AML/CTF compliance guide for independent remittance dealers

Transcription

1 AML/CTF compliance guide for independent remittance dealers

2 Disclaimer The purpose of this guide is to provide assistance to independent remittance dealers in meeting their obligations under the Anti-Money Laundering and Counter-Terrorism Financing Act It is not intended to be comprehensive and does not constitute nor should it be treated as legal advice or opinion. The Commonwealth accepts no liability for any loss suffered as a result of reliance on this publication. AUSTRAC recommends that independent professional advice be sought. The information contained herein is current as at the date of this document. Commonwealth of Australia 2013 This work is copyright. You may download, display, print and reproduce this material in unaltered form only (retaining this notice) for your personal, noncommercial use or use within your organisation. Where material has been sourced from other thirdparty sources, copyright continues. Requests and inquiries concerning reproduction and rights for commercial use should be addressed to [email protected] Date: February 2013

3 03 /overview Overview The purpose of this anti-money laundering and counter-terrorism financing (AML/CTF) compliance guide is to help independent remittance dealers meet the requirements of the Anti-Money Laundering and Counter- Terrorism Financing Act 2006 (AML/CTF Act, or the Act). Who should use this compliance guide? This compliance guide is suitable for remittance dealers who: are sole traders or have a small number of employees operate either fully or partially as an independent remittance dealer (that is, not as a remittance network provider or as an affiliate of a registered network provider). How do I know if I am an independent remittance dealer? Independent remittance dealers are businesses which provide remittance services directly to customers using their own systems and processes. Typically, transfers for customers are conducted through the business s bank accounts rather than through a system provided by a registered network provider. Why are remittance dealers covered by the AML/CTF Act? The AML/CTF Act applies to remittance dealers because remittance dealers provide one or more of the services listed in the Act. These services are included in the Act because they are vulnerable to abuse by criminals for money laundering or terrorism financing (ML/TF) purposes. Services covered by the Act attract reporting and other obligations. These are discussed further in this guide. The services covered by the Act are referred to in the Act as designated services and will be referred to as services in this guide. What is money laundering and terrorism financing? Money laundering is the process where criminals attempt to hide the true origin or ownership of the proceeds of their criminal activities to avoid prosecution, conviction and confiscation of their criminal funds. Money laundering also refers to situations where a criminal chooses to spend money which is the proceeds of a crime, such as tax evasion or drug dealing. Terrorism financing includes receiving funds from, giving funds to, or collecting funds on behalf of terrorists and terrorist organisations. This includes where a remitter is unaware that the organisation is a terrorist organisation but does not take reasonable steps to find out whether the funds will be used to engage in a terrorist act. In the past, remittance dealers have been used by criminals to launder the proceeds of crime and/or facilitate the financing of terrorism. The following case study on page 4 is a recent example of this.

4 04 AUSTRAC guide for independent remittance dealers /overview AUSTRAC case study: Australian terror suspects sent funds to Somalia to support terrorist group A joint-agency investigation led to the arrest of five suspects on charges of conspiring to commit a terrorist attack on an Australian army base. Investigations revealed the group had sent funds destined for use by the Somalia-based terrorist group, al-shabaab. The group had also facilitated travel for Australia-based supporters to attend overseas military training camps. Funds remitted offshore by the suspects did not go directly to al-shabaab but to entities linked to al-shabaab activities in Somalia. Investigating officers, assisted by AUSTRAC information, discovered that the suspects had sent thousands of dollars in low-value international funds transfer instructions (IFTIs) to Somalia. Authorities suspected these IFTIs were to support the aims of al-shabaab and associated military training activities overseas. The suspects sent the funds via remittance service businesses, often using false names of the overseas beneficiary customer to obscure the money trail. However, the telephone numbers recorded in the IFTIs for the overseas customers were correct. Investigating officers concluded that the suspects used the customers correct phone numbers to ensure the funds arrived safely and were handed to the correct customer in Somalia. In this case, the information reported in the IFTIs was valuable intelligence for the investigating officers to use to confirm other information or consider leads in the investigation. In general, the group members paid for the remittances to Somalia using their own funds. The group also remitted funds that had been raised by Australia-based social and community fundraising groups a common practice in terrorism financing methods internationally. There was no evidence to suggest that members of the social and community groups involved were aware that the funds being raised were to be remitted to East Africa in support of al-shabaab. Three suspects were found guilty of conspiring to plan an Australia-based terrorist attack and were sentenced to 18 years jail to serve 13 years and six months. Source: AUSTRAC typologies and case studies report 2012 case study 21

5 AUSTRAC guide for independent remittance dealers /overview 05 What do you have to do? You must be able to show AUSTRAC that you have: carefully thought about your ML/TF risks and how you will protect your business against them written down your policies and procedures for managing these risks followed your own policies and procedures reviewed and updated your policies and procedures regularly and as your circumstances change. Documenting the steps you are taking is a way you can show AUSTRAC your willingness to comply with your obligations under the AML/CTF Act. This guide is designed to help you do this work. What are the penalties for not complying with the AML/CTF Act or Rules? You have obligations under the AML/CTF Act which you are legally bound to meet. If you are found to be in serious breach of these obligations, civil and/or criminal penalties may be brought against you. Civil penalties for contravention of the AML/CTF Act range up to $3.4 million for an individual and up to $17 million for a corporation. The penalties for criminal offences include imprisonment for up to 10 years and/or fines up to $1.7 million. How to use this guide This compliance guide will help you perform the following activities: 1. Identify and consider the ML/TF risks your business may be exposed to and the actions you need to take to manage those risks. 2. Record in your own words the policies and procedures you will use to manage your AML/CTF obligations. 3. Organise, list and attach other documents you have that can be used to provide evidence that you have considered, planned and implemented your AML/CTF obligations. This guide is an example of the level of care, diligence and detail AUSTRAC expects you to use when you plan and implement your policies and procedures. While AUSTRAC recommends that you consider and use this guide, it is not compulsory to do so. Please be aware that providing a remittance service while unregistered is a criminal offence and penalties apply,

6 06 AUSTRAC guide for independent remittance dealers /overview Overview of guide layout This guide is organised into five modules (parts). Each module introduces obligations that you must consider and explains how to document the steps you are taking to meet these obligations. If you need more room to respond to the directions in this guide, you can attach separate documents. Module Description Page number Module 1: Enrol and register your business with AUSTRAC Module 2: Your business and money laundering and terrorism financing risks Module 3: AML/CTF program Module 4: Threshold transaction, suspicious matter and IFTI reports Module 5: Record keeping for AML/CTF Appendices Module 1 will explain how to enrol and register with AUSTRAC Module 2 will help you consider the ML/TF risks your business faces Module 3 will help you plan and document your AML/CTF program Module 4 will help ensure you are reporting to AUSTRAC when required Module 5 will help you meet your AML/CTF record-keeping requirements Resources offering you further assistance in meeting your obligations Page 7 Page 8 Page 26 Page 48 Page 54 Pages Abbreviations/glossary Pages 64 65

