution same-person electronic funds transfer instruction if the ordering
institution and the beneficiary institution are one of following:
(a) an ADI
(b) a bank
(c) a building society
(d) a credit union, or
(e) a person specified in the AML/CTF Rules.
For the purposes of the application of the Bill to making the money available to the
payer, the payer may also be known as the payee. If there are one or more persons
interposed between the ordering institution and the beneficiary institution those
interposed persons are to be disregard in working out the identities of the payer, the
ordering institution and the beneficiary institution. See explanatory memoranda on
ADI , Account , AML/CTF Rules , electronic communication and transfer .
Same institution same-person electronic funds transfer instruction
Sub-clause 9(2) defines same institution same-person electronic funds transfer
instruction . If a person (the payer) instructs a person (the ordering institution) to
make money controlled by the payer available to the payer by being credited to an
account held by the payer with the ordering institution or being paid to the payer by
the ordering institution and the transfer is to be carried out by means of electronic
communications it is a same institution same-person electronic funds transfer
instruction if the ordering institution is:
(a) an ADI; or
(b) a bank; or
(c) a building society; or
(d) a credit union; or
(e) a person specified in the AML/CTF Rules;
For the purposes of the application of this Bill to making the money available to the
payer the payer may also be known as the payee and the ordering institution may also
be known as the beneficiary institution. See explanatory memoranda on ADI ,
Account , AML/CTF Rules , electronic communication and transfer .
Clause 10 Designated remittance arrangements etc
Sub-clause 10(1) provides that a remittance arrangement (as defined in sub-clause
10(2)) is a designated remittance arrangement where the person who accepts the
money or property from the transferor entity (see definition in sub-clause 10(3)) to be
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transferred under the remittance arrangement is not an ADI, bank, building society,
credit union or a person specified in the AML/CTF Rules and the person who makes
money or property available to an ultimate transferee entity (see definition in sub-
clause 10(3)) as a result of a transfer under the remittance arrangement is also not
ADI, bank, building society, credit union or a person specified in the AML/CTF
Rules. This definition is used in Part 6 of the Bill (Register of Providers of
Designated Remittance Services).
Sub-clause 10(2) defines a Remittance arrangement as an arrangement for the
transfer of money or property including any arrangement specified in the regulations
to be a remittance arrangement . The power to include other arrangements by
regulation is necessary in order to capture arrangements that are deliberately
structured to avoid obligations under the Bill.
Sub-clause 10(3) defines the terms transferor entity (the person from whom money
or property is accepted so as to enable its transfer under the arrangement) and
ultimate transferee entity (the person to whom money or property is ultimately
transferred under the arrangement).
Examples of designated remittance arrangements include hawala, hundi, fei-chien,
and the black market peso exchange.
See explanatory memoranda on ADI , AML/CTF Rules, arrangement , money ,
property and transfer .
Clause 11 Control test
Sub-clause 11(1) provides that for the purposes of the Bill where it is necessary to
decide if a person controls a company the question is to be determined in the same
manner as that question is determined for the purposes of section 1207Q Social
Security Act 1991. Section 1207Q of the Social Security Act 1991 provides that an
individual has a controlling interest in a company if:
(a) the aggregate of the individual's direct voting interest is 50% or more
(b) the aggregate of the individual's direct control interests is 15% or more, or
(c) the company is sufficiently influenced by the individual or the individual is in
a position to exercise control over the company.
In applying section 1207Q of the Social Security Act 1991 to the Bill paragraph
1207C(1)(g) and subsections 1207C(2), (3) and (4) of the Social Security Act 1991 are
to be disregarded (sub-clause 11(3)).
Sub-clause 11(2) provides that in determining whether a person controls a trust for the
purposes of the Bill you are to apply the test in section 1207V Social Security Act
1991 which provides that an individual has a controlling interest if:
(a) the individual is the trustee, or the individual is part of a group able to remove
the trustee or vary the trust deed
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(b) the individual has 50% or more beneficial interest in the trust income, or
(c) the individual is part of a group which can control the trust income or the
individual is part of a group that can direct the trustee.
In applying section 1207V of the Social Security Act 1991 to the Bill paragraph
1207C(1)(g) and subsections 1207C(2), (3) and (4) of the Social Security Act 1991 are
to be disregarded (sub-clause 11(3)).
This clause is used in clause 14 and clause 15 (see explanatory memorandum on
clauses 14 and 15).
Clause 12 Owner-Managed branches of ADIs
This clause defines the phrase owner-managed branch of an ADI (see explanatory
memorandum on ADI). A person is an owner-managed branch of an ADI if the
person is a party to an exclusive arrangement with an ADI to offer designated services
advertised or promoted under a single brand, trademark, or business name (sub-clause
12(1)). Sub-clause 12(2) provides that where an owner-managed branch of an ADI
provides a designated service, the designated service is taken to have been provided
by the ADI.
The term applies generally to the Bill. The term is used in clause 123 (Offence of
tipping off).
Clause 13 Eligible gaming machine venues
This clause defines the phrase eligible gaming machine venue and term controller in
relation to such a venue. Where a person is in control of a venue with one or more
gaming machines located at the venue and the first person is neither the owner nor the
lessee of the gaming machines, and such other conditions (if any) as are specified in
AML/CTF Rules are satisfied, then the venue is an eligible gaming machine venue
and the first person is the controller of the venue.
Clause 14 Residency
This clause provides the method for determining whether a person is a resident for the
purposes of the Bill. The test is different for an individual, company, trust,
partnership, corporation sole, or body politic. The expression resident is used in sub-
clause 6(6) (designated services) and clauses 100 (correspondent banking) and 102
(countermeasures).
Individual
Sub-clause 14(1) provides that an individual is a resident of a particular country if
they are ordinarily resident in that country. This includes an individual in the capacity
of a trustee.
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Company
Sub-clause 14(2) provides that a company is a resident of a particular country if, and
only if the company is incorporated in that country, or an individual resident in that
country passes the control test in relation to the company (See explanatory
memorandum on control test (clause 11)). This sub-clause is also relevant to
determining the residency of a company in the capacity of trustee.
Trust
Sub-clause 14(3) provides that a trust is a resident of a particular country if:
(a) a trustee of the trust is a resident of that country
(b) an individual who passes the control test in relation to the trust (see
explanatory memoranda on control test (clause 11) and the individual is a
resident of that country, or
(c) a person who benefits or is capable of benefiting under the trust is a resident of
that country.
Partnership
Sub-clause 14(4) provides that a partnership is a resident of a particular country if,
and only if, a partner is a resident of that country.
Corporation sole
Sub-clause 14(5) provides that a corporation sole is a resident of a particular country
if, and only if the corporation sole was established in that country.
Body politic
Sub -clause 14(6) provides that a body politic of, or part of a particular country is a
resident of that country.
When an individual is ordinarily resident in a particular country
Sub-clause 14(7) provides that the AML/CTF Rules may specify matters that are to be
taken into account in determining, for the purposes of this clause, whether an
individual (including an individual in the capacity of trustee) is ordinarily resident in a
particular country.
Sub-clause 14(8) provides that the AML/CTF Rules may provide that an individual
(including an individual in the capacity of trustee) is taken, for the purposes of this
clause, to be ordinarily resident in a particular country if the individual satisfies one or
more specified conditions.
Sub-clause 14(9) provides that the AML/CTF Rules may provide that an individual
(including an individual in the capacity of trustee) is taken, for the purposes of this
clause, not to be ordinarily resident in a particular country if the individual satisfies
one or more specified conditions.
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Clause 15 Shell banks
The definition of the term shell bank in clause 15 is included to assist with the
interpretation of the prohibition (in Part 8 - correspondent banking) against financial
institutions having a correspondent banking relationship with a shell bank.
Sub-clause 15(1) sets out the four criteria which determine whether a corporation is a
shell bank. A shell bank is a corporation that is:
(a) incorporated in a foreign country
(b) is authorised to carry on banking business in its country of incorporation
(c) does not have a physical presence in its country of incorporation; and
(d) is not an affiliate of another corporation that:
(i) is incorporated in a particular country; and
(ii) is authorised to carry on banking business in its country of incorporation;
and
(iii) has a physical presence in its country of incorporation
When a corporation has a physical presence in a country
Sub-clause 15(2) provides that for the purposes of determining what is a shell bank, a
corporation has a physical presence in a country if, and only if the corporation carries
on banking business at a place in that country and at least one full-time employee of
the corporation performs banking-related duties at that place.
When a corporation is affiliated with another corporation
The test of whether a corporation is affiliated with another corporation is set out in
sub-clause 15(3). A corporation is affiliated with another corporation if, and only if,
the corporation is a subsidiary of the other corporation or at least one individual
passes the control test in relation to both corporations. Alternatively, the regulations
may provide that both corporations are taken to be under common control.
Clause 16 Electronic communications
This clause is to put it beyond doubt that in determining the application of a clause of
the Bill, it is immaterial whether any act or thing is or was done wholly or partly by
means of one or more electronic communications (see explanatory memorandum on
electronic communication )
Clause 17 Bearer negotiable instruments
A bearer negotiable instrument is a bill of exchange, cheque, promissory note, bearer
bond, traveller's cheque, money order, postal order or similar order, or any other a
negotiable instrument.
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Clause 18 Translation of foreign currency to Australian currency
This clause provides that in determining whether an amount foreign currency is not
less than an Australian dollar amount for purposes of the Bill the exchange rate
applicable at the relevant time is to be used. As there is no one official exchange rate
for currencies the wording exchange rate applicable is intended to mean the
exchange rate accepted by the majority of the financial community.
Clause 19 Translation of e-currency to Australian currency
This clause provides that the method of translation of e-currency into Australian
currency will be prescribed by the AML/CTF Rules. See explanatory memorandum
for e-currency .
Clause 20 Clubs and associations
This clause is included to remove any doubt that services provided by clubs and
associations to their members are covered by the Bill.
Clause 21 Permanent establishment
Sub-clause 21(1) provides that for the purposes of this Bill, a permanent
establishment of a person is a place at or through which the person carries on any
activities or business, and includes a place where the person is carrying on activities
or business through an agent.
Mobile services etc.
Sub-clause 21(2) extends the meaning of permanent establishment to include a person
(or their agent) provide a service on a mobile basis or while.
Electronic communications
Sub-clause 21(3) provides that the regulations may provide that, if a person provides a
specified service wholly or partly by means of one or more electronic
communications and any conditions set out in the regulations are satisfied in relation
to a particular country then the service is taken, for the purposes of this Bill, to be
provided at or through a permanent establishment of the person in that country and
not to be provided at or through a permanent establishment of the person in another
country.
Clause 22 Officials of designated agencies etc
This clause provides the meaning of official of a designated agency or a
non-designated Commonwealth agency. The chief executive officer (however
described) of the agency, a member or acting member of the agency, a member of the
staff of the agency, an officer or employee of the agency, an officer, employee or
other individual under the control of the chief executive officer (however described)
of the agency and an individual who, under the regulations, is taken to be an official
of the agency for the purposes of this Bill are officers of an agency for purposes of the
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Bill. The term officer is also defined to include, in the case of the Australian Crime
Commission an examiner of the Australian Crime Commission, in the case of a
Commonwealth Royal Commission--a person who is:
(a) a legal practitioner appointed to assist the Commission, or
(b) authorised under sub-clause 22(2), and
and in the case of a State/Territory Royal Commission--a person who is:
(a) a legal practitioner appointed to assist the Commission; and
(b) authorised under sub-clause 22(3).
Sub-clauses 22(2) and (3) allow members of Royal commissions to authorise a person
assisting the commission to be an official for the purposes of the Bill. The
authorisation must be in writing.
Instruments created under this provision are not legislative instruments as these are
instruments of authorisation (that is, an instrument the effect of which is to authorise a
specified individual to take a particular action or act in a particular way) and are
covered by Item 2 of Part 1 of Schedule 1 of the Legislative Instruments
Regulations 2004
Clause 23 Continuity of partnerships
This clause provides that a change in the composition of a partnership does not affect
the continuity of the partnership for purposes of the Bill.
Clause 24 Crown to be bound
This clause provides that the Bill binds the Crown in each of its capacities (sub-clause
24(1) but does not does not make the Crown liable to a pecuniary penalty or to be
prosecuted for an offence (sub-clause 24(2)).
Sub-clause 24(3) provides that the protection against pecuniary penalties and
prosecution in sub-clause 24 (2) does not apply to an authority of the Crown.
Clauses 25 External Territories
The Bill extends to every external territory.
Clause 26 Extra-territorial application
The Bill extends to acts, omissions, matters and things done outside Australia. Sub-
clause 26(2) has been inserted to make it clear that sub-clause 26(1) evidences a
contrary intention for the purposes of section 14.1 of the Criminal Code.
Part 2--Identification procedures etc.
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Division 1--Introduction
Customer due diligence (CDD) is the cornerstone of any effective anti-money
laundering and counter-terrorism financing system. Part 2 of the Bill is intended to
implement the CDD obligations contained in the FATF Recommendations
(Recommendations 5 to 12 inclusive). Part 2 of the Bill instead of CDD uses the term
applicable customer identification procedure which is defined in clause 5 (see
explanatory memorandum applicable customer identification procedure ).
FATF Recommendation 5 (FATF Recommendation 12 extends the application of
Recommendation 5) requires CDD to be carried out on all new and existing
customers. Recommendation 5 also provides that the extent of CDD measures may
be determined on a risk sensitive basis depending on the type of customer, business
relationship or transaction and that the measures should be applied to existing
customers on the basis of materiality and risk.
Clause 27 Simplified outline
This clause sets out a simplified outline of Part 2. It is a general guide that is designed
to assist readers. The outline provides the following:
(a) A reporting entity must verify a customer's identify before providing a
designated service to the customer. In special circumstances, however, that
procedure may be conducted after the provision of the designated service.
(b) Modified identification procedures may apply to existing customers and low
risk services.
(c) Certain low-risk services are subject to modified identification procedures.
(d) A reporting entity has an obligation to carry out ongoing due diligence on its
customers.
The terms designated service , customer and reporting entity are defined in clause
5 of the Bill (see explanatory memoranda designated service , customer and
reporting entity ).
Division 2--Identification procedures for certain pre-commencement
customers
Clause 28 Identification procedures for certain pre-commencement
customers
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Scope
Sub-clause 28(1) provides that clause 28 applies to the clause by a reporting entity of
a designated service (the post-commencement designated service) to a customer if at
a time before the commencement of this clause, the reporting entity commenced to
provide a designated service to the customer.
Exemption
Sub-clause 28(2) provides that clauses 32 (Carrying out the applicable customer
identification procedure before the commencement of the provision of a designated
service) and 34 (Carrying out the applicable customer identification procedure after
the commencement of the provision of a designated service etc.) do not apply to the
provision by the reporting entity of the post commencement designated service to the
customer (see explanatory memoranda on clauses 32 and 34).
Interpretation
Sub-clause 28(3) provides that for the purpose of Clause 28, it is assumed that Part 1
has been in force at all material times before the commencement of clause 28.
The effect of clause 28 is that existing customers are exempt from the applicable
customer identification procedure as specified in clauses 32 and 34 of the Bill. The
exemption will apply to the provision by the reporting entity of any of the designated
services listed in the Tables in clause 6 of the Bill. The exemption will not be limited
to provisions of the same type of service.
Whilst existing customers will not be required to be identified they will be subject to
risk based ongoing customer due diligence (see explanatory memorandum on
Division 6).
The terms designated service , customer and reporting entity are defined in clause
5 of the Bill (see explanatory memoranda designated service , customer and
reporting entity ).
Clause 29 Verification of identity of pre-commencement customer etc.
Scope
Sub-clause 29(1) provides that clause 29 applies where a reporting entity commenced
to provide a designated service to a customer before the commencement of clause 29,
and a suspicious matter reporting obligation arises in relation to the customer after the
commencement of clause 29. See explanatory memorandum on clause 41 (Reports of
Suspicious matters).
Requirement
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Sub-clause 29(2) provides that where clause 29 applies the reporting entity must take
such action as is specified in the AML/CTF Rules within the time limit allowed under
the AML/CTF Rules.
Civil Penalty
Sub-clause 29(3) makes the obligation imposed by sub-clause 29(2) subject to the
imposition of a civil penalty. Civil penalties may be enforced under Part 15 Division
2. The maximum penalty that can be imposed is 100,000 penalty units for a
corporation and 20,000 penalty units for persons other than a body corporate. A
person cannot be ordered to pay a civil penalty if they have been convicted of an
offence in relation to the same conduct. The burden of proof in proceedings for a civil
penalty is on the balance of probabilities and there is no requirement to prove any
fault elements in relation to the offending conduct.
Interpretation
Sub-clause 29(4) provides that it is assumed that Part 1 has been in force at all
material times before the commencement of clause 29.
Division 3--Identification procedures for certain low risk services
Clause 30 Identification procedures for certain low-risk services
Clause 30 provides that if under the AML/CTF Rules, a designated service is taken to
be a low-risk service, clause 32 (Carrying out the applicable customer identification
procedure before the commencement of the provision of a designated service) and
clause 34 (Carrying out the applicable customer identification procedure after the
commencement of the provision of a designated service etc.) of the Bill do not apply
to the provision of the designated service by the reporting entity to the customer. (See
explanatory memoranda on clauses 32 and 34).
Clause 31 Verification of identify of low-risk service customer etc.
Scope
Sub-clause 31(1) provides that clause 31 applies to a reporting entity if at a particular
time (the relevant time) the reporting entity commences to provide a designated
service to a customer, the service is taken to be a low-risk service under the
AML/CTF Rules and at the relevant time or at a later time, a suspicious matter
reporting obligation arises concerning that particular customer.
Requirement
Sub-clause 31(2) provides that where the clause 31 applies obliges a reporting entity
is required to take such action as specified under the AML/CTF Rules within the time
limit allowed under the AML/CTF Rules.
Civil Penalty
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Sub-clause 31(3) makes the obligation imposed by sub-clause 31(2) subject to the
imposition of a civil penalty. Civil penalties may be enforced under Part 15 Division
2. The maximum penalty that can be imposed is 100,000 penalty units for a
corporation and 20,000 penalty units for persons other than a body corporate. A
person cannot be ordered to pay a civil penalty if they have been convicted of an
offence in relation to the same conduct. The burden of proof in proceedings for a civil
penalty is on the balance of probabilities and there is no requirement to prove any
fault elements in relation to the offending conduct.
Division 4--Identification procedures etc.
Clause 2 Carrying out the applicable customer identification procedure before
the commencement of the provision of a designated service.
Sub-clause 32(1) provides that a reporting entity must not commence to provide a
designated service to a customer if:
(a) there are no special circumstances that justify carrying out the applicable
customer identification procedure in respect of the customer after the
commencement of the provision of the service (see clause 33),
(b) the reporting entity has not previously carried out the applicable customer
identification procedure in respect of the customer,
(c) and neither clause 28 (Identification procedures for certain
pre-commencement customers) nor clause 30 (Identification procedures for
certain low-risk services) applies to the provision of the service.
Civil Penalty
Sub-clause 32(2) makes the obligation imposed by sub-clause 32(1) subject to the
imposition of a civil penalty. Civil penalties may be enforced under Part 15 Division
2. The maximum penalty that can be imposed is 100,000 penalty units for a
corporation and 20,000 penalty units for persons other than a body corporate. A
person cannot be ordered to pay a civil penalty if they have been convicted of an
offence in relation to the same conduct. The burden of proof in proceedings for a civil
penalty is on the balance of probabilities and there is no requirement to prove any
fault elements in relation to the offending conduct.
Clause 33 Special circumstances that justify carrying out the applicable
customer identification procedure after the commencement of the provision of a
designated service
Clause 33 provides that for the purposes of this Bill, if a reporting entity commences
to provide a designated service to a customer and there are taken to be special
circumstances that justify the carrying out of the applicable customer identification
procedure in respect of the customer after the commencement of the provision of the
service if, and only if, the service is specified in the AML/CTF Rules and such other
conditions (if any) as are set out in the AML/CTF Rules are satisfied.
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Clause 34- Carrying out the applicable customer identification procedure after
the commencement of the provision of a designated service
Clause 34 provides that if a reporting entity has commenced to provide a designated
service to a customer and:
(a) when the reporting entity commenced to provide the designated service to the
customer, there were special circumstances that justified the carrying out of
the applicable customer identification procedure in respect of the customer
after the commencement of the provision of the service (see clause 33)
(b) the reporting entity has not previously carried out the applicable customer
identification procedure in respect of the customer
(c) the reporting entity has not carried out the applicable customer identification
procedure in respect of the customer within whichever of the following
periods is applicable:
(i) if the designated service is specified in the AML/CTF Rules--the period
ascertained in accordance with the AML/CTF Rules; or
(ii) in any other case--the period of 5 business days after the day on which
the reporting entity commenced to provide the service; and
(d) neither clause 28 nor clause 30 applies to the provision of the service;
then, after the end of the period referred to in (c) above, the reporting entity must not
continue to provide, and must not commence to provide, any designated services to
the customer until the reporting entity carries out the applicable customer
identification procedure in respect of the customer.
Sub-clause 34(2) provides that sub-clause 34(1) does not apply if the AML/CTF
Rules specify that the reporting entity is not required to carry out the applicable
customer identification procedure in respect of the customer and the reporting entity
takes such action as is specified in the AML/CTF Rules.
Civil Penalty
Sub-clause 34(3) makes the obligation imposed by sub-clause 34(1) subject to the
imposition of a civil penalty. Civil penalties may be enforced under Part 15 Division
2. The maximum penalty that can be imposed is 100,000 penalty units for a
corporation and 20,000 penalty units for persons other than a body corporate. A
person cannot be ordered to pay a civil penalty if they have been convicted of an
offence in relation to the same conduct. The burden of proof in proceedings for a civil
penalty is on the balance of probabilities and there is no requirement to prove any
fault elements in relation to the offending conduct.
Sub-clause 34(4) provides that a period ascertained in accordance with the AML/CTF
Rules made for the purposes of subparagraph 34(1)(d)(i) must commence at the time
when the reporting entity commences to provide the designated service in question
and may be expressed to end on the occurrence of a specified event.
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Sub-clause 34(5) provides that paragraph 34(4)(b) does not limit subparagraph
34(1)(d)(i).
See explanatory memorandum on commence to provide a designated service in
clause 5 and on clause 38 (when applicable customer identification procedure deemed
to be carried out by a reporting entity).
Division 5--Verification of identity etc.
Clause 35 Verification of identity of customer etc
Scope
Sub-clause 35(1) provides that clause 35 applies to reporting entity if:
(a) at a particular time, the reporting entity has carried out the applicable customer
identification procedure in respect of a particular customer to whom the
reporting entity provided a designated service; and
(b) at a later time, an event prescribed by the AML/CTF Rules happens, a
circumstance in the AML/CTF Rules comes into existence or a period
ascertained in accordance with the AML/CTF Rules ends.
Requirement
Sub-clause 35(2) provides that where this clause applies the reporting entity must take
such action as is specified in the rules within the time limits allowed by the rules.
This clause gives AUSTRAC the flexibility to respond to emerging money-laundering
and terrorism financing risks for example the use of new technologies or systems and
it thereby implements FATF Recommendation 8.
Civil Penalty
Sub-clause 35(3) makes the obligation imposed by sub-clause 35(2) subject to the
imposition of a civil penalty. Civil penalties may be enforced under Part 15 Division
2. The maximum penalty that can be imposed is 100,000 penalty units for a
corporation and 20,000 penalty units for persons other than a body corporate. A
person cannot be ordered to pay a civil penalty if they have been convicted of an
offence in relation to the same conduct. The burden of proof in proceedings for a civil
penalty is on the balance of probabilities and there is no requirement to prove any
fault elements in relation to the offending conduct.
See also clause 38 (when applicable customer identification procedure deemed to be
carried out by a reporting entity).
Division 6--Ongoing customer due diligence
Clause 36 Ongoing customer due diligence
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Sub-clause 36(1) provides that a reporting entity must monitor its customers in
relation to the provision by the reporting entity of designated services at or through a
permanent establishment in Australia, with a view to identifying, mitigating; and
managing the risk the reporting entity may reasonably face that the provision by it of a
designated service at or through a permanent establishment in Australia might
(whether inadvertently or otherwise) involve or facilitate money laundering or
financing of terrorism. It must fulfil this obligation in accordance with the AML/CTF
Rules.
Civil Penalty
Sub-clause 36(2) makes the obligation imposed by sub-clause 36(1) subject to the
imposition of a civil penalty. Civil penalties may be enforced under Part 15 Division
2. The maximum penalty that can be imposed is 100,000 penalty units for a
corporation and 20,000 penalty units for persons other than a body corporate. A
person cannot be ordered to pay a civil penalty if they have been convicted of an
offence in relation to the same conduct. The burden of proof in proceedings for a civil
penalty is on the balance of probabilities and there is no requirement to prove any
fault elements in relation to the offending conduct.
Sub-clause 36(3) provides an exemption from the obligation under sub-clause 36(1)
where the designated service is covered by item 54 of Table 1 in clause 6. (See
explanatory memorandum on item 54 of Table 1 in clause 6).
Sub-clause 36(4) provides that if a reporting entity is a member of a designated
business group, the obligation imposed on the reporting entity by sub-clause 36(1)
may be discharged by any other member within the group.
Division 7--General provisions
Clause 37 Applicable customer identification procedures may be carried out
by an agent of a reporting entity
Clause 37 provides that a reporting entity may use an agent to carrying out the
applicable customer identification procedure in respect of the customer on the
reporting entity's behalf. The general principles of agency apply in relation where an
agent is used. Reporting entities will remain liable for the conduct of their agents.
Clause 38 Applicable customer identification procedures deemed to be
carried out by a reporting entity
Clause 38 allows a reporting entity to rely on an applicable customer identification
procedure carried out by another reporting entity if the following conditions are met
(a) the procedure was carried out as specified in the AML/CTF Rules
(b) the customer is or becomes a customer to whom another reporting entity
provides, or proposes to provide, a designated service
(c) such other conditions set out in the AML/CTF Rules are satisfied .
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This clause does not apply to the requirement under Part 10 ( Record-keeping
requirements ).
Clause 39 General exemptions
Clause 39 provides for several situations in which Part 2 does not apply to particular
designated services.
Sub-clause 39(1) provides that Part 2 does not apply to a designated service that is of
a kind specified in the AML/CTF Rules.
Sub-clause 39(2) provides that the AML/CTF Rules may provide that a specified
clause of Part 2 does not apply to a designated service that is of a kind specified in the
AML/CTF Rules.
Sub-clause 39(3) provides that Part 2 does not apply to a designated service that is
provided in circumstances specified in the AML/CTF Rules.
Sub-clause 39(4) provides that the AML/CTF Rules may provide that a specified
clause of Part 2 does not apply to a designated service that is provided in
circumstances specified in the AML/CTF Rules.
Sub-clause 39(5) provides that Part 2 does not apply to a designated service that is
provided by a reporting entity at or through a permanent establishment of the entity in
a foreign country.
Sub-clause 39(6) provides that Part 2 (other than Division 6 Ongoing Customer Due
Diligence ) does not apply to a designated service covered by items 40, 42 or 44 of
Table 1 in clause 6.
Sub-clause 39(7) provides that Part 2 does not apply to a designated service covered
by item 54 of Table 1 in clause 6 if the service relates to arrangements for a person to
receive a designated service covered by items 40, 42 or 44 that table. See explanatory
memoranda on items 40, 42 and 44 of Table 1 in clause 6.
Part 3--Reporting obligations of reporting entities
Division 1--Introduction
Clause 40 Simplified outline
This clause sets out a simplified outline of Part 3. This is a general guide to the
clauses of this Part that is designed to assist readers in locating clauses within the Bill.
This clause outlines that the Part is intended to deal with the obligations on reporting
entities to give reports to the AUSTRAC CEO under the Bill. Reporting entities must
give reports on suspicious matters, certain threshold transactions and international
funds transactions, and may be required to give AML/CTF compliance reports.
Division 2--Suspicious matters
Clause 41 Reports of suspicious matters
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This clause is intended to implement the FATF Recommendation 13 which requires
that if a financial institution suspects or has reasonable grounds to suspect that funds
are the proceeds of criminal activity or are related to terrorist financing it should
promptly report its suspicions to the financial intelligence unit. It also implements
FATF Recommendation 11 which requires that financial institutions should pay
special attention to all complex, unusual large transactions, and all unusual patterns of
transactions, which have no apparent economic or visible lawful purpose. The
background and purpose of such transactions should, as far as possible, be examined,
the findings established in writing, and be available to help competent authorities and
auditors.
Sub-clause 41(1) sets out when a suspicious matter reporting obligation arises for a
reporting entity in relation to a person. Paragraphs 41(1)(a) and (c) provide the
circumstance elements in relation to this obligation. That is, the obligation arises
where the reporting entity commences to provide, or proposes to provide a designated
service to the person (see paragraph 41(1)(a)). The circumstances also arise where the
person requests, or inquires as the willingness, of the reporting entity to provide a
designated service, and such service is of a kind ordinarily provided by the reporting
entity (see paragraphs 41(1)(b) and (c)).
Paragraphs 41(1)(d) and (j) provide the physical elements of the obligations, that is
they are the suspicious matters which trigger the need for a matter to be reported by
the reporting entity.
Paragraph 41(1)(d) creates an obligation on the reporting entity to report a matter
where it suspects on reasonable grounds that the person is not the person they claim to
be. Paragraph 41(1)(e) creates a similar obligation is respect of a person's agent.
This obligation is consistent with FATF Recommendation 5, which requires that
financial institutions undertake due diligence measures including identifying and
verifying the identity of their customers, and which includes ongoing due diligence
obligations.
Paragraph 41(1)(f) creates an obligation to report where the reporting entity becomes
aware that the information it holds with respect to the provision, or prospective
provision, of designated services might be relevant to investigation of or prosecution
of a person for evasion or attempted evasion of a Commonwealth, State or Territory
taxation law or may be relevant to investigation or prosecution of person for an
offence against a law of the Commonwealth or of a State or Territory, or may be of
assistance in the enforcement of the Proceeds of Crimes Act 2002 or other
corresponding State or Territory legislation.
