Reportable details required for IFTIs under a designated remittance arrangement
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IFTIs involving the electronic transfer of funds
What is an EFTI?
An electronic funds transfer instruction (EFTI) is an instruction that is sent between an ordering and beneficiary institution for the purpose of transferring funds. An ordering institution or beneficiary institution must be an authorised deposit-taking institution, bank, building society, credit union or a person specified in the AML/CTF Rules, for the EFTI to take place.
There are four types of EFTIs set out in the AML/CTF Act:
- a multiple-institution person-to-person electronic funds transfer instruction
- a same-institution person-to-person electronic funds transfer instruction
- a multiple-institution same-person electronic funds transfer instruction, and
- a same-institution same-person electronic funds transfer instruction.
When is an EFTI an IFTI?
An EFTI is an IFTI when the instruction is to transfer funds out of Australia to a foreign country or into Australia from a foreign country.
EFTIs include instructions for domestic transfers as well as international transfers. It is important to remember that an EFTI can occur only between authorised deposit-taking institutions, banks, building societies, credit unions or persons specified in the AML/CTF Rules.
For more information about EFTIs, refer to chapter 10 of this Guide.
Who is responsible for reporting IFTIs to AUSTRAC?
A reporting entity that is the sender of an IFTI transmitted out of Australia, or the reporting entity that receives an IFTI transmitted into Australia, must report the instruction to AUSTRAC.
When must an IFTI report be submitted?
An IFTI report must be reported to AUSTRAC within 10 business days after the day on which the instruction was sent or received.
What happens if the IFTI report is submitted late or not reported at all?
If an IFTI report is submitted after the 10 business day period or not submitted at all, the AUSTRAC CEO has the capacity to apply for a civil penalty order of up to 100,000 penalty units ($11 million at the time of writing) for a body corporate, and up to 20,000 penalty units ($2.2 million at the time of writing) for a person other than a body corporate.
How does an IFTI have to be reported?
An IFTI report must be submitted in the approved form and contain such information relating to the transaction as is specified in the AML/CTF Rules. The reportable details required in the approved forms are set out in chapters 16 and 17 of the AML/CTF Rules. (27)
AUSTRAC would prefer IFTIs to be submitted electronically via AUSTRAC Online. AUSTRAC's approved methods of reporting, and the processes required for reporting entities to implement those methods, are outlined in AUSTRAC's AML/CTF Act reporting implementation policy. (28)
Reporting entities that do not have the technical means to submit IFTIs electronically may use the paper form developed by AUSTRAC. Paper forms can be obtained by calling the AUSTRAC Help Desk on 1300 021 037.
AUSTRAC has published sample paper forms and educational materials for each report type that can be used for training purposes. The sample forms and educational materials can be accessed via AUSTRAC Online. Please note that AUSTRAC will not accept reports submitted on sample forms.
To assist reporting entities who choose to report using a file extraction program, AUSTRAC has released electronic report file format specifications for each report type. The file format specifications for suspicious matter, threshold transaction and international funds transfer instructions reports can be accessed via AUSTRAC Online.
Who is exempt from IFTI reporting?
There are currently no exemptions for reporting IFTIs. The AUSTRAC CEO does, however, have the capacity to make AML/CTF Rules exempting IFTIs of a specified kind or sent in specified circumstances from the reporting obligation.
The following case study (29) shows how IFTI reports can be used to identify money laundering and terrorism financing.
Case study 5
Wire transfers and e-gold payments used to purchase stolen bank details
Several individuals were involved in purchasing stolen bank account and credit card details from Russia and Eastern Europe via the internet. These were purchased through international funds transfer instructions (IFTIs) of approximately AUD$2,000 and by way of e-gold payments. One of these individuals was arrested on 26 fraud and computer crime offences in relation to using these bank details to withdraw funds without authorisation in internet transfers to accounts of associates. AUSTRAC searches revealed that a person in this syndicate had a history of alleged involvement in internet bank fraud through phishing. A laptop seized at the arrest of the principal person revealed details of IFTIs transacted through remittance dealers and e-gold. Russian and other recipients identified from these transactions facilitated the identification of additional persons from AUSTRAC information.
Indicators: repeated use of internet banking to transfer funds into accounts of unrelated individuals.
Reporting of cross-border movements of physical currency and bearer negotiable instruments (BNIs)
Reporting obligations for cross-border movements of physical currency and BNIs are set out in Part 4 (sections 52 to 62) of the AML/CTF Act.
Reports about physical currency
What is physical currency?
Physical currency is defined in section 5 of the AML/CTF Act to mean coin and printed money, including foreign currency, that:
(a) is designated as legal tender, and
(b) circulates as, and is customarily used and accepted as, a medium of exchange in the country of issue.
Who has to report movements of physical currency?
Travellers entering and departing Australia are required to report any currency they are carrying of $10,000 or more in Australian dollars, or the foreign currency equivalent. Mailing or shipping currency of $10,000 or more in Australian dollars, or the foreign currency equivalent, into or out of Australia must also be reported.