7 07 /module /overview1 Module 1: Enrol and register your business with AUSTRAC Requirement to enrol and register with AUSTRAC Independent remittance dealers are required to enrol and register with AUSTRAC. Enrolling and registering are separate legal requirements and you must do both. You can submit your enrolment application and your registration application at the same time if you wish. Enrolling: You need to enrol within 28 days of providing or commencing to provide a service covered by the AML/CTF Act. You also need to keep your enrolment details up to date and advise AUSTRAC of any change to your details within 14 days. The fastest and easiest way to enrol is electronically through AUSTRAC Online at: If you do not have computer or internet access, you can enrol using a paper form available from AUSTRAC by contacting the AUSTRAC Help Desk on Registering: You also need to apply to be registered with AUSTRAC. To apply for registration under the new scheme you need to: provide information to AUSTRAC about your remittance business and main staff keep certain records about your business obtain and keep national police certificates for main staff. The fastest and easiest way to apply to register with AUSTRAC is by using the registration form located on the AUSTRAC website: If you do not have computer or internet access, you can register using a paper form available from AUSTRAC by contacting the AUSTRAC Help Desk on On 1 November 2011 a new enrolment and registration scheme was introduced. If you were enrolled or registered under the old scheme, you will still need to enrol and register under the new scheme. Please be aware that providing a remittance service while unregistered is a criminal offence and penalties apply.

8 08 08 /module/overview 2 Module 2: Your business and money laundering and terrorism financing risks You must identify the ML/TF risks your business faces. To do this you need to consider the nature of your business and how it operates. This involves considering: your customers the products and services you provide your business practices the countries you do business with. Quick checklist Step 1: Describe your business Step 2: Describe your customers and your services Step 3: Identify ML/TF risks a risk-based approach This is called an ML/TF risk assessment. To assist you with your ML/TF risk assessment, complete the following three steps.

9 AUSTRAC guide for independent remittance dealers /module 1 09 Step 1: Describe your business Legal name of your business 1 : Trading name of your business (if different to legal name): Approximately how many remittance transactions does your business conduct per week? What is the average value of these transactions? What are usually the highest and lowest values for transactions you conduct? Is the remittance service the only service your business offers? If not, what other services do you provide (for example, grocery store, restaurant, cafe, video store)? Does your business offer any other services covered by the AML/CTF Act (for example, foreign currency exchange)? 1 The legal owner of the business should be included here. The legal owner is normally an individual, a company or a partnership.

10 10 AUSTRAC guide for independent remittance dealers /module 1 Step 2: Describe your customers and your services To be able to identify the ML/TF risks to your business you must consider four important factors. These are: 1. your customers 2. the products and services you provide 3. your business practices 4. the countries you do business with. A. List all customer types On page 11, list the different types of customers you deal with. Typical customer types are individuals, companies, partnerships, associations and trusts. You may wish to list individuals in sub-categories such as face-to-face customers, students, tourists or members of your local ethnic communities. You may also want to include information about each customer type, such as their average and maximum transaction size, what percentage of your customers they represent, and whether they deal through an agent (including how often this occurs). Remember to include any politically exposed persons (PEPs) 2. 2 PEPs are individuals who are, or have been, entrusted with prominent public functions either in Australia or in a foreign country. Examples include Heads of State or government, senior politicians, senior government, judicial or military officials, senior executives of state-owned corporations and important political party officials. PEPs are potential targets for bribery due to their prominent position in public life and have a higher risk of corruption due to their access to state accounts and funds. Business relationships with family members or close associates of PEPs may involve risks similar to those in dealing with PEPs themselves.

11 AUSTRAC guide for independent remittance dealers /module 1 11 Please describe your customers: Which of the following customer types do you have? (please tick box) Individuals: Locals Customers you do not deal with face-to-face (for example, over the phone or internet) Tourists Students Regular customers Non-individual customers (for example, businesses such as a company or partnership) Other (please describe): Describe your customer types and their transaction patterns:

12 12 AUSTRAC guide for independent remittance dealers /module 1 Describe your average or typical customer (include information such as age, gender, occupation): What payment methods are used by your customers (cash, card, cheque, other)? What is the most common payment method?

13 AUSTRAC guide for independent remittance dealers /module 1 13 B. List services and methods of delivery The following table shows the services covered by the AML/CTF Act that are commonly provided by a remittance business. Use the table to indicate which services you provide and the delivery method you use. Services covered by the AML/CTF Act Face-toface Telephone Internet/ website Other: (for example, fax) I do not provide this service International funds transfer instructions outgoing (Accepting an instruction for the transfer of money or property from a customer under a remittance arrangement) International funds transfer instructions incoming (Making money or property available to a customer or arranging for it to be made available under a remittance arrangement) Specify any other services (for example, foreign currency exchange):

14 14 AUSTRAC guide for independent remittance dealers /module 1 Explain how your business transfers and makes money or property available on behalf of your customers for example, remittance through the banking system, offsetting funds, or other: C. List foreign countries you deal with The following table helps you set out the foreign countries you might deal with as an independent remittance dealer. What are the main countries your customers remit money to? What are the main countries your customers receive money from?

15 AUSTRAC guide for independent remittance dealers /module 1 15 Step 3: Identify ML/TF risks a risk-based approach What is a risk-based approach? The risk-based approach is the most cost-effective and appropriate way to manage and reduce the ML/TF risks faced by your business. It is effective in reducing risk because it allows you to focus effort where it is most needed. This means that the costs to your business and customers are balanced with the real levels of risk your business faces as assessed by you. If your business provides low-risk products to low-risk customers, the approach you need to take will potentially be simpler and less costly than if you provide high-risk products to high-risk customers. The steps involved in the risk-based approach are to: identify the ML/TF risks that are relevant to your business assess the risks facing your business design and put in place controls to manage and reduce these risks monitor and continuously improve these processes record what has been done and why. Using the risk-based approach, you decide for yourself what risks your business faces. You also assess each risk and decide how great each is. Then you put in place processes to manage and reduce those risks. Businesses often use a checklist to record the risks they face and how they intend to control each one. The attached Remitter Risk Checklist is provided as an example of a system you might use to identify, assess and minimise the risks your business faces. The checklist is an example only and may not suit your specific business. The steps of the risk-based approach are explained below. Identify the risks Identifying business risks means asking questions like: How could my business be used by criminals to launder money? What situations or customer behaviour might be suspicious? A risk-based approach starts with identifying the risks your business faces. Typical ML/TF risks faced by remittance businesses include risks posed by your customers and the products/services you offer. ACTION: write down the specific risks your business faces. You might like to use the Remitter Risk Checklist at the end of this module for this task. Risk assessment After you identify the risks, you need to assess each risk and decide if it presents a threat that is high, medium or low. This will assist you to work out how to manage the risk. To decide whether a risk poses a high, medium or low threat, you need to consider how likely it is that the risk will occur and what the impact of the risk will be. Page 16 includes examples of risks facing remittance businesses.