Paragraphs 41(1)(g) and (h) relate to the commission of offences covered in paragraph
(a), (b) or (c) of the definition of financing of terrorism in clause 5 (see explanatory
memorandum on the definition of the term financing of terrorism). This obligation is
consistent with FATF Recommendation 13. Paragraph 41(1)(g) deals with a
suspicion that provision of the service may be preparatory to the commission of such
an offence, while paragraph 41(1)(h) concerns where it may be relevant to
investigation of, or prosecution of a person for such an offence.
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Similarly, paragraphs 41(1)(i) and (j) relate to the commission of offences covered in
paragraph (a) or (b) of the definition of money laundering in clause 5 (see explanatory
memorandum on definition of the term money laundering. This obligation is also
consistent with FATF Recommendation 13. Paragraph 41(1)(i) deals with a suspicion
that provision of the service may be preparatory to the commission of such an offence,
while paragraph 41(1)(j) concerns where it may be relevant to investigation of, or
prosecution of a person for such an offence.
Sub-clause 41(2) provides the timeframe for the reporting obligation created under
sub-clause 41(1). Generally the reporting entity is required to report the matter to the
AUSTRAC CEO within three business days after the day the obligation arises (see
paragraph 41(2)(a)). The exception to the general rule is where reporting obligations
arise under paragraphs 41(1)(g) and (h) (terrorist financing offences) which must be
reported within 24 hours of the reporting entity forming the suspicion.
The time for reporting a suspicious transaction does not arise until the reporting entity
forms the relevant suspicion. In the case of an organisation this means when a
responsible officer of the organisation forms the suspicion. For example, if a bank
teller thinks that a transaction is suspicious and reports it to the responsible officer
(for dealing with suspicious transaction reporting) in the bank time does not
commence to run until the responsible officer forms the suspicion.
Sub-clause 41(3) requires the suspicious transaction report to be in the approved form
(see explanatory memorandum on approve) and to contain a statement of the grounds
on which the reporting entity holds the relevant suspicion, plus any other information
specified in the AML/CTF Rules (see explanatory memorandum on clause 229-
AML/CTF Rules).
Clause 244 of the Bill requires that any report under the Bill must be signed or
authenticated and given to the AUSTRAC CEO in a manner set out in s 28A of the
Acts Interpretation Act 1901 or in such form and manner as otherwise approved.
Sub-clause 41(4) creates civil liability for failure to report a suspicious matter to the
AUSTRAC CEO where such an obligation arises under sub-clause 41(2). The effect
of sub-clause 41(4) is to render a person liable to a civil penalty if they fail to report
such a matter.
Civil penalties may be enforced under Part 15 Division 2 (see explanatory
memorandum on Division 2 of Part 15). The maximum penalty that can be imposed
is 100,000 penalty units for a corporation and 20,000 penalty units for persons other
than a body corporate. A person cannot be ordered to pay a civil penalty if they have
been convicted of an offence in relation to the same conduct. The burden of proof in
proceedings for a civil penalty is on the balance of probabilities and there is no
requirement to prove any fault elements in relation to the offending conduct.
Sub-clause 41(5) provides that the AML/CTF Rules may specify matters to be taken
into account in determining whether a matter is suspicious and should be reported.
The AML-CTF Rules made under clause 229 of the Bill have the status of a
legislative instrument under the Legislative Instruments Act 2003.
Clause 42 Exemptions
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Clause 42 provides for several situations in which Division 2 of Part 3 does not apply
to particular designated services.
Sub-clause 42(1) provides that Division 2 of Part 3 does not apply to a designated
service that is of a kind specified in the AML/CTF Rules.
Sub-clause 42(2) provides that the AML/CTF Rules may provide that a specified
clause of Division 2 of Part 3 does not apply to a designated service that is of a kind
specified in the AML/CTF Rules.
Sub-clause 42(3) provides that Division 2 of Part 3 does not apply to a designated
service that is provided in circumstances specified in the AML/CTF Rules.
Sub-clause 42(4) provides that the AML/CTF Rules may provide that a specified
clause of Division 2 of Part 3 does not apply to a designated service that is provided in
circumstances specified in the AML/CTF Rules.
Sub-clause 42(5) provides that Division 2 of Part 3 does not apply to a designated
service that is provided by a reporting entity at or through a permanent establishment
of the entity in a foreign country. This sub-clause overcomes conflict of laws issues
associated with suspicious transaction reporting obligations in foreign jurisdictions.
Reporting entities providing designated services through a permanent establishment in
a foreign jurisdiction should be subject to complementary domestic FATF
requirements in the foreign jurisdiction and therefore it would be unnecessarily
burdensome on reporting entities to require them to be subject to reporting obligations
in multiple jurisdictions, particularly in cases where such obligations may be
conflicting.
Sub-clause 42(6) provides that Division 2 of Part 3 does not apply to a designated
service covered by item 54 of Table 1 in clause 6. Item 54 of Table 1 covers a holder
of an Australian financial services licence who arranges for a person to receive a
designated service (see explanatory memorandum on Australian financial services
licence ).
In addition, sub-clause 42(6) provides an exception to the operation of Division 2 of
Part 3 in circumstances where the designated service has been arranged through a
licensed financial advisor. This exempts financial advisers from this requirement for
the purposes of the first tranche of the legislation.
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Division 3--Threshold transactions
Clause 43 Reports of threshold transactions
This clause requires reporting entities that have commenced to provide or are
providing a designated service to a customer that involves a threshold transaction to
report the transactions to the AUSTRAC CEO within 10 business days after the
transaction takes place (see sub-clause 43(2)). See explanatory memorandum on
threshold transaction.
This clause continues in force pre-existing long-standing obligations under the FTRA
and is also consistent with FATF Recommendation 19.
Sub-clause 43(3) requires the threshold transaction report to be in the approved form
and to contain any information specified in the AML/CTF Rules (see clause 229).
Clause 244 requires that any report under the Bill must be signed or authenticated and
given to the AUSTRAC CEO in a manner set out in s 28A of the Acts Interpretation
Act 1901 or in such form and manner as otherwise approved.
Sub-clause 43(4) creates civil liability for failure to report a threshold transaction to
the AUSTRAC CEO where such an obligation arises under sub-clause 43(2). The
effect of sub-clause 43(4) is to render a person liable to a civil penalty if they fail to
report such a matter.
Civil penalties may be enforced under Part 15 Division 2 (see explanatory
memorandum). The maximum penalty that can be imposed is 100,000 penalty units
for a corporation and 20,000 penalty units for persons other than a body corporate. A
person cannot be ordered to pay a civil penalty if they have been convicted of an
offence in relation to the same conduct. The burden of proof in proceedings for a civil
penalty is on the balance of probabilities and there is no requirement to prove any
fault elements in relation to the offending conduct.
Clause 44 Exemptions
Clause 44 provides for several situations in which Division 3 of Part 3 does not apply
to particular designated services.
Sub-clause 44(1) provides that Division 3 of Part 3 does not apply to a designated
service that is of a kind specified in the AML/CTF Rules.
Sub-clause 44(2) provides that the AML/CTF Rules may provide that a specified
clause of Division 3 of Part 3 does not apply to a designated service that is of a kind
specified in the AML/CTF Rules.
Sub-clause 44(3) provides that Division 3 of Part 3 does not apply to a designated
service that is provided in circumstances specified in the AML/CTF Rules.
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Sub-clause 44(4) provides that the AML/CTF Rules may provide that a specified
clause of Division 3 of Part 3 does not apply to a designated service that is provided in
circumstances specified in the AML/CTF Rules.
Sub-clause 44(5) provides that Division 3 of Part 3 does not apply to a designated
service that is provided by a reporting entity at or through a permanent establishment
of the entity in a foreign country. This sub-clause overcomes conflict of laws issues
associated with suspicious transaction reporting obligations in foreign jurisdictions.
Reporting entities providing designated services through a permanent establishment in
a foreign jurisdiction should be subject to complementary domestic FATF
requirements in the foreign jurisdiction and therefore it would be unnecessarily
burdensome on reporting entities to require them to be subject to reporting obligations
in multiple jurisdictions, particularly in cases where such obligations may be
conflicting.
Sub-clause 44(6) provides that Division 3 of Part 3 does not apply to a designated
service covered by item 54 of table 1 in clause 6. Item 54 of table 1 covers a holder of
an Australian financial services licence who arranges for a person to receive a
designated service (see explanatory memorandum on Australian financial services
licence).
Division 4--International funds transfer instructions
Clause 45 Reports of international funds transfer instructions
This clause continues on long-standing obligations under the FTRA (see section 17B
FTRA). The scope of the clause is set out in sub-clause 45(1) which provides that the
obligation relates to services provided to a sender of an international funds transfer
instruction out of Australia, or the receiver of an international funds transfer
instruction into Australia (see paragraph 45(1)(a)).
The type of instructions which are defined as an international funds transfer
instruction for the purposed of this Bill is specified in the table in clause 46 of the
Bill.
The obligation is to report any international funds transfer instructions regardless of
the amount of the transfer. In order to provide a level of flexibility and adaptability in
this obligation, paragraph 45(1)(b) provides a mechanism to enable a threshold to be
imposed at a later date if that is considered appropriate. At present it is considered
appropriate that the current position under the FTRA (namely that the reporting
obligation is not subject to a threshold) should continue.
In addition, under paragraph 45(1)(c) additional conditions may be specified under the
AML/CTF Rules. These Rules are formulated by AUSTRAC under clause 229 of the
Bill, and under that clause they have the status of a legislative instrument for the
purpose of the Legislative Instruments Act 2003.
Sub-clause 45(2) provides the timeframe for the reporting obligation created under
sub-clause 45(1). The reporting entity is required to report the matter to the
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AUSTRAC CEO within ten business days after the day on which they sent or
received the instruction.
Sub-clause 45(3) requires the international funds transfer report to be in the approved
form and to contain any such information as specified in the AML/CTF Rules (see
clause 229). See explanatory memorandum on approved .
Clause 244 which requires that any report under the Bill must be signed or
authenticated and given to the AUSTRAC CEO in a manner set out in s 28A of the
Acts Interpretation Act 1901 or in such form and manner as otherwise approved.
Sub-clause 45(4) creates civil liability for failure to report an international funds
transfer instruction to the AUSTRAC CEO. The effect of sub-clause 45(4) is to
render a person liable to a civil penalty if they fail to report such a matter.
Civil penalties may be enforced under Part 15 Division 2 (see explanatory
memorandum on Division 2). The maximum penalty that can be imposed is 100,000
penalty units for a corporation and 20,000 penalty units for persons other than a body
corporate. A person cannot be ordered to pay a civil penalty if they have been
convicted of an offence in relation to the same conduct. The burden of proof in
proceedings for a civil penalty is on the balance of probabilities and there is no
requirement to prove any fault elements in relation to the offending conduct.
Sub-clause 45(5) is intended to ensure that the use of a funds transfer chain does not
affect the reporting entity's obligation to report an international funds transfer
instruction. Funds transfer chain is defined in sub-clause 64(2) (see explanatory
memorandum on sub-clause 64(2)). Under this sub-clause the obligations under
clause 45 are not affected by whether the instructions are sent or received by an
interposing institution in a funds transfer chain. This ensures that multiple transfers
cannot be used to conceal financial activity by excluding such activity from reporting
obligations.
Funds transfer chain is defined under clause sub-clause 64(2) as being constituted by
the ordering and beneficiary institutions in addition to each interposed person in
between them. In essence, when funds are transferred between different institutions a
fund transfer chain is created.
Clauses 45(6) and 45(7) enable AML/CTF Rules to be made providing that clause 42
does not apply to an international funds transfer instruction of a kind specified in the
Rules or one sent or received in the circumstances specified in the Rules.
The AML/CTF Rules are formulated by AUSTRAC under clause 229 of the Bill, and
under that clause have the status of a legislative instrument for the purpose of the
Legislative Instruments Act 2003. Clause 229 allows AUSTRAC to make rules
prescribing matters required or permitted by any other clause of the Bill.
Clause 46 International Funds Transfer Instruction
This clause defines the term international funds transfer instruction for the purposes
of the Bill. The term is defined by reference to a table which specifies the types of
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instructions which might arise and prescribes the circumstances required for each
instruction type to be considered an international funds transfer instruction.
Items 1 and 2 of the table define when an electronic funds transfer instruction is an
international funds transfer instruction for the purposes of the Bill. Pursuant to the
table this occurs when:
(a) the ordering institution accepts the instructions at or through a permanent
establishment in Australia and the transferred money is made available to the
payee at or through a permanent establishment of the beneficiary institution in
a foreign country (item 1 of the table at clause 46), or
(b) the ordering institution accepts the instructions at or through a permanent
establishment in a foreign country and the money is transferred to a permanent
establishment of the receiving institution in Australia (see Item 2 of the table
at clause 46).
Items 3 and 4 of the table define when instructions for the transfer of money or
property under a designated remittance arrangement (as defined under clause 10 of
the Bill see explanatory memorandum on clause 10) is an international funds
transfer instruction for the purposes of the Bill. Pursuant to the table this occurs
when:
(a) the instruction is accepted at or through a permanent establishment of a person
in Australia and money or property is made available to the transferee entity
by a permanent establishment of a person in a foreign country (see Item 3 of
the table at clause 46), or
(b) the instruction is accepted at or through a permanent establishment of a person
in a foreign country and the money or property is to be, or is, made available
to the ultimate transferee entity at or through a permanent establishment of the
person in Australia (see item 4 of the table at clause 46).
See explanatory memorandum on ordering institution, beneficiary institution, payee,
ultimate transferee entity, permanent establishment .
In general terms, if the transfer or remittance is ordered in Australia and the money or
property is made available in a foreign country, or vice versa, then the transfer is
deemed to be an international funds transfer for the purposes of the Bill.
Division 5--AML/CTF compliance reports
Clause 47 AML/CTF compliance reports
Clause 47 creates an obligation on reporting entities to produce reports periodically
regarding their compliance with the reporting requirements under the Bill. The
reports are also required to ensure compliance with the AML/CTF Rules, which are
formulated by AUSTRAC under clause 229 of the Bill, and under that clause have the
status of a legislative instrument for the purpose of the Legislative Instruments Act
2003.
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The scope of the obligation is outlined in sub-clause 47(1). Clause 47 applies if
AML/CTF Rules provide that a specified period is a reporting period and the specified
period beginning at the end of a reporting period is the lodgement period for that
reporting period. The Rules may specify that a specified period may be a recurring
period.
Sub-clause 47(2) provides that if such a reporting period is provided for under the
AMF/CTF Rules, then the reporting entity is required to give a report to the
AUSTRAC CEO within the lodgement period under sub-clause 47(2). Sub-clause
47(3) requires the compliance report to be in the approved form and to contain any
such information as required by the approved form.
Clause 244 of the Bill requires that any report under the Bill must be signed or
authenticated and given to the AUSTRAC CEO in a manner set out in s 28A of the
Acts Interpretation Act 1901 or in such form and manner as otherwise approved.
Sub-clause 47(4) creates civil liability for failure to provide a compliance report in
circumstances where the obligation arises under sub-clause 47(2). The effect of sub-
clause 47(4) is to render a person liable to a civil penalty if they fail to provide such a
report.
Civil penalties may be enforced under Part 15 Division 2 (see explanatory
memorandum on Division 2). The maximum penalty that can be imposed is 100,000
penalty units for a corporation and 20,000 penalty units for persons other than a body
corporate. A person cannot be ordered to pay a civil penalty if they have been
convicted of an offence in relation to the same conduct. The burden of proof in
proceedings for a civil penalty is on the balance of probabilities and there is no
requirement to prove any fault elements in relation to the offending conduct.
Sub-clause 47(5) provides that clause 47 does not apply to a reporting entity which
only provides designated services under item 54 of table 1 in clause 6.
Sub-clause 47(6) provides for reporting responsibility in relation to a designated
business group, as defined under clause 5 of the Bill (see explanatory memorandum
on designated business group). This sub-clause enables the reporting obligation to be
discharged by any member of the group. In addition, sub-clause 47(7) allows for
multiple members of the same designated business group to set out their reports in the
same document.
Under sub-clause 47(8), the AML/CTF Rules can create different provisions for
different reporting entities with respect to compliance reporting. AML/CTF Rules are
formulated by AUSTRAC under clause 229 of the Bill and under that clause have the
status of a legislative instrument for the purpose of the Legislative Instruments Act
2003.
Sub-clause 47(8) operates subject to sub-s 33(3A) of the Acts Interpretation Act 1901
which states:
Where an Act confers a power to make, grant or issue any instrument (including rules,
regulations or by-laws) with respect to particular matters (however the matters are
described), the power shall be construed as including a power to make, grant or issue
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such an instrument with respect to some only of those matters or with respect to a
particular class or particular classes of those matters and to make different provision
with respect to different matters or different classes of matters.
The intention of sub-clause 47(8) is to enable reporting obligations to be adapted to
different procedures and risks that may apply to different classes of reporting entities.
Clause 48 Self-incrimination
This clause clarifies that a reporting entity is not excused from compliance reporting
obligations created by clause 47 on the basis that such a report would tend to
incriminate, or expose the person to a penalty.
It is not intended, however, that any report made under clause 47 may be used for any
purpose outside of the objectives of this Bill. For this reason, sub-clause 48(2)
provides that the report given under clause 47, or the fact of the giving of the report,
may not be used as evidence against the person in civil or criminal proceedings (with
the exception of civil proceedings under the Bill for contravention of sub-clause 47(2)
or civil proceedings under the Proceeds of Crime Act 2002 that relate to this Bill) or
in criminal proceedings (with the exception of proceedings for an offence against
clause 136 [false or misleading information] that relate to clause 47 or proceedings for
an offence against section 137.1 Criminal Code (false or misleading information) that
relate to clause 47 of this Bill).
It is necessary to remove the common law privilege against self-incrimination in the
limited circumstances of compliance reporting under sub-clause 47 in order to ensure
that an effective compliance regime exists. The risk-based regulatory approach
adopted by the Bill necessitates that, in assessing compliance, AUSTRAC requires
periodically updated information from reporting entities relating to the provision of
designated services. This type of information may only be obtained from the reporting
entity or an employee of the reporting entity.
The immunity from use of the information obtained is direct use immunity, that is, it
protects the person who gave the information from having it used against them in all
but the limited class of proceedings set out in sub-clause 48(2). This is distinguished
from derivative immunity which protects the person from having information
obtained from other sources being used against them, in circumstance where such
information is obtained as a result of the information which they have provided. For
example, if the information obtained from the person leads investigators to other
evidence of an offence, derivative immunity would prevent that other evidence from
being used in a prosecution against the person.
This clause does not extend the immunity to derivative use because to do so would
unacceptably fetter the effective investigation and prosecution of offences under the
Bill. However, the inclusion of direct use immunity within this clause provides greater
immunity than provisions in other corporate regulation as recommended by the Joint
Standing Committee on Companies and Securities (1992) and the Review of the
Derivative Use Immunity Reforms (1997).
Division 6--General Provisions
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Clause 49 Further information to be given to the AUSTRAC CEO etc.
This clause creates an obligation on the reporting entity with respect to
communications made to the AUSTRAC CEO under clauses 41, 43 or 45 of the Bill.
This obligation arises when a person or entity as specified under sub-clause 49(1) (for
example, the commissioner for the Australia Federal Police or the Commissioner of
Taxation) gives written notice requiring the reporting entity to give further
information or produce documents as specified in the notice within the time and
manner also specified in the notice.
This clause partly implements FATF Recommendation 28 which requires competent
authorities to be able to obtain documents and information for use in investigations of
money laundering and underlying predicate offences. FATF Recommendation 28 is
also partly implemented by Parts 13 (Audit), 14 (Information-gathering powers) and
15 (Enforcement) of the Bill.
The requesting authorities who receive information pursuant to this clause are subject
to specific secrecy obligations set out in clause 122 in Division 2 of Part 11 (Secrecy
and Access see explanatory memorandum on clause 122).
Sub-clause 49(2) creates an obligation on the reporting entity to comply with the
terms of a notice issued under sub-clause 49(1).
Sub-clause 49(3) creates civil liability for failure to comply with the terms of the
notice issued under sub-clause 49(1) where such an obligation arises under sub-clause
49(2).
Civil penalties may be enforced under Part 15 Division 2 (see explanatory
memorandum). The maximum penalty that can be imposed is 100,000 penalty units
for a corporation and 20,000 penalty units for persons other than a body corporate. A
person cannot be ordered to pay a civil penalty if they have been convicted of an
offence in relation to the same conduct. The burden of proof in proceedings for a civil
penalty is on the balance of probabilities and there is no requirement to prove any
fault elements in relation to the offending conduct.
Instruments created under this clause are not legislative instruments as they are
instruments requesting or requiring a person to attend premises, give evidence, answer
questions, produce documents or give information and are covered by Item 19 of
Part 1 of Schedule 1 of the Legislative Instruments Regulations 2004
Clause 50 Request to obtain information about the identity of holders of
foreign credit cards and foreign debit cards
This clause creates an obligation with respect to the identification of the holder of, or
signatories to, particular credit or debit cards where such information is requested by
either the AUSTRAC CEO or, the Commissioner of Taxation pursuant to clause 49 of
the Bill. The obligation under clause 50 arises where the identification information is
requested about a credit or debit card issued outside of Australia and the reporting
entity does not itself have such information (see sub-clause 50(1)).
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This clause implements FATF Recommendation 28 which requires competent
authorities to be able to obtain documents and information for use in investigations of
money laundering and underlying predicate offences. FATF Recommendation 28 is
also partly implemented by Parts 13 (Audit), 14 (Information-gathering powers) and
15 (Enforcement) of the Bill.
In the circumstances specified under sub-clause 50(1), the AUSTRAC CEO, or the
Commissioner of Taxation may, by written notice, direct the reporting entity to
request the card issuer to give the reporting entity the requested information (see
sub-clause 50(2)) The reporting entity must comply with such a direction within 10
business days (see sub-clause 50(3)).
Sub-clauses 50(4) and (5) create an obligation on a reporting entity that is subject to a
written notice issued under sub-clause 50(2) to provide a report to the AUSTRAC
CEO or the Commissioner of Taxation (depending on which of them issued the notice
under sub-clause 50(2) to the reporting entity) as to the response or otherwise by the
card issuer. This must generally be given within 20 business days after the direction
was given, but may be longer if provided for by the requesting party.
Sub-clause 50(6) requires the report to be in the approved form and to contain the
details, if any, that have been supplied by the card issuer in addition to any other
information required by the approved form (see explanatory memorandum on
approved ).
Clause 244 of the Bill requires that any report under the Bill must be signed or
authenticated and given to the AUSTRAC CEO in a manner set out in s 28A of the
Acts Interpretation Act 1901 or in such form and manner as otherwise approved.
Sub-clause 50(7) creates civil liability for failure to comply with the obligations
created by sub-clauses 50(3), 50(4) and 50(5).
Civil penalties may be enforced under Part 15 Division 2 (see explanatory
memorandum on Division 2). The maximum penalty that can be imposed is 100,000
penalty units for a corporation and 20,000 penalty units for persons other than a body
corporate. A person cannot be ordered to pay a civil penalty if they have been
convicted of an offence in relation to the same conduct. The burden of proof in
proceedings for a civil penalty is on the balance of probabilities and there is no
requirement to prove any fault elements in relation to the offending conduct.
Clause 51 Division 400 and Chapter 5 of the Criminal Code
This clause clarifies that a person who provides information under sub-clauses 41, 43,
45 or 49 of the Bill will be taken not to have been in possession of that information
for the purposes of Division 400 (Money Laundering) and Chapter 5 (The Security of
the Commonwealth) of the Criminal Code.
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Part 4--Reports about cross-border movements of physical
currency and bearer negotiable instruments
Part 4 implements FATF Special Recommendation IX (SR IX). SR IX, which deals
with cash couriers, requires countries to have measures in place to detect the physical
cross-border transportation of currency and bearer negotiable instruments (BNIs).
The Interpretative Note to SR IX states that countries may meet their obligations
under SR IX by implementing either a declaration or a disclosure system and that a
country does not have to use the same type of system for incoming and outgoing
cross-border transportation of currency or BNIs.
Australia already has a declaration system in place under the FTRA for transportation
of currency into and out of Australia which is designed to monitor cross-border
transfer of cash amounts of $10,000 or more (see section 15 FTRA). Schedule 9 of
the Anti-Terrorism Act (No.2) 2005 (AT Act), which comes into effect on 14
December 2006, inserts section 15AA (reports in relation to bearer negotiable
instruments taken into or out of Australia) into the FTRA.
Part 4 of the Bill will come into effect the day after Royal Assent of the Bill (see item
9 in column 1 of the table in commencement clause (clause 2) of the Bill. If the Bill
receives Royal Assent before 14 December 2006 then Schedule 9 AT Act will not
commence at all (see item 3 in the table in commencement clause 2 of the Anti-Money
Laundering and Counter-Terrorism Financing (Transitional Provisions and
Consequential Amendments) Bill 2006 (the Transitional Bill). In relation to cash
courier reports this means that section 15AA would not be inserted into the FTRA at
all. However if the Bill is enacted and receives Royal Assent after 14 December
2006 then the amendments made by Schedule 9 AT Act (to the FTRA) will come into
force
Division 1--Introduction
Clause 52 Simplified Outline
This clause sets out a simplified outline of Part 4. It is a general guide that is designed
to assist readers. The outline provides that:
· Cross border movements of physical currency must be reported to the
AUSTRAC CEO, a customs officer or a police officer if the total value moved
is above a threshold; and
· If a person arriving or leaving Australia produces a bearer negotiable
instrument (BNI) to either a police officer or a customs officer, the officer may
require that person to give a report about the BNI to either the AUSTRAC
CEO, a customs officer or a police officer.
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Division 2--Reports about physical currency
Clause 53 Reports about movements of physical currency into or out of
Australia
This clause deals with reporting requirements for movements of physical currency
into or out of Australia.
Sub-clause 53(1) creates an offence for a person who moves a total amount of
physical currency that is not less than $10,000 into or out of Australia without giving
the report required by this clause. The maximum penalty for the offence is
imprisonment for 2 years or 500 penalty units, or both.
Sub-clause 53(2) provides that strict liability applies to paragraph 53(1)(c) (namely to
the physical element of circumstances that a report in respect of the movement has not
been given in accordance with this clause. See section 6.1 Criminal Code in relation
to strict liability.
Sub-clause 53(3) provides that movement of physical currency of not less than
$10,000 into or out of Australia where a report has not been given is subject to
liability as a civil penalty. Sub-clause 53(4) provides that sub-clause 53(3) is a civil
penalty clause. See explanatory memorandum on Division 2 of Part 15 (Enforcement)
which deals with civil penalties.
Sub-clauses 53(5) and (6) contain exemptions to sub-clauses 53(1) and (3). Namely,
sub-clause 53(5) provides that commercial passenger carriers are exempt from
reporting in respect of physical currency in the possession of any of the carrier's
passengers. Sub-clause 53(6) provides that commercial goods carriers are exempt
from reporting in respect of physical currency carried on behalf of another person who
has not disclosed to the carrier that the goods include physical currency.
Sub-clause 53(7) provides that a person who wishes to rely on the exemptions
contained in sub-clauses 53(5) and (6) bears an evidential burden in relation to that
matter. See explanatory memorandum on the definition of the term evidential burden
in clause 5.
Sub-clause 53(8) sets out the requirements for clause 53 reports which are for the
report to be in the approved form, contain such information as specified in the
AML/CTF Rules and be given to either the AUSTRAC CEO, a customs officer or a
police officer and comply with the applicable timing rule in sub-clause 54(1). (See
explanatory memorandum on approved).
Clause 54 Timing of reports about physical currency movements
Applicable timing rule
This clause spells out the applicable timing rule for clause 53 reports to be given to
either the AUSTRAC CEO, a customs officer or a police officer for inward and
outward movements of physical currency (not less than $10,000 in total). This clause
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is intended to clarify the exact time when the obligation to report physical currency
transfers into and out of Australia arises and the offence is complete.
Paragraph 54(1)(a) requires the clause 53 report to be given at the time worked out
under sub-clause 54(2), if the person is bringing physical currency into Australia.
Paragraph 54(1)(b) requires the report to be given at the time worked out under sub-
clause 54(3), if the person is taking physical currency out of Australia.
Paragraph 54(1)(c) provides that if the physical currency is to be taken out of
Australia by a person by consignment to a place outside Australia or by consignment
to another person for carriage by that person or by a third person to a place outside
Australia then a report must be given at any time before the physical currency is
irrevocably committed by the first-mentioned person to the Australian Postal
Corporation or to the other person.
Paragraph 54(1)(d) provides that, in any other case, a report must be given at any time
before the movement of the physical currency takes place.
Inwards movements
The effect of paragraph 54(2)(a) is that where a person moves physical currency into
Australia on an aircraft or ship, the applicable time to report is as soon as he or she
arrives at the place at which customs officers examine baggage.
Paragraph 54(2)(b) applies to persons who enter Australia by any other method which
includes private yachts or private aircraft. These people are required to report at the
first opportunity that the person has to give the clause 53 report after arrival.
Outwards movements
The effect of paragraph 54(3)(a) is that where a person moves physical currency out
of Australia on an aircraft or ship, the applicable time to report is as soon as the
person arrives at the area where the customs officer examines the passport of the
person before the person embarks.
Paragraph 54(3)(b) applies to persons who leave Australia by any other method which
includes private aircraft or yachts. These people are required to report as soon as the
person reaches the customs officer who is to examine the passport of the person
before the person embarks or, if there is no such examination, the last opportunity the
person has to give the clause 53 report before leaving Australia.
Clause 55 Reports about receipts of physical currency from outside Australia
Sub-clause 55(1) creates an offence for a person who receives a total amount of
physical currency which has been moved to the person from outside Australia that is
not less than $10,000 in total, a report has not been made under clause 53 before the
movement and a report about the receipt has not been given within 5 business days of
receipt of the physical currency. The penalty for the offence created is imprisonment
for 2 years or 500 penalty units, or both.
