When do businesses have to start keeping records of their activities and transactions?
Record keeping for transaction records and the provision of designated services is required under the AML/CTF Act. Transaction records are required to be kept for seven years after the record is made.
The implementation of record-keeping requirements will be staggered in line with the implementation of the relevant section of the AML/CTF Act.
Record-keeping requirements under the Financial Transaction Reports Act 1988 will continue for businesses/cash dealers who are not captured under the AML/CTF Act.
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When do businesses have to start reporting financial transactions to AUSTRAC?
Transaction reporting requirements under the AML/CTF Act are not yet in effect. In December 2006, electronic funds transfer instruction requirements came into effect, but these are not required to be reported to AUSTRAC, only recorded and provided to AUSTRAC on request. Reporting requirements will come into effect on 12 December 2008 relating to:
- suspicious matters
- international funds transfer instructions
- threshold transactions (i.e. physical cash or e-currency of $10,000 or more, or any other thresholds provided by regulations).
Until the AML/CTF Act reporting requirements come into effect, transaction reporting requirements for businesses/cash dealers under the Financial Transaction Reports Act 1988 will continue.
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What does AUSTRAC do with the financial transaction information it collects?
All transaction reports provided to AUSTRAC are analysed, stored and disseminated to law enforcement, revenue collection, national security and social justice agencies, as well as international bodies, all of which have written agreements with AUSTRAC. Transactions are examined for activities and patterns that may indicate money laundering and/or terrorism financing and can play a significant role in detecting, investigating and prosecuting individuals and groups engaged in domestic and international crime.
AUSTRAC is not an investigative agency; it provides intelligence to agencies (such as the Australian Federal Police) which do have an investigative role.
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What if I don't comply with the AML/CTF Act requirements?
AUSTRAC aims to create an environment of voluntary compliance with the AML/CTF regime and anticipates that most businesses will seek to comply with requirements under the AML/CTF Act. However, in the case of serious non-compliance AUSTRAC has a broad range of enforcement powers which include criminal prosecutions, civil penalty orders, remedial directions and written undertakings.
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What penalties are imposed for breaches of the new legislation?
Breaches of the AML/CTF Act may result in criminal or civil penalties.
The penalties for criminal offences include imprisonment for up to 10 years and fines of up to $1.1 million.
A contravention of a civil penalty provision may attract a penalty of up to $11 million for a corporation and up to $2.2 million for an individual.
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FAQs ' Small Business
What does a risk-based AML/CTF regime mean for small business?
As the AML/CTF regime is risk-based, small businesses are able to develop their own compliance procedures and processes tailored to the specific risks faced by the business, allocating resources accordingly to counter those risks.
A high-risk business is one that provides services that can be easily exploited for money laundering and terrorism financing purposes and may include opening of accounts, international transfers of money, remittance services, selling stored value cards, taking bets at the race track and providing casino gambling services.
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How will AUSTRAC work with small business?
As the AML/CTF regulator, AUSTRAC is responsible for promoting compliance with the AML/CTF Act and with the Financial Transaction Reports Act, until such time that this Act is replaced by the AML/CTF Act). To this end, AUSTRAC will assist small businesses to understand their obligations under the legislation through:
- education visits;
- provision of information updates and resources on our website;
- information sessions and workshops;
- help desk telephone and e-mail services; and
- compliance monitoring to assess and encourage compliance.
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What are the requirements for small business?
The core of the AML/CTF legislation is the need for businesses to know their customers, monitor their customers' behaviour and be able to identify the risks their customers and services may pose in relation to financial crime. A business will need to demonstrate that it can assess such risk and have in place a plan for the ongoing management and reduction of risk.
If you have processes and procedures in place to address the following questions then you are on your way to fulfilling your AML/CTF obligations:
- How can you be sure your customer is who they say they are?
- Do you have in place customer identification procedures that make it difficult to provide untrue or misleading information?
- Do you have in place procedures for reporting suspicious matters ' e.g. unusual customer behaviour or unusual transaction activity?
- How do you track and monitor customer transactions?
- Have you identified which services you provide that are considered to be `designated services' under the AML/CTF Act?
- How will you train your staff to ensure they have an understanding of their responsibilities under the AML/CTF Act?
- How will you ensure that you keep your staff up-to-date with changes to products, services and customers that may mean an increase or decrease in the risk of potential criminal activity?
- How are you going to make, keep and store records relating to things such as customer identification?
- Who is going to be responsible for making sure your business meets and continues to meet its obligations under the AML/CTF Act?
If you are unable to address these questions then it is time to start thinking about these issues.
AUSTRAC can assist businesses with information to understand their obligations under the Act, however businesses are best placed to identify and implement the most cost-effective and practical solutions. How you approach these issues will be tailored to suit your specific customer and business needs and you are best placed to identify and implement the most cost-effective and practical solutions.
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FAQ's - Privacy
Please visit the website of The Office of the Privacy Commissioner at http://www.privacy.gov.au/business/aml/index.html or contact them on 1300 363 992.