16 16 AUSTRAC guide for independent remittance dealers /module 1 Customers All customers potentially pose a ML/TF risk. Some customers will pose a higher risk than others. Below are examples of customers that may be high risk : a customer who is unwilling to produce evidence of identification or who produces unsatisfactory evidence of identification a new customer, particularly one who does not deal face-to-face, or wants to carry out large one-off transactions a customer who wishes to deal only in large amounts of cash and not in traceable bank transfers a customer who is not local to the business or outside your normal target customer base a customer engaged in a business which involves significant amounts of cash complex business ownership structures with the potential to conceal the identity of the underlying beneficial owners or controlling person(s) of a business an individual (or an immediate relative) holding a public position which carries a risk of exposure to the possibility of corruption e.g. a politically exposed person (PEP) a customer based in, or conducting business in or through, high-risk countries, or countries with known higher levels of corruption, organised crime or drug production/ distribution. Can a customer s behaviour change their level of risk? Yes, it can. For example, if a customer displays some of the behaviours below, their ML/FT risk level increases: a customer or group of customers making frequent transactions to the same individual/ group of individuals where the customer is, or appears to be, acting on behalf of another person, and the customer is unwilling to give the name(s) of the person(s) they represent a customer is willing to pay very high charges to complete a transaction a customer whose normal remitting behaviour changes and they are unwilling to explain the reason for this or the source of the increased funds. Products/services provided by your business All remittance products potentially pose a risk of abuse by money launderers or terrorist financiers. Some products or services can increase the risk. For example: products which allow/facilitate payments to third parties remittance arrangements which allow for individual payments to be pooled together with other payments before the funds are transferred overseas, making an individual payment hard to identify dealing with an overseas counterpart who is not appropriately licensed or is operating in an illegal or suspicious manner remittances to/from specific countries that may be considered a risk due to the country being known as a source of drugs or other significant criminal activity for example, subject to trade sanctions; known to be a tax haven; or linked to proscribed terrorist organisations. Note: The above is just a short list of examples. Your risk assessment of your own business should include any other risks that apply specifically to your circumstances.

17 AUSTRAC guide for independent remittance dealers /module 1 17 ACTION: Using the list of risks you identified for your business, categorise each risk as high, medium or low. You might like to use the Remitter Risk Checklist at the end of this module for this task Controlling and minimising the risk After you identify and assess the risks specific to your business, you now need to consider how you will control, minimise or avoid each risk entirely. These processes are called risk controls. Because every business is different, there are many ways to treat risks. Many of your existing procedures may already help to reduce the risk of ML/TF. Some examples are: limiting the size of transactions in some circumstances not transferring money to high-risk countries maintaining relationships with long-standing customers applying more rigorous customer due diligence measures obtaining additional information on higher risk customers to more thoroughly verify their identity and/or any beneficial owners of funds transferred conducting more rigorous ongoing monitoring of the transactions and activity of customers ensuring your staff are aware of the ML/TF risks which your business faces and are trained in how to control those risks. Identifying a customer or transaction as being of a higher risk does not automatically mean that the customer/transaction is involved with money laundering or terrorism financing. Similarly, a customer/transaction seen as low risk does not mean that the customer/transaction is not involved with money laundering or terrorist financing. Employees of the business need to be alert and use their experience and common sense when applying the business s risk-based criteria and rules. ACTION: Using the list of risks you identified and assessed for your business, write down what steps you will take to control, minimise or avoid each risk. Again, the Remitter Risk Checklist may be useful for this task. Risk monitoring and improving the effectiveness of controls Once you have identified your risks and considered how you will control them, you must then ensure you have processes in place to enable you to identify new risks or quickly recognise changes in your existing risks. This requires you to consider the risk of any new: products you introduce countries you remit to or from partners or staff who join your business processes you introduce delivery methods you implement customers or customer types you attract.

18 18 AUSTRAC guide for independent remittance dealers /module 1 Your business should also have some means of assessing whether your existing risk controls are working effectively and, if not, where they need to be improved. You will also need to regularly review your AML/CTF policies and processes. You should monitor and review the following factors when assessing your businesses ML/TF risks: the procedures you use to identify changes in customer characteristics or behaviour Further resources available The AUSTRAC website includes resources with examples of how to address the risks which typically face a small- to medium-sized business. These include: changes to the ways your products and services may be used for ML/TF the adequacy of your staff training the compliance monitoring arrangements you use; for example, internal audit/quality assurance processes or external reviews. Recording what has been done and why You should keep documents relating to the risk assessment and management procedures and processes. Keeping these documents will enable you to show AUSTRAC that your customer due diligence and ongoing monitoring procedures are appropriate.

19 AUSTRAC guide for independent remittance dealers /module 1 19 Remitter Risk Checklist EXAMPLE Risk types and risk indicators Possible control options Risk rating after controls: high, medium or low In all cases you must employ the following risk controls: obtain minimum know your customer (KYC) information maintain ongoing monitoring of transactions ensure your employees have risk awareness training. Customer profile and delivery method Customer is an individual and considered low risk, but you are not satisfied with the information about the true identity of the customer or the true intent of the transaction. Consider whether or not to proceed with the business. Customer who does not deal face-to-face Seek additional identification (beyond minimum requirements) and/or make independent enquiries about the customer and their background. If appropriate, insist on meeting the customer face-to-face. Proceed if you are satisfied. If you are not satisfied with the information about the true identity of the customer or the true intent of the transaction, you should consider whether or not to proceed with the transaction or business arrangement.»» If you are still suspicious, you must lodge a suspicious matter report (SMR) with AUSTRAC.

20 20 AUSTRAC guide for independent remittance dealers /module 1 Risk types and risk indicators A customer who is not a local resident or is outside your normal target customer base Possible control options Seek additional identification (beyond minimum requirements) and/or make independent enquiries about the customer and their background. Proceed if you are satisfied. If you are still suspicious, you must lodge an SMR with AUSTRAC. Risk rating after controls: high, medium or low A customer is not willing to produce evidence of identification, or produces unsatisfactory or seemingly forged identification A customer (or an immediate relative) who holds a public position and/or is located in a country which carries a risk of exposure to the possibility of corruption Seek additional identification (beyond minimum requirements) and/or make independent enquiries about the customer and their background. Proceed if you are satisfied. Develop an identification discrepancies policy that is, what you will do if your customer will not provide identification or where you suspect the identification is false. If you are still suspicious, you must lodge an SMR with AUSTRAC. Seek additional identification (beyond minimum requirements) and/or make independent enquiries about the customer and their background.»» If you are still suspicious, you must lodge an SMR with AUSTRAC.