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Sub-clause 55(2) provides that strict liability applies to the physical elements of the
offence in paragraphs 55(1)(c) and (d). See section 6.1 Criminal Code in relation to
strict liability.
Sub-clause 55(3) provides that a person must not receive physical currency moved to
the person from outside Australia that is not less than $10,000 in total if a report has
not been made under clause 53 before the movement and a report about the receipt has
not been given within 5 business days of receipt of the physical currency. Sub-clause
55(4) provides that sub-clause 55(3) is a civil penalty clause. (See explanatory
memorandum on Enforcement).
Sub-clause 55(5) sets out the requirements for clause 55 reports which are for the
report to be in the approved form, contain information specified in the AML/CTF
Rules and to be given to either the AUSTRAC CEO, a customs officer or a police
officer. (See explanatory memorandum on approve)d.
Clause 56 Obligations of customs officers and police officers
This clause provides that where a customs officer or a police officer receives a report
under either clauses 53 or 55, the officer must forward the report to the AUSTRAC
CEO within 5 business days after the day of receiving the report.
Clause 57 Movements of physical currency out of Australia
Sub-clause 57(1) provides that clause 57 sets out the two situations in which a person
moves physical currency out of Australia.
Sub-clause 57(2) provides that for the purposes of the Bill, a person moves physical
currency out of Australia if he or she either takes or sends such currency out of
Australia.
Sub-clause 57(3) provides that for the purposes of the Bill, the person is taken to have
moved physical currency out of Australia if he or she arranges to leave Australia on a
ship or aircraft and for the purpose of leaving Australia goes towards an aircraft or
ship through an embarkation area and either takes the currency into the embarkation
area or has the currency in his or her baggage and does not provide a report about the
currency when he or she is at the place in the embarkation area at which customs
officers examine passports.
Clause 58 Movements of physical currency into Australia
This clause provides that for the purposes of the Bill, a person moves physical
currency into Australia if that person brings or sends the physical currency into
Australia.
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Division 3--Reports about bearer negotiable instruments
Clause 59- Reports about movements of bearer negotiable instruments into or
out of Australia
Reporting requirement
Sub-clause 59(1) provides that if a person, if required to do so under clause 200,
produces to a police or customs officer, one or more bearer negotiable instruments
that the person has with him or her, or a police or customs officer conducts an
examination or search and finds one or more bearer negotiable instruments (BNIs)
that the person has with him or her, then the officer may require the person to give a
report about the BNIs to either the AUSTRAC CEO, a customs officer or police
officer, as soon as possible. Clause 200 deals with the questioning and search powers
in relation to BNIs. (See explanatory memorandum on bearer negotiable instrument).
Sub-clause 59(1) provides a discretion to the police or customs officer to determine in
each case whether or not a report should be required. In some instances, an officer
may consider that it would be more appropriate for further criminal investigation to
take place. In such instances, AUSTRAC would be informed of the results of that
investigation under usual AUSTRAC/police protocols.
There is no monetary threshold on the face value of a BNI that triggers a request for
the person to give a clause 59 report. In practice, a person will only be required to
produce a BNI when required to do so by a police or customs officer (see explanatory
memorandum on Questioning and search powers in relation to bearer negotiable
instruments). For example, officers may request disclosure by particular persons
about whom they might already have some relevant intelligence information.
Sub-clause 59(2) sets out the requirements for the form and content of a report to be
given under sub-clause 59(1), which are for the report to be in the approved form and
to contain such information as specified in the AML/CTF Rules. (see explanatory
memorandum on approved).
Sub-clause 59(3) creates an offence in circumstances where a person is subject to a
clause 59(1) requirement (namely a police or customs officer has required the person
to give a BNI report) and the person engages in conduct that breaches that
requirement. The penalty for the offence created is imprisonment for 2 years or 500
penalty units, or both.
Sub-clause 59(4) provides that a person who is subject to a requirement under
sub-clause 59(1) must not engage in conduct that breaches that requirement and
sub-clause 59(5) provides that sub-clause 59(4) is a civil penalty clause. (see
explanatory memorandum on Division 2 of Part 15 (Enforcement) which deals with
civil penalties).
Clause 60 Obligations of customs officers and police officers
This clause provides that a customs officer or a police officer who receives a report
under clause 59, must forward the report to the AUSTRAC CEO within 5 business
days after the day of receiving the report.
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Division 4--Information about reporting obligations
Clause 61 Power to affix notices about reporting obligations
Scope
Sub-clause 61(1) specifies that the clause applies to a written notice relating to
reporting obligations under Part 4, the form and content of which are specified in
AML/CTF Rules.
Power to affix notices
Sub-clause 61(2) provides that a customs officer may affix such notices on any part of
an aircraft or ship or in any other place specified in the AML/CTF Rules.
Under sub-clause 61(3) a person commits an offence if a clause 61 notice has been
affixed and the person's conduct results in interference or removal or defacement of
the notice. The maximum penalty for the offence is 50 penalty units.
Sub-clause 61(4) provides a defence if the conduct is authorised by the AUSTRAC
CEO or the Customs CEO. The defendant bears an evidential burden in relation to the
matter in sub-clause 61(4) (see section 13.3(3) Criminal Code on evidential burden).
Sub-clause 61(5) provides that the sub-clause 61(3) offence is a strict liability
offence. See section 6.1 Criminal Code on strict liability.
Clause 62 - Notice about reporting obligations to be given to travellers to
Australia
Scope
Sub-clause 62(1) specifies that the clause applies to a written notice relating to
reporting obligations under Part 4, the form and content of which are specified in
AML/CFT Rules.
Notice to be given to travellers
Sub-clause 62(2) provides that a person in charge of an aircraft or ship which is
travelling to Australia (without stopping between the point of departure outside
Australia and Australia) must give a copy of the written notice to all persons
travelling aboard the aircraft or ship including members of the crew
Offence
Sub-clause 62(3) creates an offence if a person is subject to a requirement under
sub-clause 61(2) (namely to give a copy of the notice to persons travelling on board
the ship or aircraft) and the person breaches the requirement. The maximum penalty
for the offence is 50 penalty units.
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Sub-clause 62(4) provides that the sub-clause 62(3) offence is a strict liability offence.
(See section 6.1 Criminal Code on strict liability).
Part 5--Electronic funds transfer instructions
Division 1--Introduction
Clause 63 Simplified outline
This clause provides a simplified outline of Part 5. This is a general guide to the
clauses of this Part that is designed to assist readers in locating clauses within the Bill.
Part 5 provides that electronic funds transfer instructions must include certain
information about the origin of the transferred money.
Division 2--2 or more institutions involved in the transfer
Clause 64 Electronic funds transfer instructions --2 or more institutions
involved in the transfer
This clause is intended to implement FATF Recommendation 7 which requires that:
Financial Institutions should, in relation to cross-border corespondent banking
and other similar relationships, in addition to performing normal due diligence
measures:
...
e) With respect to "payable-through accounts", be satisfied that the respondent
bank has verified the identity of and performed on-going due diligence on the
customers having direct access to accounts of the correspondent and that it is able
to provide relevant customer identification data upon request to the
correspondent bank.
Scope
Sub-clause 64(1) provides clause 64 applies to either a multiple-institution person-to-
person electronic funds transfer instruction or to a multiple-institution same-person
electronic funds transfer instruction (see explanatory memoranda on multiple-
institution person-to-person electronic funds transfer instruction (clause 8) and
multiple-institution same-person electronic funds transfer instruction (clause 9)).
Fund transfer chain
Sub-clause 64(2) the term funds transfer chain the purposes of the Bill, it provides
that the following persons form a funds transfer chain, the ordering institution, each
person (if any) interposed between the ordering institution and the beneficiary
institution and the beneficiary institution. Each person in the chain is to be known as
an institution. See explanatory memoranda on beneficiary institution, ordering
institution and transfer.
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Obligations of ordering institution
Sub-clause 64(3) requires an ordering institution to obtain the complete payer
information where it accepts a transfer instruction at or through a permanent
establishment of the ordering institution in Australia before the ordering institution
passes on, dispatches or takes any other action to carry out the transfer instruction (see
explanatory memoranda on beneficiary institution; complete payer information
(clause 71), ordering institution, permanent establishment in Australia and transfer).
Sub-clause 64(4) requires an ordering institution that has accepted a transfer
instruction through a permanent establishment in Australia to provide the complete
payer information to the AUSTRAC CEO, if requested in writing to do so. The
information must be supplied to the AUSTRAC CEO within 3 business days of the
request being made if the request is made within 6 months of the date that the transfer
instruction was accepted by the ordering institution, otherwise the ordering institution
has 10 business days in which to provide the information.
Sub-clause 64(5) requires an ordering institution that has accepted a transfer
instruction through a permanent establishment in Australia to provide the complete
payer information to the beneficiary institution, if requested in writing to do so. The
information must be supplied to the beneficiary institution within 3 business days of
the request being made if the request is made within 6 months of the date that the
transfer instruction was accepted by the ordering institution, otherwise the ordering
institution has 10 business days in which to provide the information.
Sub-clause 64(6) places an obligation on the ordering institution to ensure that before
transfer instructions are passed on in the chain, they contain the required transfer
information, (see explanatory on required transfer information (clause 70)).
Obligations of interposed institutions in the funds transfer chain
Sub-clause 64(7) provides that an institution in the fund transfer chain, before passing
on a transfer instruction to another institution in the chain, where the transfer
instruction was accepted by the ordering institution at or through a permanent
establishment in a foreign country, the interposed institution must ensure that the
instruction includes the tracing information. Where the instruction was accepted by
the ordering instruction other than at or through a permanent establishment in a
foreign country the interposed institution must ensure that that the instruction includes
so much of the required transfer information as was passed on to the interposed
institution. Sub-clause 64(7) applies where either the instruction was passed on to the
institution at or through a permanent establishment in Australia or is to be passed on
by the institution at or through a permanent establishment in Australia and either the
transfer instruction is accepted by the ordering institution at or through a permanent
establishment in Australia, or the making available of the transferred money by the
beneficiary institution would take place by the beneficiary institution at or through a
permanent establishment in Australia.
Sub-clause 64(9) creates a civil liability for failure to comply with sub-clauses 64(3)
to (7) inclusive. Civil penalties may be enforced under Part 15 Division 2. The
maximum penalty that can be imposed is 100,000 penalty units for a corporation and
20,000 penalty units for persons other than a body corporate. A person cannot be
99
ordered to pay a civil penalty if they have been convicted of an offence in relation to
the same conduct. The burden of proof in proceedings for a civil penalty is on the
balance of probabilities and there is no requirement to prove any fault elements in
relation to the offending conduct.
Clause 65 Request to include customer information in certain international
electronic funds transfer instructions
This clause is intended to implement the FATF Recommendation 7 which requires
that:
Financial Institutions should, in relation to cross-border corespondent banking
and other similar relationships, in addition to performing normal due diligence
measures:
...
e) With respect to "payable-through accounts", be satisfied that the
respondent bank has verified the identity of and performed on-going due
diligence on the customers having direct access to accounts of the correspondent
and that it is able to provide relevant customer identification data upon request to
the correspondent bank.
Scope
Sub-clause 65(1) provides that clause 65 applies to either a multiple-institution
person-to-person electronic funds transfer instruction or to a multiple-institution
same-person electronic funds transfer instruction where either the instruction is
accepted by the ordering institution at or through a permanent establishment in
Australia or the transferred money is to be made available to the payee by the
beneficiary institution at or through a permanent establishment in Australia (see
explanatory memoranda on multiple-institution person-to-person electronic funds
transfer instruction (clause 8), multiple-institution same-person electronic funds
transfer instruction (clause 9) and permanent establishment in Australia).
Direction to beneficiary institution
Sub-clause 65(2) provides that where a beneficiary institution that has received, two
or more electronic funds transfer instructions, and at least one does not contain the
required transfer information, the AUSTRAC CEO may issue written directions to the
beneficiary institution to request the ordering institution to include required transfer
information in all future electronic funds transfer instructions passed on by the
ordering institution to the beneficiary institution. The beneficiary institution must
comply with this direction within 10 business days.
Report by beneficiary institution
Where a beneficiary institution has received a direction from the AUSTRAC CEO
under sub-clause 65(2), sub-clause 65(3) requires it to report to the AUSTRAC within
20 business days of being given the notice under sub-clause (2), or such longer period
allowed by the AUSTRAC CEO, about the ordering institutions response or lack of
response, to the request.
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Sub-clause 65(4) requires that a report under sub-clause 65(3) must be in the approved
form. Clause 244 of the Bill requires that any report under the Bill must be signed or
authenticated and given to the AUSTRAC CEO in a manner set out in s 28A of the
Acts Interpretation Act 1901, or in such form and manner as otherwise approved.
Civil penalty
Sub-clause 65(5) provides that a failure to comply with sub-clauses 65(2) and (3)
makes the beneficiary institution liable to a civil penalty. Civil penalties may be
enforced under Part 15 Division 2. The maximum penalty that can be imposed is
100,000 penalty units for a corporation and 20,000 penalty units for persons other
than a body corporate. A person cannot be ordered to pay a civil penalty if they have
been convicted of an offence in relation to the same conduct. The burden of proof in
proceedings for a civil penalty is on the balance of probabilities and there is no
requirement to prove any fault elements in relation to the offending conduct.
Powers of beneficiary institution
Sub-clause 65(6) gives the beneficiary institution a discretion to refuse to make the
transferred money available to the payee, for the purposes set out in sub-clause 65(7),
if the electronic transfer instruction does not include the required transfer information,
until such time as this information is made available to them. Sub-clause 65(7)
provides that the purpose of exercising the discretion under sub-clause 65(6) is to
enable the beneficiary institution to identify, mitigate or manage the risk to it that
making available the transferred money at, or through, a permanent establishment in
Australia might (inadvertently or otherwise) involve or facilitate money laundering or
financing of terrorism.
Protection from liability
Sub-clause 65(8) prevents criminal or civil action being taken against a beneficiary
institution, or its officers, employees or agent, in relation to any action taken in good
faith under sub-clause 65(6).
See explanatory memoranda for beneficiary institution, electronic funds transfer
instructions, money, ordering institution, permanent establishment in Australia and
required transfer information.
Division 3--Only one institution involved in the transfer
Clause 66 Electronic funds transfer instructions--only one institution
involved in the transfer
Scope
Sub-clause 66(1) provides that this clause applies to either a same-institution person-
to-person electronic funds transfer instruction or to a same-institution same-person
electronic funds transfer instruction except where the instruction is received in
relation to accounts held by the payer with the ordering institution in the same
country (see explanatory memoranda on ordering institution), same-institution
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person-to-person electronic funds transfer instruction (clause 8) and same-institution
same-person electronic funds transfer instruction (clause 9).
Obligations of beneficiary institution
Sub-clause 66(2) provides that if the transfer instruction is accepted by the ordering
institution at or through a permanent establishment in Australia, or the making
available by the beneficiary institution of the transferred money would take place at or
through a permanent establishment of the beneficiary institution in Australia then
before the beneficiary institution makes the transferred money available to the payee
it must obtain the complete payer information. (See explanatory memoranda on
beneficiary, complete payer information, ordering institution, permanent
establishment, and transfer instruction).
If a transfer instruction is covered by sub-clause 66(2) then under sub-clause 66(3) the
AUSTRAC CEO may direct the ordering institution to provide the AUSTRAC CEO
with the complete payer information. Such a request must be complied with in 3
business days after the request by the AUSTRAC CEO if such request is given within
6 months of the date that the transfer instruction was accepted, otherwise the ordering
institution has 10 business days to comply.
Offence
Sub-clause 66(4) creates criminal offences for breaches of sub-clauses 66(2) or (3).
The penalty for an offence under sub-clause 66(4) is imprisonment for 2 years and/or
120 penalty units. The elements of the criminal offence are set out in paragraphs
66(4)(a) and (c). Chapter 2 of the Criminal Code 1995 requires that all physical
elements of an offence have a fault element unless the statute specifically provides
that strict liability applies to an offence or elements of an offence. Under the Criminal
Code, where the clause does not state a fault element, fault elements are implied.
Sub-clause 66(5) provides that strict liability is to be applied to the physical element
of the offence at paragraph 66(4)(b). That is, the prosecution is not required to prove
any fault element in respect of paragraph 66(4)(b). A defence of honest and
reasonable mistake as to the fact is available to a person charged with an offence
under sub-clause 66(4) in relation to the physical element in paragraph (b). Strict
liability is required for paragraph 66(4)(b) because of the difficulty in proving that a
person intentionally failed to do something, especially as the reason for the failure
will usually only be within the knowledge of the defendant.
In contrast, the prosecution will be required to prove the fault elements for the
elements of the offence contained in paragraphs 66(4)(a) and (c). Paragraphs 66(4)
(a) and (c) are circumstance elements of the offence and as such the fault element of
recklessness is applied by default under sub-s 5.6(2) of the Criminal Code. That is,
the prosecution must prove the person was reckless as to his or her obligations under
sub-clause 66(2) or (3) and also as to whether their conduct was in breach of such
obligations.
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Civil Liability
Sub-clause 66(6) makes a person liable to a civil penalty for failure to comply with
sub-clauses 66(2) or (3). Civil penalties may be enforced under Part 15 Division 2 of
the Bill. The maximum penalty that can be imposed is 100,000 penalty units for a
corporation and 20,000 penalty units for persons other than a body corporate. A
person cannot be ordered to pay a civil penalty if they have been convicted of an
offence in relation to the same conduct. The burden of proof in proceedings for a civil
penalty is on the balance of probabilities and there is no requirement to prove any
fault elements in relation to the offending conduct.
Division 4--General provisions
Clause 67 Exemption
Clause 67 prescribes exemptions from the obligations under Part 5 of the Bill for a
number of specific transaction types.
Approved third-party bill payment system
Sub-clause 67(1) exempts instructions that arise from the use of an approved third-
party bill payment system from the operation of Part 5 (see explanatory memoranda
on approved third-party bill payment system).
Debit cards and credit cards
Sub-clause 67(2) exempts instructions arising from use of a credit card or debit card
(see definition in clause 5) from the operation of Part 5 of the Bill if the use does not
involve a cash advance, the number of the card is included in the instruction, and the
card and circumstances of the transaction, are not of a kind specified under the
AML/CTF Rules. (see explanatory memoranda on credit card and debit card).
Cheques
Sub-clause 67(3) exempts instructions that arise from the use of a cheque from the
operation of Part 5 unless the cheque is of a kind specified in the AML/CTF Rules.
ATMs
Sub-clause 67(4) exempts instructions given by the use of an ATM from the operation
of Part 5 unless the ATM is of a kind specified in the AML/CTF Rules, or the use
takes place in circumstances as specified in the AML/CTF Rules.
Inter-financial institution transfers
Sub-clause 67(5) exempts the transfer of money between two financial institutions if
each financial institution acts on its own behalf. (see explanatory memoranda on
transfer and money).
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Prescribed instructions
Sub-clause 67(6) allows the AML/CTF Rules to prescribe instructions for exemption
from the operation of Part 5.
Clause 68 Defence of relying on information supplied by another person
This clause provides for a defence to proceedings for breach of a civil penalty clauses
in sub-clauses 64(8), 65(5) or 66(6) of the Bill.
Sub-clause 68(2) provides that it is a defence if the defendant proves the breach is the
result of reasonable reliance on information provided by another person, except where
the information was provided by an officer, employee or agent of the defendant. The
burden of proof on the defendant is the balance of probabilities.
Clause 69 Division 400 and Chapter 5 of the Criminal Code
This clause clarifies that a person who provides information under clauses 64 or 66 of
the Bill will be protected against the possession element of the money laundering
offences in Division 400 of the Criminal Code, that is, the person will not be deemed
to be in possession of the information in such circumstances.
Clause 70 Required transfer information
This clause defines required transfer information with respect to electronic funds
transfer information for the purposes of the Bill.
Paragraph 70(a) provides that the required transferred information is the tracing
information if:
(a) transfer instructions are of a kind specified under the AML/CTF Rules
(b) accepted by the ordering institution in circumstances specified in the
AML/CTF Rules, or
(c) the transfer instruction is to be passed on or carried out in circumstances
specified in the AML/CTF Rules
Paragraph 70(b) provides that the required transferred information is the tracing
information if:
(a) the ordering institution accepts the transfer instruction at or through a
permanent establishment in a particular country
(b) the beneficiary institution makes, or is to make, the money available at or
through a permanent establishment in another country
(c) the transfer instruction is a batched electronic funds transfer instruction and
(d) paragraph 70(a) does not apply
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Paragraph 70(c) provides that the required transferred information is the tracing
information if:
(a) the ordering institution accepts the transfer instruction at or through a
permanent establishment in a particular country
(b) the beneficiary institution makes, or is to make, the money available at or
through a permanent establishment in another country
(c) the transfer instruction is not a batched electronic funds transfer instruction,
and
(d) paragraph 70(a) does not apply
(see explanatory memoranda on complete payer information (clause 71) and tracing
information (clause 72)).
Clause 71 Complete payer information
This clause prescribes what constitutes complete payer information with respect to an
electronic funds transfer instruction for the purposes of the Bill. The complete payer
information is the name of the payer plus one of the following:
(a) the payer's full business or residential address (not being a post office box)
(b) a unique identification number given to the payer by the Commonwealth or an
authority of the Commonwealth (for example, an Australian Business Number
or an Australian Company Number)
(c) a unique identification number given to the payer by the government of a
foreign country
(d) the identification number given to the payer by the ordering institution, or
(e) if the payer is an individual--the date and place of birth of the payer;
Where the money is transferred from a single account held by the payer with the
ordering institution in Australia the complete payer information also includes the
account number for the account. Alternatively, if the money is not transferred from a
single account held by the payer with the ordering institution in Australia then either a
unique reference number for the transfer instruction or, if the money is transferred
from a single account held by the payer with the ordering institution the complete
payer information also includes the account number for the account.
Clause 72 Tracing information
This clause defines tracing information as the account number where the money is to
be transferred from an account held by the payer with the ordering institution, or in
any case, a unique reference number for the transfer instruction. (see explanatory
memorandum on unique reference number).
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Part 6 Register of Providers of Designated Remittance
Services
This Part implements FATF SR VI by requiring the registration of informal money
or value transfer systems. These services are also known as alternative remittance
services, or underground (or parallel) banking systems. Examples of some systems
include hawala, hundi, fei-chien, and the black market peso exchange. The definition
of remittance arrangement in clause 10(2) is intended to capture informal money or
value transfer systems described in FATF Special Recommendation VI which are
provided through a permanent establishment in Australia.
Clause 73 Simplified Outline
Clause 73 provides a simplified outline of Part 6. A person must not provide a
registrable designated remittance service unless the person's name is entered on the
Register of Providers of Designated Remittance Services.
Clause 74 Unregistered persons must not provide registrable designated
remittance services
Sub-clause 74(1) prohibits a person from providing a registrable designated
remittance service unless the person's name and registrable details are entered on the
Register of Providers of Designated Remittance Services. See explanatory
memorandum on registrable designated remittance service, registrable details and
Register of Providers of Designated Remittance Services and on items 31 and 32 in
table 1 of clause 6.
Sub-clause 74(2) makes it an offence for a person who is subject to a requirement
under sub-clause 74(1) to provide a registrable designated remittance service when the
person's name and registrable details are not entered on the Register of Providers of
Designated Remittance Services. The maximum penalty for the offence is 2 years
imprisonment or 500 penalty units or both.
Sub-clause 74(3) provides that strict liability applies to paragraphs 74(2)(b) and (c).
Chapter 2 of the Criminal Code provides that all physical elements of an offence have
an express or implied fault element unless the offence specifically provides that strict
liability applies to the offence or to elements of the offence. Under the Criminal Code
where the offence does not state the applicable fault element for a particular physical
element there are implied fault elements. Paragraphs (a), (b) and (c) of sub-clause
74(2) set out the physical elements of the offence and the offence does not specify the
applicable fault elements for any of these physical elements. The default fault
elements will not apply to the physical elements of the offence in paragraphs 74(2) (b)
and (c) because sub-clause 74(3) states that strict liability applies to those paragraphs.
This means that there is fault element attaching to these physical no elements and
therefore the prosecution only needs to prove the physical elements themselves. A
defence of honest and reasonable mistake of fact is available. However, the offence
does not apply strict liability to paragraph 74(2)(a) and since no fault element is
106
specified to apply to it the default fault element of recklessness will apply to the
physical element of circumstances in paragraph 74(2)(a).
Sub-clause 74(4) creates an aggravated offence where a person has breached the
physical elements of the offence in sub-clause 74(2) and has received a direction
from the AUSTRAC CEO under sub-clause 191(2) that the person must not provide a
registrable designated remittance service without the person's name or registrable
details being on the Register or unless the AUSTRAC CEO has accepted an
undertaking by the person under clause 197 in relation to sub-clause 74(1). This
offence carries a maximum penalty of 4 years imprisonment or 1000 penalty units or
both.
Sub-clause 74(5) provides that strict liability applies to paragraphs 74(4)(b) and (c).
See the explanatory memorandum on sub-clause 74(3) concerning strict liability for
some of the physical elements of the offences at 74(2).
Sub-clause 74(6) provides for a further aggravated offence where the elements of the
aggravated offence in sub-clause 74(4) apply and the AUSTRAC CEO has previously
given a direction to the person or has previously accepted an undertaking from the
person. An offence against sub-clause 74(6) carries a maximum penalty of 7 years
imprisonment or 2000 penalty units or both.
Sub-clause 74(7) provides that strict liability applies to paragraphs 74(6)(b) and
74(6)(c). See the explanatory memorandum on sub-clause 74(3) concerning strict
liability for some of the physical elements of the offences at 74(2).
Sub-clause 74(8) provides for a further aggravated offence where the elements of the
offence in sub-clause 74(1) apply and the person has been previously convicted of an
offence against sub-clauses 74(2), (4) or (6) which has not been set aside or quashed
or an order previously made against the person under section 19B Crimes Act 1914
concerning those previous convictions has not been set aside or quashed (a section
19B Crimes Act 1914 order is one where the offence is found proved but no
conviction is recorded for example because of the person's prior good record).
An offence against sub-clause 74(8) carries a maximum penalty of 7 years
imprisonment or 2000 penalty units or both. Sub-clause 74(9) provides that strict
liability applies to paragraphs 74(8)(b) and (c). See the explanatory memorandum on
sub-clause 74(3) concerning strict liability for some of the physical elements of the
offences at 74(2).
Sub-clause 74(10) provides that sub-clause 74(1) is a civil penalty clause. This means
that a person may be subject to a civil penalty instead of being charged with a
criminal offence for conduct breaching sub-clause 74(1). Civil penalties may be
enforced under Part 15 Division 2. The maximum penalty that can be imposed is
100,000 penalty units for a corporation and 20,000 penalty units for persons other
than a body corporate. A person cannot be ordered to pay a civil penalty if they have
been convicted of an offence in relation to the same conduct. The burden of proof in
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proceedings for a civil penalty is on the balance of probabilities and there is no
requirement to prove any fault elements in relation to the offending conduct.
Sub-clauses 74(11) and 74(12) provide additional defences in criminal proceedings
for an offence against sub-clauses 74(2), (4), (6), or (8) or in civil penalty
proceedings for a contravention of sub-clause 74(1). Under sub-clause 74(11) it is a
defence if the defendant proves that he or she had made an application to the
AUSTRAC CEO under clause 76 to be registered prior to the contravention. This
defence is only valid if the defendant had not subsequently requested the AUSTRAC
CEO remove such details from the Register under clause 78. Under sub-clause
74(12) it is also a defence to such proceedings if the defendant proves that he or
she had informed the AUSTRAC CEO in writing of his or her registrable details
prior to the contravention. In criminal proceedings the defendant bears a legal burden
in relation to either defence under section 13.4 of the Criminal Code).
Clause 75 Register of Providers of Designated Remittance Services
Clause 75 requires the AUSTRAC CEO to maintain a Register of Providers of
Designated Remittance Services. This register may be maintained by electronic means
(sub-clause 75(2)). The register is not a legislative instrument (sub-clause 75(3)). The
AML/CTF Rules may make provision for the correction of entries on the register
(sub-clause 75(4)(a)) and any other matter relating to the administration or operation
of the register (sub-clause 75(4)(b)). (see explanatory memorandum on Register of
Providers of Designated Remittance Services).
The register of providers is not a legislative instrument. It does not need to be made
public because it is not a document the public needs access to in order to understand
rights and obligations under the Bill. Clause 79 (see explanatory memorandum)
provides that a reporting entity may request the AUSTRAC CEO to tell the reporting
entity whether the names of a specified person is entered on the Register of Providers
of Designated Remittance Services.
Clause 76 Registration
This clause requires the AUSTRAC CEO to register a person's name and registrable
details on the Register of Providers of Designated Remittance Services where the
person makes written application to the AUSTRAC CEO on the approved form, and
the person's name is not already on the register.
Clause 77 Updating of entries on the Register of Providers of Designated
Remittance Services
This clause requires the AUSTRAC CEO to update details on the Register of
Providers of Designated Remittance Services when the AUSTRAC CEO has been
informed by a person on the register that the person's name and/or registrable details
have changed.
Clause 78 Removal of entries from the Register of Providers of Designated
Remittance Services
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This clause requires AUSTRAC to remove a person's name and registrable details
from the Register of Providers of Designated Remittance Services (Clause 75) in the
event that the person requests, in writing, that the person's name and registrable
details be removed from the register.
Clause 79 Access to the Register of Providers of Designated Remittance
Services
Where a reporting entity has asked the AUSTRAC CEO whether the name of a
specified person is entered on the Register of Providers of Designated Remittance
Services clause 79 requires the AUSTRAC CEO to comply with the request as soon
as practicable after the request is made (sub-clause 79(2)).
