Explanatory Note for Consultation Purposes

Explanatory note for consultation purposes

The Report on the Statutory Review of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 and Associated Rules and Regulations (the Review) recommended that the AML/CTF Rules should be simplified, rationalised and presented in a user-friendly format to improve accessibility and understanding of obligations.

The indicative restructure of the existing AML/CTF Rules Compilation, as published here for consultation, focuses on providing a ‘user-friendly’ format as noted in the Review.

This document is an indicative restructure for consultation. The restructure does not make substantive changes to the text of the AML/CTF Rules but comprises the first phase of substantive simplification. The outcomes of the consultation will inform AUSTRAC’s AML/CTF Rules simplification process.

It incorporates changes up to and including Anti-Money Laundering and Counter-Terrorism Financing Rules Amendment Instrument 2017 (No.1).

The restructure assumes that an AML/CTF Rules Instrument has created the Compilation as published here for consultation, retitled the Anti-Money Laundering and Counter-Terrorism Financing Rules 2017, thereby replacing the current compilation contained in the Anti-Money Laundering and Counter-Terrorism Financing Rules Instrument 2007 (No.1). Accordingly, the format of the restructure is not in terms of an AML/CTF instrumentrepealing and replacing the existing Compilation.

It is not intended that the published restructure will be made and registered, instead the focus is on stakeholder views on the framework which may be established. It is AUSTRAC’s current view that the restructure will not proceed to making until the AML/CTF Rules simplification process is completed.

The restructure:

• Groups like chapters together, for example, all the exemption chapters
• Removes redundant and repetitive text
• Clarifies and simplifies existing chapter titles, including providing titles where missing, for example, ‘Key Terms and Concepts’ for the former Chapter 1 and ‘Customer Identification’ for the former Chapter 4
• Provides simplified outlines to aid reporting entities in understanding their obligations
• Provides, for industry comment, possible repeal of current Chapter 44 and the provisions in the current Chapter 27 which relate to the Register of Providers of Designated Service Providers

The restructure is in the following order:

• Key Terms and Concepts
• Designated persons – specified persons
• Customer Identification
• Customer Due Diligence
• AML/CTF Programs
• Reporting obligations
• Remittance Sector Register
• Reporting Entities Roll
• Record-keeping
• Full Exemptions
• Partial Exemptions

A ‘Translation Table’ setting out the changes is included in the restructure and this Explanatory Note.

All additions are in bold and deletions are in strikethrough. It is noted that there are some technical issues with the restructure, which will be resolved as the simplification process proceeds to its conclusion.

Calculation of Regulatory Costs

These draft amendments may result in regulatory savings or costs if implemented. As discussed above, it is not the current intention that the restructure will be implemented as it is indicative, however, AUSTRAC welcomes any stakeholder submissions on the potential regulatory impact of the restructure.

The Australian Government has implemented an annual $1 billion red tape reduction target to which agencies such as AUSTRAC are required to contribute if regulatory action by an agency results in a cost reduction to businesses, community organisations or individuals. Any identified savings may also be used by an agency to ‘offset’ regulatory action which may impose regulatory costs.

Further details on the Australian Government policy are available at Cutting Red Tape.

AUSTRAC requests that industry provide, in any submission on these draft amendments, an estimate of any savings or costs that may result from their implementation. It is preferred that such estimates use the Regulatory Burden Measure (RBM) as a basis for the calculation, as the RBM has been mandated by the Australian Government for use by agencies. Further details on the RBM are available at Commonwealth Regulatory Burden Measure.

Human Rights (Parliamentary Scrutiny) Act 2011 requirements

The Human Rights (Parliamentary Scrutiny) Act 2011 requires that Statements of Compatibility must be made by the rule-maker with regard to disallowable legislative instruments, and must contain an assessment of whether the legislative instrument is compatible with the rights and freedoms recognised in the seven core international human rights treaties that Australia has ratified.