21 AUSTRAC guide for independent remittance dealers /module 1 21 Risk types and risk indicators A customer who wants to carry out a large one-off transaction A customer who is engaged in a business which involves significant amounts of cash A customer which is a company with complex ownership structures and/or with the potential to conceal underlying beneficiaries Possible control options Seek additional identification (beyond minimum requirements) and/or make independent enquiries about the customer and their background. Make further enquiries about the nature of the transaction and source of funds. Proceed if you are satisfied. If you are still suspicious, you must lodge an SMR with AUSTRAC. Seek additional identification (beyond minimum requirements) and/or make independent enquiries about the customer, their business and background. Proceed if you are satisfied. Consider making further enquiries about the nature of the transactions the customer wishes to undertake, including enquiring about the beneficiary customer and the country of destination. Proceed if you are satisfied. If you are still suspicious, you must lodge an SMR with AUSTRAC. Seek additional identification (beyond minimum requirements) and/or make independent enquiries about the customer, their company and background. Proceed if you are satisfied. Complete detailed beneficial ownership search.»» If you are still suspicious, you must lodge an SMR with AUSTRAC. Risk rating after controls: high, medium or low

22 22 AUSTRAC guide for independent remittance dealers /module 1 Risk types and risk indicators A customer based in, or conducting business in or through, a high-risk country, or a country with known higher levels of corruption, organised crime or drug production/distribution A customer who begins remitting more often and/or in larger amounts than usual Possible control options Seek additional identification (beyond minimum requirements) and/or make independent enquiries about the customer and their background. Check if the country is a proscribed foreign country as defined in the AML/CTF Act 3. Check the AUSTRAC website ( for the current list. Consider also checking the Department of Foreign Affairs and Trade website ( gov.au/un/unsc_sanctions/index.html) for sanctioned countries. Proceed if you are satisfied. If you are still suspicious, you must lodge an SMR with AUSTRAC. Make further enquiries about the nature of the transaction and source of funds. Proceed if you are satisfied. If you are still suspicious, you must lodge an SMR with AUSTRAC. Risk rating after controls: high, medium or low A customer or group of customers making frequent transactions to the same individual/group of individuals Seek additional identification (beyond minimum requirements) and/or make independent enquiries about the customer and their background. Proceed if you are satisfied. Consider making further enquiries about the nature of the transaction and source of funds. Proceed if you are satisfied. If you are still suspicious, you must lodge an SMR with AUSTRAC. 3 As at February 2013 Iran is the only proscribed country.

23 AUSTRAC guide for independent remittance dealers /module 1 23 Risk types and risk indicators A customer is willing to pay unusually high charges or fees Possible control options Seek additional identification (beyond minimum requirements) and/or make independent enquiries about the customer and their background. Proceed if you are satisfied. If you are still suspicious, you must lodge an SMR with AUSTRAC. Risk rating after controls: high, medium or low Where the customer is, or appears to be, acting on behalf of another person, and is not willing to give the name(s) of the person(s) they represent A customer who insists on transfers which are immediate or as soon as possible for no apparent good reason Seek additional identification (beyond minimum requirements) and/or make independent enquiries about the customer and their background. Proceed if you are satisfied. Consider making further enquiries about the nature of the transaction and source of funds. Proceed if you are satisfied. If you are still suspicious, you must lodge an SMR with AUSTRAC. Seek additional identification (beyond minimum requirements) and/or make independent enquiries about the customer and their background. Proceed if you are satisfied. Consider making further enquiries about the nature of the transaction and source of funds. Proceed if you are satisfied.»» If you are still suspicious, you must lodge an SMR with AUSTRAC.

24 24 AUSTRAC guide for independent remittance dealers /module 1 Risk types and risk indicators Products and services Possible control options Risk rating after controls: high, medium or low Remittance services Ensure you are enrolled and registered with AUSTRAC before offering a remittance service (refer to pages 7 for further details). Implement an AML/CTF program (refer to pages 26 for further details). Report relevant transactions to AUSTRAC (refer to pages 48 for further details). Does your business employ a remittance arrangement where individual payments are pooled together with other payments before transferring overseas, making an individual payment hard to identify? Is your overseas counterpart licensed? Are they operating in a suspicious manner? Seek additional identification (beyond minimum requirements) and/or make independent enquiries about the customer and their background. Proceed if you are satisfied. Make further enquiries about your overseas partner. Proceed if you are satisfied.»» If you are still suspicious, you must lodge an SMR with AUSTRAC.

25 AUSTRAC guide for independent remittance dealers /module 1 25 Risk types and risk indicators Country Does your business remit money to or from countries that are: experiencing significant civil unrest under Australian Government sanctions or are proscribed foreign countries as defined in the AML/CTF Act known for significant transnational criminal activity such as drugs trafficking, money laundering, or people smuggling known as a tax haven known to have links to terrorist organisations? Possible control options Seek additional identification (beyond minimum requirements) and/or make independent enquiries about the customer and their background. Check if the country is a proscribed foreign country as defined in the AML/CTF Act 4. Check the AUSTRAC website ( for the current list. Consider also checking the Department of Foreign Affairs and Trade website ( unsc_sanctions/index.html) for sanctioned countries. Proceed if you are satisfied. Risk rating after controls: high, medium or low 4 As at February 2013 Iran is the only proscribed country.

26 26 26 /module/overview 3 Module 3: AML/CTF program Remittance dealers are required to have a written AML/CTF program to identify, minimise and manage ML/TF risks. The obligations which form part of your AML/CTF program are to: appoint an AML/CTF compliance officer implement a process to screen employees before they are employed train employees on an ongoing basis so they understand their AML/CTF responsibilities have a process in place to respond to feedback from AUSTRAC have a process in place to monitor and review your AML/CTF program have procedures in place to collect and verify customer identification information have procedures in place to monitor customers transactions list the types of reports you are required to submit to AUSTRAC (for example, SMRs) describe the procedures you have in place for reporting to AUSTRAC ensure approval and ongoing oversight of the AML/CTF program by the business owner (or Chief Executive Officer/Board). Quick checklist Step 1: Appoint an AML/CTF compliance officer Step 2: Describe your employee due diligence program Step 3: Describe your AML/CTF risk awareness training program Step 4: How will you respond to AUSTRAC feedback? Step 5: Establish regular independent reviews of your AML/CTF program Step 6: Collect and verify KYC information Step 7: Ongoing customer due diligence Step 8: Management approval and ongoing oversight of the AML/CTF program These obligations are described in more detail in the following eight steps. Complete each step as required.