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Part 7--Anti-money laundering and counter-terrorism
financing programs
Division 1--Introduction
Part 7 deals with anti-money laundering and counter-terrorism financing programs
(AML/CTF programs) which are central to the risk-based scheme established by this
Bill. This part implements FATF Recommendation 15 that financial institutions
develop programs against money laundering and terrorist financing. FATF
recommends that programs include:
internal policies, procedures and controls
(a)
compliance management arrangements
(b)
screening procedures and ongoing training for employees, and
(c)
an audit function to test the system
(d)
Clause 80 Simplified outline
This clause sets out a simplified outline of Part 7. The clause notes that a reporting
entity must have and comply with an AML/CTF program which is to be divided into
Parts A and B (A is to identify, mitigate and manage the money laundering (ML) and
financing of terrorism (FT) risks a reporting entity may face and B sets out customer
identification procedures).
Division 2--Reporting entity's obligations
Clause 81 Reporting entity must have an anti-money laundering and
counter-terrorism financing program
Sub-clause 81(1) provides that a reporting entity must not commence to provide a
designated service to a customer if the reporting entity has not adopted and does not
maintain an AML/CTF program. AML/CTF programs are described in Division 3 of
Part 7.
Sub-clause 81(2) provides that sub-clause 81 (1) is a civil penalty clause. See
explanatory memorandum on Division 2 of Part 15 (Enforcement); Division 2 deals
with civil penalties. The maximum penalty that can be imposed is 100,000 penalty
units for a corporation and 20,000 penalty units for persons other than a body
corporate. A person cannot be ordered to pay a civil penalty if they have been
convicted of an offence in relation to the same conduct. The burden of proof in
proceedings for a civil penalty is on the balance of probabilities and there is no
requirement to prove any fault elements in relation to the offending conduct.
Clause 82 Compliance with Part A of an anti-money laundering and
counter-terrorism financing program
Compliance with program
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Sub-clause 82(1) provides that a reporting entity that has adopted a standard (see
clause 84) or joint (see clause 85) AML/CTF program must comply with Part A of
that program (or Part A as varied).
Sub-clause 82 (2) provides that sub-clause 82 (1) is a civil penalty clause. See
explanatory memorandum on Division 2 of Part 15 (Enforcement); Division 2 deals
with civil penalties. The maximum penalty that can be imposed is 100,000 penalty
units for a corporation and 20,000 penalty units for persons other than a body
corporate. A person cannot be ordered to pay a civil penalty if they have been
convicted of an offence in relation to the same conduct. The burden of proof in
proceedings for a civil penalty is on the balance of probabilities and there is no
requirement to prove any fault elements in relation to the offending conduct.
Exceptions
Under sub-clauses 82(3) and (4), a person need not comply with a requirement in Part
A of a standard or joint AML/CTF program that is in addition to the requirements of
paragraph 84(2)(c). Where a person seeks to rely on the exception in sub-clause 82(3)
and (4) as a defence in civil penalty proceedings, they bear an evidentiary burden in
relation to the matter. See explanatory memorandum on the definition of the term
evidential burden in clause 5
Division 3--Anti-money laundering and counter-terrorism financing
programs
Clause 83 Anti-money laundering and counter-terrorism financing programs
Sub-clause 83(1) defines AML/CTF programs as a standard AML/CTF program
(Clause 84), a joint AML/CTF program (Clause 85) or a special AML/CTF program
(Clause 86). Sub-clause 83 (2) provides that an AML/CTF program is not a
legislative instrument for the purposes of the Legislative Instruments Act 2003.
AML/CTF Programs are not legislative instruments. They do not need to be made
public because the public does not need access to AML/CTF Programs to understand
their rights and obligations under the Bill. AML/CTF Programs may also contain
commercially confidential information.
Clause 84 Standard anti-money laundering and counter-terrorism financing
program
Sub-clause 84(1) provides that a standard AML/CTF program is a written program
that applies to a particular reporting entity and which is divided into Part A (general)
and Part B (customer identification).
Sub-clause 84(1) defines a standard AML/CTF program as a program that applies to a
particular RE and has two parts, Part A (general) and Part B (customer identification).
Part A (general)
Sub-clause 84(2) provides that Part A of the program will have the primary purpose of
identifying, mitigating and managing the risk that the reporting entity may reasonably
111
face that by providing designated services at or through a permanent establishment in
Australia it might (inadvertently or otherwise) facilitate or be involved in money
laundering or financing of terrorism. Part A must comply with any requirements, if
any, as are specified in the AML/CTF Rules. If the reporting entity provides
designated services at or through a permanent establishment in a foreign country Part
A of the reporting entity's standard AML/CTF program must comply with any
AML/CTF Rules relevant to provision of designated services in this manner.
Part B (customer identification)
Sub-clause 84(3) provides that the sole or primary purpose of Part B of a standard
AML/CTF program is to set out applicable customer identification procedures for the
purposes of applying this Bill to customers of the reporting entity. Part B must also
comply with requirements, if any, specified in AML/CTF Rules.
Reviews
Sub-clause 84(4) provides that a requirement under paragraph 84(2)(c) which Part A
must comply with may relate to reviews of a standard AML/CTF program.
Holder of an Australian financial services licence
Sub-clause 84(5) excludes reporting entities that only provide designated services
under item 54 of table 1 in clause 6 from adopting or maintaining a standard
AML/CTF program. Item 54 of table 1 covers a holder of an Australian financial
services licence who arranges for a person to receive a designated service. Reporting
entities who provide item 54designated services are required to adopt and maintain a
special AML/CTF program under clause 86. The explanatory memorandum on
Australian financial services licence notes that the term has the same meaning as in
Chapter 7 Corporations Act 2001.
Variation
Sub-clause 84 (6) provides that a standard AML/CTF program may be varied so long
as the varied program is still a standard AML/CTF program.
Registered scheme compliance plan
In order to minimise compliance costs sub-clause 84 (7) allows a reporting entity,
which is a responsible entity of a registered scheme under the Corporations Act 2001,
to integrate its standard AML/CTF program into the same document as contains the
registered scheme's compliance plan under the Corporations Act 2001.
Clause 85 Joint anti-money laundering and counter-terrorism financing
program
Sub-clause 85(1) allows reporting entities which are members of a designated
business group (see explanatory memorandum on designated business group) to each
adopt a joint AML/CTF program thereby providing compliance savings across the
group. The joint program must be in writing and will apply to each reporting entity
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that from time to time belongs to a particular designated business group. It is divided
into Part A (general) and Part B (customer identification).
Part A (general)
Sub-clause 85(2) provides that Part A of a joint program will have the primary
purpose of identifying, mitigating and managing the risks that each of the reporting
entities may reasonably face that in providing a designated service through a
permanent establishment in Australia they might (inadvertently or otherwise) facilitate
or be involved in money-laundering or terrorist financing. Part A must comply with
any requirements, if any, as are specified in the AML/CTF Rules. If any of the
reporting entities provides designated services at or through a permanent
establishment in a foreign country Part A of the joint AML/CTF program must
comply with any AML/CTF Rules relevant to provision of designated services in this
manner.
Part B (customer identification)
Sub-clause 85(3) provides that the sole or primary purpose of Part B of a joint
AML/CTF program is to set out applicable customer identification procedures for the
purposes of applying this Bill to customers of each of the reporting entities. Part B
must also comply with requirements, if any, specified in AML/CTF Rules.
Different reporting entities
Sub-clause 85(4) provides that a joint AML/CTF program may make different
provision with respect to different reporting entities. This does not limit sub-section
33(3A) of the Acts Interpretation Act 1901.
Reviews
Sub-clause 85 (5) provides that a requirement under paragraph 85(2)(c) which Part A
must comply with may relate to reviews of a joint AML/CTF program.
Holder of an Australian financial services licence
Sub-clause 85(6) excludes reporting entities that only provide designated services
under item 54 of table 1 in clause 6 from adopting or maintaining a joint AML/CTF
program. Item 54 of table 1 covers a holder of an Australian financial services licence
who arranges for a person to receive a designated service. Reporting entities who
provide item 54 designated services are required to adopt and maintain a special
AML/CTF program under clause 86. The explanatory memorandum on Australian
financial services licence notes that the term has the same meaning as in Chapter 7
Corporations Act 2001.
Variation
Sub-clause 85(7) provides that a joint AML/CTF program may be varied so long as
the varied program is still a joint AML/CTF program.
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Clause 86 Special anti-money laundering and counter-terrorism financing
program
Sub-clause 86(1) provides that a special AML/CTF Program is a written program
adopted by a particular reporting entity where the only designated services provided
by the reporting entity are under item 54 of table 1 in clause 6. Item 54 of table 1
covers a holder of an Australian financial services licence who arranges for a person
to receive a designated service. The explanatory memorandum on Australian
financial services licence notes that the term has the same meaning as in Chapter 7
Corporations Act 2001. The sole or primary purpose of the program is to set out
applicable customer identification procedures for the purposes of applying this Bill to
customers of the reporting entity. The program must also comply with requirements,
if any, specified in AML/CTF Rules.
Sub-clause 86(2) excludes reporting entities other than those that only provide
designated services under item 54 of table 1 in clause 6 from adopting or maintaining
a special AML/CTF program. Item 54 of table 1 covers a holder of an Australian
financial services licence who arranges for a person to receive a designated service.
The explanatory memorandum on Australian financial services licence notes that the
term has the same meaning as in Chapter 7 Corporations Act 2001.
Variation
Sub-clause 86(3) provides that a special AML/CTF program may be varied so long as
the varied program is still a special AML/CTF program.
Clause 87 Revocation of adoption of anti-money laundering and
counter-terrorism financing program
Clause 87 provides that a reporting entity may adopt a new AML/CTF program at any
time.
Clause 88 Different applicable customer identification procedures
Sub-clause 88(1) provides that Part B of a standard or joint AML/CTF program, or a
special AML/CTF program or AML/CTF rules for the purposes of paragraph
84 (3)(b), 85(3)(b) or 86(1)(c) may make different provisions for customer
identification for different kinds of customers, different kinds of designated services
or different circumstances. This does not limit the subsection 33(3A) Acts
Interpretation Act.
Clause 89 Applicable customer identification procedures--agent of customer
Clause 89 applies to the situation where a customer deals with the reporting entity
through an agent of the customer in circumstances specified in the AML/CTF Rules.
The AML/CTF Rules may require that Part B of a standard or joint AML/CTF
program or that a special AML/CTF program must provide that the applicable
customer identification procedure must involve the taking of steps specified in the
AML/CTF Rules in relation to the agent.
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Clause 90 Applicable customer identification procedures--customers other
than individuals
Clause 90 applies where a customer is a company, trust, partnership, corporation sole
or body politic. The AML/CTF Rules may require that Part B of a standard or joint
AML/CTF program or that a special AML/CTF program must provide that the
applicable customer identification procedure must involve the taking of steps
specified in the AML/CTF Rules in relation to a person who is associated with the
customer.
AML/CTF Rules may specify customer identification procedures in relation to a
person who is associated with the customer or specified in the rules.
Clause 91 Applicable customer identification procedures--disclosure
certificates
Where a designated service is provided to a customer specified in the AML/CTF
Rules or is provided to a customer in circumstances specified in the Rules the Rules
may require that Part B of a standard or joint AML/CTF program or that a special
AML/CTF program must provide that the applicable customer identification
procedure must involve the reporting entity obtaining a disclosure certificate from the
customer or from a person who is associated with the customer and is specified in the
Rules.
Division 4--Other provisions
Clause 92 Request to obtain information from a customer
Scope
Sub-clause 92(1) provides that clause 92 applies if a reporting entity has adopted a
standard or joint AML/CTF program and the reporting entity has reasonable grounds
to believe that the customer has information that is likely to assist the reporting entity
to comply with Part A of the program. This applies if the reporting entity is currently
providing or has provided in the past a designated service to the customer.
Sub-clause 92(2) provides that the reporting entity may request, by written notice
given to the customer, that the customer give the information to the reporting entity
within the period and in the manner specified in the notice.
Sub-clause 92(3) provides that the notice must set out the effect of sub-clause 92(4).
Sub-clause 92(4) provides that if the customer does not provide the information, then
the reporting entity may refuse to continue to provide, or to commence to provide, the
designated service or may restrict or limit provision of the designated service until the
customer provides the information.
Sub-clause 92(5) provides that the reporting entity or an officer, employee or agent of
the reporting entity acting in the course of their office, employment or agency is
protected from any action, suit or proceeding (whether criminal or civil) for anything
done or omitted to be done in good faith in the course of the exercise of the power
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conferred by sub-clause 92(4) (namely the power to refuse to continue to provide the
service etc).
Instruments created under this clause are not legislative instruments as these are
instrument requesting or requiring a person to attend premises, give evidence, answer
questions, produce documents or give information and are covered by Item 19 of Part
of Schedule 1 of the Legislative Instruments Regulations 2004.
Clause 93 Exemptions
AML/CTF Rules may provide that a kind of designated service specified in the Rules
or a designated service provided in circumstances specified in the Rules is exempt
from the requirements of Part A of a standard or joint AML/CTF program. See
explanatory memorandum on paragraphs 84(2)(a) and (b) and 85(2)(a) and (b) as to
Part A of a standard AML/CTF program and Part A of a joint AML/CTF program.
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Part 8--Correspondent banking
This Part implements FATF Recommendation 18, which states that financial
institutions should refuse to enter into, or continue correspondent banking
relationships with shell banks and should guard against establishing relations with
respondent foreign financial institutions that permit their accounts to be used by shell
banks.
Clause 94 Simplified Outline
This Part prohibits a financial institution from entering into a correspondent banking
relationship with a shell bank or another financial institution that has a correspondent
banking relationship with a shell bank. Financial institutions must carry out a due
diligence assessment before forming a correspondent banking relationship, and once
such a relationship is established, regular due diligence assessments must be carried
out by the financial institution. Financial institutions are only subject to this Part if
they meet the geographical link test (see explanatory memorandum for clause 100).
Clause 95 Prohibition of entry into correspondent banking relationships with
shell banks etc.
Sub-clause 95(1) prohibits a financial institution (see explanatory memorandum on
financial institution ) from entering into a correspondent banking relationship with
another person if the person does so reckless as to whether the person with whom
such a relationship is sought, is a shell bank, or has a correspondent banking
relationship with a shell bank (see explanatory memoranda on correspondent banking
relationship and shell bank in clause 5).
Sub-clause 95(2) provides that sub-clause 95(1) is a civil penalty clause. Civil
penalties may be enforced under Part 15 Division 2. The maximum penalty that can
be imposed is 100,000 penalty units for a corporation and 20,000 penalty units for
persons other than a body corporate. A person cannot be ordered to pay a civil
penalty if they have been convicted of an offence in relation to the same conduct. The
burden of proof in proceedings for a civil penalty is on the balance of probabilities
and there is no requirement to prove any fault elements in relation to the offending
conduct.
Financial institutions are only subject to this clause if they meet the geographical link
test in clause 100 (see explanatory memorandum for clause 100).
Clause 96 Termination of correspondent banking relationship with shell bank
etc.
Sub-clause 96(1) requires that if a financial institution (first financial institution) that
is in a correspondent banking relationship with another person, becomes aware that
the other person is a shell bank, the first financial institution must terminate the
relationship with the shell bank within 20 business days after gaining this awareness,
or such longer period (if any) as the AUSTRAC CEO allows.
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Sub-clause 96(2) provides that if a financial institution (first financial institution) is in
a correspondent banking relationship with another financial institution and the first
financial institution becomes aware that the other financial institution has a
correspondent banking relationship with a shell bank, the first financial institution
must, within 20 business days after gaining this awareness, or such longer period as
the AUSTRAC CEO allows, either terminate the correspondent banking relationship
(sub-clause 96(2)(e)), or request the other financial institution to terminate the
correspondent banking relationship with the shell bank.
Sub-clause 96(3) provides that where the first financial institution makes a request of
another financial institution to end a correspondent banking relationship with a shell
bank under paragraph 96(2)(f), and 20 business days after making the request the
other financial institution has not complied with the request, the first financial
institution must terminate the correspondent banking relationship with that financial
institution within the next 20 business days or within such longer period as the
AUSTRAC CEO allows (sub-clause 96(3)(c) and (d)).
Sub-clause 96(4) renders a person liable to a civil penalty for breaching sub-clauses
96(1), (2) or (3). Civil penalties may be enforced under Part 15 Division 2. The
maximum penalty that can be imposed is 100,000 penalty units for a corporation and
20,000 penalty units for persons other than a body corporate. A person cannot be
ordered to pay a civil penalty if they have been convicted of an offence in relation to
the same conduct. The burden of proof in proceedings for a civil penalty is on the
balance of probabilities and there is no requirement to prove any fault elements in
relation to the offending conduct.
Financial institutions are only subject to this clause if they meet the geographical link
test in clause 100 (see explanatory memorandum for clause 100).
Clause 97 Due diligence assessments before entering into correspondent
banking relationships etc.
Preliminary risk assessment
Under sub-clause 97(1) a financial institution (the first financial institution) must
assess the risk that it may reasonably face, that by entering into a correspondent
banking relationship with another financial institution the relationship might,
inadvertently or otherwise involve or facilitate money laundering or the financing of
terrorism.
Due diligence assessment
Sub-clause 97(2) provides that if the first financial institution determines that the risk
is such that a due diligence assessment is warranted it must carry out an assessment in
accordance with the AML/CTF Rules and prepare a written record of the assessment
as soon as practicable after completion of the assessment.
Sub-clause 97(3) renders a person liable to a civil penalty for a breach of sub-clauses
97(1) and (2). Civil penalties may be enforced under Part 15 Division 2. The
maximum penalty that can be imposed is 100,000 penalty units for a corporation and
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20,000 penalty units for persons other than a body corporate. A person cannot be
ordered to pay a civil penalty if they have been convicted of an offence in relation to
the same conduct. The burden of proof in proceedings for a civil penalty is on the
balance of probabilities and there is no requirement to prove any fault elements in
relation to the offending conduct.
Financial institutions are only subject to this clause if they meet the geographical link
test in clause 100 (see explanatory memorandum for clause 100).
Clause 98 Regular due diligence assessments of correspondent banking
relationships etc
Preliminary risk assessment
Under sub-clause 98(1), if a financial institution (the first financial institution) has
entered into a correspondent banking relationship with another financial institution,
the first financial institution must carry out regular assessments of the risk it may
reasonably face that the correspondent banking relationship might (whether
inadvertently or otherwise) involve or facilitate money laundering or financing of
terrorism.
Due diligence assessment
Under sub-clause 98(2) if a financial institution (the first financial institution) has
entered into a correspondent banking relationship with another financial institution,
the first financial institution must carry out regular assessments of such matters as are
specified in the AML/CTF Rules and prepare a written record of each assessment as
soon as practicable after the completion of the assessment if carrying out those
assessments are warranted by the risk identified in an assessment carried out by the
first financial institution under sub-clause 98(1).
Frequency of assessments
Under sub-clause 98(3) the first assessment under sub-clause 98(1) must be carried
out within, if the first financial institution enters into the correspondent banking
relationship after the commencement of this clause, the period beginning at the time
when the first financial institution enters into the correspondent banking relationship
and ending at the end of the period ascertained in accordance with the AML/CTF
Rules or otherwise it must be a carried out within the period beginning at the
commencement of this clause and ending at the end of the period ascertained in
accordance with the AML/CTF Rules.
Sub-clause 98(4) provides that the intervals between subsequent assessments must not
be longer than the period ascertained in accordance with the AML/CTF Rules.
Sub-clause 98(5) provides that AML/CTF Rules made under sub-clause 98(3) to
determine the frequency of assessments may provide that the first financial institution
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may determine the frequency so long as it has regard to matters specified in the
AML/CTF Rules.
Sub-clause 98(7) renders a person liable to a civil penalty for breach of sub-clauses
98(1) and (2). Civil penalties may be enforced under Part 15 Division 2. The
maximum penalty that can be imposed is 100,000 penalty units for a corporation and
20,000 penalty units for persons other than a body corporate. A person cannot be
ordered to pay a civil penalty if they have been convicted of an offence in relation to
the same conduct. The burden of proof in proceedings for a civil penalty is on the
balance of probabilities and there is no requirement to prove any fault elements in
relation to the offending conduct.
Financial institutions are only subject to this clause if they meet the geographical link
test in clause 100 (see explanatory memorandum for clause 100).
Clause 99 Rules about correspondent banking relationships
Sub-clause 99(1) provides that a financial institution must not enter into a
correspondent banking relationship unless a senior officer of the financial institution
approved the entering into of that relationship, having regard to matters in the
AML/CTF Rules. Sub-clause 99(2) requires that where a financial institution has a
correspondent banking relationship it must document each party's responsibilities
under that relationship.
Sub-clause 98(3) renders a person liable to a civil penalty for breach of sub-clauses
98(1) and (2). Civil penalties may be enforced under Part 15 Division 2. The
maximum penalty that can be imposed is 100,000 penalty units for a corporation and
20,000 penalty units for persons other than a body corporate. A person cannot be
ordered to pay a civil penalty if they have been convicted of an offence in relation to
the same conduct. The burden of proof in proceedings for a civil penalty is on the
balance of probabilities and there is no requirement to prove any fault elements in
relation to the offending conduct.
Clause 100 Geographical links
Clause 100 provides that Part 8 only applies where a financial institution carries on an
activity or business through a permanent establishment in Australia or the financial
institution is a resident of Australia which carries on an activity or business at or
through a permanent establishment of the financial institution in a foreign country or
the financial institution is a subsidiary of a company that is a resident of Australia and
it carries on an activity or business at or through a permanent establishment in a
foreign country. (see explanatory memoranda on permanent establishment,
subsidiary and resident).
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Part 9 Countermeasures
This part implements FATF Recommendation 21 which requires financial institutions
to give special attention to business relationships and transactions with persons (legal
or natural) in countries which do not or insufficiently apply the FATF
Recommendations.
This part also implements FATF Recommendation 22 which requires financial
institutions to apply the principles required by the FATF recommendations to their
branches and subsidiaries located abroad, especially those located in countries where
the FATF Recommendations are insufficiently applied.
Clause 101 Simplified Outline
As indicated in the simplified outline this Part enables regulations to be made
prohibiting or regulating the entering into of transactions with residents of prescribed
foreign countries.
Clause 102 Countermeasures
This clause enables regulations to be made which make provision for or in relation to
prohibiting or regulating the entering into of transactions with residents of prescribed
foreign countries.
Sub-clause 102(1) enables regulations to be made in the following circumstances;
(a) where one of the parties to the transaction is a resident of Australia and the
other party is a resident of a prescribed foreign country,
(b) where one of the parties to the transaction enters into the transaction in the
course of carrying on an activity or business at or through a permanent
establishment of the party in Australia and the other party is a resident of a
prescribed foreign country,
(c) where one of the parties to the transaction is a resident of Australia and the
other party is a corporation incorporated in a prescribed foreign country,
(d) where one of the parties to the transaction enters into the transaction in the
course of carrying on an activity or business at or through a permanent
establishment of the party in Australia and the other party is a corporation
incorporated in a prescribed foreign country,
(e) one of the parties to the transaction is a resident of Australia and the other party
is an individual who is physically present in a prescribed foreign country, and
(f) one of the parties to the transaction enters into the transaction in the course of
carrying on an activity or business at or through a permanent establishment of
the party in Australia and the other party is an individual who is physically
present in a prescribed foreign country.
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Sub-clause 102(2) provides that regulations made for the purposes of sub-clause
102(1) may be of general application or may be limited by reference to a specified
transaction; a specified party or a specified prescribed foreign country.
Clause 103 Sunsetting of regulations after 2 years
Section 50 of the Legislative Instruments Act 2003 provides that legislative
instruments subject to section 50 expire on 1 April or 1 October, 10 years after their
introduction unless the legislative instrument contains provisions which amend earlier
legislative instruments that continue to be in force after the making of the principal
legislative instrument. Clause 102 reduces that term to two years. That is, any
regulations made under sub-clause 102(1) will cease to be in force on the 1 April or 1
October of the second anniversary of the commencement day of the regulations.
Part 10--Record-keeping requirements
This Part implements FATF Recommendation 10 which applies to financial
institutions. The Part implements the 1st and 2nd paragraphs of FATF
Recommendation 10 which require financial institutions to maintain for at least 5
years all necessary records on transactions and to also keep for 5 years identification
records obtained through the customer due diligence process.
This Part continues the current 7 year document retention obligations in the FTRA.
The 7 year period has been retained because the lesser period of 5 years recommended
by FATF would result in an unintentional undermining of enforcement of other
relevant pieces of legislation which currently already have their own 7 year document
retention obligations (for example the Corporations Act 2001).
Where obligations under this Part are satisfied by keeping copies the obligation can be
met by keeping electronic copies as per the Electronic Transactions Act 1999.
Division 1--Introduction
Clause 104 Simplified Outline
This clause provides a simplified outline of Part 10.
Clause 105 Privacy Act not overridden by this Part
This clause makes it clear that this Part is not intended to override the credit reporting
provisions in Part IIIA of the Privacy Act 1988. This means that records retained in
compliance with this Part for longer than the maximum period permitted under the
Privacy Act 1988 should only be used for purposes associated with fulfilling the
requirements of this Act, the regulations and the AML/CTF Rules, or in compliance
with a warrant issued by law enforcement and national security agencies.
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Division 2--Records of transactions etc
Clause 106 Records of Designated Services
This clause will ensure that Reporting Entities cannot avoid record keeping
requirements by deliberately not making records. The clause requires that the
AML/CTF Rules (see explanatory memorandum on clause 229) may provide that a
Reporting Entity must make a record of information in the following circumstances:
(a) Provision of a specified kind of designated service to a customer, or
(b) Provision of a designated service in specified circumstances.
In such cases the AML/CTF Rules may require that the record of information be in a
specified format.
Failure to comply with a direction under sub-clause 106(4) makes the Reporting
Entity liable for a civil penalty. Civil penalties may be enforced under Part 15
Division 2 (see explanatory memorandum on Part 15 Division 2). The maximum
penalty that can be imposed is 100,000 penalty units for a corporation and 20,000
penalty units for persons other than a body corporate. A person cannot be ordered to
pay a civil penalty if they have been convicted of an offence in relation to the same
conduct. The burden of proof in proceedings for a civil penalty is on the balance of
probabilities and there is no requirement to prove any fault elements in relation to the
offending conduct.
Sub-clause 106(6) provides that subject to any conditions in the AML/CTF Rules, the
obligations under this clause can be performed on behalf of a Reporting Entity which
is a member of a designated business group (see explanatory memorandum on clause
5 definition of designated business group) by any other member of that designated
business group. The purpose of this provision is to allow associated business entities
with joint AML/CTF programs, to make joint arrangements for meeting their record
keeping obligations.
For example, one entity within a designated business group may provide a record
storage and retrieval service for a number of entities within the business group who
may share a client base. Liability under the Act remains with the reporting entity or
entities with whom the obligation arose.
Clause 107 Transaction records to be retained
Clause 107 implements the 1st paragraph of FATF Recommendation 10 which
requires financial institutions to maintain for at least 5 years all necessary records on
transactions.
Clause 107 deals with obligations on Reporting Entities relating to records generated
by the Reporting Entity while clause 108 imposes record keeping obligations on the
Reporting Entity in relation to documents generated and provided by the customer.
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Sub-clause 107(1) provides that the clause applies where a reporting entity makes a
record of information relating to provision of a designated service to a customer.
Sub -clause 107(2) requires applicable records (or a copy or extract of those records)
to be retained for 7 years. It is consistent with Part VIA of the FTRA which requires
financial institutions to keep customer generated financial transaction documents for 7
years.
Sub-clause 107(3) provides that sub-clause 107(2) is a civil penalty provision. Civil
penalties may be enforced under Part 15 Division 2 (see explanatory memorandum on
Part 15 Division 2). The maximum penalty that can be imposed is 100,000 penalty
units for a corporation and 20,000 penalty units for persons other than a body
corporate. A person cannot be ordered to pay a civil penalty if they have been
convicted of an offence in relation to the same conduct. The burden of proof in
proceedings for a civil penalty is on the balance of probabilities and there is no
requirement to prove any fault elements in relation to the offending conduct.
Sub-clause 107(4) provides that subject to any conditions in the AML/CTF Rules, the
obligations under this clause can be performed on behalf of a Reporting Entity which
is a member of a designated business group (see explanatory memorandum on clause
5 definition of designated business group) by any other member of that designated
business group. The purpose of this provision is to allow associated business entities
with joint AML/CTF programs, to make joint arrangements for meeting their record
keeping obligations.
For example, one entity within a designated business group may provide a record
storage and retrieval service for a number of entities within the business group who
may share a client base. Liability under the Bill remains with the reporting entity or
entities with whom the obligation arose.
Clause 108 Customer - provided transaction documents to be retained
Clause 108 implements the 1st paragraph of FATF Recommendation 10 which
requires financial institutions to maintain for at least 5 years all necessary records on
transactions.
Clause 108 imposes record keeping obligations on the Reporting Entity in relation to
documents generated and provided by a customer which relate to the provision of a
designated service. This is to be distinguished from clause 107 which deals with
obligations relating to records generated by the Reporting Entity.
Clause 108 requires Reporting Entities to retain customer generated documents (or
copies of those documents) for 7 years. It is consistent with Part VIA of the FTRA
which requires financial institutions to keep customer generated financial transaction
documents for 7 years.
Sub-clause 108(3) is a civil penalty provision. Civil penalties may be enforced under
Part 15 Division 2 (see explanatory memorandum on Part 15 Division 2). The
maximum penalty that can be imposed is 100,000 penalty units for a corporation and
20,000 penalty units for persons other than a body corporate. A person cannot be
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ordered to pay a civil penalty if they have been convicted of an offence in relation to
the same conduct. The burden of proof in proceedings for a civil penalty is on the
balance of probabilities and there is no requirement to prove any fault elements in
relation to the offending conduct.
Sub-clause 108(4) provides that subject to any conditions in the AML/CTF Rules, the
obligations under this clause can be performed on behalf of a Reporting Entity which
is a member of a designated business group (see explanatory memorandum on clause
5 definition of designated business group) by any other member of that designated
business group. The purpose of this provision is to allow associated business entities
with joint AML/CTF programs, to make joint arrangements for meeting their record
keeping obligations.
