The "ongoing customer due diligence" component of
the Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF)
regime commences on 12 December 2008.
Those entities who are a Reporting Entity will now be required
to monitor customers to whom they provide designated services and
their transactions on an ongoing basis.
The AML Rules specify three mandatory components of
"ongoing customer due diligence":
Collection and verification of additional "know
your customer" (KYC) information:
Reporting Entities are already required to collect and verify
information about a customer's identity before providing a
designated service to that customer. As part of the "ongoing
customer due diligence" obligations, Reporting Entities must
also determine when it is necessary to collect further KYC
information, or update or verify existing KYC information. All
Reporting Entities must address this in their AML/CTF
Transaction monitoring program:
A Reporting Entity must include in Part A of their AML/CTF program
a transaction monitoring program which identifies transactions that
appear to be "suspicious". Each Reporting Entity must
decide on the most appropriate form of transaction monitoring for
their business. Reporting Entities may adopt computer based systems
or paper monitoring programs.
Enhanced customer due diligence program:
A Reporting Entity must also include in Part A of their AML/CTF
program an enhanced customer due diligence program which the
Reporting Entity will apply when there is high ML/TF risk or a
reportable suspicious matter has arisen.
The AML/CTF governing body, AUSTRAC, requires that the Reporting
Entity be compliant with these obligations by 12 March 2010, at the
very latest, and will require the Reporting Entity to apply its
transaction monitoring program, once implemented, retrospectively
to those transactions that occurred from 12 December 2008.
AUSTRAC expects reporting entities who are implementing complex
computerised "ongoing customer due diligence" procedures
which will not be fully functional on 12 December 2008, to utilise
manual or other existing tools during the interim period.
The "ongoing customer due diligence" obligations do
not apply to an Australian financial services licence holder who
arranges for a person to receive a designated service pursuant to
item 54 of table 1 in section 6 of the AML/CTF Act.
Michael Levy, a lawyer at Madgwicks, has acted for a broad range
of clients on a variety of matters including general corporate and
commercial advice, restructure and business sales, Trade Practices
Act and ASX compliance.
Rick Goldberg, a Partner at Madgwicks, has
over 18 years experience in corporate and commercial law. His
particular areas of practice include funds management,
superannuation and regulatory compliance, and his clients include
ASX companies, industry super funds, fund managers, IDPS operators,
stockbrokers, as well as family owned private businesses.
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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