It is considered that the indicative restructure is compatible with the human rights and freedoms recognised or declared in the international instruments listed in the definition of ‘human rights’ in subsection 3(1) of the Human Rights (Parliamentary Scrutiny) Act 2011.

Translation table

Previous Chapter / Previous Chapter Title / Revised Part and Division / Revised Division Title
Chapter 1 / - / Part 2, Division 1 / Key terms and concepts
Chapter 2 / - / Part 2, Division 2 / Designated business group
Chapter 3 / - / Part 5, Division 2 (for Chapter 3, Part 3.1) / Correspondent banking due diligence
Part 2, Division 3 (for Chapter 3, Part 3.2) / Correspondent banking relationship
Chapter 4 / - / Part 4, Division 1 (for Chapter 4, Part 4.1) / Customer identification - general
Part 4, Division 2 (for Chapter 4, Part 4.2) / Individuals
Part 4, Division 3 (for Chapter 4, Part 4.3) / Companies
Part 4, Division 4 (for Chapter 4, Part 4.4) / Trustees
Part 4, Division 5 (for Chapter 4, Part 4.5) / Partners
Part 4, Division 6 (for Chapter 4, Part 4.6) / Associations
Part 4, Division 7 (for Chapter 4, Part 4.7) / Registered co-operatives
Part 4, Division 8 (for Chapter 4, Part 4.8) / Government bodies
Part 4, Division 9 (for Chapter 4, Part 4.9) / Verification from documentation
Part 4, Division 10 (for Chapter 4, Part 4.10) / Verification from reliable and independent electronic data
Part 4, Division 11 (for Chapter 4, Part 4.11) / Agents of customers
Part 4, Division 12 (for Chapter 4, Part 4.12) / Collection and Verification of Beneficial Owner information
Part 4, Division 13 (for Chapter 4, Part 4.13) / Collection and Verification of Politically Exposed Person information
Part 4, Division 14 (for Chapter 4, Part 4.14) / Exemptions from identifying beneficial owners and politically exposed persons
Chapter 5 / - / Part 6, Division 1 / Special AML/CTF Programs
Chapter 6 / - / Part 4, Division 15 / Identity verification
Chapter 7 / - / Part 4, Division 16 / Reliance on customer identification
Chapter 8 / - / Part 6, Division 2 / Standard AML/CTF programs – Part A
Chapter 9 / - / Part 6, Division 3 / Joint AML/CTF programs – Part A
Chapter 10 / - / Part 12, Division 1 / Gambling services
Chapter 11 / Compliance Report - Reporting and Lodgement periods / Part 7, Division 1 / Compliance reports
Part 12, Division 2 / Compliance reporting
Chapter 12 / Electronic funds transfer instructions / Part 12, Division 3 / Electronic funds transfer instructions
Chapter 13 / Approved third-party bill payment system / Part 2, Division 4 / Approved third-party bill payment system
Chapter 14 / Thresholds for certain designated services / Part 12, Division 4 / Thresholds for bills of exchange, travellers’ cheques and currency exchange
Chapter 15 / Ongoing customer due diligence / Part 5, Division 1 / Ongoing customer due diligence
Chapter 16 / Reportable details for international funds transfer instructions (items 1 and 2 in section 46) / Part 7, Division 2 / International Funds Transfer Instructions – Electronic
Chapter 17 / Reportable details for international funds transfer instructions under a designated remittance arrangement (items 3 and 4 in section 46) / Part 7, Division 3 / International Funds Transfer Instructions – Designated Remittance Arrangement
Chapter 18 / Reportable details for suspicious matters / Part 7, Division 4 / Suspicious matter reports
Chapter 19 / Reportable details for threshold transactions / Part 7, Division 5 / Threshold transaction reports
Chapter 20 / Record-keeping obligations under section 114 / Part 10, Division 1 / Reliance on identification records made by another reporting entity
Chapter 21 / Issuing or selling a security or derivative / Part 12, Division 5 / Issuing or selling a security or derivative
Chapter 22 / Exemption of certain types of transactions relating to the over-the-counter derivatives market / Part 11, Division 1 / Energy derivatives
Chapter 23 / Anti-Money Laundering and Counter-Terrorism Financing Rules - persons specified as 'non-financiers' / Part 2, Division 6 / Accounting and law practices
Chapter 24 / Anti-Money Laundering and Counter-Terrorism Financing Rules for movements of physical currency into or out of Australia / Part 7, Division 6 / Physical currency into and out of Australia