For example, one entity within a designated business group may provide a record
storage and retrieval service for a number of entities within the business group who
may share a client base. Liability under the Bill remains with the reporting entity or
entities with whom the obligation arose.
Clause 109 Records relating to transferred ADI Accounts
This clause deals with the record keeping situation where an account is being
transferred between two banks or ADIs (see definition of ADI or authorised deposit-
taking institution in explanatory memorandum clause 5).
The clause ensures that at least one ADI will retain copies of the records but avoids
the situation where both ADI's have to retain the records for 7 years. This will
facilitate compliance with FATF Recommendations 5 and 10 relating to Customer
Due Diligence and record-keeping by having records available to Reporting Entities
institutions for the purpose of Customer Due Diligence as well as ensuring Reporting
Entities can swiftly comply with requests for information from competent authorities.
The clause only places obligations on ADIs and applies where an ADI possesses
documents under either clause 107 (documents generated by a Reporting Entity in
relation to the provision of a designated service) or clause 108 (documents generated
by a customer in relation to the provision of a designated service).
Sub-clause 109(1) provides that if these documents relate to an active account that has
been or is proposed to be transferred to another ADI (the transferee ADI) either
pursuant to Australian law or under an arrangement between the two ADIs then the
documents must be passed on to the second ADI (the transferee ADI) by the ADI
which is the current holder (the transferor ADI) within the required time frame of 120
days (see sub-clause 109(3)).
Sub-clause 109(3) provides that as long as the current holder (the transferor ADI)
passes on the records within the time frame it is relieved of its obligations under
clauses 6, 107 and 124 to continue to hold the documents or copies of those
documents for 7 years.
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Sub-clause 109(4) clarifies that once the documents are passed to the second ADI (the
transferee ADI) the second ADI must then retain the documents or copies of that
document for 7 years.
The effect of sub-clause 109(5) is a civil penalty provision. Civil penalties may be
enforced under Part 15 Division 2 (see explanatory memorandum on Part 15
Division 2). The maximum penalty that can be imposed is 100,000 penalty units for a
corporation and 20,000 penalty units for persons other than a body corporate. A
person cannot be ordered to pay a civil penalty if they have been convicted of an
offence in relation to the same conduct. The burden of proof in proceedings for a civil
penalty is on the balance of probabilities and there is no requirement to prove any
fault elements in relation to the offending conduct.
Clause 110 Retention of records relating to closed ADI accounts
This clause requires that an ADI retain records that relate to closed (ADI) accounts.
This is in line with FATF Recommendation 10 relating to customer due diligence and
record-keeping.
Transferor ADI may give documents to transferee ADI
Sub-clause 110(1) permits an ADI (the transferor ADI) to give the original and copies
of a document (the second document) relating to an account to another ADI (the
transferee ADI) if the transferor ADI has given another document (the first document)
relating to the same account to the transferee ADI in accordance with clause 109. The
second document must be the transferor ADI's possession in fulfilment of an
obligation imposed on it by clause 107 or 108 and relate to a closed account. Further,
the transferor ADI and the transferee ADI must agree in writing that the second
document should be given by the transferor ADI to the transferee ADI within the
120 day period allowed by clause 109 (Records relating to transferred ADI accounts)
for the giving of the first document.
Transferor ADI released from retention obligations
Sub-clause 110(2) provides that clause 107 (Transactions records to be retained) and
clause 108 (Customer-provided transaction documents to be retained) do not apply to
the transferor ADI, in relation to the second document, if the transferor ADI gave the
original or a copy of the second document to the transferee ADI within the 120 day
period allowed by clause 109 (Records relating to transferred ADI accounts) for the
giving of the first document.
Retention obligations of transferee ADI
Sub-clause 110(3) provides that if the transferee ADI is given the original or a copy of
the second document within the 120 day period allowed by clause 109 (Records
relating to transferred ADI accounts) for the giving of the first document, the
transferee ADI must retain either the second document or a copy of the second
document for 7 years after the giving of the second document.
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Civil penalty
Sub-clause 110(4) provides that a breach of the obligation to retain records under sub-
clause 110(3) makes the transferee liable to a civil penalty. Civil penalties may be
enforced under Part 15 Division 2. The maximum penalty that can be imposed is
100,000 penalty units for a corporation and 20,000 penalty units for persons other
than a body corporate. A person cannot be ordered to pay a civil penalty if they have
been convicted of an offence in relation to the same conduct. The burden of proof in
proceedings for a civil penalty is on the balance of probabilities and there is no
requirement to prove any fault elements in relation to the offending conduct.
Division 3--Records of identification procedures
Clause 111 Copying documents obtained in the course of carrying out an
applicable custom identification procedure
Clause 111 provides that for the purposes of the Bill if a document is produced to a
reporting entity in the course of an applicable customer identification procedure
carried out under the Bill and the reporting entity makes a copy of the document the
reporting entity is taken to have made a record of the information contained in the
document (see explanatory memorandum on applicable customer identification
procedure).
Clause 112 Making of records of identification procedures
This clause requires that when a reporting entity carries out an applicable customer
identification procedure in respect of a customer under the Bill, the reporting entity
must make a record of the procedure, the information obtained in the course of
carrying out the procedure and such other information about the procedure as is
specified in the AML/CTF Rules.
The effect of sub-clause 112(6) is to provide that breach of the sub-clause 112(2)
obligation renders a person liable to a civil penalty. The burden of proof is on the
balance of probabilities and there is no requirement to prove any fault element for a
breach of the sub-clause 112(2) obligation.
Sub-clause 112(3) provides that a record under sub-clause 112(2) must comply with
such requirements (if any) as are specified in the AML/CTF Rules.
Civil penalty
Sub-clause 112(4) provides that a breach of the obligation to make a record under
sub-clause 112(2) makes the reporting entity liable to a civil penalty. Civil penalties
may be enforced under Part 15 Division 2. The maximum penalty that can be
imposed is 100,000 penalty units for a corporation and 20,000 penalty units for
persons other than a body corporate. A person cannot be ordered to pay a civil
penalty if they have been convicted of an offence in relation to the same conduct. The
burden of proof in proceedings for a civil penalty is on the balance of probabilities
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and there is no requirement to prove any fault elements in relation to the offending
conduct.
Designated business groups
Sub-clause 112(5) provides that where a reporting entity is a member of a designated
business group (see explanatory memorandum on designated business group), the
obligation to a record of information in sub-clause 112(2) may be discharged by any
other member of the designated business group. The purpose of this provision is to
allow entities within a business group to rely on members of the group to discharge
the record keeping obligations, for example by providing a record storage and
retrieval service for a number of entities within the business group who may share a
client base. Liability under the Bill remains with the reporting entity with whom the
obligation arose.
Clause 113 Retention of records of identification procedures
Clause 113 implements the 2nd paragraph of FATF Recommendation 10 that financial
institutions should keep records for at least 5 years on the identification data obtained
through the customer due diligence process.
Scope
Sub-clause 113(1) provides that clause 113 applies to a reporting entity if it carried
out an applicable customer identification procedure (see explanatory memorandum
on applicable customer identification procedure) in respect of a customer to whom it
provided, or proposed to provide, a designated service and the reporting entity made a
record of the procedure, the information obtained in the course of carrying out the
procedure and such other information (if any) about the procedure as is specified in
the AML/CTF Rules.
Retention
Sub-clause 113(2) requires the reporting entity to retain the record, or a copy of the
record, until the end of the 7 year period that the reporting entity ceased to provide
any designated services to the customer.
Civil penalty
Sub-clause 113(3) provides that a breach of the obligation to retain the record under
sub-clause 113(2) makes the reporting entity liable to a civil penalty. Civil penalties
may be enforced under Part 15 Division 2. The maximum penalty that can be
imposed is 100,000 penalty units for a corporation and 20,000 penalty units for
persons other than a body corporate. A person cannot be ordered to pay a civil
penalty if they have been convicted of an offence in relation to the same conduct. The
burden of proof in proceedings for a civil penalty is on the balance of probabilities
and there is no requirement to prove any fault elements in relation to the offending
conduct.
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Designated business groups
Sub-clause 113(4) provides that where a reporting entity is a member of a designated
business group (see explanatory memorandum on designated business group ) the
obligation to retain a record of information in sub-clause 113(4) may be discharged by
any other member of the designated business group.
Clause 114 Records of identification procedures deemed to have been carried out
by a reporting entity
Scope
Clause 114 applies where on a particular day (the customer identification day), a
reporting entity (the first reporting entity) carried out the applicable customer
identification procedure in respect of a customer to whom it provided a designated
service, and
(a) under clause 38, Part 2 of the Bill has effect as if the applicable customer
identification procedure had also been carried out in respect of the customer
by another reporting entity (the second reporting entity)
(b) the first reporting entity made a record of the procedure or information
obtained in the course of carrying out the procedure or such other information
(if any) about the procedure as is specified in the AML/CTF Rules' and
(c) the record is not declared by the AML/CTF Rules to be exempt from this
clause.
Copy of record to be given to second reporting entity
Sub-clause 114 provides that if, on the customer identification day the second
reporting entity provides, or proposes to provide, a designated service to the customer
and it does not already have a copy of the record referred to in sub-clause 114(1) the
second reporting entity must, by written notice given to the first reporting entity
within 5 business days after that day, request the first reporting entity to give it a copy
of the record within 5 business days after the request is made.
Sub-clause 114(3) applies where the customer becomes a customer to the second
reporting entity after the customer identification day. It is in similar terms to sub-
clause 114(2):
Sub-clause 114(4) requires the first reporting entity to comply with a request under
whichever of sub-clauses 114(2) and (3) is applicable.
Retention of copy by second reporting entity
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Sub-clause 114(5) requires the second reporting entity to retain a copy of the record
given to it by the first reporting entity until the end of the first 7-year periods that
began at a time after the applicable customer identification procedure was carried out
and throughout the whole of which the second reporting entity did not provide any
designated services to the customer.
Civil penalty
Sub-clause 114(6) provides that a breach of the obligations sub-clause 114(2), (3), (4)
and (5) makes person who breached the obligation liable to a civil penalty. Civil
penalties may be enforced under Part 15 Division 2. The maximum penalty that can
be imposed is 100,000 penalty units for a corporation and 20,000 penalty units for
persons other than a body corporate. A person cannot be ordered to pay a civil
penalty if they have been convicted of an offence in relation to the same conduct. The
burden of proof in proceedings for a civil penalty is on the balance of probabilities
and there is no requirement to prove any fault elements in relation to the offending
conduct.
Designated business groups
Sub-clause 114(7) provides that where a reporting entity is a member of a designated
business group (see explanatory memorandum on designated business group), an
obligation imposed on the reporting entity by sub-clause 114(2), (3), (4) or (5) may be
discharged by any other member of the group. The purpose of this provision is to
allow entities within a business group to rely on members of the group to discharge
the record keeping obligations, for example by providing a record storage and
retrieval service for a number of entities within the business group who may share a
client base. Liability under the Bill remains with the reporting entity with whom the
obligation arose.
Division 4--Records about electronic funds transfer instructions
Clause 115 Retention of records about funds transfer instructions
Scope
This clause applies where clause 64 applies to a multiple-institution person-to-person
electronic funds transfer instruction or a multiple-institution same-person electronic
funds transfer instruction and the transfer instruction is to be passed on by an
interposed institution at or through a permanent establishment of the person in
Australia, and:
(a) some or all of the required transfer information was passed on to the
interposed institution by another person in the funds transfer chain
(b) the transfer instruction was accepted by the ordering institution at or through a
permanent establishment of the ordering institution in a foreign country, and
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(c) the transfer instruction was passed on to the person by a permanent
establishment of the ordering institution or of another person, in a foreign
country.
See explanatory memoranda on clause 64, multiple-institution person-to-person
electronic funds transfer instruction or multiple-institution same-person electronic
funds transfer instruction, permanent establishment and transfer.
Keeping and retention of records
Sub-clause 115(2) requires the interposed institution referred to in sub-clause 115
make a record of so much of the required transfer information as was passed on to the
person it and retain that record, or a copy of the record, for 7 years after the transfer
instruction was passed on to the person.
Civil penalty
Sub-clause 115(3) provides that a breach of an obligation in sub-clause 115(2) makes
the interposed institution liable to a civil penalty. Civil penalties may be enforced
under Part 15 Division 2. The maximum penalty that can be imposed is 100,000
penalty units for a corporation and 20,000 penalty units for persons other than a body
corporate. A person cannot be ordered to pay a civil penalty if they have been
convicted of an offence in relation to the same conduct. The burden of proof in
proceedings for a civil penalty is on the balance of probabilities and there is no
requirement to prove any fault elements in relation to the offending conduct.
Division 5--Records about anti-money laundering and
counter-terrorism financing programs
Clause 116 Records about anti-money laundering and counter-terrorism
financing programs
Scope
Sub-clause 116(1) provide that this clause applies to a reporting entity if the reporting
entity adopts an anti-money laundering and counter-terrorism financing program that
applies to the reporting entity (see explanatory memorandum on anti-money
laundering and counter-terrorism financing program).
Record of adoption
Sub-clause 116(2) requires a reporting entity to make a record of the adoption of the
anti-money laundering and counter-terrorism financing program and retain the
record, or a copy of the record, throughout the period for beginning at the completion
of the preparation of the record and ending 7 years after the day on which the
adoption ceases to be in force.
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Retention of program etc.
Sub-clause 116(3) requires the reporting entity to retain the program, or a copy of the
program, throughout the period beginning at the time of the adoption and ending 7
years after the day on which the adoption ceases to be in force. If the program is
varied while the adoption is in force sub-clause 116(4) requires the reporting entity
must retain the variation, or a copy of the variation, throughout the period beginning
at the time of the variation and ending 7 years after the day on which the adoption
ceases to be in force.
Civil penalty
Sub-clause 116(4) provides that a breach of an obligation under sub-clauses 112(2),
(3) or (4) makes the reporting entity liable to a civil penalty. Civil penalties may be
enforced under Part 15 Division 2. The maximum penalty that can be imposed is
100,000 penalty units for a corporation and 20,000 penalty units for persons other
than a body corporate. A person cannot be ordered to pay a civil penalty if they have
been convicted of an offence in relation to the same conduct. The burden of proof in
proceedings for a civil penalty is on the balance of probabilities and there is no
requirement to prove any fault elements in relation to the offending conduct.
Designated business groups
Sub-clause 116(6) provides that where a reporting entity is a member of a designated
business group (see explanatory memorandum on designated business group), the
obligations in sub clauses 116(2), (3) and (4) may be discharged by any other member
of the designated business group.
Division 6--Records about due diligence assessments of
correspondent banking relationships
Clause 117 Retention of records of due diligence assessments of correspondent
banking relationships
Financial institution must retain the record, or a copy of the record prepared under
sub-clauses 97(2) or 98(2) for 7 years after the completion of the preparation of the
record. This is consistent with FATF Recommendation 10 which maintains that
financial institutions should maintain, for at least five years, all necessary records on
transactions, both domestic or international, to enable them to comply swiftly with
information requests from the competent authorities. Such records must be sufficient
to permit reconstruction of individual transactions (including the amounts and types of
currency involved if any) so as to provide, if necessary, evidence for prosecution of
criminal activity. Clause 117 continues the current 7 year document retention
obligations in the FTRA.
Civil penalty
Sub-clause 117(3) provides that a breach of the obligation under sub-clause 117(2)
makes the reporting entity liable to a civil penalty. Civil penalties may be enforced
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under Part 15 Division 2. The maximum penalty that can be imposed is 100,000
penalty units for a corporation and 20,000 penalty units for persons other than a body
corporate. A person cannot be ordered to pay a civil penalty if they have been
convicted of an offence in relation to the same conduct. The burden of proof in
proceedings for a civil penalty is on the balance of probabilities and there is no
requirement to prove any fault elements in relation to the offending conduct.
Division 7--General provisions
Clause 118 Exemptions
This clause provides that:
(a) Part 10 (other than clauses 109, 110, 115, 116 and 117) does not apply to a
designated service that is of a kind specified in the AML/CTF Rules.
(b) The AML/CTF Rules may provide that a specified provision of Part 10 (other
than clauses 109, 110, 115, 116 and 117) does not apply to a designated
service that is of a kind specified in the AML/CTF Rules.
(c) That Part 10 (other than clauses 109, 110, 115, 116 and 117) does not apply to
a designated service that is provided in circumstances specified in the
AML/CTF Rules.
(d) The AML/CTF Rules may provide that a specified provision of Part 10 (other
than clauses 109, 110, 115, 116 and 117) does not apply to a designated
service that is provided in circumstances specified in the AML/CTF Rules.
(e) That Part 10 (other than clauses 109, 110, 115, 116 and 117) does not apply to
a designated service that is provided by a reporting entity at or through a
permanent establishment of the reporting entity in a foreign country.
Clause 119 This Part does not limit any other obligations
This clause provides that Part 10 does not limit any other obligations placed on a
person to make records or retain documents.
Part 11--Secrecy and access
This Part applies to information obtained under both the Bill and the FTRA. It
replaces Part IV of the FTRA which is to be repealed by Item 114 in the Schedule to
the AML/CTF (Transitional Provisions and Consequential Amendments) Bill 2006.
Division 1--Introduction
Clause 120 Simplified outline
This clause provides the following is a simplified outline of Part 11:
(a) Except as permitted by this Bill, an AUSTRAC official must not disclose
information or documents obtained under this Bill
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(b) A reporting entity must not disclose that it has:
(i) reported, or is required to report, information to the AUSTRAC CEO
under clause 41, or
(ii) formed a suspicion, under clause 41, about a transaction or matter.
(c) The Australian Taxation Office and certain other Australian government
bodies may access AUSTRAC information.
Division 2--Secrecy
Clause 121 Secrecy--AUSTRAC information and AUSTRAC documents
Sub-clause 121(1) states who are entrusted public officials and provides that clause
121 specifies what an entrusted public may do with AUSTRAC Information and
documents containing AUSTRAC information. The AUSTRAC CEO, AUSTRAC
staff, consultants engaged by AUSTRAC and persons whose services are made
available to the AUSTRAC CEO under sub-clause 225(3) of the Bill are entrusted
public officials.
Sub-clause 121(2) provides that an entrusted public official commits an offence if
having received AUSTRAC information, other than under clause 49 or Division 4, the
entrusted public official discloses the information to another person. The maximum
penalty for the offence is imprisonment for 2 years or 120 penalty units, or both.
Sub-clause 121(3) provides exceptions to the prohibition in sub-clause 121(2). An
entrusted public official may disclose AUSTRAC information where:
(a) the disclosure is for the purposes of this Bill or the FTRA;
(b) the disclosure is for the purposes of the performance of the functions of the
AUSTRAC CEO;
(c) the disclosure is otherwise in connection with the performance of the entrusted
public official's duties under this Bill or the FTRA;
(d) the disclosure is in connection with giving another entrusted public official
access to information for the purposes of, or in connection with:
(i) the performance of the functions of the AUSTRAC CEO; or
(ii) the performance of the other person's duties under this Bill or the FTRA;
(e) the disclosure is in connection with giving access to AUSTRAC information
in accordance with Division 4.
A person charged with an offence under sub-clause 121(2) bears an evidential burden
in relation to a matter in sub-clause 121(3).
Sub-clause 121(4) provides that except where it is necessary to do so for the purposes
of giving effect to the Bill or the FTRA, an entrusted public official is not to be
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required to produce a document containing AUSTRAC information, or to disclose
AUSTRAC information, to a court or tribunal.
Clause 122 Secrecy--information obtained under section 49
Sub-clause 122(1) states who are entrusted investigating officials and provides that
clause 122 specifies what an entrusted investigating official may do with clause 49
information (Further information to be given to the AUSTRAC CEO etc see
explanatory memorandum on clause 49). The AUSTRAC CEO, AUSTRAC staff,
consultants engaged by AUSTRAC and persons whose services are made available to
the AUSTRAC CEO under sub-clause 225(3) of the Bill, the Commissioner of the
Australian Federal Police, the Chief Executive Officer of the Australian Crime
Commission, the Commissioner of Taxation, the Chief Executive Officer of Customs,
the Integrity Commissioner and investigating officers (see explanatory memorandum
on investigating officer) are entrusted investigating officials.
Sub-clause 122(2) provides that an entrusted investigating official commits an offence
if having obtained clause 49 information the entrusted investigating official discloses
the information to another person. The maximum penalty for the offence is
imprisonment for 2 years or 120 penalty units, or both.
Sub-clause 122(3) provides exceptions to the prohibition in sub-clause 122(2). An
entrusted public official may disclose AUSTRAC information where:
(a) the disclosure is for the purposes of this Bill or the FTRA
(b) the disclosure is for the purposes of the performance of the functions of the
AUSTRAC CEO
(c) the disclosure is otherwise in connection with the performance of the entrusted
investigating official's duties under this Bill or the FTRA
(d) if the disclosure is in connection with giving another person entrusted
investigating official access to information for the purposes of, or in
connection with:
(i) the performance of the functions of the AUSTRAC CEO, or
(ii) the performance of the other person's duties under this Bill or the FTRA
(e) if the entrusted investigating official is the Commissioner of the Australian
Federal Police--the disclosure is in connection with giving an AFP member
access to information for the purposes of, or in connection with, the
performance of the AFP member's duties
(f) if the entrusted investigating official is the Chief Executive Officer of the
Australian Crime Commission--the disclosure is in connection with giving:
(i) an examiner of the Australian Crime Commission, or
(ii) a member of the staff of the Australian Crime Commission
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access to information for the purposes of, or in connection with, the
performance of the examiner's duties or the member's duties, as the case may
be (see explanatory memoranda on examiner of the Australian Crime
Commission )
(g) if the entrusted investigating official is the Commissioner of Taxation--the
disclosure is in connection with giving a taxation officer access to information
for the purposes of, or in connection with, the performance of the taxation
officer's duties
(h) if the entrusted investigating official is the Chief Executive Officer of
Customs--the disclosure is in connection with giving a customs officer access
to information for the purposes of, or in connection with, the performance of
the customs officer's duties
(i) if the entrusted investigating official is the Integrity Commissioner--the
disclosure is in connection with giving an Australian Commission for Law
Enforcement Integrity officer access to information for the purposes of, or in
connection with, the performance of the Australian Commission for Law
Enforcement Integrity officer's duties, or
(j) the disclosure is in connection with giving another entrusted investigating
official access to information for the purposes of, or in connection with, the
performance of the other official's duties.
A person charged with an offence under sub-clause 122(2) bears an evidential burden
in relation to a matter in sub-clause 122(3).
Division 3--Disclosure of information
Clause 123 Offence of tipping off
Sub-clause 123(11) creates offences for `tipping off'. This clause implements
paragraph (b) of FATF Recommendation 14 (financial institutions should be
prohibited by law from disclosing that a suspicious transaction report has been made
to the financial intelligence unit).
Prohibitions
Sub-clause 123(1) prohibits a reporting entity that communicated information under
sub-clause 41(2) of the Bill to the AUSTRAC CEO from disclosing that the
information has been communicated to the AUSTRAC CEO to anybody except the
AUSTRAC CEO or a staff member of AUSTRAC (see explanatory memoranda on
clause 41 (Report of a suspicious matter) and disclose ).
Sub-clause 123(2) prohibits a reporting entity from disclosing that it has formed a
suspicion under clause 41(1) of the Bill or any other information which could
reasonably be expected to infer that a suspicion had been formed or that information
had been disclosed to the AUSTRAC CEO under sub-clause 41(2), to anybody except
the AUSTRAC CEO or a staff member of AUSTRAC (see explanatory memorandum
on clause 41 (Report of a suspicious matter)).
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Sub-clause 123(3) prohibits a reporting entity from disclosing that it has given
information to, or produced a document to a person under sub-clause 49(1) to
anybody other than the person to whom it gave the information or to whom it
produced the document (see explanatory memorandum on clause 49 (further
information to be given to the AUSTRAC CEO etc.)).
Exceptions
Sub-clauses 123(4), (5), (6), (7) and (8) contain exemptions to the offence.
Sub-clause 123(4) allows a reporting entity to disclose information of the type
referred to in sub-clause 123(2) to legal practitioners, qualified accountants and
persons specified in the AML/CTF Rules where the information relates to the affairs
of a customer of the reporting entity. The disclosure must be for the purposes of
dissuading the customer from engaging in conduct that constitutes, or could
constitute, evasion of a taxation law, evasion of a law of a State or Territory that deals
with taxation or an offence against a law of the Commonwealth or of a State or
Territory. A person charged with an offence under sub-clause 123(11) bears an
evidential burden in relation to a matter in sub-clause 123(4). Sub-clause 123(4)
implements the Interpretative Note to FATF Recommendation 14 ( tipping off does
not extend to when lawyers, notaries, other independent professionals and accountants
acting as independent legal professionals seek to dissuade a client from engaging in
illegal activity).
Sub-clause 123(5) provides that sub-clause 123(2) does not apply to the disclosure of
information by a reporting entity if the disclosure is to a legal practitioner for the
purpose of obtaining legal advice. A person charged with an offence under sub-clause
123(11) bears an evidential burden in relation to a matter in sub-clause 123(5).
Sub-clause 123(6) provides that sub-clause 123(2) does not apply to the disclosure of
information about the operation of Part 4 (Offences to give effect to Security Council
decisions) of the Charter of the United Nations Act 1945. A person charged with an
offence under sub-clause 123(11) bears an evidential burden in relation to a matter in
sub-clause 123(6).
Sub-clause 123(7) provides that sub-clause 123(2) does not apply to the disclosure of
information by a reporting entity if the reporting entity belongs to a designated
business group that has adopted a joint anti-money laundering and counter-terrorism
financing program that applies to the reporting entity and relates to the designated
business group. It is also necessary that the information relates to the affairs of a
customer of the reporting entity, and that the disclosure is made to another reporting
entity that belongs to the designated business group for the purpose of informing the
other reporting entity about the risks involved in dealing with the customer. A person
charged with an offence under sub-clause 123(11) bears an evidential burden in
relation to a matter in sub-clause 123(7) (see subsection 13.3(3) of the Criminal
Code).
Sub-clause 123(8) provides that sub-clause 123(2) does not apply to disclosure by a
reporting entity if the reporting entity is an ADI and the disclosure is to an
owner-managed branch of the ADI (see explanatory memoranda on ADI and owner-
managed branch). A person charged with an offence under sub-clause 123(11) bears
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an evidential burden in relation to a matter in sub-clause 123(8) (see subsection
13.3(3) of the Criminal Code).
Sub-clause 123(9) provides that sub-clause 123(2) does not apply to the disclosure of
information by a reporting entity if the disclosure is in compliance with a requirement
under a law of the Commonwealth, a State or a Territory or the disclosure is to an
Australian government body that has responsibility for law enforcement. A person
charged with an offence under sub-clause 123(11) bears an evidential burden in
relation to a matter in sub-clause 123(9) (see subsection 13.3(3) of the Criminal
Code).
Sub-clause 123(10) provides that except where it is necessary to do so for the
purposes of giving effect to this Bill or the FTRA, a reporting entity is not to be
required to disclose to a court or tribunal information mentioned in sub-clauses
123(1), (2) and (3).
Sub-clause 123(11) makes it an offence for a person to disclose information in
contravention of sub-clauses 123(1), (2) and (3). The offence carries a maximum
penalty of imprisonment for 2 years or 120 penalty units, or both.
Clause 124 Report and information not admissible
This clause is based on sub-section 16(5D) FTRA.
Paragraph 124(1)(a) prevents a report under sub-clause 41(2) (suspicious transaction
reports), document purporting to set out information contained in such a report and a
document given under sub-clause 49(1) (Further information to be given to the
AUSTRAC CEO etc.) being admissible in evidence in Court or tribunal proceeding,
other than those proceedings referred in sub-clause 124(2).
Paragraph 124(1)(b) extends the prohibition in paragraph 124(1)(a) to evidence of
whether or not:
(a) a report was prepared for the purposes of sub-clause 41(2)
(b) a report prepared for the purposes of sub-clause 41(2), or a document
purporting to set out information (including the formation or existence of a
suspicion) contained in such a report, was given to, or received by, the
AUSTRAC CEO
(c) a particular information (including the formation or existence of a suspicion)
was contained in a report prepared for the purposes of sub-clause 41(2)
(d) a particular information (including the formation or existence of a suspicion)
was given under sub-clause 49(1), and
(e) a particular document was produced under sub-clause 49(1).
See explanatory memorandum on clause 41 (Reports of suspicious matters) and clause
49 (Further information to be given to the AUSTRAC CEO etc).
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Sub-clause 124(2) provides that the prohibition in clause 124(1) does not apply to
criminal proceedings for an offence against clauses 123 (Tipping off), 136 (False or
misleading information) or 137 (Producing false or misleading documents) or civil
penalty proceedings for contravention of sub-clauses 41(2) and 49(2). See
explanatory memoranda on clauses 41 (Report of a suspicious matter) and 49 (further
information to be given to the AUSTRAC CEO etc.), 123 (Tipping off), 136 (False or
misleading information) and 137 (Producing false or misleading documents)
Division 4-- Access to AUSTRAC information by agencies
Subdivision A--Access by the ATO to AUSTRAC information
Clause 125 Access by the ATO to AUSTRAC information
Clause 125(1) provides that the Commissioner of Taxation and any taxation officer is
entitled to access AUSTRAC information for any purpose relating to the facilitation
of the administration or enforcement of a taxation law (see explanatory memorandum
on taxation officer ). Sub-clause 125(2) authorises an official of a designated agency
to disclose AUSTRAC information to the Commissioner of Taxation or a taxation
officer.
Application of section 3C of the Taxation Administration Act 1953
Sub-clause 125(3) applies section 3C of the Taxation Administration Act 1953 (TAA)
to AUSTRAC information received by the ATO under clause 125. Section 3C TAA
deals with secrecy of taxation information. Sub-clause 125(4) provides that section
3C of TAA does not apply where the disclosure by the Commissioner of Taxation or a
taxation officer of AUSTRAC information to an official of a designated agency for
the purposes of, or in connection with, the performance of the official's duties in
relation to the designated agency, so long as the official holds an appropriate
authorisation under sub-clause 126(1) (see explanatory memoranda on clause 126
(Access by designated agencies to AUSTRAC information and disclose).
