AML Compliance Training for agents Australia

Transcription

1 AML Compliance Training for agents Australia

2 Money Laundering (ML) Money laundering (ML) is the process of concealing the nature, the identity, the source and the destination of illegal begotten money. It involves three different stages: Placement physically placing illegally obtained money into the financial system or the retail economy. Layering separating the illegally obtained money from its criminal source by layering it through a series of financial transactions, which makes it difficult to trace the money back to its original source. Integration transforming the proceeds into a seemingly legitimate form for use and enjoyment.

3 States in Money Laundering pictorial example

4 What is Terrorism & Terrorism Financing (TF)? Terrorism is the unlawful use, or threatened use, of force or violence against individuals or property to intimidate or coerce governments or societies, often to achieve political, religious or ideological objectives. It is a global problem. Terrorism financing can be raised by legitimate sources such as fund-raising activities and business profits, as well as illegitimate sources such as the drug trade and fraud. Therefore, it is sometimes depicted as the reverse of traditional money laundering. Instead of illegal money being 'washed' to make it legal, terrorist financing often involves the task of filtering legitimate funds into terrorist hands.

5 AML Legislative requirements Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) Act 2006 Legislating governing AML compliance requirements for designated services AML/CTF Rules Specific detail on precise requirements as outlined in the AML/CTF Act AUSTRAC is the government authority responsible for administering compliance of the Act The legal requirements underpinning AML compliance for XM and agents includes: Registration requirements (to provide remittance services) AML/CTF program (risk assessment, compliance procedures etc) Customer identification/verification procedures Reporting obligations Record-keeping requirements Offences, Audit and Enforcement Consequences of non-compliance are serious, and include: De-registration, significant fines, or even imprisonment.

6 What are XM s key Compliance Policies & Agent s responsibilities? Agents are obliged to comply with all XM Compliances Policies in our roles to counter money laundering and counter terrorism financing risks. This includes: Conduct appropriate due diligence for all customers and transactions Not split transactions to avoid government identification and reporting requirements or any Xpress Money policy Conduct appropriate KYC checks for all transactions/customers Not knowingly or negligently create or record false names or information Not accept non-cash payments Cooperate and comply with local regulators and law enforcement bodies Comply with relevant Privacy and AML laws Implement and enhance internal policies, procedures & controls incl training employees Advise XM of any changes to agent details, key personnel etc within 14 days Report suspicious or unusual matters to XM (Aust) Compliance dept

7 Agent details & Key Personnel Key Personnel: Director/Secretary Owners or shareholders (>25% ownership share of business/company) Manager Employee with authority to represent policy of Agent Compliance officer It is a mandatory AUSTRAC registration requirement for all agent s key personnel to be declared to XM (by using AADD application / key personnel form) within 14 days of change. Registration details: Name of agent / key personnel Address of agent / key personnel Directors, Owners Declarations regarding relevant adverse legal outcomes for KP National Police Certificate for all key personnel (<12 months old at time of registration)

8 What is KYC (Know-Your-Customer)? Agents should have a proper understanding of their customers to satisfy compliance obligations. It is equally important that employees of the agents are properly trained regarding the importance of KYC and specific KYC policies or procedures. KYC involves due diligence vetting of a particular transaction/customer as well as ongoing due diligence (ie. Monitoring the activity/pattern of transactions over time for particular customers). Do not hesitate to ask questions: What is the purpose of the transaction? What is your customer s business? What is the source of funds? KYC has two stages: Identification & Verification (contrast verification with authentication) Refer XM (Australia) brochures: AML Compliance Guide and Customer Identification & Verification (CIV) brochure for guidance.

9 Principle objectives of KYC Policy: Ensures that customers are properly identified and verified. Verification using a reliable and independent document an original primary photographic identification document such as passport or driver licence. Implementing processes to effectively manage the risks posed by customers trying to misuse facilities. If a business knows its customers well, it may be able to prevent damage to its reputation and avoid fraud or excessive risk in financial transactions involving customers. * Remember KYC doesn t mean to INVESTIGATE the customer; however it ensures to check if the information provided by the customer is correct.

