Australia: Anti-Money Laundering And Counter-Terrorism Financing Update

Last Updated: 25 June 2008
Article by Jim Bulling

AUSTRAC launches a Public Legal Interpretation series

AUSTRAC has launched a Public Legal Interpretation (PLI) series to address issues that have arisen in the interpretation of the Financial Transaction Reports Act 1988 (Cth) (FTR Act) and Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) (AML/CTF Act).

PLIs will not replace other AUSTRAC publications such as the AUSTRAC Regulatory Guide and Guidance Notes, which provide information and assistance to reporting entities regarding how AUSTRAC may administer the AML/CTF Act. Rather, PLIs will be used to publish AUSTRAC's legal interpretation on provisions and aspects of the FTR Act and the AML/CTF Act. PLIs do not constitute legal advice and cannot be relied upon as such.

AUSTRAC proposes to publish a series of seven PLIs during 2008 on a range of topics including the provision of designated services by an Australian financial services licensees, which is expected to be issued in early July.

No-action letters

Guidance Note 08/01 outlines when AUSTRAC may issue a 'no-action letter' where a reporting entity has breached or anticipates a future breach of the AML/CTF Act and requests that AUSTRAC not take enforcement or other regulatory action.

Requests to AUSTRAC to issue a no-action letter must be in writing and contain details of the quantification and qualification of the breach or anticipated breach and provide a proposed solution. Guidance Note 08/01 contains a list of details AUSTRAC expects reporting entities to address in providing this information. AUSTRAC will take this information into account in assessing whether to issue a no-action letter and may also consider matters such as:

  • the size and complexity of the reporting entity's business
  • whether the reporting entity has taken serious its responsibility for ensuring it adequately understands and complies with its obligations under the AML/CTF Act
  • whether the reporting entity is committed to fostering a culture of voluntary compliance with the AML/CTF Act.

Generally, AUSTRAC will be prepared to consider issuing a no-action letter where there is doubt as to whether a particular act or conduct would be lawful and AUSTRAC is of the view that enforcement action would not advance the policy of the AML/CTF Act.

By issuing a no-action letter, AUSTRAC is stating that it will not take regulatory or enforcement action in respect of a particular act or omission. The letter is a statement of AUSTRAC's regulatory approach to a particular circumstance and is not an expression of legal views. It also does not preclude third parties from taking action in relation to the reporting entity in respect of the circumstances involved.

AUSTRAC may withdraw or revise a no-action letter at any time and reserves the right to take any action it considers appropriate in cases where, for example, there has been incomplete disclosure by the reporting entity at the time of requesting the no-action letter.

In considering whether to request AUSTRAC to provide a no-action letter, a reporting entity should keep in mind that the request cannot be made on a 'without prejudice' basis. Further, information provided to AUSTRAC may be used by AUSTRAC for any of its statutory functions or accessed by the ATO or a specified designated agency given authority to access the information by the AUSTRAC Chief Executive Officer.

AML/CTF Compliance Officers

Guidance Note 08/02 outlines AUSTRAC's view on matters a responsible entity should consider when designating an AML/CTF Compliance Officer and possible duties of a compliance officer.

The Rules to the AML/CTF Act (Rules) require that the reporting entity designate a person as the Compliance Officer at the 'management' level. AUSTRAC has broadly interpreted 'management' to mean a person who undertakes the handling, direction or control of AML/CTF compliance within a particular reporting entity.

While the Rules do not specify whether the Compliance Officer must be an employee or may be an independent contractor, AUSTRAC considers it preferable that an employee be appointed as the Compliance Officer. However, AUSTRAC acknowledges that it may be appropriate to appoint an independent contractor as the Compliance Officer where an internal appointment may adversely affect the reporting entity's compliance with its AML/CTF obligations. This may be the case where there is an actual or perceived conflict of interest.

As the Rules are silent as to the duties to be undertaken by a Compliance Officer, AUSTRAC has provided a list of suggested duties that a Compliance Officer may undertake in Guidance Note 08/02. These include:

  • ensuring the reporting entity's continual compliance with its obligations under the AML/CTF Act
  • contributing to the design, implantation and maintenance of internal AML/CTF compliance manuals, policies, procedures and systems
  • overseeing the AML/CTF compliance and staff training program
  • providing leadership and contributing to a culture of AML/CTF compliance
  • acting as a contact officer with AUSTRAC
  • conducting periodic internal review of AML/CTF compliance.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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