Subdivision B--Access by designated agencies to AUSTRAC information
Clause 126 - Access by designated agencies to AUSTRAC information
Clause 126 provides that the AUSTRAC CEO may, in writing, authorise officials, or
a class of officials, of a specified designated agency to have access to AUSTRAC
information for the purposes of performing the agency's functions and exercising the
agency's powers (see explanatory memorandum on designated agency ). Sub-clause
126(2) provides that an authorisation under sub-clause 126(1) is not a legislative
instrument. These are not legislative instruments as they are instruments of
authorisation (that is, an instrument the effect of which is to authorise a specified
individual to take a particular action or act in a particular way) and are covered by
Item 2 of Part 1 of Schedule 1 of the Legislative Instruments Regulations 2004.
Limitations on AUSTRAC's power to authorise access by State or Territory agencies
Sub-clause 126(3) limits the power of the AUSTRAC CEO in respect of designated
agencies referred to in paragraphs (p) to (x) of the definition of designated agencies in
clause 5 of the Bill. The AUSTRAC CEO may only authorise those agencies if the
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agency undertakes to comply with the Information Privacy Principles set out in
section 14 of the Privacy Act 1988 in respect of AUSTRAC information obtained
under an authorisation under sub-clause 126(1) or 128(2).
AUSTRAC information, or class of AUSTRAC information, to which access is
authorised
Sub-clause 126(4) provides that an authorisation under sub-clause 126(1) must state
the AUSTRAC information, or the class of AUSTRAC information, to which the
officials of the designated agency are to have access.
Treasury Department
Sub-clauses 126(5) and (6) provide that clause 126 does not apply to a function,
power or to the duties of an official of the Treasury Department, unless the power or
duty relates to the Foreign Acquisitions and Takeovers Act 1975. This means that the
Treasury Department is a designated agency under this Bill for the limited purpose of
undertaking duties that relate to that Bill.
Clause 127 dealings with AUSTRAC information once accessed
Sub-clause 127(1) provides that clause 127 restricts what an entrusted agency official
(an official or former official of a designated agency) may do with AUSTRAC
information they have accessed under sub-clause 125(4), clause 126 or sub-clauses
128 (1) or (2) or 132(2) or (4). Sub-clause 127 (4) defines this information as
accessed information.
Sub-clause 127 makes it an offence for an entrusted agency official to disclose
accessed information. The offence carries a maximum penalty of imprisonment for 2
years or 120 penalty units or both. See explanatory memorandum on disclose .
Sub-clause 127(3) provides exemption to the prohibition in sub-clause 127(3). Sub-
clause 127(3) allows disclosure in connection with the performance by entrusted
agency official of his or her duties, or where it is authorised by, or is in connection
with communicating AUSTRAC information under sub-clause 125(2), or clause 128
(When AUSTRAC information can be passed on by an official of a designated
agency), clause 132 (communication of AUSTRAC information to a foreign country)
or clause 133 (when the Director-General of Security may communicate AUSTRAC
information to a foreign intelligence agency).
Clause 128 When AUSTRAC information can be passed on by an official of a
designated agency
Other officials of the same agency
Sub-clause 128(1) provides that an official of a designated agency may disclose
AUSTRAC information to another official of the same agency in connection with
performance by the latter officer of their duties.
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Official of another designated agency
Sub-clause 128(2) allows an official of a designated agency to disclose AUSTRAC
information to an official of another designated agency in connection with the
performance of the latter's duties so long as he or she has an appropriate authorisation
under sub-clause 126(1).
Court or Tribunal proceedings etc.
Sub-clause 128(3) enables an officer of a designated agency to disclose the
information to a person for the purposes of, or in connection with, or in the course of
court or tribunal proceedings including proposed or possible legal proceedings.
Information obtained under clause 41 or clause 49 in so far as that clause relates to a
communication under clause 41 is excluded from the operation of sub-clause 128(3)
by sub-clause 128(4).
Sub-clause 128(5) prohibits a person who has had information disclosed to them
under paragraph 128(3)(a) (information disclosed for the purposes of, or in connection
with, court or tribunal proceedings) from disclosing that information to another
person. However, sub-clause 128(6) provides that sub-clause 128(5) does not apply if
the disclosure is for the purposes of court or tribunal proceedings or is authorised by
Division 4.
Sub-clause 128(7) makes it an offence to breach sub-clause 128(5). The offence
carries a maximum penalty of 2 years imprisonment or 120 penalty units or both.
Investigations
Sub-clause 128(8) permits an official of a designated agency to disclose AUSTRAC
information (other than that obtained under clauses 41 or 49 where it relates to a
communication under clause 41) to a person in relation to an investigation (sub-clause
128(9)). Sub-clause 128(10) prohibits a person to who AUSTRAC information has
been disclosed under sub-clauses 128(8) from disclosing the information to another
person. Sub-clause 128(11) provides that sub-clause 128(10) does not apply if the
disclosure is for the purposes of an investigation or court or tribunal proceedings.
Sub-clause 128(12) makes it an offence for a person to disclose information in breach
of sub-clause 128(10). The maximum penalty for the offence is 2 years imprisonment
or 120 penalty units or both. If a defendant wishes to establish a defence under sub-
clause 128(11) the defendant bears an evidential burden in relation to the matter in
sub-clause 128(11) (see subsection 13.3(3) of the Criminal Code).
ASIO Officials
Sub-clause 128(13) provides that an ASIO official (see explanatory memorandum on
ASIO official ) may disclose AUSTRAC information to an IGIS official (see
explanatory memorandum on IGIS Official ) for the purposes of the IGIS official's
duties in relation to ASIO or employees of ASIO. Sub-clause 128(13) also provides
that an ASIO official may disclose AUSTRAC information to its responsible Minister
for the purposes of, or in connection with, the performance of the ASIO Minister's
functions under the Australian Security Intelligence Organisation Act 1979, or
security (within the meaning of that Bill) and to the Minister responsible for the
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administration of the Telecommunications (Interception and Access) Act 1979 for the
purposes of, or in connection with, the performance of that Minister's functions under
that Act.
Australian Crime Commission officials
Sub-clause 128(14) allows disclosure of AUSTRAC information by officials of the
Australian Crime Commission in the following circumstances:
(a) the Chief Executive Officer of the Australian Crime Commission may, in a
manner that does not identify, and is not reasonably capable of being used to
identify, a person to whom AUSTRAC information relates, communicate the
information to the Board of the Australian Crime Commission
(b) the Chair of the Board of the Australian Crime Commission may, in a manner
that does not identify, and is not reasonably capable of being used to identify,
a person to whom AUSTRAC information relates, communicate the
information to the Inter-Governmental Committee in a report by the Chair
under subsection 59(4) of the Australian Crime Commission Act 2002
(c) the Chair of the Board of the Australian Crime Commission may, in a manner
that does not identify, and is not reasonably capable of being used to identify,
a person to whom AUSTRAC information relates, communicate the
information to the Parliamentary Joint Committee on the Australian Crime
Commission under subsection 59(6A) of the Australian Crime Commission
Act 2002
(d) the Chief Executive Officer of the Australian Crime Commission may
communicate AUSTRAC information to an examiner of the Australian Crime
Commission who is conducting an examination under Division 2 of Part II of
the Australian Crime Commission Act 2002
(e) an examiner of the Australian Crime Commission may disclose AUSTRAC
information in the course of such an examination before the examiner, and
(f) a member of the staff of the Australian Crime Commission may disclose
AUSTRAC information for the purposes of, or in connection with, the
performance of the staff member's duties in relation to the Australian Crime
Commission.
Disclosure to responsible Ministers
Sub-clause 128(15) provides that a designated agency established by a law of the
Commonwealth and an official of the agency may disclose AUSTRAC information to
the Minister responsible for the administration of that law if the disclosure is for the
purposes of, or in connection with, the performance of the Minister's responsibilities
in relation to the agency.
Sub-clause 128(16) provides that if a Department of the Commonwealth is a
designated agency, an official of the Department may disclose AUSTRAC
information to the Minister responsible for the Department if the disclosure is for the
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purposes of, or in connection with, the performance of the Minister's responsibilities
in relation to the Agency.
Sub-clause 128(17) provides that if a designated agency is established by law of a
State or Territory, an official of the agency may disclose AUSTRAC information to
the State or Territory Minister responsible for the administration of that law if the
disclosure is for the purposes of, or in connection with, the performance of the State
or Territory Minister's responsibilities in relation to the agency.
Sub-clause 128(18) provides that if a designated agency is a Department of a State or
Territory, an official of the Agency may disclose AUSTRAC information to the State
or Territory Minister responsible for the Agency if the disclosure is for the purposes
of, or in connection with, the performance of the State or Territory Minister's
responsibilities in relation to the Agency.
IGIS officials
Sub-clause 128(19) authorises an IGIS official (see explanatory memorandum on
IGIS Official ) to disclose AUSTRAC information in the following circumstances:
(a) to another IGIS official for the purposes of, or in connection with, the
performance of that official's duties in relation to ASIO or employees of
ASIO;
(b) to the Director-General of Security in a draft report under section 21 of the
Inspector-General of Intelligence and Security Act 1986 in relation to ASIO or
employees of ASIO;
(c) in a manner that does not identify, and is not reasonably capable of being used
to identify, a person to whom the information relates, in a report under
section 22 of the Inspector-General of Intelligence and Security Act 1986 in
relation to ASIO or employees of ASIO;
(d) in a written response to a complainant under section 23 of the
Inspector-General of Intelligence and Security Act 1986 in relation to ASIO or
employees of ASIO;
(e) to the Director-General of Security in a report, in relation to ASIO or
employees of ASIO, under section 25A of the Inspector-General of
Intelligence and Security Act 1986;
(f) in a manner that does not identify, and is not reasonably capable of being used
to identify, a person to whom the information relates, in a report to the ASIO
Minister, in relation to ASIO or employees of ASIO, under section 25A of the
Inspector-General of Intelligence and Security Act 1986;
(g) in a report under subsection 21(1B) or 22(4) or section 25 of the
Inspector-General of Intelligence and Security Act 1986.
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Subdivision C Access by non-designated Commonwealth agencies to
AUSTRAC information
Clause 129 Access by non-designated Commonwealth agencies to
AUSTRAC information
Clause 129 allows the AUSTRAC CEO to grant an official of a non-designated
Commonwealth agency access to AUSTRAC information for the purposes of an
investigation of a possible breach of a law of the Commonwealth or a proposed
investigation of a possible breach of a law of the Commonwealth. The official of the
non-designated Commonwealth agency must make an application to the AUSTRAC
CEO to obtain the necessary authority. The AUSTRAC CEO's authorisation must be
in writing and must state the AUSTRAC information or class of AUSTRAC
information to which access is granted (sub-clause 129(3)). See explanatory
memorandum on non-designated Commonwealth agency.
Instruments created under this clause are not legislative instruments as they are
instruments of authorisation (that is, an instrument the effect of which is to authorise a
specified individual to take a particular action or act in a particular way) and are
covered by Item 2 of Part 1 of Schedule 1 of the Legislative Instruments Regulations
2004.
Clause 130 Dealings with AUSTRAC information once accessed
Clause 130 restricts what a person (the entrusted Commonwealth agency official) who
is or was an official of a non-designated Commonwealth agency may do with
accessed information (Accessed information is AUSTRAC information obtained by
the entrusted Commonwealth agency official under sub-clause 129(1) or 131(2)).
Sub-clause 130(2) provides that an entrusted Commonwealth agency official commits
an offence if the official has obtained accessed information and discloses the
information to another person. The maximum penalty for the offence is imprisonment
for 2 years or 120 penalty units, or both.
Sub-clause 130(3) exempts a disclosure by an entrusted Commonwealth agency
official, from the prohibition in sub-clause 130(2), where the disclosure is for the
purposes of, or in connection with, the performance of the official's duties in
connection with the investigation or proposed investigation concerned, or the
disclosure is in connection with communicating AUSTRAC information under clause
131. A defendant in a prosecution for a breach of sub-clause 130(3) bears an
evidential burden in relation to a matter in sub-clause 130(3) (see subsection 13.3(3)
of the Criminal Code).
Clause 131 When AUSTRAC information can be passed on by an official of a
non-designated Commonwealth agency
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Scope
Sub-clause 131(1) provides that clause 131 applies if AUSTRAC information is
disclosed to an official of a non-designated Commonwealth agency for the purposes
of an investigation or proposed investigation. See explanatory memorandum on non-
designated Commonwealth agency .
Disclosure to other officials of the same agency
Sub-clause 131(2) provides that the official who had information disclosed to them
under this division may disclose the AUSTRAC information to another official of the
agency for the purposes of, or in connection with, the performance of the other
official's duties in relation to the investigation or proposed investigation.
Disclosure for the purposes of court or tribunal proceedings
Sub-clause 131(3) provides that the official who had information disclosed to them
under this division may disclose the AUSTRAC information to a person for the
purposes of, or in connection with, court or tribunal proceedings, or proposed or
possible court or tribunal proceedings, connected with the investigation or proposed
investigation.
Sub-clause 131(4) provides that a person to whom AUSTRAC information has been
disclosed under sub-clause 131(3) must not disclose the information to another
person. A breach of this sub-clause is an offence against sub-clause 131(6). An
offence against sub-clause 131(6) carries a maximum penalty of imprisonment for 2
years or 120 penalty units, or both.
Sub-clause 131(5) provides that sub-clause 131(4) does not apply if the disclosure is
for the purposes of, or in connection with, the court or tribunal proceedings or the
proposed or possible court or tribunal proceedings. A defendant bears an evidential
burden in relation to the matter in sub-clause 131(5) (see subsection 13.3(3) of the
Criminal Code).
Subdivision D--Communication of AUSTRAC information to foreign countries etc.
Clause 132 Communication of AUSTRAC information to a foreign country
This clause is similar to sub-sections 27(11A), (11B), (11C) and (11D) of the FTRA.
The clause operates as an exemption to the secrecy provision in clause 121.
Foreign country
Sub-clause 132(1) enables the AUSTRAC CEO to communicate AUSTRAC
information to the government of a foreign country if the AUSTRAC CEO is satisfied
the foreign government has given appropriate undertakings for protecting the
confidentiality of the information, controlling the use that will be made of it, ensuring
that the information will be used only for the purpose for which it is communicated to
the government of the foreign country and it is appropriate, in all the circumstances of
the case.
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Foreign law enforcement agency--access by Commissioner of the Australian Federal
Police to AUSTRAC information
Sub-clause 132(2) allows the AUSTRAC CEO to authorise the Commissioner of the
Australian Federal Police to have access to AUSTRAC information for the purposes
of communicating the information to a foreign law enforcement agency under sub-
clause 132(3).
When the Commissioner of the Australian Federal Police may communicate
AUSTRAC information to a foreign law enforcement agency
Sub-clause 132(3) allows the Commissioner of the Australian Federal Police to
communicate AUSTRAC information to a foreign law enforcement agency if the
Commissioner is satisfied that the foreign law enforcement agency has given
appropriate undertakings for, protecting the confidentiality of the information,
controlling the use that will be made of it, ensuring that the information will be used
only for the purpose for which it is communicated to the foreign law enforcement
agency and it is appropriate in all the circumstances of the case to do so . Sub-clause
132(4) allows the Commissioner of the Australian Federal Police to authorise a
member of the Australian Federal Police to access the AUSTRAC information and
communicate it to the foreign law enforcement agency on behalf of the
Commissioner.
Foreign law enforcement agency--access by Chief Executive Officer of the Australian
Crime Commission to AUSTRAC information
Sub-clause 132(5) allows the AUSTRAC CEO to authorise the Chief Executive
Officer of the Australian Crime Commission to have access to AUSTRAC
information for the purposes of communicating the information to a foreign law
enforcement agency under sub-clause 132(6).
When the Chief Executive Officer of the Australian Crime Commission may
communicate AUSTRAC information to a foreign law enforcement agency
Sub-clause 132(6) authorises the Chief Executive Officer of the Australian Crime
Commission to communicate AUSTRAC information to a foreign law enforcement
agency if the Chief Executive Officer of the Australian Crime Commission is satisfied
that the foreign law enforcement agency has given appropriate undertakings for,
protecting the confidentiality of the information, controlling the use that will be made
of it, ensuring that the information will be used only for the purpose for which it is
communicated to the foreign law enforcement agency and it is appropriate, in all the
circumstances of the case, to do so.
Sub-clause 132(7) allows the Chief Executive Officer of the Australian Crime
Commission to authorise a member of the staff of the Australian Crime Commission
to access the AUSTRAC information and communicate it to a foreign law
enforcement agency on behalf of the Chief Executive Officer of the Australian Crime
Commission.
Instruments created under this clause are not legislative instruments as these are
instruments of authorisation (that is, an instrument the effect of which is to authorise a
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specified individual to take a particular action or act in a particular way) and are
covered by Item 2 of Part 1 of Schedule 1 of the Legislative Instruments Regulations
2004.
Clause 133 When the Director-General of Security may communicate
AUSTRAC information to a foreign intelligence agency
Sub-clause 133(1) authorises the Director-General of Security to communicate
AUSTRAC information to a foreign intelligence agency if the Director-General is
satisfied that the foreign intelligence agency has given appropriate undertakings for
protecting the confidentiality of the information, controlling the use that will be made
of it, ensuring that the information will be used only for the purpose for which it is
communicated to the foreign country and it is appropriate, in all the circumstances of
the case, to do so.
Sub-clause 133(2) permits the Director-General of Security to authorise an ASIO
official to access AUSTRAC information and communicate it a foreign intelligence
agency on the Director-General's behalf.
Instruments created under this clause are not legislative instruments as these are
instruments of authorisation (that is, an instrument the effect of which is to authorise a
specified individual to take a particular action or act in a particular way) and are
covered by Item 2 of Part 1 of Schedule 1 of the Legislative Instruments Regulations
2004.
Division 5--Use of AUSTRAC information in court or tribunal
proceedings
Clause 134 Use of AUSTRAC information in court or tribunal proceedings
Clause 134 provides that a person who obtains AUSTRAC information is not to be
required to produce in a court or tribunal a document containing AUSTRAC
information or to disclose to any court or tribunal any AUSTRAC information, except
where it is necessary to do so for the purposes of carrying into effect the clauses of
this Bill or the FTRA.
Part 12--Offences
Clause 135 Simplified Outline
This clause provides a simplified outline of this Part. It is an offence to:
(a) produce false or misleading information
(b) produce a false or misleading document
(c) forge a document for use in an identification procedure
(d) provide or receive a designated service using a false customer name or
customer anonymity, or
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(e) structure a transaction to avoid a reporting obligation under the Bill.
Clause 136 false or misleading information
This clause makes it an offence to give false or misleading information to:
(a) the AUSTRAC CEO
(b) an authorised officer (see explanatory memorandum on authorised officer)
(c) a customs officer
(d) a police officer
(e) a reporting entity, or
(f) a person acting on a reporting entity's behalf
To commit the offence the person must know that the information is false or
misleading, or that the information omits a matter or thing without which it is
misleading. The information must also be given under the Bill.
The clause only applies if the information is false or misleading in a material
particular (sub-clause 136(2)), or the information did not omit any matter or thing
without which the information is misleading in a material particular (sub-clause
136(3)). A defendant bears an evidential burden in relation to the matter in sub-clause
136(2) and (3) (see subsection 13.3(3) of the Criminal Code).
Sub-clause 136(4) provides the element of the offence in paragraph 136(1)(c) attracts
absolute liability (136(4)). Under section 6.2 of Criminal Code an element of an
offence which has absolute liability has no fault element and the defence of mistake of
fact under section 9.2 of the Criminal Code is unavailable. However the existence of
absolute liability will not make any other defence unavailable (section 6.2(3) of the
Criminal Code). This element of the offence has been provided with absolute liability
to avoid the prosecution having to prove that the information was given under the Bill
as it would be difficult for the prosecution to prove this element as the information
would be only within the knowledge of the defendant. All other elements of the
offence have a fault element.
The offence carries a maximum penalty of imprisonment for 10 years or 10,000
penalty units or both.
This clause could be used to prosecute customers who provide false information in the
course of a verification or confirmation procedure either to a reporting entity pursuant
to Part 2 of the Bill, for example where a body corporate provides false or misleading
information as to its beneficial owners. The clause could also be used to prosecute
reporting entities who provide false or misleading information to AUSTRAC or
authorised officer when exercising monitoring powers under Part 10 of the Bill. The
offence relates to any requirement under the Bill to provide information.
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It is necessary for the Bill to contain this offence despite a similar offence in the
Criminal Code. This is because offence at section 137.1 of the Criminal Code
includes a physical element that the information is given in compliance or purported
compliance with a law of the Commonwealth. This element of the section 137.1
Criminal Code offence could not be satisfied in relation to a prosecution under this
Bill of a customer because there are no specific obligations under the Bill for a
customer to give information. Rather the obligations are on the reporting entity to
carry out various procedures and obligations under the Bill.
Clause 137 Producing false or misleading documents
Sub-clause 137(1) provides that a person commits an offence if the person produces,
under the Bill, a document knowing that it is false or misleading, to either:
(a) the AUSTRAC CEO
(b) an authorised officer (see explanatory memorandum on authorised officer)
(c) a customs officer (see explanatory memorandum on customs officer)
(d) a police officer (see explanatory memorandum on police officer)
(e) a reporting entity, or
(f) a person acting on a reporting entity's behalf
The maximum penalty for the offence is imprisonment for 10 years or 10,000 penalty
units, or both.
The element of the offence that a document be produced under the Bill is provided
with absolute liability by sub-clause 137(3). Under section 6.2 of Criminal Code an
element of an offence which has absolute liability has no fault element and the
defence of mistake of fact under section 9.2 of the Criminal Code is unavailable.
However the existence of absolute liability will not make any other defence
unavailable (section 6.2(3) of the Criminal Code). This element of the offence has
been provided with absolute liability to avoid the prosecution having to prove that the
information was given under the Bill as it would be difficult for the prosecution to
prove this element as the information would be only within the knowledge of the
defendant. All other elements of the offence have a fault element.
The clause only applies if the document is false or misleading in a material particular
(sub-clause 137(2)). A defendant bears an evidential burden in relation to proving the
document was not false or misleading in a material particular (see sub-section 13.3(3)
of the Criminal Code).
It is necessary for the Bill to contain its own specific offence of this nature despite
there being a generic offence in the Criminal Code. This is because the Criminal
Code offence at 137.2 includes a physical element that the document is produced in
compliance or purported compliance with a law of the Commonwealth. This element
of the section 137.2 Criminal Code offence could not be satisfied in relation to a
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prosecution under this Bill of a customer because the Bill requires the reporting entity
to obtain information from their customers.
Clause 138 False document
Making a false document
Sub-clause 138(1) makes it an offence for a person to make a false document with the
intention that the person or another will produce the false document in the course of
an applicable customer identification procedure under the Bill. The maximum penalty
for the offence is imprisonment for 10 years or 10,000 penalty units, or both. Sub-
clause 138(2) provides that in a prosecution for an offence against sub-clause 138(1),
it is not necessary to prove that the defendant knew that the applicable customer
identification procedure is under the Bill.
This offence is included because the offence of forgery at 144.1 of the Criminal Code
will not cover the situations intended to be criminalised by the Bill. This is because
forgery under section 144.1 of has the physical element that the forger intended to
dishonestly induce a third person in that person's capacity as a public official to
accept it as genuine.
Possessing a false document
Sub-clause 138(3) makes it an offence for a person to possess a document, knowing
that it is false, with the intention that the person or another person will produce the
document in the course of an applicable customer identification procedure under the
Bill. The maximum penalty for the offence is imprisonment for 10 years or 10,000
penalty units, or both. Sub-clause 138(4) provides that in a prosecution for an offence
against sub-clause 138(3), it is not necessary to prove that the defendant knew that the
applicable customer identification procedure is under the Bill.
Possessing equipment for making a false document
Sub-clause 138(5) makes it an offence for a person to possess a device, material or
other thing, that the person knows is designed or adapted for the making of a false
document (whether or not the device, material or thing is designed or adapted for
another purpose), with the intention that the person or another person will use it to
commit an offence against sub-clause 138(1). The maximum penalty for the offence
is imprisonment for 10 years or 10,000 penalty units, or both.
Making equipment for making a false document
Sub-clause 138(6) makes it an offence for a person to make or adapt a device,
material or other thing knowing that the device, material or other thing is designed or
adapted for the making of a false document (whether or not the device, material or
thing is designed or adapted for another purpose) with the intention that the person or
another person will use it to commit an offence against sub-clause 138(1). The
maximum penalty for the offence is imprisonment for 10 years or 10,000 penalty
units, or both.
Interpretation
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Sub-clause 138(7) provides that an expression used in this clause that is also used in
Part 7.7 of the Criminal Code has the same meaning as in that Part.
Clause 139 Providing a designated service using a false customer name or
customer anonymity
Sub-clause 139(1) makes it an offence for a reporting entity to provide a designated
service to a customer using a false customer name if at least one clause of Division 2,
3 or 4 of Part 2 of the Bill applies to the provision of the designated service. This
offence implements the first paragraph of FATF Recommendation 5 (Financial
institutions shall not keep anonymous accounts or accounts in obviously fictitious
names ).
This offence has the same penalty (maximum of 2 years imprisonment or 120 penalty
units or both) as the equivalent offence at section 24 FTRA. The section 24 FTRA
offence applies to a person who opens an account with a cash dealer in a false name.
Sub-clause 139(2) provides absolute liability for the element of the offence in
paragraph 139(1)(d) (at least one clause of Division 2, 3 or 4 of Part 2 applies to the
provision of the designated service). Under section 6.2 of Criminal Code an element
of an offence which has absolute liability has no fault element and the defence of
mistake of fact under section 9.2 of the Criminal Code is unavailable. However, the
existence of absolute liability will not make any other defence unavailable (section
6.2(3) of the Criminal Code). This element of the offence has been provided with
absolute liability to avoid the prosecution having to prove that the defendant was
reckless as to whether at least one clause of Division 2, 3 or 4 of Part 2 applies to the
provision of the designated service. It would be difficult for the prosecution to prove
that the defendant was reckless as to whether a clause of Division 2, 3 or 4 of Part 2
applies to the provision of the designated service. All other elements of the offence
have a fault element.
Sub-clause 139(3) makes it an offence for a reporting entity commence to provide a
designated service on the basis of customer anonymity and at least one clause of
Division 2, 3 or 4 of Part 2 applies to the provision of the designated service. The
maximum penalty for the offence is imprisonment for 2 years or 120 penalty units, or
both.
Sub-clause 139(4) provides absolute liability for the element of the offence in
paragraph 139(3)(d) (at least one clause of Division 2, 3 or 4 of Part 2 applies to the
provision of the designated service). Under section 6.2 of the Criminal Code an
element of an offence which has absolute liability has no fault element and the
defence of mistake of fact under section 9.2 of the Criminal Code is unavailable.
However, the existence of absolute liability will not make any other defence
unavailable (section 6.2(3) of the Criminal Code). This element of the offence has
been provided with absolute liability to avoid the prosecution having to prove that the
defendant was reckless as to whether at least one clause of Division 2, 3 or 4 of Part 2
applies to the provision of the designated service. It would be difficult for the
prosecution to prove that the defendant was reckless as to whether a clause of
Division 2, 3 or 4 of Part 2 applies to the provision of the designated service. All
other elements of the offence have a fault element.
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Clause 140 Receiving a designated service using a false customer name or
customer anonymity
Sub-clause 140(1) makes it an offence for a person to receive a designated service
using a false customer name if at least one clause of Division 2, 3 or 4 of Part 2 of the
Bill applies to the provision of the designated service. This offence implements the
first paragraph of FATF Recommendation 5 (Financial institutions shall not keep
anonymous accounts or accounts in obviously fictitious names). The maximum
penalty for the offence is imprisonment for 2 years or 120 penalty units, or both.
Sub-clause 140(2) provides absolute liability for the element of the offence in
paragraph 139(1)(c) (at least one clause of Division 2, 3 or 4 of Part 2 applies to the
provision of the designated service). Under section 6.2 of the Criminal Code an
element of an offence which has absolute liability has no fault element and the
defence of mistake of fact under section 9.2 of the Criminal Code is unavailable.
However, the existence of absolute liability will not make any other defence
unavailable (section 6.2(3) of the Criminal Code). This element of the offence has
been provided with absolute liability to avoid the prosecution having to prove that the
defendant was reckless as to whether at least one clause of Division 2, 3 or 4 of Part 2
applies to the provision of the designated service. It would be difficult for the
prosecution to prove that the defendant was reckless as to whether a clause of
Division 2, 3 or 4 of Part 2 applies to receipt of the designated service. All other
elements of the offence have a fault element.
Sub-clause 140(3) makes it an offence for a person to receive a designated service on
the basis of customer anonymity and at least one clause of Division 2, 3 or 4 of Part 2
applies to the provision of the designated service. The maximum penalty for the
offence is imprisonment for 2 years or 120 penalty units, or both.
Sub-clause 140(4) provides absolute liability for the element of the offence in
paragraph 139(3)(d) (at least one clause of Division 2, 3 or 4 of Part 2 applies to the
provision of the designated service). Under section 6.2 of Criminal Code an element
of an offence which has absolute liability has no fault element and the defence of
mistake of fact under section 9.2 of the Criminal Code is unavailable. However the
existence of absolute liability will not make any other defence unavailable (section
6.2(3) of the Criminal Code). This element of the offence has been provided with
absolute liability to avoid the prosecution having to prove that the defendant was
reckless as to whether at least one clause of Division 2, 3 or 4 of Part 2 applies to the
provision of the designated service. It would be difficult for the prosecution to prove
that the defendant was reckless as to whether a clause of Division 2, 3 or 4 of Part 2
applies to the provision of the designated service. All other elements of the offence
have a fault element.