27 AUSTRAC guide for independent remittance dealers /module 3 27 Step 1: Appoint an AML/CTF compliance officer You must appoint someone from management or at a senior level (such as the business owner) to be the AML/CTF compliance officer. The compliance officer should be the main point of contact for AUSTRAC and for your employees in relation to AML/CTF. You may also wish to nominate a backup person for times when the compliance officer is not available. What duties does the AML/CTF compliance officer have? (Tick all relevant tasks) Enrolling and maintaining business details with AUSTRAC Ensuring the business is registered with AUSTRAC and meets the record-keeping requirements for registration Approving the AML/CTF program and procedures Updating and maintaining the AML/CTF program and procedures Updating and maintaining the ML/TF risk assessment Training employees about their AML/CTF responsibilities Screening prospective employees Ensuring criminal history checks of main staff are undertaken Responding to feedback from AUSTRAC Monitoring transaction and customer activity to identify suspicious transactions

28 28 AUSTRAC guide for independent remittance dealers /module 3 Conducting further enquiries on high-risk or suspicious customers Sighting and recording identification for customers Reporting IFTIs, threshold transactions and suspicious matters to AUSTRAC Keeping records of the AML/CTF program and customer identification Other: Step 2: Describe your employee due diligence program You are required to have an employee due diligence program. This is a program to decide if, and how, you should screen your employees (including prospective employees) who are in a position to facilitate an ML/TF offence. For example, you may check their identity and background to satisfy yourself that they are of good character and are not involved with criminals or criminal activity. An employee due diligence program must also contain procedures to manage employees who fail, without reasonable excuse, to comply with a system, control or procedure which relates to your AML/CTF program. If you do not have any employees, please indicate below. How many employees do you have? (Include people who may assist you from time to time with conducting transactions, including unpaid family and friends who work in your business.) Full-time: Part-time: Casual:

29 AUSTRAC guide for independent remittance dealers /module 3 29 Are there different roles within your business (for example, accountant, customer service officer)? If so, list them below: Which roles are directly involved in the remittance services your business provides or could have an opportunity to facilitate ML/TF? How do you verify the identity of a new employee before you employ them in your business? What checks do you perform on new employees before you employ them for example, speak with previous employers, personal reference checks, work history checks, criminal history, national police check? What checks do you perform on an employee who is transferred or promoted to a position in your business where they have increased opportunities to commit ML/TF offences?

30 30 AUSTRAC guide for independent remittance dealers /module 3 How do you supervise employees to ensure they are following AML/CTF procedures? What would you do if an employee breached AML/CTF requirements? Step 3: Describe your AML/CTF risk awareness training program You are required to educate your employees (including unpaid family members and friends working in your business) about the risk of your business being misused to commit ML/TF offences. You are also required to train them in your AML/CTF obligations and procedures. You must have a risk awareness training program which covers: your obligations under the AML/CTF Act and the consequences of non-compliance the types of ML/TF risk your business may face and the potential consequences of such risk the policies and procedures in your AML/CTF program that affect the work carried out by employees. You may wish to refer to AUSTRAC s e-learning courses, which can be found online at courses.html. These online courses provide a general understanding of AML/CTF. Who receives the training?

31 AUSTRAC guide for independent remittance dealers /module 3 31 How often do employees receive training? (Tick all that apply) When they start working for the business Every 6 months Every 12 months Every 24 months When they change roles Other: Who delivers the training? How is the training delivered (for example, on the job, short group sessions, online training)?

32 32 AUSTRAC guide for independent remittance dealers /module 3 What topics are covered in your training? Do you keep records of employee training? If yes, please describe: How are employees tested on their understanding of AML/CTF after training? How do you ensure employees are kept up to date on new AML/CTF issues? What do you do if an employee breaches your AML/CTF program or procedures?

33 AUSTRAC guide for independent remittance dealers /module 3 33 Step 4: How will you respond to AUSTRAC feedback? You must have procedures that you will follow if AUSTRAC instructs you to improve your AML/CTF compliance. Who is responsible for responding to AUSTRAC feedback? What process does this person take to ensure feedback is recorded, responded to and relevant employees are notified of the result? What steps will you follow if AUSTRAC instructs you to improve your AML/CTF processes? What time frame have you set for responding to AUSTRAC feedback? Within two days Within one week Within two weeks Other:

34 34 AUSTRAC guide for independent remittance dealers /module 3 Step 5: Establish regular independent reviews of your AML/CTF program Your AML/CTF program must be regularly reviewed by an independent person. Many businesses choose to review their program annually, when business practices change or if a serious ML/TF incident occurs. The independent review should assess the following: the effectiveness of the AML/CTF program whether the AML/CTF program complies with the AML/CTF Act whether the program has been effectively implemented whether you have complied with your AML/CTF program. The results of the independent review must be provided to the AML/CTF compliance officer or other authorised senior officer/proprietor responsible for ongoing oversight of the AML/CTF program. While the review can be conducted by an internal or external person, the reviewer must be independent. That means the reviewer must not have been involved in designing or implementing your AML/CTF program. For example, your AML/CTF compliance officer would not be independent and is not an appropriate person to conduct a review. If there is no one in your business who can conduct an internal independent review, you may consider asking an external adviser such as your accountant or solicitor to conduct the review. You may wish to base your review on the AUSTRAC Small business checklist which is available at: Who conducts the independent review? How often will the review be conducted? Every 12 months Every 24 months Other:

35 AUSTRAC guide for independent remittance dealers /module 3 35 How do you ensure that the reviewer is independent? Describe the review process and how you will address recommendations arising from the review: Step 6: Collect and verify KYC information You must not start providing a designated service to a new customer before carrying out the applicable customer identification procedure. Failure to do this may lead to a civil penalty as detailed on page 5. Remittance dealers must identify a customer: when they transfer money to a foreign country on behalf of a customer when they make money available from a foreign country to a customer when a customer is considered to be high risk (the risks listed in your risk register will assist you in identifying high-risk customers) when you have a suspicion about the customer or doubt the customer is who they claim to be if your enhanced customer due diligence program requires you to collect and verify further KYC information about a customer (covered in Step 7). Identification is divided into two parts: collection and verification. Collection involves asking a customer to state their details. Verification involves confirming those details against identification documents, such as a drivers licence or passport.

