Banking and Finance Law Noticeboard March 2021 - AML/CTF Act amended
As outlined in the Explanatory Memorandum accompanying the Bill for the Amending Act, the legislation contains a range of measures to strengthen Australia’s capabilities to address money laundering and terrorism financing risks, and generate regulatory efficiencies, including amendments to:
- expand the circumstances when reporting entities may rely on customer identification and verification procedures undertaken by a third party;
- explicitly prohibit reporting entities from providing a designated service if customer identification procedures cannot be performed;
- strengthen protections on correspondent banking by:
- prohibiting financial institutions from entering into a correspondent banking relationship with another financial institution that permits its accounts to be used by a shell bank, and
- requiring banks to conduct due diligence assessments before entering, and during, all correspondent banking relationships;
- expand exceptions to the prohibition on tipping off to permit reporting entities to share suspicious matter reports (SMRs) and related information with external auditors, and foreign members of corporate and designated business groups;
- provide a simplified and flexible framework for the use and disclosure of financial intelligence to better support combatting money laundering, terrorism financing and other serious crimes;
- create a single reporting requirement for the cross-border movement of monetary instruments; and
- address barriers to the successful prosecution of money laundering offences by:
- clarifying that the existence of one Commonwealth constitutional connector is sufficient to establish an instrument of crime offence, and
- deeming money or property provided by undercover law enforcement as part of a controlled operation to be the proceeds of crime for the purposes of prosecution.
The Amending Act also amends the Australian Federal Police Act 1979 (Cth), the Criminal Code Act 1995 (Cth), the Inspector‑General of Intelligence and Security Act 1986 (Cth), the Proceeds of Crime Act 2002 (Cth), and the Surveillance Devices Act 2004 (Cth).
It is usual for the Government to allow extended commencement of provisions which require changes to regulatory compliance. Accordingly, Mathew Leighton-Daly, author of our publication Financial Crime Control and Anti-Money Laundering, has made extensive annotations to the relevant provisions to be amended, to guide compliance with the new requirements. Subscribers are advised to keep watch for update 1 of 2021, due for publication by the beginning of April, which comprehensively addresses the amendments referred to above.