When did the provisions commence?
Section 6 of the AML/CTF Act, containing the tables of designated services, came into effect on 13 December 2006.
The specific obligations that providers of designated services are required to comply with came into effect in four stages, from 13 December 2006 to 12 December 2008. (11)
What are the relevant FATF recommendations?
The glossary to the Financial Action Task Force (FATF) recommendations describes the various financial (financial institutions) and non-financial (designated non-financial businesses and professions) activities considered by FATF to be subject to the greatest risk of money laundering and terrorism financing.
The AML/CTF Act includes all the activities categorised by FATF as financial institution activities. The FATF recommendations, in particular recommendations 5-16 (12), and Special Recommendations IV and VII, underpin the obligations imposed by the AML/CTF Act. These obligations include identification, verification, ongoing customer due diligence, record keeping, reporting, internal controls and having a risk assessment program.
Financial institutions defined in the FATF glossary
A number of the FATF recommendations impose obligations on financial institutions. The glossary to the FATF recommendations defines 'financial institutions' as 'any person or entity who conducts as a business one or more of the following activities or operations for or on behalf of a customer…'. Appendix H of this Guide contains a copy of some of the key FATF recommendations, and the list of the activities of financial institutions and designated non-financial businesses and professions in the glossary.
The following table identifies the most relevant FATF financial institutions activity for designated services covered in this chapter.
|
Accounts |
1 |
|
Cash carrying |
10 |
|
Currency exchange |
13 |
|
Loans |
2 and 6 |
|
Securities |
7 and 8 |
|
Superannuation and approved deposit funds |
11 |
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Designated non-financial businesses and professions defined in the FATF glossary
The AML/CTF Act does not impose obligations on designated non-financial businesses and professions, except for bullion dealers (table 2) (13) , gambling service providers (table 3)(14), and lawyers and accountants if they provide any of the designated services in the AML/CTF Act. The following table identifies the most relevant FATF designated non-financial businesses and professions activity for designated services covered in this chapter.
|
Bullion |
c |
|
Betting and betting accounts |
a |
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The meaning of 'geographical link'
Subsection 6(6) of the AML/CTF Act sets out its intended geographical reach. The Act applies to designated services provided by a reporting entity where:
- the service is provided at or through a permanent establishment of the person in Australia, or
- the person providing the service is a resident of, or a subsidiary of a company that is a resident of, Australia and the service is provided at or through a permanent establishment of the person in a foreign country.
Permanent establishment
For the purposes of the Act, 'permanent establishment' is defined as:
a place at or through which the person carries on any activities or business (including a place where the person's activities or business is carried on through an agent). (15)
This includes a service provided by a person (or their agent) in a particular country where the service is provided on a mobile basis or while travelling. (16)
Resident
The method of determining whether a person is a 'resident' within the meaning of the AML/CTF Act differs depending on the type of reporting entity: individual, company, trust, partnership, corporation sole or body politic.
An 'individual' (including in the capacity of a trustee) is a resident of a particular country if they are ordinarily resident in that country. (17)
A 'company' is a resident of a particular country if:
- the company is incorporated in that country, or
- an individual resident in that country passes the 'control test' in relation to the company. (18)
To pass the 'control test' in relation to a company:
- the aggregate of the individual's (and, if applicable, the individual's associates') direct voting interest has to be 50 per cent or more, or
- the aggregate of the individual's (and, if applicable, the individual's associates') direct control interests has to be 15 per cent or more, or
- the company has to be sufficiently influenced by the individual (or an associate of the individual), or
- the individual (either alone or together with associates) has to be in a position to exercise control over the company.(19)
A 'trust' is a resident of a particular country if:
- a trustee of the trust is a resident of that country, or
- an individual resident in that country passes the control test in relation to the trust, or
- a person who benefits or is capable of benefiting under the trust is a resident of that country. (20)
To pass the 'control test' in relation to a trust:
- the individual has to be the trustee, or part of a group able to remove the trustee or vary the trust deed
- the individual has to have 50 per cent or more beneficial interest in the trust income, or the individual is part of a group which can control the trust income or the trustee. (21)
A 'partnership' is a resident of a particular country if a partner is a resident of that country. (22)
A 'corporation sole' is a resident of a particular country if the corporation sole was established in that country. (23)
A 'body politic' of, or of a part of, a particular country is a resident of that country. (24)
The remainder of this chapter provides detailed guidance for providers of specific designated services. These services are grouped into:
They correspond to the services listed in tables 1, 2 and 3 of section 6 of the AML/CTF Act.
Exemptions
Anti-Money Laundering and Counter-Terrorism Financing Rules Amendment Instrument 2009 (No. 4) has added Chapter 36 to the AML/CTF Rules, providing an exemption for certain designated services provided within a corporate structure.
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97 No additional designated services have been specified in the Anti-Money Laundering and Counter-Terrorism Financing Regulations (AML/CTF Regulations) to date.
98 See PLI 4 (paragraph 10) at www.austrac.gov.au/files/pli_4_reporting_entity.pdf.
99 See chapters 2-4 of this Guide for information on the requirements for AML/CTF programs and customer identification, chapter 8 for ongoing customer due diligence and chapter 9 for reporting obligations. The requirements for record keeping are summarised in guidance note 08/04: Record-keeping requirements at www.austrac.gov.au/files/gn0804_record_keeping.pdf.
100 In relation to designated services 31 and 32 (designated remittance arrangements), under certain circumstances an agent of a principal may also be a reporting entity under the AML/CTF Act. For details, see PLI 3 (paragraphs 46-87) at www.austrac.gov.au/files/pli3_pdrs.pdf.
101 AUSTRAC Online can be accessed at www.austrac.gov.au.
102 See also PLI 2 at www.austrac.gov.au/files/pli_n2.pdf.
103 See also chapter 10 of this Guide (Electronic funds transfer instructions).
104 See also PLI 3 at www.austrac.gov.au/files/pli3_pdrs.pdf.
105 This section includes the AUSTRAC Online categories of chips/currency exchange services, games of chance or skill and gaming machines.
106 See PLI 4 at www.austrac.gov.au/files/pli_4_reporting_entity.pdf.
107 See chapter 1 of this Guide for details.
108 Recommendation 7 and Special Recommendation VII relate to special requirements for correspondent banking and wire transfers respectively, and do not apply to all categories of designated services. Recommendations 12 and 16 relate to designated non-financial businesses and professions and effectively replicate the recommendations (5-11, 13-15) that apply to financial institutions.
109 The designated services related to trading in bullion partially address the requirements of FATF recommendations 12 and 16, which refer to dealers in precious metals.
110 The designated services related to betting and betting accounts address the requirements of designated non-financial businesses and professions in relation to casinos.
111 See subsection 21(1) of the AML/CTF Act.
112 See subsection 21(2) of the AML/CTF Act.
113 See subsection 14(1) of the AML/CTF Act.
114 See subsection 14(2) of the AML/CTF Act.
115 See subsection 11(1) of the AML/CTF Act.
116 See subsection 14(3) of the AML/CTF Act.
117 See subsection 11(2) of the AML/CTF Act.
118 See subsection 14(4) of the AML/CTF Act.
119 See subsection 14(5) of the AML/CTF Act.
120 See subsection 14(6) of the AML/CTF Act.
Financial services | Bullion | Gambling services
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