36 36 AUSTRAC guide for independent remittance dealers /module 3 A. Collection The minimum identification information that needs to be collected for an individual is: the full name of the customer their date of birth their residential address (not a post office box). What information do you collect from an individual customer? Full name Residential address Date of birth Phone number address Other: What information do you collect from non-individual customers (for example, businesses such as a company or partnership)? (if applicable)

37 AUSTRAC guide for independent remittance dealers /module 3 37 You may need to collect additional identification details about a customer in situations when: the customer is not able to provide sufficient or satisfactory identification documents a customer is assessed as having a high ML/TF risk rating. Examples of additional identification details include a Medicare card or a bank statement. Details of a customer s occupation or their source of funds can often provide further context to their remittance activity and may help to reduce the ML/TF risk for that customer. What additional information would you ask a high-risk or suspicious customer to provide (for example, ask about their occupation, their place of employment and their reason for sending or receiving money)? Corporations and other customer types have separate identification requirements. AUSTRAC s customer identification Ready reckoner provides information about customer identification and is available at: B. Verification Verification is checking that the details the customer gave you are true and correct. Use identification documents such as a drivers licence or passport to do this. The minimum identification information to be verified for an individual is: the customer s name, and their date of birth or residential address. If the customer is not able to provide sufficient or satisfactory identification documents, or when you assess a customer as having a high ML/TF risk rating, you may need to verify additional identification details about a customer. There are many ways to verify the minimum information for individuals. An example for low- to medium-risk customers is provided on page 38.

38 38 AUSTRAC guide for independent remittance dealers /module 3 Example for verifying minimum individual information After collecting the customer information: verify the customer information using an original or certified copy of a photographic document for example, current drivers licence or passport or verify the customer information using both: an original or certified copy of a non-photographic government-issued document for example, a birth certificate, citizenship certificate or pension card issued by Centrelink and an original or certified copy of a commercial document such as a telephone bill. A certified copy is a copy of a document certified as a true copy of the original document by an authorised person, such as a legal practitioner, justice of the peace, or police officer (see Appendix 2). You must also check that the documents have not expired (although a passport issued by the Commonwealth which expired within the preceding two years is acceptable). List the procedures you follow when collecting and verifying information about your customers. You should also list what details are recorded and what identification documents (or combination of documents) are sufficient to prove a customer s identity to you:

39 AUSTRAC guide for independent remittance dealers /module 3 39 What photographic documents (or certified copies) will you accept as proof of identity on their own? Drivers licence Passport Proof-of-age card Other government-issued photographic ID: What combination of non-photographic and other documents (or certified copies) will you accept as proof of identity? Non-photographic: Birth certificate Citizenship certificate Centrelink pension card Other primary non-photographic document : Other: Centrelink statement

40 40 AUSTRAC guide for independent remittance dealers /module 3 Tax assessment notice Rates notice Other secondary document (for example, telephone bill): Describe how you record details of the identification process and documents for example, writing down the drivers licence number or photocopying the identification documents: If you have non-individual customers (such as companies), describe your identification and verification procedures for these customers: Describe your procedure if you form a suspicion that the identification document may be false or that the customer is not who they claim to be:

41 AUSTRAC guide for independent remittance dealers /module 3 41 Describe how you identify customers who use methods other than face-to-face interactions, to initiate a funds transfer for example, by telephone or over the internet: Step 7: Ongoing customer due diligence You must have processes in place to update and collect further customer information and to monitor your customers and their transactions on an ongoing basis. This is called ongoing customer due diligence and involves: deciding when you should update or verify your existing information about a customer (see A below) and collecting any further information about your customer as required ongoing monitoring of customers and their transactions (see B below) enhanced scrutiny of high-risk and suspicious customers (see C below). A. Describe in what circumstances you update and re-verify customer information In what circumstances would you update and/or re-verify an existing customer s information? You find out your customer has changed their name Your customer mentions they have a new address Mail you sent to a customer is returned marked not at this address or return to sender

42 42 AUSTRAC guide for independent remittance dealers /module 3 You find out your customer has a new phone number Other: B. Describe your transaction monitoring program You must have a transaction monitoring program in place to identify any transactions which appear to be suspicious. This includes: complex, unusually large transactions unusual patterns of transactions transactions with no apparent purpose. Examples of ML/TF indicators are outlined in Appendix 3 to assist you in identifying suspicious transactions. Who conducts the transaction monitoring for your business? What would you consider to be a large, unusual transaction or pattern of transactions that is, what do you look for when monitoring for suspicious transactions?

43 AUSTRAC guide for independent remittance dealers /module 3 43 Are your employees trained to seek approval from their supervisor before undertaking any unusual or large transactions for a customer? When do you review your transaction records looking for suspicious patterns of activity? Every week Every month Every six months Every year In response to unusual customer activity observed by you or your employees Other:

44 44 AUSTRAC guide for independent remittance dealers /module 3 C. Describe your enhanced customer due diligence procedures You must also have an enhanced customer due diligence program. This sets out your procedures for situations where there is a high ML/TF risk or when a suspicious matter reporting obligation arises. In these situations, you must: seek further information from a customer or third party to clarify or update the customer s information undertake more detailed analysis of the customer s information verify or re-verify the customer s information undertake more detailed analysis and monitoring of the customer s past and present transactions if appropriate, report the suspicious matter to AUSTRAC. For example, if a pre-existing customer sounds different on the telephone and/or their transaction activity is unusual, you may wish to confirm their identity. Also for example, if a letter sent to a customer s address is returned you may wish to re-verify the customer s address. Remember that in some circumstances it may not be appropriate to obtain further information from a customer or a third party, such as when you cannot do so without tipping off the customer or a third party to your suspicions. Describe your procedure for dealing with situations where the ML/TF risk is high, or where you form a suspicion that must be reported. Who is responsible for conducting enhanced customer due diligence?

45 AUSTRAC guide for independent remittance dealers /module 3 45 If you had a suspicion about a customer, what would you do? (Tick all that apply) Engage the customer in conversation to find out more about them Interview employees to hear their version of events Review information held about the customer s identity Ask the customer for identification or re-verify the customer s identification Review the customer s transactions looking for suspicious patterns Record the findings of your enhanced customer due diligence Submit an SMR to AUSTRAC (see Module 4 for more details about SMRs) Other:

46 46 AUSTRAC guide for independent remittance dealers /module 3 Step 8: Management approval and ongoing oversight of the AML/CTF program The appropriate, authorised person in your business must approve, adopt and maintain ongoing oversight of the AML/CTF program. This person could be a director, sole trader, owner, partner, or senior manager of the business, but it must be someone with enough authority and responsibility to make this decision. Who is responsible for approving and adopting this program? What role do they have in the business? Record of approval and adoption I approve this AML/CTF program for adoption in this business. Signed: Date: / / Name:

47 How do you ensure the program is up to date and working? AUSTRAC guide for independent remittance dealers /module 3 47

48 48 48 /module/overview 4 Module 4: International funds transfer instructions, threshold transaction and suspicious matter reports You must submit IFTIs, threshold transaction reports (TTRs) and SMRs to AUSTRAC. The information must be in the form approved by AUSTRAC and contain specified information. AUSTRAC prefers that reports are submitted electronically through AUSTRAC Online, which is accessed through the AUSTRAC website. If you do not have the technical means to submit reports electronically, you may use the paper form developed by AUSTRAC. The paper form can be obtained by calling the AUSTRAC Help Desk on An AUSTRAC e-learning course about transaction reporting provides further information and assistance and is also available through the AUSTRAC website: reporting_mod3_p1.html Please be aware that it is an offence and penalties apply where there is failure to submit various reports or where information in those reports is deliberately omitted, is false or is misleading.