Chapter 25 / Anti-Money Laundering and Counter-Terrorism Financing Rules for receipts of physical currency from outside Australia / Part 7, Division 7 / Receipts of physical currency from outside Australia
Chapter 26 / Anti-Money Laundering and Counter-Terrorism Financing Rules for movements of bearer negotiable instruments into or out of Australia / Part 7, Division 8 / Bearer negotiable instruments into or out of Australia
Chapter 27 / Anti-Money Laundering and Counter-Terrorism Financing Rules for registrable details relating to the Register of Providers of Designated Remittance Services and the Remittance Sector Register / Part 8, Division 1 / Registrable details for the Remittance Sector Register
Chapter 28 / Applicable customer identification procedures in certain circumstances - assignment, conveyance, sale or transfer of businesses / Part 12, Division 6 / Customer identification - assignment, conveyance, sale or transfer of business
Chapter 29 / Record-keeping obligations under section 107 / Part 10, Division 2 / Exempt transaction records
Chapter 30 / Disclosure certificates / Part 4, Division 17 / Disclosure certificates
Chapter 31 / Exemption of certain types of transactions relating to currency exchange transactions / Part 11, Division 2 / Traveller accommodation - currency exchange transactions
Chapter 32 / Exemption of certain types of transactions relating to safe deposit boxes or similar facilities / Part 11, Division 3 / Traveller accommodation - Safe deposit boxes
Chapter 33 / Applicable customer identification procedure for purchases and sales of bullion valued at less than $5,000 / Part 12, Division 7 / Bullion transactions less than $5,000
Chapter 34 / Affixing of notices about cross-border movement reporting obligations / Part 7, Division 9 / Notices about cross-border movement reporting obligations
Chapter 35 / Exemption from applicable customer identification procedures for correspondent banking relationships / Part 12, Division 8 / Correspondent banking relationships
Chapter 36 / Exemption of certain designated services within a corporate structure / Part 11, Division 4 / Corporate structures
Chapter 37 / Exemption from threshold transaction reporting for certain designated services / Part 12, Division 19 / Inter- ADI threshold transaction reporting
Chapter 38 / Exemption from applicable customer identification procedures for the sale of shares for charitable purposes / Part 12, Division 9 / Sale of shares for charitable purposes
Chapter 39 / Exemption from applicable customer identification procedures - premium funding loans for a general insurance policy / Part 12, Division 10 / General insurance - premium funding loans
Chapter 40 / Definition of 'exempt legal practitioner service' / Part 2, Division 5 / Exempt legal practitioner service
Chapter 41 / Exemption from applicable customer identification procedures - cashing out of low value superannuation funds and for the Departing Australia Superannuation Payment / Part 12, Division 11 / Low value superannuation funds and the Departing Australia Superannuation Payment
Chapter 42 / Commodity warehousing of grain / Part 11, Division 5 / Grain warehousing
Chapter 43 / Friendly Society closed funds / Part 11, Division 6 / Friendly Society closed funds
Chapter 44 / Removing a Person's Name and Registrable Details from the Register of Providers of Designated Remittance Services / Part 8, Division 2 / Removing registrable details from the Register of Providers of Designated Remittance Services
Chapter 45 / Debt Collection / Part 12, Division 12 / Debt collection
Chapter 46 / Special circumstances for the applicable customer identification procedure / Part 4, Division 18 / Customer identification after the commencement of a designated service
Chapter 47 / Risk-only life policy interests in a superannuation fund / Part 11, Division 7 / Risk-only life policy interests in a superannuation fund
Chapter 48 / Exemption of salary packaging administration services from the AML/CTF Act / Part 11, Division 8 / Salary packaging
Chapter 49 / International Uniform Give-Up Agreements / Part 12, Division 13 / International Uniform Give-Up Agreements