Clause 141 Customer commonly known by 2 or more different names--
disclosure to reporting entity
Sub-clause 141(1) makes it an offence for a person who is commonly known by 2 or
more different names, to receive a designated service from a reporting entity using
one of those names not having previously disclosed the other name or names to the
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reporting entity and at least one clause of Division 2, 3 or 4 of Part 2 applies to the
provision of the designated service. The maximum penalty for the offence is
imprisonment for 2 years or 120 penalty units, or both.
Sub-clause 141(2) provides absolute liability for the element of the offence in
paragraph 141(1)(e) (at least one clause of Division 2, 3 or 4 of Part 2 applies to the
provision of the designated service). Under section 6.2 of Criminal Code an element
of an offence which has absolute liability has no fault element and the defence of
mistake of fact under section 9.2 of the Criminal Code is unavailable. However, the
existence of absolute liability will not make any other defence unavailable (section
6.2(3) of the Criminal Code). This element of the offence has been provided with
absolute liability to avoid the prosecution having to prove that the defendant was
reckless as to whether at least one clause of Division 2, 3 or 4 of Part 2 applies to the
provision of the designated service. It would be difficult for the prosecution to prove
that the defendant was reckless as to whether a clause of Division 2, 3 or 4 of Part 2
applies to the provision of the designated service. All other elements of the offence
have a fault element.
Clause 142 Conducting transactions so as to avoid reporting requirements
relating to threshold transactions
This offence is based on the similar offence contained in sub-section 31(1) of the
FTRA. The offence will cover customers who structure their transactions so that they
are not threshold transactions and therefore are not required to be reported under
clause 43 (see explanatory memoranda on clause 43 and threshold transactions ).
Sub-clause 142(1) makes it an offence for a person (the first person) to be a party to 2
or more non-reportable transactions and having regard to:
(a) the manner and form in which the transactions were conducted, including the
matters to which sub-clause 142(3) applies, and
(b) any explanation made by the first person as to the manner or form in which
the transactions were conducted;
it would be reasonable to conclude that the first person conducted, or caused the
transactions to be conducted, in that manner or form for the sole or dominant purpose
of ensuring, or attempting to ensure, that the money or property involved in the
transactions was transferred in a manner and form that would not give rise to a
threshold transaction that would have been required to have been reported under
clause 43.
The maximum penalty for the offence is imprisonment for 5 years or 300 penalty
units, or both.
Sub-clause 142(2) provides that sub-clause 142(1) does not apply if the defendant
proves that the first person did not conduct the transactions, or cause the transactions
to be conducted, as the case may be, for the sole or dominant purpose of ensuring, or
attempting to ensure, that the money or property involved in the transactions was
transferred in a manner and form that would not give rise to a threshold transaction
that would have been required to have been reported under clause 43. A defendant
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bears a legal burden in relation to the matters in sub-clause 142(2)--see section 13.4
of the Criminal Code.
Sub-clause 142(3) provides that it applies to the following matters:
(a) the value of the money or property involved in each transaction;
(b) the total value of the transactions;
(c) the period of time over which the transactions took place;
(d) the interval of time between any of the transactions;
(e) the locations at which the transactions took place.
Clause 143 Conducting transfers so as to avoid reporting requirements
relating to cross -border movements of physical currency
This offence is based on the offence in sub-section 31(2) of the FTRA. The offence
applies to customers who structure their transactions so that they are not reportable
transfers of physical currency out of or into Australia. Clause 53 places obligations on
persons transferring $10,000 or more of physical currency into or out of Australia (see
explanatory memoranda on that clause 53, physical currency and transfer).
Sub-clause 143(1) makes it an offence for a person (the first person) to conduct, or
causes another person to conduct, 2 or more non-reportable cross-border movements
of physical currency and having regard to:
(a) the manner and form in which the movements were conducted, including the
matters to which sub-clause 143(3) applies; and
(b) any explanation made by the first person as to the manner or form in which the
movements were conducted;
it would be reasonable to conclude that the first person conducted the movements, or
caused the movements to be conducted, as the case may be, in that manner or form for
the sole or dominant purpose of ensuring, or attempting to ensure, that no report in
relation to the physical currency involved in the movements would be made under
clause 53.
The maximum penalty for the offence is imprisonment for 5 years or 300 penalty
units or both. This is the same penalty provided by sub-section 31(3) FTRA for the
equivalent offence in sub-section 31(2) FTRA.
Sub-clause 143(2) provides that sub-clause 143(1) does not apply if the defendant
proves that the first person did not conduct the movements, or cause the movements to
be conducted, as the case may be, for the sole or dominant purpose of ensuring, or
attempting to ensure, that the no report in relation to the physical currency involved in
the movement would be made under clause 53. A defendant bears a legal burden in
relation to the matters in sub-clause 142(2)--see section 13.4 of the Criminal Code.
Sub-clause 143(3) applies to the following matters:
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(a) the total amount of the physical currency involved in each movement;
(b) the total amount of the physical currency involved in the movements;
(c) the period of time over which the movements occurred;
(d) the interval of time between any of the movements;
(e) the locations at which the movements were initiated or conducted.
Part 13--Audit
Division 1--Introduction
Part 13 implements FATF Recommendation 23 which requires financial institutions
to be subject to regulation for anti-money laundering purposes having regard to the
risk of money laundering and terrorist financing, and Recommendation 29 which
requires that regulators have adequate powers to monitor and ensure compliance by
financial institutions with requirements to combat money laundering and terrorist
financing.
Clause 144 Simplified outline
This clause provides the following simplified outline of Part 13:
(a) An authorised officer may enter any reporting entity business premises:
(i) with the occupier's consent, or
(ii) under a monitoring warrant.
(b) An authorised officer who enters any reporting entity business premises may
exercise monitoring powers.
(c) The AUSTRAC CEO may require a reporting entity to carry out an external
audit or a money laundering and terrorism financing risk assessment.
Division 2--Appointment of authorised officers and issue of identity
cards
Clause 145 Appointment of authorised officers
This clause provides that the AUSTRAC CEO may appoint an AUSTRAC staff
member to be an authorised officer for the purposes of the Bill. The clause is similar
to section 27A of FTRA. The regulations may provide conditions that an AUSTRAC
staff member must meet before being appointed an authorised officer (sub-clause
145(2)). Authorised officers are subject to the directions of the AUSTRAC CEO
when exercising powers or performing functions as an authorised officer (sub-clause
145(3)).
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Instruments created under this clause are not legislative instruments as these are
instruments of authorisation (that is, an instrument the effect of which is to authorise a
specified individual to take a particular action or act in a particular way) and are
covered by Item 2 of Part 1 of Schedule 1 of the Legislative Instruments Regulations
2004.
Clause 146 Identity cards
Sub-clause 146(1) requires the AUSTRAC CEO to issue identity cards to authorised
officers. The identity card must be in a form approved by the AUSTRAC CEO in
writing and must contain a recent photograph (sub-clause 146(2). An authorised
officer's must carry his or her identity card when exercising his or her powers or
performing a function as an authorised officer (sub-clause 146(5)).
Sub-clause 146(3) makes it an offence for an authorised officer to fail to immediately
return his or her identity card once the authorised officer ceases to be an authorised
officer. The offence is punishable by a maximum fine of one penalty unit. Sub-clause
146(4) provides a defence of reasonable excuse to an offence under sub-clause 146(3).
The defendant bears the evidential burden in relation to this defence, meaning that the
accused must adduce evidence that demonstrates a reasonable possibility that he or
she had a reasonable excuse (see subsection 13.3(3) of the Criminal Code) for not
returning his or her identity card immediately on ceasing to be an authorised officer.
Division 3--Powers of authorised officers
Subdivision A--Monitoring powers
Clause 147 Authorised officer may enter premises by consent or under a
monitoring warrant
This clause enables an authorised officer to enter reporting entity business premises
(see explanatory memorandum for reporting entity business premises) at any
reasonable time of day to determine whether the reporting entity is complying with its
obligations under the Bill, regulations or AML/CTF Rules. Sub-clause 147(2)
provides that an authorised officer may only enter premises if, either he or she has the
consent of the occupier (paragraph 147(2)(a)) or under a monitoring warrant issued
under clause 159 (paragraph 147(2)(b)) (see explanatory memorandum on clause
159). Where an authorised officer is on premises with the consent of the occupier the
officer must leave the premises if the occupier asks him to do so (paragraph 147(3)).
Clause 148 Monitoring powers of authorised officers
This clause sets out the powers that an authorised officer may exercise when
searching premises under clause 147 (whether by consent or under a monitoring
warrant).
Sub-clause 147(1) gives authorised officers the following monitoring powers:
(a) to search the premises for any compliance records that are kept at, or
accessible from, the premises and relate to a reporting entity
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(b) to search the premises for any system used by a reporting entity at the
premises for keeping those records
(c) to search the premises for any reports under the Bill that are retained at, or
accessible from, the premises
(d) to search the premises for any system used by a reporting entity in connection
with preparing reports under the Bill, sending such reports to the AUSTRAC
CEO or retaining such reports
(e) to search the premises for any other thing on the premises that may be relevant
to the obligations of a reporting entity under the Bill, the regulations or the
AML/CTF Rules
(f) to examine any activity conducted on the premises that may relate to
information provided under the Bill, the regulations or the AML/CTF Rules
(g) to examine any thing on the premises that may relate to information provided
under the Bill, the regulations or the AML/CTF Rules
(h) to take photographs or make video or audio recordings or sketches on the
premises of any such activity or thing
(i) to inspect any document on the premises that may relate to information
provided under the Bill, the regulations or the AML/CTF Rules
(j) to take extracts from, or make copies of, any such document, and
(k) to take onto the premises such equipment and materials as the authorised
officer requires for the purpose of exercising powers in relation to the
premises.
Further monitoring powers are set out in sub-clauses 148(2), (3) and (4). Sub-clause
148(2) gives an authorised officer the power to secure a thing for up to 24 hours
where the officer believes the thing affords evidence of the commission of an offence
against the Bill, or the commission of an offence against the Crimes Act 1914 or the
Criminal Code that relates to the Bill or the regulations, where it is necessary to do so
to prevent the thing from being concealed, lost or destroyed before a warrant to seize
it could be obtained. Paragraph 148(2)(iii) provides that this power may only be
exercised in serious and urgent circumstances.
Sub-clause 148(3) provides that monitoring powers include the power to operate
equipment at the premises to whether the equipment contains information relevant to
assessing the correctness of information under the Bill. Sub-clause 148(4) provides
that monitoring powers include the following powers in relation to information found
in the exercise of the power under sub-clause 148(3):
(a) to operate facilities at the premises to put the information in documentary form
and copy the documents so produced
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(b) to operate facilities at the premises to transfer the information to a disk, tape or
other storage device that:
(i) is brought to the premises for the exercise of the power; or
(ii) is at the premises and the use of which for the purpose has been agreed in
writing by the occupier of the premises;
(c) to remove from the premises a disk, tape or other storage device to which the
information has been transferred in exercise of the power under paragraph (b).
Instruments created under this clause are not legislative instruments as these are
instruments of authorisation (that is, an instrument the effect of which is to authorise a
specified individual to take a particular action or act in a particular way) and are
covered by Item 2 of Part 1 of Schedule 1 of the Legislative Instruments Regulations
2004.
Clause 149 Tampering or interfering with things secured in the exercise of
monitoring powers
Clause 149 makes it an offence for a person to tamper or interfere with a thing that
has been secured by an authorised officer exercising monitoring powers under clause
148. The penalty for this offence is imprisonment for 6 months or 30 penalty units or
both.
Subdivision B--Powers of authorised officers to ask questions and seek production
of documents
Clause 150 Authorised officer may ask questions and seek production of
documents
This clause enables an authorised officer who has entered premises under clause 147,
whether by consent or under a monitoring warrant, to question the occupier of the
premises and obtain documents while on the premises. If the authorised officer has
entered with the consent of the occupier the officer may ask the occupier questions or
to produce documents relating to the operation of the Bill, regulations or the
AML/CTF Rules (sub-clause 150(1)). If entry is obtained under monitoring warrant,
obtained under clause 159, the officer may require any person on the premises to
answer questions or produce documents relating to the operation of the Bill, the
regulations or the AML/CTF Rules (sub-clause 150(2)).
Sub-clause 150(3) makes it an offence for a person who is required to answer a
question or to produce a document under sub-clause 150(2) to refuse to answer the
question or produce the document. The maximum penalty for the offence is
imprisonment for 6 months or 30 penalty units.
Sub-clause 150(4) provides that a person is not excused from answering a question or
producing a document under sub-clause 150(2) on the grounds of self-incrimination.
However, sub-clause 150(5) provides that the answer or document is not admissible in
evidence against the person in civil proceedings other than proceedings under the
Proceeds of Crime Act 2002 that relate to the Bill, or criminal proceedings other than
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proceedings for an offence against sub-clause 150(3) or offences against clauses 136
(giving false or misleading information) or 137 (producing false or misleading
documents) of the Bill or their equivalents in the Criminal Code (sections 137.1 and
137.2). See explanatory memoranda on clauses 136 and 137.
It is necessary to remove the common law privilege against self-incrimination in the
limited circumstances of executing a monitoring warrant in this instance - with the
protection afforded by sub-clause 150(5) - in order to ensure that an effective
compliance regime exists. The risk-based regulatory approach adopted by the Bill
necessitates that, in assessing compliance, AUSTRAC needs to gain information
relating to the business practices, and internal policies and procedures of a reporting
entity. This type of information may only be obtainable from the reporting entity, an
employee of the reporting entity, or other occupier of the premises that is the subject
of a monitoring warrant.
This immunity from use of the information obtained is a direct use immunity, that is,
it protects the person who gave the information from having it used against them in all
but the limited class of proceedings set out in sub-clause 150(5). This is opposed to a
derivative immunity which protects the person from having information obtained
from other sources as result of the information obtained from them, being used against
them, for example if the information obtained from the person leads investigators to
other evidence of an offence by the person that other evidence can be used in a
prosecution against the person.
This clause does not extend the immunity to derivative use because to do so would
unacceptably fetter the effective investigation and prosecution of offences under the
Bill. However, the inclusion of the use immunity within this clause provides greater
immunity than provisions in other corporate regulation as recommended by the Joint
Standing Committee on Companies and Securities (1992) and the Review of the
Derivative Use Immunity Reforms (1997).
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Division 4--Obligations and incidental powers of authorised officers
Clause 151 authorised officer must produce identity card on request
This clause prohibits an authorised officer from exercising any powers under Part 13
if the authorised officer does not produce his or her identity card when requested to do
so by the occupier. The provision is equivalent to sub-section 27B(5) of the FTRA.
Clause 152 Consent
Where an authorised officer seeks to enter premises by consent in accordance with
clause 147, sub-clause 152(1) requires the officer to first inform the occupier that he
or she may refuse consent. Consent must be voluntarily given for access to be lawful
(sub-clause 152(2)) and the consent may limit access to a particular period (sub-clause
152(3)). A consent limited to a specified period may be withdrawn before the end of
the period. If the consent is unlimited it has effect until withdrawn (sub-clause
152(4)). If consent is withdrawn the authorised officer must leave the premises
(sub clause 152(5)).
Clause 153 Announcement before entry
This clause requires an authorised officer who has obtained a monitoring warrant
under clause 159 to enter premises to announce his or her right to enter the premises
and give any person at the premises an opportunity for the officer to enter the
premises by consent before the officer enters under the warrant.
Clause 154 Details of monitoring warrant to be given to occupier etc before
entry
Sub-clause 154(1) provides that where a monitoring warrant (see explanatory
memorandum on clause 159) is being executed in relation to a premises an authorised
officer must make available to the occupier, or if the occupier is not present, any other
person who apparently represents the occupier, a copy of the monitoring warrant.
Sub-clause 154(2) requires the authorised officer to identify himself or herself to the
occupier or the representative of the occupier.
Sub-clause 154(3) provides that the copy of the warrant mentioned in sub-clause
154(1) does not have to include the signature of the magistrate who issued the
warrant.
Clause 155 Use of electronic equipment in exercising monitoring powers
Where an authorised officer is on premises, whether by the consent of the occupier or
under a monitoring warrant, sub-clauses 155(1) and (2) enable the officer (or person
assisting the officer) to operate electronic equipment at the premises in order to
exercise monitoring powers if the officer has reasonable grounds to believe this can be
done without damage to the equipment.
Sub-clause 155(3) enables the authorised officer to secure electronic equipment if the
officer believes on reasonable grounds that there is relevant material on the premises
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which can only be accessed by arranging for an expert to operate the electronic
equipment, and which the authorised officer believes may be destroyed, altered or
interfered with if this is not done. The authorised officer may do whatever is
necessary to secure the equipment including locking it up or placing a guard on it.
Sub-clause 155(4) requires the authorised officer to give notice to the occupier of the
premises of the authorised officer's intention to secure the equipment and that it may
be secured for up to 24 hours.
Sub-clause 155(5) enables the equipment to be secured for up to 24 hours or until it
has been operated by an expert, whichever happens first, unless an extension has been
granted by a magistrate under sub-clause 155(6). Sub-clause 155(6) permits an
authorised officer to apply to a magistrate for an extension of the period in sub-clause
155(5) if the authorised officer believes, on reasonable grounds, that the expert
assistance will not be available within 24 hours.
Sub-clause 155(7) requires the authorised officer to notify the occupier of his or her
intention to apply for an extension and gives the occupier a right to be heard in
relation to the application. Sub clause 155(8) applies the provisions in Part 13 relating
to the issuing of a monitoring warrant (subject to any necessary modification) to an
application for extension of the 24 hour period.
Clause 156 Compensation for damage to electronic equipment
This clause enables the owner of electronic equipment and user of data programs to
apply for compensation from the Commonwealth, where electronic equipment,
recorded data or data program has been damaged as a result of being operated under
clause 155. Paragraph 156(1)(b) provides that compensation is payable where the
damage occurred because insufficient care was exercised in the selection of the person
to operate the equipment or in by the person operating the equipment. If agreement
cannot be reached about the amount of compensation, the owner the equipment or
user of data program may apply to the Federal Court for the Court to determine the
amount of compensation (sub-clause 156(3)). In determining the amount of
compensation the Court must take into account whether the occupier of the premises,
or it employees and agents provided any appropriate warning or guidance on the
operation of the equipment (sub-clause 156(4)). Sub-clause 156(5) provides that
compensation is payable out of money appropriated by the Parliament.
Division 5--Occupier's rights and responsibilities
Clause 157 Occupier entitled to be present during execution of monitoring
warrant
Clause 157 enables the occupier or person apparently representing the occupier, if
present, to observe the execution of the warrant. This right is lost if the person
impedes the execution of the warrant (sub-clause 157(2)). Sub-clause 157(3) provides
that this clause does not prevent the execution of the warrant in 2 or more areas of the
premises at the same time.
161
Clause 158 Occupier to provide authorised officer with facilities and
assistance
Sub-clause 158(1) requires the occupier, or other person apparently representing the
occupier, to give the authorised officer executing the warrant all reasonable facilities
and assistance for the effective exercise of their powers. Sub-clause 158(2) makes it
an offence for a person to provide assistance as required by sub-clause 158(1). The
maximum penalty for the offence is 30 penalty units.
Division 6--Monitoring warrants
Clause 159 Monitoring warrants
This clause sets out the process for application and issue of a monitoring warrant in
order to permit entry to premises under paragraph 147(2)(b) to exercise monitoring
powers (see explanatory memorandum on clause 147.
Sub-clause 159(1) provides that an authorised officer may apply to a magistrate for a
warrant in relation to reporting entity business premises. Sub-clause 159(2)
authorises the magistrate to issue the warrant if the magistrate is satisfied, by
information on oath or affirmation, that it is reasonably necessary that one or more
authorised officers should have access to the premises for the purposes of determining
whether the provisions of the Bill, the regulations or the AML/CTF Rules have been,
or are being, complied with. However, sub-clause 159(3) provides that the magistrate
must not issue the warrant unless the authorised officer or some other person has
given to the magistrate, either orally or by affidavit, such further information (if any)
as the magistrate requires concerning the grounds on which the issue of the warrant is
being sought.
Sub-clause 159(4) provides that the warrant must contain a description of the
premises to which the warrant relates and authorise one or more authorised officers
(whether or not named in the warrant), and any person or persons assisting the
authorised officer or authorised officers to enter the premises and to exercise the
powers set out in clause 148 in relation to the premises. The warrant must also state:
(a) whether the entry is authorised to be made at any time of the day or during
specified hours of the day
(b) specify the day (not more than 6 months after the issue of the warrant) on
which the warrant ceases to have effect, and
(c) the purpose for which the warrant is issued.
Clause 160 Magistrates Personal capacity
Sub-clause 160(1) provides that the powers conferred on magistrate under clause 159
are conferred on the magistrate in a personal capacity. This clause mirrors section
4AAA Crimes Act 1914. Section 4AAA provides that where a law of the
Commonwealth confers a non-judicial power or function on a magistrate to issue
search or arrest warrants the power is conferred in the magistrate's personal capacity
and not as a member of a court.
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Sub-clause 160(2) provides that the magistrate need not accept the functions but
where the magistrate does accept the function sub-clause 160(3) provides the
magistrate with the same protections as if he or she were performing the function as a
member of the court of which the magistrate is a member.
Clause 161 External Audits risk management etc
This clause gives the AUSTRAC CEO the power to, by written notice, require a
reporting entity to appoint an external auditor to report on the action that the reporting
entity has taken to identify, mitigate and manage the risk of facilitating money
laundering and terrorism financing that the reporting entity might reasonably face in
providing a designated service through a permanent establishment in Australia (sub-
clause 161(2)). External auditor is defined in clause 5 of the Bill to be a person
authorised under clause 164 to be an external auditor for the purposes of the Bill.
Before the AUSTRAC CEO can exercise his power to appoint an external auditor the
AUSTRAC CEO must have reasonable grounds to suspect that the reporting entity
has not taken or is not taking appropriate action to identify, manage and mitigate the
risk of facilitating money laundering and terrorism financing face by providing a
designated service (sub-clause 161(1)).
Sub-clause 161(2) provides that the AUSTRAC CEO may, by written notice, require
a reporting entity to appoint an external auditor and arrange for the external auditor to
carry out an external audit of the reporting entity's capacity and endeavours to,
identify, mitigate and manage the risk the reporting entity may reasonably face that
the provision by the reporting entity of designated services at or through a permanent
establishment of the reporting entity in Australia might (whether inadvertently or
otherwise) involve or facilitate money laundering or financing of terrorism. The sub-
clause also provides that reporting entity is required to arrange for the external auditor
to give the reporting entity a written report (the audit report) setting out the results of
the audit and give the AUSTRAC CEO a copy of the audit report within the period
specified in the notice.
Sub-clause 161(3) requires the AUSTRAC CEO to specify in the written notice,
matters to be covered by the audit report, the form of the audit report and the kind of
details it is to cover.
Sub-clause 161(4) provides that the notice may specify that either or both of the
following matters be covered in the auditor's report:
(a) an assessment of the risk the reporting entity may reasonably face that the
provision by the reporting entity of designated services at or through a
permanent establishment of the reporting entity in Australia might (whether
inadvertently or otherwise) involve or facilitate money laundering, financing
of terrorism, and
(b) an assessment of what the reporting entity will need to do, or continue to do, to
identify, mitigate and manage the risk the reporting entity may reasonably face
that the provision by the reporting entity of designated services at or through a
permanent establishment of the reporting entity in Australia might (whether
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inadvertently or otherwise) involve or facilitate money laundering or financing
of terrorism.
Sub-clause 161(6) provides that officers, employees and agents of the reporting entity
and officers, employees and agents of another member of a designated business group
to which the reporting entity belongs are ineligible to be appointed as an external
auditor (see explanatory memorandum on designated business group ).
Sub-clause 161(7) makes it an offence for a person to fail to comply with a
requirement to appoint or arrange an external auditor under sub-clause 161(2). The
maximum penalty for the offence is imprisonment for 6 months or 30 penalty units.
Sub-clauses 161(8) and 161(9) makes the reporting entity liable for a civil penalty for
failing to comply with a requirement under sub-clause 161(2). Civil penalties may be
enforced under Part 15 Division 2. The maximum penalty that can be imposed is
100,000 penalty units for a corporation and 20,000 penalty units for persons other
than a body corporate. A person cannot be ordered to pay a civil penalty if they have
been convicted of an offence in relation to the same conduct. The burden of proof in
proceedings for a civil penalty is on the balance of probabilities and there is no
requirement to prove any fault elements in relation to the offending conduct.
Instruments created under this clause are not legislative instruments as these are
instrument requesting or requiring a person to attend premises, give evidence, answer
questions, produce documents or give information and are covered by Item 19 of Part
1 of Schedule 1 of the Legislative Instruments Regulations 2004.
Clause 162 External audits compliance
This clause gives the AUSTRAC CEO power to appoint an external auditor where the
AUSTRAC CEO has reasonable grounds to suspect that a reporting entity has
contravened, is contravening, or is proposing to contravene the Bill, the regulations or
the AML/CTF Rules. The AUSTRAC CEO may, by written notice, require the
reporting entity to appoint an external auditor to carry out an audit of the reporting
entity in relation to the reporting entity's compliance with the Bill, the regulations and
the AML/CTF Rules, and to provide a copy of the report to the AUSTRAC CEO
within a time period stated on the notice (sub-clause 162(2)).
Sub-clause 162(3) specifies that the AUSTRAC CEO must specify in the written
notice, requiring the appointment of the external auditor, the matters to be covered by
the audit and the form of, and the details to be contained, in the audit report.
Sub-clause 162(4) provides that the notice may specify that either or both of the
following matters be covered in the auditor's report:
(a) an assessment of the reporting entity's existing capacity to comply with this
Bill, the regulations and the AML/CTF Rules, or
(b) an assessment of what the reporting entity will need to do, or continue to do, to
comply with this Bill, the regulations and the AML/CTF Rules.
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Sub-clause 162(5)) provides that sub-clause 162(4) does not limit the matters that may
be included in a notice under paragraph 162(3)(a).
Sub-clause 162(6) provides that officers, employees or agents of the reporting entity
or of another member of the designated business group to which the reporting entity
belongs may not be appointed as an external auditor (see explanatory memorandum
on designated business group ).
Sub-clause 162(7) makes it an offence for a person to fail to comply with a
requirement to appoint or arrange an external auditor under sub-clause 161(2). The
maximum penalty for the offence is imprisonment for 6 months or 30 penalty units.
Sub-clauses 162(8) and 162(9) makes the reporting entity liable for a civil penalty for
failing to comply with a requirement under sub-clause 162(2). Civil penalties may be
enforced under Part 15 Division 2. The maximum penalty that can be imposed is
100,000 penalty units for a corporation and 20,000 penalty units for persons other
than a body corporate. A person cannot be ordered to pay a civil penalty if they have
been convicted of an offence in relation to the same conduct. The burden of proof in
proceedings for a civil penalty is on the balance of probabilities and there is no
requirement to prove any fault elements in relation to the offending conduct.
Instruments created under this clause are not legislative instruments as these are
instrument requesting or requiring a person to attend premises, give evidence, answer
questions, produce documents or give information and are covered by Item 19 of Part
1 of Schedule 1 of the Legislative Instruments Regulations 2004.
Clause 164 External auditor may have regard to the results of previous audit
This clause provides that an external auditor appointed under clause 161 or 162 may
have regard to a previous external audit if it has been carried out within the past 2
years and the external considers it is still relevant.
Clause 164 External auditors
This clause provides that the AUSTRAC CEO may, by writing, authorise individuals
to be external auditors for the purposes of the Bill. Sub-clause 164(2) provides that
this authorisation is not a legislative instrument. Sections 33(3) and 46 of the Acts
Interpretation Act 1901 will apply to the exercise of the AUSTRAC CEO's power
under this clause.
Instruments created under this clause are not legislative instruments as these are
instruments of authorisation (that is, an instrument the effect of which is to authorise a
specified individual to take a particular action or act in a particular way) and are
covered by Item 2 of Part 1 of Schedule 1 of the Legislative Instruments Regulations
2004.
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Division 8 AML/CTF risk assessments
Clause 165 AML/CTF risk assessments
This clause gives the AUSTRAC CEO power to issue a notice to a reporting entity to
require the reporting entity to carry out a money laundering and terrorism financing
risk assessment, and prepare a written report setting out the results of the assessment
(sub-clause 165(2)). Before issuing such a notice to a reporting entity the AUSTRAC
CEO must be satisfied, that the reporting entity has not carried out an money
laundering Terrorism Financing risk assessment or where the reporting entity has
carried out a money laundering Terrorism Financing risk assessment that the
assessment is no longer current or is inadequate (sub-clause 165(1)). The reporting
entity must provide the report to the AUSTRAC CEO within the timeframe specified
in the notice (sub-clause 165(2)).
Sub-clause 165(6) defines a money laundering and terrorism financing risk
assessment as an assessment by a reporting entity of the risk that the reporting entity
may reasonably face that the provision by it of designated services, at or through a
permanent establishment of the entity in Australia, might (inadvertently or otherwise)
involve or facilitate money laundering or the financing of terrorism, and what the
reporting entity will need to do, or continue to do to identify, mitigate and manage
that risk.
Sub-clause 165(3) makes it an offence for a person to fail to comply with a notice
under sub clause 165(2). The maximum penalty for the offence is imprisonment for 6
months or 30 penalty units.
Sub-clauses 165(4) and 165(5) makes the reporting entity liable for a civil penalty for
failing to comply with a requirement under sub-clause 165(2). Civil penalties may be
enforced under Part 15 Division 2. The maximum penalty that can be imposed is
100,000 penalty units for a corporation and 20,000 penalty units for persons other
than a body corporate. A person cannot be ordered to pay a civil penalty if they have
been convicted of an offence in relation to the same conduct. The burden of proof in
proceedings for a civil penalty is on the balance of probabilities and there is no
requirement to prove any fault elements in relation to the offending conduct.