When and where is physical currency reported?
Reporting of physical currency usually occurs at the customs examination area when entering or leaving Australia. Cross-Border Movement - Physical Currency (CBM-PC) reporting forms are available from Customs officers at international airports and sea ports.
Mailing or shipping currency of $10,000 or more out of Australia must be reported to a Customs officer or a police officer, or directly to AUSTRAC. Reporting forms can be obtained by contacting AUSTRAC. The report must be submitted before sending the currency out of Australia. When receiving currency from outside Australia, the report must be submitted by the recipient within five business days of receiving the currency. (30)
Reports about BNIs
What is a BNI?
A BNI is a non-cash monetary instrument that may contain the instruction 'pay to the bearer'. The bearer is the person in possession of the BNI. Common examples of BNIs are cheques, promissory notes, traveller's cheques, bearer bonds, money orders and postal orders.
Who has to complete a Cross-Border Movements - Bearer Negotiable Instruments (CBM-BNI) form?
Anyone who is requested to do so by a Customs or police officer.
When and where is a CBM-BNI form completed?
A Customs or police officer may request that a person completes a CBM-BNI form when entering or departing Australia. This usually occurs at the customs examination area.
A CBM-BNI form may also have to be completed when a Customs or police officer conducts an examination or search and finds a BNI which a person has with them. The completed CBM-BNI form must be given to AUSTRAC, or the Customs or police officer as soon as possible.
National Privacy Principles
Reporting entities should note that in relation to activities they undertake to comply with the AML/CTF Act, they will have obligations under the Privacy Act 1988. These obligations include the requirement to comply with the National Privacy Principles, even if an entity would otherwise be exempt from the Privacy Act. For further information about these obligations, go to www.privacy.gov.au or call 1300 363 992.
Additional AUSTRAC resources
- AUSTRAC Self Assessment Questionnaire (see Appendix I)
- AUSTRAC AML/CTF Act reporting implementation policy
- AUSTRAC Public Legal Interpretation No. 6 of 2008 - Suspect transactions and suspicious matter reports
- AUSTRAC Public Legal Interpretation No. 7 of 2008 - significant cash transaction and threshold transaction reports
- AUSTRAC Public Legal Interpretation No. 8 of 2008 - cross border movements
- AUSTRAC Public Legal Interpretation No. 11 of 2009 - electronic funds transfer instructions and international funds transfer instructions
- AUSTRAC guidance note 09/03 - International funds transfer instruction reporting requirements for items 1 and 2 of section 46 of the AML/CTF Act
- AUSTRAC forms for a suspicious matter report (SMR), threshold transaction report (TTR) and international funds transfer instruction (IFTI) report (sample forms available through AUSTRAC Online)
- AUSTRAC explanatory guides accompanying SMR, TTR and IFTI forms (available through AUSTRAC Online)
- AUSTRAC explanatory guide on file format specifications (available through AUSTRAC Online)
- AUSTRAC e-learning
- AUSTRAC Typologies and Case Studies Report 2007
- AUSTRAC Information Circular No.42: Bribery of Foreign Public Officials
Frequently asked questions
Q. If I ask a customer to provide more KYC information or to verify their KYC information, will I be in breach of the tipping off provisions?
A. It is AUSTRAC's view that the mere act of asking a customer for additional information about their identity, or source or destination of their funds, for example, would not constitute an unlawful disclosure of information under the tipping off provisions of the AML/CTF Act. The offence of tipping off occurs when a person discloses to persons outside AUSTRAC that an SMR has been submitted, or that a relevant suspicion has been formed. (31)
Q. If I have referred a suspicious matter to the Australian Federal Police, do I still have to report it to AUSTRAC?
A. Yes. Suspicious matters within the meaning of subsection 41(1) of the AML/CTF Act must be reported to AUSTRAC. This obligation is prescribed by subsection 41(2) of the AML/CTF Act. AUSTRAC will analyse all SMRs and may pass information on to a law enforcement agency such as the Australian Federal Police, if appropriate.
Q. Does a reporting entity have to submit an SMR every time it receives a request for information on a customer or group of customers from a law enforcement agency?
A. No. Whether a reporting entity needs to submit an SMR to AUSTRAC depends on the circumstances of, and reasons for, the approach by a law enforcement agency. However, a reporting entity may view the request for information as a trigger for further scrutiny of the relevant customer(s) and their transactions, including applying the entity's enhanced customer due diligence program. If that ultimately results in the AML/CTF compliance officer forming a reasonable suspicion within the meaning of section 41 of the AML/CTF Act, the reporting entity will have to submit an SMR.
Q. What is the difference between a transfer of funds and the instruction to send or receive funds?
A. The instruction is just that, an instruction - no actual money or property moves. A transfer occurs when the money or property actually moves from one place to another.
Q. Can a person carry physical currency or a BNI for someone else?
A. Yes, but the carrier must still report the physical currency. Reports about a BNI need be made by the carrier only on request. (32) On the CBM-PC or CBM-BNI reporting form the person carrying the currency or BNI gives information about themself, as well as information about the person for whom they are carrying the currency or BNI.