10 Acceptable ID s and Limits Acceptable ID at a physical location is a reliable and independent photographic ID document which contains name plus either address or DOB. ID s MUST be collected for ALL transactions in Australia. The prescribed categories acceptable for Xpress Money include: Driver licence (Australia) Passport (Australia or Foreign) with English translation, if necessary Age proof card There is also provision for Other ( reliable and independent photographic ID), which may be accepted. However, if there is any query about the acceptability of a particular ID, agent should revert to prescribed ID category or contact XM compliance department for guidance. The agent employee is to confirm that the details provided on the Send/Receive form match with the details mentioned on the ID document and if necessary request additional information or documentation to substantiate any details or alleviate any concerns that agent may have.

11 What is Customer Due Diligence? Customer due diligence involves taking appropriate measures for all customers and transactions in order to understand the circumstances surrounding transactions. The due diligence process aims to identify any money laundering risks and to take appropriate action to mitigate these risks. Due diligence involves: Effective customer acceptance policies to identify risks at initial point of contact Robust risk management practices to identify and understand ML/TF risks and then to appropriately mitigate and manage these risks Understanding particularly transactions, customers and corridors which may represent varying levels of risk. Conducting proper identification verification. Routinely monitoring transaction activity to ensure the activity matches with the customer's profile. This is also called as enhanced due diligence (EDD). Procedures to conduct enhanced due diligence (EDD). e.g: Name/Address/ID details Data quality Unusual/suspicious circumstances such as split or structured transactions High value transactions

12 Why do we conduct Due Diligence: To reduce AML risks To be reasonably satisfied that customers are who they say they are To be confident there is no legal barrier (e.g. government sanctions) to provide the product or service requested To be able to assist law enforcement, by providing available information on customers or activities being investigated To ensure full compliance with the law and XM guidelines

13 Record Keeping Requirements: All agents need to legally maintain the record of all the transactions for at least 7 years. The objective of record keeping is to ensure that we are able to provide the basic information about customer and to reconstruct the individual transactions undertaken at the request of the relevant authorities at any given time. The essential details that the agent branch has to file and preserve includes: Full contact address and phone, mobile number of the sender/receiver Customer Identification Details of the transactions During the term of the agency or upon its termination, XM will upon reasonable notice to the Agent, inspect, audit and review the Agent s books and records relating to compliance with XM s written policies and procedures and local laws and regulations.

14 What is Sanction List? When a business provides different products or services to a new or existing customer it should be aware of the Sanction list. The Australian Department of Foreign Affairs and Trade publish Sanction list of various entities. Sanctioned Entities: may cover: Countries and government institutions Individuals Companies Charitable organizations and non-profit associations Known terrorist groups and their affiliates. Sanctioned Purposes: The purpose of blacklists varies. Entities should be particularly vigilant of sanctions prohibiting funds flows and to be vigilant of transactions that involve contravention.

15 Unusual or Suspicious Transactions / Suspicious Matter Reports (SMR) An unusual or suspicious transaction is any transaction that Has no business or apparent lawful purpose; Is conducted by a person who may not be who they claim to be; Is not the kind in which a customer would normally be expected to engage Examples of Suspicious transactions/red flags: Customer trying to structure their transactions to avoid thresholds (in Aust or overseas); Customer appear nervous, rushed or defensive to questioning about his remittance; Customer who may be reluctant to show ID; Customer who may offer gifts to avoid certain record keeping requirements or if you handle the transaction in a certain way as he/she desires; Customer concealing the beneficial owner of funds; Two customers coming together but sending money transfer separately to the same beneficiary. In the event of a suspicious transaction: 1. Agent representative is required to promptly report suspicious/unusual transactions to XM 2. It is the duty and responsibility of XM Compliance (Aust) to investigate and forward the SMR to relevant authorities. 3. Note: It is an offence to tip-off a customer about a potential suspicious report.

16 So our obligations are clear: We must: Verify the identity of Client (Customer Due Diligence measures). Keep accurate and complete records. (Enhanced customer due diligence and ongoing monitoring). Maintain adequate control systems. (Policies and procedures to prevent money laundering and terrorist financing) Continually bear in mind the possibility of money laundering i.e., identifying suspicious transactions. Report unusual/suspicious transactions to Xpress Money. Training of employees.