49 AUSTRAC guide for independent remittance dealers /module 4 49 International funds transfer instruction reporting If you transmit an IFTI out of Australia, or receive an IFTI transmitted into Australia, these transactions must be reported to AUSTRAC within 10 business days after the day on which the instruction was sent or received by you. There is no minimum financial threshold for reporting an IFTI all IFTIs must be reported to AUSTRAC, regardless of the amount. Who in your business is responsible for reporting IFTIs to AUSTRAC? How do you ensure that all IFTIs are submitted to AUSTRAC? What is the process that you (or your employees) use to report IFTIs to AUSTRAC? How do you ensure that IFTIs are submitted within the required time frames?

50 50 AUSTRAC guide for independent remittance dealers /module 4 Threshold transaction reporting If you provide designated services which involve cash transactions of $10,000 or more, they must be reported within 10 business days after the day on which the transaction took place. If you send or receive an IFTI which involves a cash transaction of $10,000 or more, you need to submit both an IFTI report and a TTR. Questions to consider when determining your TTR reporting obligations: Do you accept or make cash payments of $10,000 or more? Yes No If you undertake cash transactions of $10,000 or more, answer the following questions: Who in your business is responsible for reporting TTRs to AUSTRAC? How do you ensure that all TTRs are submitted to AUSTRAC? What is the process that you (or your employees) use to report TTRs to AUSTRAC? How do you ensure that TTRs are submitted to AUSTRAC within the required time frame?

51 AUSTRAC guide for independent remittance dealers /module 4 51 If a customer conducts several cash transactions under the $10,000 threshold, the customer may be intentionally trying to avoid threshold reporting. It is an offence to split transactions into separate amounts under $10,000 to avoid the threshold transaction reporting requirements. This offence, commonly known as structuring, attracts a maximum penalty of five years imprisonment or a fine of up to $51,000 (300 penalty units), or both. If you form a suspicion that a customer is structuring transactions, or may be attempting to structure transactions, you must submit an SMR to AUSTRAC (see suspicious matter reporting below). Suspicious matter reporting You are required to report certain suspicious matters to AUSTRAC in connection with any service covered by the AML/CTF Act that you: provide propose to provide have been asked to provide to a person. This requirement applies regardless of whether or not you actually provide the service to that person. You are obliged to submit an SMR to AUSTRAC if you form a suspicion on reasonable grounds that: the person (or their agent) is not who they claim to be information you have may be: relevant to the investigation or prosecution of a person for: an evasion (or attempted evasion) of a tax law an offence against a Commonwealth, state or territory law of assistance in enforcing: the Proceeds of Crime Act 2002 a state or territory law that corresponds to that Act providing a service may be: relevant to committing an ML/TF offence relevant to the investigation or prosecution of a person for an offence related to ML/TF.

52 52 AUSTRAC guide for independent remittance dealers /module 4 In summary: you must submit an SMR if, at any time while dealing with a customer, you form a suspicion that a matter may be related to an offence, tax evasion, the proceeds of crime or financing of terrorism. Examples of suspicious matters include: a customer paying cash for multiple transactions under $10,000 to avoid threshold transaction reporting customer s remittance activity does not match the expected income for their stated occupation a customer s source of funds is known, or suspected to be, linked to criminal activities. You must complete an SMR and submit it to AUSTRAC within: 24 hours if your suspicion relates to terrorism financing three business days if your suspicion relates to any other activity including money laundering. A list of examples of ML/TF indicators or potentially suspicious behaviours is included in Appendix 3 to assist you. Who do your employees inform when they think a customer or matter is suspicious? Who is responsible for completing enhanced customer due diligence and reporting SMRs to AUSTRAC? How do you ensure that SMRs are submitted within the required time frames?

53 AUSTRAC guide for independent remittance dealers /module 4 53 Do you report via the internet or a paper-based form? Internet (AUSTRAC Online) Paper How do you identify suspicious matters? Include examples of things you would consider to be suspicious: You must submit an SMR if, at any time while dealing with a customer, you form a suspicion that a matter may be related to an offence, tax evasion, the proceeds of crime or financing of terrorism.

54 54 54 /module/overview 5 Module 5: Record keeping You are obliged to keep certain records. You need to: retain records of customer identification for seven years after the relationship with the customer ends keep any transaction records (for example, a copy of a customer request to transfer money) for seven years after the service is provided retain a copy of your AML/CTF program and a record of the adoption of the program for seven years after the program ceases to have effect. For example, if you modify your AML/ CTF program, you must keep a copy of the old program for seven years after the date the program was modified. Quick checklist records to keep Customer identification records AML/CTF program Transaction records

55 AUSTRAC guide for independent remittance dealers /module 5 55 Customer identification records How do you store records of customer identification? How do you ensure these records are kept for seven years after the relationship with the customer ends? AML/CTF program How do you store records of your AML/CTF program? How do you ensure these are kept for seven years after the AML/CTF program was revised or updated?

56 56 AUSTRAC guide for independent remittance dealers /module 5 Transaction records How do you store records of customer transactions? How do you ensure these records are kept for seven years after the relationship with the customer ends?

57 57 /appendix /overview1 Appendix 1: Risk register for changes in ML/TF risk Identify risks Treat risks Allocate risk rating Newly identified or changed ML/TF risks Treatment (controls) Risk rating (after treatment)

58 58 AUSTRAC guide for independent remittance dealers /appendix 1 Newly identified or changed ML/TF risks Treatment (controls) Risk rating (after treatment)

59 AUSTRAC guide for independent remittance dealers /appendix 1 59 Newly identified or changed ML/TF risks Treatment (controls) Risk rating (after treatment)

60 60 60 /appendix /overview 2 Appendix 2: Persons who can certify documents Persons who can certify documents 1. a person who, under a law in force in a state or territory, is currently licensed or registered to practise in an occupation listed in Parts 1 or 2 of Schedule 2 of the Statutory Declarations Regulations 1993 ( Details/F2006C00248). For the purposes of the AML/CTF Rules, where Part 2 uses the term 5 or more years of continuous service, this should be read as 2 or more years of continuous service 2. a person who is enrolled on the roll of the Supreme Court of a state or territory, or the High Court of Australia, as a legal practitioner (however described) 3. an officer with, or authorised representative of, a holder of an Australian financial services licence, having 2 or more years of continuous service with one or more licensees 4. an officer with, or a credit representative of, a holder of an Australian credit licence, having 2 or more years of continuous service with one or more licensees.