Instruments created under this clause are not legislative instruments as these are
instrument requesting or requiring a person to attend premises, give evidence, answer
questions, produce documents or give information and are covered by Item 19 of Part
1 of Schedule 1 of the Legislative Instruments Regulations 2004.
Part 14-- Information-gathering powers
The Notice to Produce procedure for the obtaining of information or documents
created by Part 14 provides an alternative method to the monitoring warrant
mechanism created by Part 13. An authorised officer (clause 5) will be able to utilise
the mechanism which appears most appropriate in a particular instance. For example
where the authorised officer believes the reporting entity would consent to give
AUSTRAC the required information or documents if required to do so, the authorised
officer may consider it more appropriate for a notice under clause 167(2) to be given
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to the reporting entity than to use the Part 13 clauses. In other instances the
surrounding circumstances may indicate that it is more appropriate for AUSTRAC to
seek physical access to the reporting entity's premises. In such instances AUSTRAC
will then be able to seek access by consent or by way of a monitoring warrant. There
may be instances where a combination of these various options is necessary.
Clause 166 Simplified outline
This clause provides a simplified outline of Part 14, namely that an authorised officer
may obtain information or documents.
Clause 167 Authorised officer may obtain information and documents
Scope
Sub-clause 167(1) provides that clause 167 applies where an authorised officer
believes on reasonable grounds that the person is or has been:
· a reporting entity
· an officer, employee or agent of a reporting entity
· a person on the Register of Providers of Designated Remittance Services, and
also believes that the person has information or documents relevant to the operation of
the Bill, regulations or AML/CTF Rules. See explanatory memorandum authorised
officer, reporting entity, Register of Providers of Designated Remittance Services and
AML/CTF Rules.
Requirement
Sub-clause 167(2) provides that the authorised officer may give a written notice to the
person requiring the person to give the authorised officer information or produce
documents or copies of documents in the manner and within the time specified in the
notice.
Offence
Sub-clause 167(3) makes it an offence for a person who has been given a sub-clause
167(2) notice to omit to do an act and the omission contravenes a requirement in the
notice. The maximum penalty for the offence is 6 months imprisonment or 30 penalty
units or both.
Notice to set out effect of offence provisions
Sub-clause 167(4) provides that the notice under sub-clause 167(2) must set out the
effect of sub-clause 167(3) (namely that a person commits an offence if the physical
elements set out in paragraphs 167(3)(a), (b) and (c) are satisfied), and the effect of
clauses 136 and 137 (these clauses create offences for giving false or misleading
information and producing false or misleading documents).
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Instruments created under this clause are not legislative instruments as these are
instrument requesting or requiring a person to attend premises, give evidence, answer
questions, produce documents or give information and are covered by Item 19 of Part
1 of Schedule 1 of the Legislative Instruments Regulations 2004.
Clause 168 Copying documents reasonable compensation
Clause 168 provides that a person is entitled to reasonable compensation for copying
documents (under sub-clause 167(2)(c)) where this is required by a notice under
sub-clause 167(2).
Clause 169 Self-incrimination
Clause 169(1) provides that a person is not excused from giving information or
producing a document under clause 167 on the grounds of self-incrimination.
However, sub-clause 169(2) provides that any information given or document
produced or the fact that information was given or documents produced, is not
admissible in evidence against the person:
· in civil proceedings (other than proceedings under the Proceeds of Crime Act
2002) that relate to the Bill,
· in criminal proceedings other than proceedings for an offence against sub-
clause 167(3) or proceedings for offences against clauses 136 (giving false or
misleading information) or 137 (producing false or misleading documents)
that relate to Part 14, or
· proceedings for the equivalent offences in the Criminal Code that relate to this
Part (namely proceedings under sections 137.1 or 137.2 Criminal Code).
Clause 170 Copies of documents
This clause enables an authorised officer to inspect a document produced under Part
14 and to make and retain copies or extracts from documents produced.
Clause 171 Authorised officer may retain documents
This clause enables an authorised officer to take possession and retain for as long as
necessary documents produced in response to a notice (sub-clause 171(1)) subject to
providing the person otherwise entitled to possession of the document with a certified
copy of it (sub-clause 171(2)). The certified copy must be received by all courts and
tribunals as if it were the original (sub-clause 171(3)). The person otherwise entitled
to possession (or a person authorised by that person) is entitled to have reasonable
access to inspect it and make copies or extracts of the document until a certified copy
is supplied to them.
Clause 172 Division 400 and Chapter 5 of the Criminal Code
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Where a person provides information under a sub-clause 167(2) notice the person will
not be regarded as being in possession of the information for the purpose of Division
400 (money laundering offences) and Chapter 5 (Security of the Commonwealth) of
the Criminal Code.
Part 15--Enforcement
This Part of the Bill sets out the various ways in which compliance with the
obligations imposed by the Bill can be enforced. This allows AUSTRAC to choose
the most appropriate enforcement mechanism for ensuring compliance with the Bill.
The enforcement powers are generally granted to AUSTRAC (except the questioning,
search and arrest powers in Division 8 of Part 15 which are to be carried out by either
a police officer or a customs officer). The enforcement powers include the following:
(a) civil penalties (Division 2);
(b) infringement notices for unreported cross-border movements of physical
currency (Division 3);
(c) monitoring of compliance (Division 4);
(d) remedial directions by the AUSTRAC CEO (Division 5);
(e) injunctions (Division 6);
(f) enforceable undertakings (Division 7); and
(g) powers of questioning, search and arrest in relation to cross-border movements
of physical currency and bearer negotiable instruments (Division 8).
Division 1--Introduction
Clause 173 Simplified Outline
This clause provides a simplified outline of Part 15.
Division 2--Civil Penalties
General
A civil penalty is a penalty imposed by a court using civil procedure rather than
criminal law procedures. A key difference between a criminal offence and a civil
penalty is that in civil penalty proceedings the civil standard of proof applies, namely
the balance of probabilities, rather than the criminal standard of proof of beyond
reasonable doubt. This means that the court only has to be satisfied that it was more
likely than not that the defendant breached its obligation under the Bill to impose a
penalty. A second aspect of a civil penalty is that there is no requirement to prove any
fault elements in relation to the offending conduct, as would be the case in criminal
proceedings ie it is not necessary to show that the defendant intended to breach the
civil penalty clause.
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Civil penalties may be enforced under Part 15 Division 2. The maximum penalty that
can be imposed is 100,000 penalty units for a corporation and 20,000 penalty units for
persons other than a body corporate. A person cannot be ordered to pay a civil
penalty if they have been convicted of an offence in relation to the same conduct.
Clause 174 Ancillary contravention of civil penalty provision
Sub-clause 174(1) provides that a person must not
(a) attempt to contravene a civil penalty clause
(b) aid, abet, counsel or procure a contravention of a civil penalty clause
(c) induce, whether by threats or promises or otherwise, a contravention of a civil
penalty clause
(d) is in any way, directly or indirectly knowingly concerned in or party to, a
contravention of a civil penalty clause
(e) conspire with others to effect a contravention of a civil penalty clause.
Sub-clause 174(2) provides that sub-clause 174(1) is a civil penalty clause.
Civil penalties may be enforced under Part 15 Division 2 (see explanatory
memorandum on Division 2). The maximum penalty that can be imposed is 100,000
penalty units for a corporation and 20,000 penalty units for persons other than a body
corporate. A person cannot be ordered to pay a civil penalty if they have been
convicted of an offence in relation to the same conduct. The burden of proof in
proceedings for a civil penalty is on the balance of probabilities and there is no
requirement to prove any fault elements in relation to the offending conduct.
Clause 175 Civil penalty orders
Sub-clause 175(1) provides that the Federal Court may order a person to pay a
pecuniary penalty to the Commonwealth (to be known as a civil penalty order
sub-clause 175(2)) where it is satisfied that a person has contravened civil penalty
clause. Sub-clause 175(3) requires the Federal Court to take into account the matters
set out in paragraphs 175(3)(a) to (g) in determining the amount of the pecuniary
penalty.
The maximum penalty for a body corporate is 100,000 penalty units (sub-clause
175(4)), and the maximum penalty for any other person (including legal and natural
persons see explanatory memorandum on person) is 20,000 penalty units). The
value for a penalty unit is prescribed by section 4AA of the Crimes Act 1914. One
penalty unit currently equals $110.00.
If a person's conduct contravenes more than one civil penalty clause and proceedings
are instituted in relation to contravention of more than one clause, then sub-clause
175(6) provides that the person cannot be subject to more than one pecuniary penalty
in relation to the same conduct.
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Sub-clause 133(7) provides that the pecuniary penalty is civil debt owing to the
Commonwealth and may be enforced as if it were a judgment debt.
Clause 176 Who may apply for a civil penalty order
Sub-clause 176(1) prevents anybody other than AUSTRAC CEO from applying for a
civil penalty order under the Bill. Sub-clause 176(2) provides that the operation of
the Director of Public Prosecutions Act 1983 (DPP) is not excluded by sub-clause
176(1). This will enable the DPP to represent AUSTRAC in such proceedings.
Clause 177 2 or more proceedings may be heard together
This clause allows the Federal Court to direct that two or more proceedings for a civil
penalty order are to be heard together.
Clause 178 Time Limit for application for an order
This clause prevents proceedings for a civil penalty order being commenced more
than 6 years after the alleged contravention.
Clause 179 Civil Evidence and procedure rules for civil penalty orders
This clause provides that the Federal Court is required to apply the rules of evidence
and procedure for civil matters in proceedings for a civil penalty order. This means
that the civil standard of proof, namely the balance of probabilities, will apply.
Clause 180 Civil Proceedings after criminal proceedings
Clause 180 prevents the Federal Court making a civil penalty order against a person
where the person has been convicted of a criminal offence for substantially the same
conduct.
Clause 181 Criminal Proceedings during civil proceedings
This clause provides that where proceedings for a civil penalty order and criminal
proceedings are started against a person for substantially the same conduct the civil
proceedings will be stayed. The civil proceedings will be dismissed if the person is
convicted of the offence but may be resumed if the person is not convicted of the
offence.
Clause 182 Criminal Proceedings after civil proceedings
This clause provides that the fact that a civil penalty order has been made against a
person does not prevent criminal proceedings being started against the person for
substantially the same conduct.
Clause 183 Evidence given in proceedings for penalty not admissible in
criminal proceedings
Where criminal proceedings are commenced against a person who has already given
evidence or produced documents in civil penalty proceedings arising from
substantially the same conduct this clause makes that evidence inadmissible in the
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criminal proceedings. This clause does not apply to criminal proceedings relating to
the falsity of the evidence in the civil proceedings.
Division 3--Infringement notices for unreported cross-border
movements of physical currency and bearer negotiable instruments
This Division provides an infringement notice procedure where a person has not
reported the movement of physical currency or bearer negotiable instruments, in
amounts of $10,000 or more, into or out of Australia where the circumstances
surrounding the non-reporting are such that civil or criminal proceedings are
inappropriate.
Clause 184 When an infringement notice can be given
AUSTRAC authorised officers, customs officers and police officers may give a
person an infringement notice where there are reasonable grounds to believe the
person has not reported moving physical currency or bearer negotiable instruments
into or out of Australia in contravention of sub-clauses 53(3) and 59(4). An
infringement notice may only be issued within 12 months of the alleged contravention
taking place (sub-clause 184(2)).
Clause 185 Matters to be included in an infringement notice
An infringement notice must contain the following details:
(a) name of the person to whom the notice is given;
(b) name of the person who gave the notice;
(c) set out brief details relating to the alleged contravention of sub-clause 53(3) or
59(4) including the date of the alleged contravention; and
(d) contain a statement to the effect that neither criminal nor civil penalty
proceedings will be brought in relation to the matter if the penalty specified in
the notice is paid to the AUSTRAC CEO, on behalf of the Commonwealth,
within:
(i) 28 days after the notice is given or
(ii) if the AUSTRAC CEO allows a longer period that longer period; and
(e) give an explanation of how payment is to be made; and
(f) set out any such matters as are specified in the regulations.
Clause 186 Amount of penalty
The penalty in the infringement notice relating to a contravention of sub-clause 53(3)
and 59(4) is 5 penalty units if the value of the physical currency or bearer negotiable
instruments involved in the alleged contravention is $20,000 or more. For amounts
under $20,000 the penalty is 2 penalty units.
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Clause 187 Withdrawal of an infringement notice
This clause allows an authorised officer to give a written notice to a person
withdrawing an infringement notice within 28 days of the infringement notice being
given to the person. If the infringement notice is withdrawn after the penalty has been
paid the Commonwealth is liable to refund the penalty.
Instruments created under this provision are not legislative instruments as they are
instruments that vary or revoke an instrument that is not a legislative instrument and
are covered by Item 33 of Part 1 of Schedule 1 of the Legislative Instruments
Regulations 2004.
Clause 188 What happens if the penalty is paid
This clause provides that if the penalty is paid the person's liability is discharged and
criminal or civil proceedings cannot be brought for the alleged contravention.
Clause 189 Effect of this division on criminal and civil proceedings
Clause 189 provides that an infringement notice is an alternative to criminal or civil
penalty proceedings. If the circumstances warrant it civil penalty proceedings or
criminal proceedings may be brought against a person rather than an infringement
notice being issued. If an infringement notice is issued, and either withdrawn or not
complied with civil penalty proceedings or criminal proceeding may be brought. In
civil penalty proceedings or criminal proceedings a court is not limited to the
infringement notice penalty and may impose any penalty allowed under clauses 53
and 59 and sub-clause 175(4).
Division 4--Monitoring of compliance
Clause 190 Monitoring of compliance
This clause seeks to implement FATF Recommendations 23 and 24 in that it requires
the AUSTRAC CEO to monitor the compliance of reporting entities with their
obligations under the Bill.
Sub-clause 190(1) provides that the AUSTRAC CEO is to monitor compliance by
reporting entities with their obligations under the Bill, regulations and AML/CTF
Rules and to report to the Minister on compliance by reporting entities.
AUSTRAC is able to perform its monitoring task using its powers in Parts 13 (Audit)
and 14 (Information-gathering powers).
Sub-clause 190(2) allows the AUSTRAC CEO to give an Australian government
body a copy of a report under sub-clause 190(1) where the CEO has reasonable
grounds to believe a reporting entity has breached any of its obligations under the Bill,
regulations or AML/CTF Rules and the CEO is satisfied the breach is relevant to the
functions and power of the body.
Sub-clause 190(3) provides that an action, suit or proceeding (whether criminal or
civil) does not lie against the Commonwealth, the AUSTRAC CEO or a member of
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staff of AUSTRAC for action taken under clause 190 in giving the report or a copy of
it to a government body.
Sub-clause 190(4) provides that sub-clause 190(2) does not limit clause 126. Clause
126 enables the AUSTRAC CEO to authorise officials of a specified designated
agency to have access to AUSTRAC information for the purpose of the agency
performing its functions and exercising its powers. See explanatory memorandum on
clause 126.
AUSTRAC may also receive relevant information from Commonwealth, State or
Territory agencies which could assist AUSTRAC in monitoring compliance by
reporting entities. The power for such agencies to forward relevant information to
AUSTRAC will depend on their powers under their own principal legislation.
Division 5--Remedial directions
Clause 191 Remedial directions
Sub-clause 191(1) applies where the AUSTRAC CEO is satisfied that a reporting
entity has contravened, or is contravening a civil penalty clause, other than sub-clause
191(4).
Sub-clause 191(2) empowers the AUSTRAC CEO to give a written direction to a
reporting entity requiring it to take specified action directed towards ensuring that the
reporting entity does not, or is unlikely to contravene a civil penalty clause in the
future.
Sub-clause 191(3) provides some examples of such directions by the AUSTRAC
CEO. These include a direction to implement effective compliance monitoring
systems, or a direction that a reporting entity implement a training program to educate
a reporting entity's officers, employees and agents of their responsibilities in relation
to civil penalty clauses under this Bill.
The remedial direction power enables AUSTRAC to make a direction for specific
remedial action to be taken by a reporting entity to bring them into compliance with
the Bill, regulations or AML/CTF rules. A remedial direction has the following
benefits:
(a) it enables the reporting entity to negotiate with AUSTRAC a plan to achieve
full compliance
(b) it may negate the need for prosecution or civil penalty actions to be taken
(c) can achieve faster compliance outcomes than punitive actions
(d) is outcome-focussed rather than punitive in approach
Failure to comply with a direction under sub-clause 191(2) makes the Reporting
Entity liable for a civil penalty (sub-clause 191(4)). Civil penalties may be enforced
under Part 15 Division 2 (see explanatory memorandum on Division 2). The
maximum penalty that can be imposed is 100,000 penalty units for a corporation and
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20,000 penalty units for persons other than a body corporate. A person cannot be
ordered to pay a civil penalty if they have been convicted of an offence in relation to
the same conduct. The burden of proof in proceedings for a civil penalty is on the
balance of probabilities and there is no requirement to prove any fault elements in
relation to the offending conduct.
Sub-clause 191(6) provides that a direction under sub-clause 191(2) is not a
legislative instrument as the public does not need access to the instrument to
understand rights and obligations under the Bill. Remedial directions may also
include commercially confidential information.
Division 6--Injunctions
Clause 192 Injunctions
Sub-clause 192(1) provides that if a person has engaged, is engaging or proposing to
engage, in any conduct in contravention of a civil penalty clauses the AUSTRAC
CEO may apply to the Federal Court for an injunction restraining the person from
engaging in conduct and (where the court is of the opinion that it is desirable to)
requiring a person to do something.
Sub-clause 192(2) gives the AUSTRAC CEO the power to apply to the Federal Court
for an injunction requiring a person to do an act or thing where the person has refused
or failed, or is refusing or failing, or is proposing to refuse or fail to do an act or thing,
and this refusal or failure would be a contravention of a civil penalty clause.
AUSTRAC has similar powers to seek injunctions under section 32 of the FTRA.
Clause 193 Interim injunctions
Clause 193 allows the Federal Court, on the application for an injunction under clause
193, to grant an interim injunction restraining a person from engaging in conduct
contravening or potentially contravening a civil penalty clause pending determination
of the application for an injunction. Where the Federal Court does grant an interim
injunction it cannot require the applicant to give any undertakings as to damages (sub-
clause 193(2)).
Clause 194 Discharge etc. of injunctions
Clause 194 permits the Federal Court to discharge or vary an injunction granted under
Division 6 of Part 15.
Clause 195 Certain limits on granting injunctions not to apply
Restraining injunctions
Where the Federal Court is satisfied that a person has engaged in a particular kind of
conduct paragraph 195(1)(a) permits it to grant an injunction restraining the person
from engaging in that kind of conduct whether or not it appears the person intends to
engage in that kind of conduct again or to continue to engage in that type of conduct.
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Paragraph 195(1)(b) permits the Court to grant an injunction where it is satisfied that
if an injunction is not granted the person will engage in a particular kind of conduct,
whether or not the person has previously engaged in the conduct of that type, and
whether or not there is imminent danger of substantial damage to any person if the
person the subject of application for an injunction engages in the conduct.
Performance injunctions
Where the Federal Court is satisfied that a person has refused or failed to do an act or
thing paragraph 195(2)(a) permits the Court to grant an injunction requiring the
person to do the act or thing, whether or not it appears the person intends to again
refuse or continue to refuse or fail to do the act or thing.
Paragraph 195(2)(b) permits the Court to grant an injunction whether or not the
person has previously refused to do the act or thing, and whether or not there is
imminent danger of substantial damage to any person if it appears to the Court that, if
an injunction is not granted, it is likely the person will refuse or fail to the act or thing.
Clause 196 Other Powers of the Federal Court unaffected
This clause makes it clear that the powers given to the Federal Court under Division 6
are in addition to, and not instead of, any other powers of the Court, whether
conferred by the Bill or not.
Division 7--Enforceable undertakings
This Division enables the AUSTRAC CEO to accept written undertakings from
reporting entities, and to seek an order from the Federal Court in the event that such
an undertaking is breached. Enforceable undertakings are an additional compliance
tool for AUSTRAC to use in appropriate circumstances.
The use of enforceable undertakings has the following benefits:
(a) it enables the reporting entity to negotiate with AUSTRAC a plan to achieve
full compliance
(b) it may negate the need for prosecution or civil penalty actions to be taken
(c) it can achieve faster compliance outcomes than punitive actions, and
(d) it is outcome-focussed rather than punitive in approach.
Clause 197 - Acceptance of undertakings
Sub-clause 197(1) provides type of undertakings that the AUSTRAC CEO can accept.
Paragraphs 197(1)(a) (b) and (c) provides that these are that the person:
(a) will take specified action to comply with the Bill, regulations or the AML/CTF
Rules
(b) refrain from taking specified action in order to comply with this Bill,
regulations or the AML/CTF Rules, or
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(c) will take specified action directed towards ensuring that the person does not
contravene the Bill, regulations or AML/CTF Rules in the future.
The written undertaking must state that it is an undertaking under clause 197 (sub-
clause 197(2)). The person may withdraw or vary the undertaking at any time with
the consent of the AUSTRAC CEO (sub-clause 197(3)) and the AUSTRAC CEO may
cancel the undertaking (sub-clause 197(4)). To ensure transparency in the process, by
making other regulated entities aware of the undertakings made by competitors, sub-
clause 197(5) gives AUSTRAC power to publish undertakings on its Internet site.
Clause 198 Enforcement of undertakings
This clause outlines the penalties that may be imposed for failure to adhere to an
undertaking. Under sub-clause 198(1) if the AUSTRAC CEO considers that a person
has breached an undertaking given under clause 197 (and the undertaking has not
been withdrawn or cancelled), he or she may apply to the Federal Court for an order
under sub-clause 198(2). If the Federal Court is satisfied that the undertaking has
been breached it may make any or all of the following orders as set out in paragraphs
198(2)(a), (b), (c) and (d):
(a) an order directing the person to comply with the undertaking
(b) an order directing the person to pay to the Commonwealth an amount up to the
amount of any financial benefit that the person has obtained, directly or
indirectly, that is reasonably attributable to the breach
(c) an order directing the person to compensate any other person who has suffered
loss or damage as a result of the breach, or
(d) any other order that the court considers appropriate.
Division 8--Powers of questioning, search and arrest in relation to
cross-border movements of physical currency and bearer negotiable
instruments
This Division empowers police or customs officers (in respect of whom a declaration
under section 219ZA of the Customs Act 1901 is in force) to question a person leaving
(sub-clause 199(1)) or entering (sub-clause 199(2)) Australia, as to whether he or she
has any currency in respect of which they are required to lodge a report under clause
53. Powers of examination and search of the person, as well as of ships and aircraft,
are granted, where a breach of clause 53 or clause 200 is suspected, and in the event
that an officer has reasonable grounds to suspect that physical currency or bearer
negotiable instruments may afford evidence of a contravention of clause 53 or clause
200, the officer may seize such currency.
These powers are consistent with FATF Special Recommendation IX for the
prevention of terrorist financing. FATF Special Recommendation IX states that
countries should have in place measures to detect the physical cross-border
transportation of currency and bearer negotiable instruments, including a declaration
system. The recommendation further states that authorities should have legal authority
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to stop or restrain currency or bearer negotiable instruments suspected to relate to
money laundering or terrorist financing or that are falsely declared or disclosed.
Clause 199 Questioning and search powers in relation to physical currency
Person leaving Australia
Sub-clause 199(1)requires a person who is about to leave Australia or is in an
embarkation area for the purpose of leaving Australia, to declare, if required to do so
by a police or customs officer, whether or not the person has with him or her any
Australian or foreign currency. If the person has any currency, the person must
declare the total amount and declare whether or not to the best of the person's
knowledge and belief a report has been lodged under clause 53 in respect of the
Australian or foreign currency and produce the currency that the person has with him
or her to the officer... Clause 53 requires a person to lodge a report if the person is
moving $10,000 or more into or out of Australia in physical currency. Physical
currency is defined in clause 5 (see explanatory memorandum on physical currency).
Person arriving in Australia
Sub-clause 199(2) requires a person who arrives in Australia to declare, if required to
do so by a police or customs officer, whether or not the person has with him or her
any Australian or foreign currency and declare the total amount of Australian or
foreign currency the person has with him or her. If the person is in possession of any
Australian or foreign currency the person must declare whether or not to the best of a
person's knowledge and belief, a report under clause 53 has been given in respect of
such currency and produce the currency to the officer.
Powers of examination and search
Sub-clause 199(3) authorises a police officer or a customs officer, with such
assistance as is reasonable and necessary, to examine an article which a person, who
is about to leave Australia or who has arrived in Australia, has with him or her, for the
purpose of finding out whether the person has with him or her any physical currency
in respect of which a report under clause 53 is required.
Sub-clause 199(4) empowers a police or customs officer, with such assistance as is
reasonable and necessary, to search a person about to leave or arrive in Australia for
the purpose of finding out whether the person has with him or her any physical
currency in respect of which a report under clause 53 is required if the officer has
reasonable grounds to suspect that there is on the person, or in their clothing, physical
currency in respect of which a report under clause 53 is required. The customs or
police officer conducting the search must be of the same sex as the person being
searched (sub-clause 199(6)).
A police or customs officer is able to seize physical currency found in the course of a
search or examination under sub-clauses 199(3) or 199(4) if the officer has reasonable
grounds to believe the currency may afford evidence as to the commission of an
offence against clause 53 (sub-clause 199(5)).
Boarding of ships and aircraft
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Sub-clause 161(7) permits a police or customs officer, or a person assisting such an
officer to board a ship or aircraft for the purpose of exercising the powers conferred
by sub-clauses 199(1), (2), (3) or (4).
Sub-clause 199(8) enables a police or customs officer, with such assistance as is
reasonable and necessary, to board a ship or aircraft and examine the ship or aircraft
and any goods found on the ship or aircraft to ascertain whether there is any physical
currency on board the ship or aircraft in respect of which a clause 53 report is
required.
Entry to eligible places
Sub-clause 199(9) authorises a police or customs officer, with such assistance as is
reasonable and necessary, to go onto or enter any eligible place (see explanatory
memorandum on eligible place ) and examine the place and any goods found at or in
it, for the purpose of finding out whether there is at or in the place, or the goods, any
physical currency in respect of which a report under clause 53 is required. .
Seizure
Sub-clause 199(10) authorises a police or customs officer who has reasonable grounds
to suspect that physical currency found in the course of an examination or search
under sub-clauses 199(8) or (9) may afford evidence as to the commission of an
offence against sub-clause 53, to seize the physical currency
Offence
Sub-clause 199(11) makes it an offence to breach a requirement under sub-clauses
199(1) or (2). The maximum penalty for a contravention is imprisonment for 1 year
or 60 penalty units, or both.
Clause 200 Questioning and search powers in relation to bearer negotiable
instruments
Person leaving Australia
Sub-clause 200(1) requires a person who is about to leave Australia or who is an
embarkation area for the purpose of leaving Australia, if required to do so by a police
or customs officer, to declare whether or not the person has with him or her any bearer
negotiable instruments (see explanatory memorandum on the definition in clause 5 of
bearer negotiable instrument ). If the person has any bearer negotiable instruments,
the person must declare the amount payable under each negotiable instrument. The
person must, if required to do so by a police or customs officer, produce to such an
officer any bearer negotiable instruments that the person has with him or her.
Person arriving in Australia
Sub-clause 200(2) requires a person arriving in Australia, if required to do so by a
police or customs officer, to declare whether or not the person has with him or her any
bearer negotiable instruments, to declare the amount payable under each bearer
negotiable instrument and produce the bearer negotiable instrument to the officer.
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Officer may copy bearer negotiable instruments
Where a person produces a bearer negotiable instrument to a police or customs officer
under sub-clause 200(1) or (2), sub-clause 200(3) authorises the officer to make a
copy of the bearer negotiable instrument. Once copied, the officer must return the
negotiable instrument to the person.
Officer may conduct searches etc
Under sub-clause 200(4) where a police or customs officer has asked a person to
make a declaration under sub-clause 200(1) or (2) and the officer has reasonable
grounds to suspect that the person has made a false or misleading declaration (a false
declaration), the officer may, with such assistance as is reasonable and necessary,
examine an article which the person has with him or her if the person is about to leave
Australia or has arrived in Australia for the purpose of finding out whether the person
has with him or her any bearer negotiable instruments in respect of which a false
declaration has been made.
If a person refuses or fails to make a declaration under sub-clause 200(1) or (2) when
asked by a customs or police officer to do so, sub-clause 200(5) empowers a police or
customs officer, with such assistance as is reasonable and necessary, to examine an
article which the person has with him or her if the person is about to leave or arrive in
Australia for the purpose of finding out whether the person has with him or her any
bearer negotiable instruments.
Sub-clause 200(6) provides that, if a police or customs officer has asked a person to
produce a bearer negotiable instrument under sub-clause 200(1) and the person
refuses or fails to produce the bearer negotiable instrument the officer may, with such
assistance as is reasonable and necessary, examine an article which the person has
with him or her if the person is about to leave or arrive in Australia for the purpose of
finding out if the person has any bearer negotiable instruments with him or her.
Sub-clauses 200(7), (8) and (9) provide that if a police or customs officer (in respect
of whom a declaration under section 219ZA Customs Act 1901 is in force) has asked a
person to make a declaration under sub-clauses 200(1) or (2) and the officer suspects
on reasonable grounds that the person has made a false or misleading declaration or
the person refuses or fails to make a declaration or refuses to produce a bearer
negotiable instrument when asked and the officer has reasonable grounds to suspect
that the person has a bearer negotiable instrument on him or her or in clothing worn
by the person, the officer may search the person, with such assistance as is reasonable
and necessary, if the person is about to leave or arrive in Australia to find out if the
person does have any bearer negotiable instruments on him or her.
The customs or police officer conducting the search under sub-clauses 200(7), (8) or
(9) must be of the same sex as the person being searched (sub-clause 200(10)).
Officer may conduct searches on board a ship or aircraft
Sub-clause 200(11) authorises police or customs officers and persons assisting them,
to board a ship or aircraft or go into any eligible place (see explanatory memorandum
180
on the definition in clause 5 of eligible place ) for the purpose of