Q. If a person has any BNIs as well as physical currency, do they need to report both?
A. A CBM-PC form must be completed when a person is carrying $10,000 or more in physical currency, into or out of Australia. Only physical currency is counted in the total amount. For example, $5,000 in physical currency and $5,000 in traveller's cheques are not reportable on a CBM-PC form because the physical currency is less than $10,000.
BNIs such as traveller's cheques are reported on a separate form, but only when requested by a Customs or police officer. A single form cannot be used to report both currency and BNIs.
Q. If a BNI is valued under $10,000, does it need to be reported on request?
A. Reporting a BNI is different from reporting currency. There is no monetary threshold for a BNI. Even if the BNI has no face value (for example, a signed blank cheque), it still needs to be reported if requested by a Customs or police officer.
Q. What happens to the completed CBM-PC or CBM-BNI form?
A. The CBM-PC or CBM-BNI form is usually given to a Customs or police officer, who may check that all required information has been given. The officer then forwards the form to AUSTRAC. When mailing or shipping currency, the reporting form can be sent directly to AUSTRAC. The information provided on reporting forms is stored in a secure system and is accessible only by AUSTRAC and a number of partner agencies, including law enforcement agencies. Personal details are not provided to any private companies.
54 FATF, 9 Special Recommendations (SR) on Terrorist Financing, FATF, Paris, France, http://www.fatf-gafi.org/document/9/0,3343,en_32250379_32236920_34032073_1_1_1_1,00.html,
viewed 24 February 2009.
55 For a summary of reporting requirements under the FTR Act, refer to chapter 7 of this Guide.
56 See subsection 41(1) of the AML/CTF Act.
57 FATF, The 40 Recommendations and the FATF 9 Special Recommendations, FATF, Paris, France, www.fatf-gafi.org/dataoecd/16/54/40339628.pdf,
viewed 24 February 2009.
58 See AUSTRAC Guideline No.1 at www.austrac.gov.au/guidelines.html
59 Case studies 1 and 2 are examples of suspect transaction reporting under the FTR Act but are equally applicable to the SMR provisions of the AML/CTF Act.
60 See section on threshold transaction reports (TTRs) for details on TTR obligations.
61 See subsections 41(1)(d) to (j) of the AML/CTF Act.
62 See AUSTRAC guidance note 08/02 (AML/CTF Compliance Officers), paragraph 4.1(b), at www.austrac.gov.au/guidance_notes.html
63 See subsection 41(4) and section 175 of the AML/CTF Act.
64 See chapter 18 of AML/CTF Rules Instrument 2007 (No.1) at www.austrac.gov.au/aml_ctf_rules.html
65 See AUSTRAC's AML/CTF Act reporting implementation policy at www.austrac.gov.au/amlctfact_reporting_implementation.html
66 See section 49 of the AML/CTF Act.
67 See subsection 42(5) of the AML/CTF Act.
68 See section 42 of the AML/CTF Act.
69 See section 123 of the AML/CTF Act.
70 See subsections 123(4) to (9) of the AML/CTF Act.
71 See subsection 123(10) of the AML/CTF Act.
72 See subsection 43(2) of the AML/CTF Act.
73 See subsection 43(4) and section 175 of the AML/CTF Act.
74 See AML/CTF Rules chapter 19 ('Reportable details for threshold transactions') at www.austrac.gov.au/aml_ctf_rules.html. Please note that amendments to chapter 19 will come into effect on 1 January 2011. As of that date, if a person conducts the threshold transaction on behalf of a customer, that person's details will also need to be reported to AUSTRAC.
75 See AUSTRAC's AML/CTF Act reporting implementation policy at www.austrac.gov.au/amlctfact_reporting_implementation.html
76 See subsection 44(5) of the AML/CTF Act.
77 See PLI2 for a legal interpretation of the item 54 provision at www.austrac.gov.au/pli.html
78 See PLI3 for a legal interpretation of designated remittance services at www.austrac.gov.au/pli.html
79 AUSTRAC e-learning - 'Introduction to AML/CTF - Remittance Providers Registration' at www.austrac.gov.au/elearning/pdf/mod_remittance_providers.pdf
80 See Anti-Money Laundering and Counter-Terrorism Financing Rules Instrument 2007 (No.1) at www.austrac.gov.au/aml_ctf_rules.html
81 See AUSTRAC's AML/CTF Act reporting implementation policy at www.austrac.gov.au/amlctfact_reporting_implementation.html
82 AUSTRAC Typologies and Case Studies Report 2007.
83 See paragraph 55(1)(d) of the AML/CTF Act.
84 See paragraphs 123(2)(c) and (d) and subsection 123(3) of the AML/CTF Act; and Public Legal Interpretation No. 6 - Suspect transactions and suspicious matter reports at http://www.austrac.gov.au/pli.html
85 See subsection 59(1) of the AML/CTF Act.