61 61 /appendix /overview3 Appendix 3: Money laundering and terrorism financing indicators Money laundering and terrorism financing indicators Examples of ML/TF indicators are listed below to assist independent remittance dealers when conducting their ML/TF risk assessment. This list may also be useful for your staff in identifying suspicious matters and as triggers to include in your transaction monitoring program. Independent remittance dealers will need to assess whether these indicators apply to the nature, size and complexity of their business. The indicators listed should be treated as general only. This is not intended to be a complete list. Examples of ML/TF indicators include: Customer behaviours Unusual behaviour displayed by the customer, or potential customer, receiving or requesting the designated service for example, extreme nervousness. The customer s identification details are vague or difficult to verify. The customer is excessively concerned with privacy and confidentiality. The customer is reluctant and/or refuses to provide appropriate customer identification (KYC) information. The customer uses aliases and/or a variety of addresses. The customer requests that correspondence is sent to an address not linked to their identifying documentation. Another person acts on behalf of a customer but never discloses any information about the customer besides minimum information necessary to undertake the transaction. The customer s place of residence or business is not located near your remittance business and there is no reasonable explanation as to why the customer wishes to use your services. The customer shows an unusual interest in the internal controls and processes of your business. Information provided by the customer contradicts information gathered from other sources. Unusual business dealings, particularly where significant amounts of cash are involved, in circumstances that are difficult to explain. The customer is engaged in a business which involves significant amounts of cash. The customer remits large amounts of cash. A transaction appears unusual based on the information you know about the customer. Customer exhibits sudden and unexpected change in the pattern of activity.

62 62 AUSTRAC guide for independent remittance dealers /appendix 3 The customer is insistent on cash transactions when other payment methods may be more appropriate, such as direct payment into their bank account. A customer is suspected of using a false name. Multiple customers sending international funds transfers to the same overseas beneficiary. Multiple international funds transfers being sent to the same beneficiary in one day. The customer is reluctant to use normal banking facilities. The customer has a large number of transactions in a short period of time. Another person is present for all transactions but does not participate in the actual transaction. The customer has unexplained income, inconsistent with their financial situation. Customer undertakes transfers to countries not associated with their usual transaction activity. Customer refuses to complete the required documentation for conducting the transfer. Delivery method The customer insists on only remitting money through non-face-to-face methods such as phone, , fax or over a web-based (internet) service. Jurisdiction The customer is known to be involved with companies or accounts in high-risk countries; that is, any country known to be a tax haven, source of narcotics or other significant criminal activity, or any country subject to trade sanctions. The customer is based in, or conducting business through or in, a high-risk country. The beneficial owners or beneficiaries of a nonindividual customer (for example, a company) are resident in a high-risk country. Other»» Cash notes are in poor condition or otherwise tainted for example, stained with a marking dye, wet, dirty or have an unusual smell. Large unexplained variances in transactional activity. Customer is seeking to move funds without any reason. Multiple same-day transactions. Customer undertakes multiple funds transfers in values just below $10,000. Same home address provided by different people. Variation in the spelling of names or addresses.

63 63 /appendix /overview4 Appendix 4: Assistance and resources For any enquiries, please contact the AUSTRAC Help Desk: telephone: (local call cost within Australia) fax: Useful AUSTRAC publications include: AUSTRAC e-news AUSTRAC Regulatory guide AUSTRAC e-learning Information brochures Ready reckoner (minimum identification and verification for low-risk customers) Reporting requirements Self Assessment Questionnaire Small business checklist AUSTRAC typologies and case studies reports Guidance Note 08/02: AML/CTF Compliance Officers Money laundering in Australia All publications are available on the AUSTRAC website ( or by contacting the AUSTRAC Help Desk.

64 64 AUSTRAC guide for independent remittance dealers /abbreviations Abbreviations AML/CTF Anti-money laundering and counter-terrorism financing AML/CTF Act Anti-Money Laundering and Counter-Terrorism Financing Act 2006 AUSTRAC Australian Transaction Reports and Analysis Centre IFTI International funds transfer instruction: an instruction transmitted electronically into or out of Australia, for a transfer of funds; reported to AUSTRAC under the Financial Transactions Reports Act 1988 (FTR Act) and AML/CTF Act KYC Know your customer ML Money laundering PEP Politically exposed person SMR Suspicious matter report: submitted to AUSTRAC under the AML/CTF Act when a business forms a suspicion that a matter may be related to an offence against an Australian law, including money laundering, the financing of terrorism, proceeds of crime, or tax evasion TF Terrorism financing TTR Threshold transaction report: submitted to AUSTRAC under the AML/CTF Act when a business provides a designated service to a customer that involves the transfer of physical currency (or e-currency) of AUD10,000 or more (or the foreign currency equivalent)

65 AUSTRAC guide for independent remittance dealers /glossary 65 Glossary AML/CTF program Under the AML/CTF Act, businesses must have an AML/CTF program consisting of Part A (general, relating to money laundering and terrorism financing risk) and Part B (customer identification). AUSTRAC Online An online information system accessed through the AUSTRAC website, which provides businesses with an electronic way to submit reports to AUSTRAC and access AML/CTF information. Designated service A designated service is any service listed in section 6 of the AML/CTF Act. Designated services cover a wide range of business activities within the financial services, bullion and gambling sectors. If you provide any one or more of the designated services specified in the AML/CTF Act, you have obligations under the Act. High-risk jurisdiction Jurisdictions which are known to be a source of narcotics or other significant criminal activity, any jurisdiction subject to trade sanctions, jurisdictions known to be a tax haven, or jurisdictions linked to proscribed terrorist organisations. Remittance services/ remittance dealer Also known as money transfer businesses, these are financial services that accept cash, cheques, other monetary instruments or other stores of value, in one location and pay a corresponding sum in cash or other form to a beneficiary in another location. This is done by a communication, message, transfer or through a clearing network to which the money/value transfer system belongs. Structuring This is a money laundering technique which involves the deliberate splitting of a large amount of cash into a number of smaller deposits to evade threshold reporting requirements. Structuring can also involve layering funds for international funds transfers in an effort to avoid the transfers attracting scrutiny.

66 About AUSTRAC The Australian Transaction Reports and Analysis Centre (AUSTRAC) is a government agency that was established in As Australia s AML/CTF regulator and financial intelligence unit, AUSTRAC plays an important role in the global fight against crime and works to support an Australian community that is hostile to money laundering and the financing of terrorism. In its role as regulator, AUSTRAC monitors business which provide financial, gambling and other services specified under legislation. In implementing Australia s AML/CTF regulatory framework, AUSTRAC assists businesses to fulfil their AML/CTF obligations and guard against attempts to misuse their services for ML/TF. In its role as Australia s financial intelligence unit, AUSTRAC collects financial transaction reports, analyses the information and shares financial intelligence with other Australian government agencies and overseas counterparts. AUSTRAC information plays an important role in the prevention, detection and prosecution of crime and assists authorities to trace the trail of illicit money and combat money laundering and other serious crimes.