Chapter 50 / Exemption from applicable customer identification procedure in certain circumstances / Part 12, Division 14 / Pre-commencement customers within designated business groups
Chapter 51 / AML/CTF Rules relating to certain definitions under the AML/CTF Act - Ordering and Beneficiary Institutions, Financial Institutions and Non-Financiers / Part 7, Division 10 / Submission of International Funds Transfer Instruction Reports – specified entities
Chapter 52 / Persons who are licensed to operate no more than 15 gaming machines / Part 12, Division 15 / Small gaming machine licensees
Chapter 53 / Exemption from threshold transaction reporting for certain designated services relating to Australian Government Entities and authorised deposit-taking institutions / Part 12, Division 16 / Threshold transaction reporting - Australian Government Entities and authorised deposit-taking institutions
Chapter 54 / Reporting obligations of registered remittance affiliates / Part 8, Division 11 / Registered network providers reporting for affiliates on the Remittance Sector Register
Chapter 55 / Remittance Sector Register / Part 8, Division 5 / Correction of the Remittance Sector Register
Chapter 56 / Information to be included in an application for registration as a remittance network provider, a remittance affiliate of the registered remittance network provider or an independent remittance dealer / Part 8, Division 3 / Information for remittance registration applications
Chapter 57 / Matters to be considered by the AUSTRAC CEO in considering applications for registration / Part 8, Division 4 / Assessment of registration applications
Chapter 58 / Matters to be considered by the AUSTRAC CEO when deciding to cancel a registration / Part 8, Division 8 / Cancellation of remittance registrations
Chapter 59 / Matters to be considered by the AUSTRAC CEO when deciding to suspend a registration / Part 8, Division 7 / Suspension of remittance registrations
Chapter 60 / Change in registration details regarding the person / Part 8, Division 6 / Change in remittance registration details
Chapter 61 / Reporting obligations of remittance affiliates / Part 8, Division 10 / Registered network providers reporting for affiliates on the Register of Providers of Designated Remittance Services
Chapter 62 / Reporting Entities Roll / Part 9, Division 3 / Correction of enrolment details
Chapter 63 / Information to be provided or in relation to an application for enrolment as a reporting entity / Part 9, Division 1 / Assessment of enrolment applications
Chapter 64 / Changes in enrolment details in respect to a reporting entity / Part 9, Division 2 / Changes in enrolment details
Chapter 65 / Removal of entries from the Reporting Entities Roll / Part 9, Division 4 / Removal of enrolment entries from the Reporting Entities Roll
Chapter 66 / Applicable customer identification procedures in certain circumstances - compulsory partial or total transfer of business made under theFinancial Sector (Business Transfer and Group Restructure) Act 1999 / Part 12, Division 17 / Compulsory transfers of business
Chapter 67 / Warrants / Part 12, Division 18 / Warrants
Chapter 68 / Anti-Money Laundering and Counter-Terrorism Financing Rules relating to records of identification procedures / Part 10, Division 3 / Record-keeping for customer identification
Chapter 69 / Casino licence holders - exemption from applying for registration on the Remittance Sector Register / Part 12, Division 20 / Casino license holders exempt from applying for registration
Chapter 70 / Renewal of registration / Part 8, Division 9 / Renewal of registration
Chapter 71 / Credit card reform - specifying persons under items 1, 2 and 3 of Table 1 in subsection 6(2) of the AML/CTF Act / Part 3, Division 1 / Non-ADI credit card issuers and acquirers
Chapter 72 / Account-based money transfer systems / Part 7, Division 11 / Account-based money transfer systems
Chapter 73 / Exemption for Registered plan management providers / Part 11, Division 9 / Registered plan management providers
Chapter 74 / Exemption for licensed trustee companies / Part 12, Division 21 / Licensed trustee companies