Threshold transactions

22-JAN-2010

If a reporting entity provides a designated service to a customer which involves the transfer of physical currency or e-currency of AUD10,000 or more (or the foreign currency equivalent), the reporting entity must submit a threshold transaction report (TTR) to AUSTRAC.

'Physical currency' is the coin or printed money of Australia or another country which is designated as legal tender. 'E-currency' is an electronic form of currency which is backed by precious metal or bullion.

A TTR must be submitted within 10 business days of the threshold transaction taking place. AUSTRAC has produced several TTR forms tailored for the following business types:

  • financial and bullion services
  • investment, superannuation and insurance
  • money services businesses
  • gambling services.

Reporting deposits of physical currency into a reporting entity's bank account

Under section 43 of the AML/CTF Act, if a reporting entity provides a designated service to a customer, and the provision of the service involves a threshold transaction, i.e. the transfer of not less than $10,000 physical currency, then the reporting entity must submit a threshold transaction report (TTR) to AUSTRAC.

In some cases, rather than providing physical currency directly to a reporting entity, a customer may deposit physical currency into the reporting entity's bank account.

It is AUSTRAC's view that deposits of physical currency into a reporting entity's account are reportable by the account provider only, regardless of whether the reporting entity uses those funds to provide a designated service in a separate transaction.

For example, a customer deposits $20,000 physical currency into an account held in the name of a stockbroker. The stockbroker uses the deposited funds to purchase securities on behalf of the customer. No physical currency is handled by the (stockbroker) reporting entity or its agents.

It is AUSTRAC's view that there are two designated services provided in two separate transactions. Firstly, the account deposit (designated service item 3) is provided by the bank with whom the stockbroker's account is held. Secondly, the purchase of the securities (designated service item 33) is provided by the stockbroker.

The first transaction, the account deposit, involves the transfer of not less than $10,000 physical currency. Therefore, the bank has an obligation to submit a TTR to AUSTRAC relating to the provision of designated service item 3 to the account holder.

The subsequent provision of the designated service by the stockbroker to the customer would not involve the transfer of physical currency. Therefore, the stockbroker would not have an obligation to submit a TTR to AUSTRAC in respect of the provision of that designated service.

However, if the stockbroker, or its agent, handled $10,000 or more of physical currency in the provision of the designated service, e.g. paying for securities using physical currency, a TTR obligation will arise for the stockbroker.

This principle also applies for other designated services. For example, physical currency deposited by a customer into the bank account of a foreign exchange dealer or superannuation fund. The obligation to report a TTR relating to the account deposit would be with the account provider, not with the foreign exchange dealer or superannuation fund.

Regardless of their TTR obligations, reporting entities should be cognisant of their suspicious matter reporting (SMR) obligations. AUSTRAC expects that all reporting entities have in place appropriate risk-based systems and controls to identify and analyse any unusual deposits made into bank accounts relating to the provision of a designated service. Where a reporting entity forms a suspicion about the deposit, they are required to submit a SMR to AUSTRAC under section 41 of the AML/CTF Act.

Must reporting entities collect and verify 'know your customer' (KYC) information every time they provide a designated service involving a threshold transaction?

When completing a TTR, a reporting entity is required to provide a description of any documentation or electronic data sources used to verify the identity of the customer in the course of carrying out the applicable customer identification procedure.

The reporting entity is not required to:

  • complete this section of the TTR where the customer is a pre-commencement customer for whom the reporting entity has not carried out an applicable customer identification procedure
  • carry out the applicable customer identification every time a TTR obligation arises relating to a post-commencement customer who has been previously identified under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act).

Notwithstanding an entity's reporting obligations, it is a matter for a reporting entity to determine, based on their risk-based systems and controls, whether to collect and/or verify any additional KYC information from the customer or whoever is conducting the transaction when providing a designated service involving $10,000 or more of physical currency.

Part 10 of the AML/CTF Act requires reporting entities to make and retain certain records about information that they have obtained in the course of carrying out the applicable customer identification procedure.

It is a matter for reporting entities to determine how to record and keep this information so that it may be readily retrieved for reporting purposes. This includes information collected by an agent, a licensed financial adviser and other members of a designated business group of which the reporting entity is a member.

Commencement of further TTR reportable details from
1 October 2011

From 1 October 2011 reporting entities will be required to include details of the individual conducting the threshold transaction where that individual is not the customer of the designated service.

As the current (December 2008) versions of the TTR paper and electronic forms do not contain any questions relating to the individual conducting the transaction, new October 2011 versions of the forms have been developed.

Reporting entities will be expected to use the new October 2011 TTR forms for all threshold transactions that take place from 1 October 2011 onwards.

Further information

AUSTRAC has produced various educational tools and publications to assist reporting entities with their TTR obligations. These include:

08-MAR-2013

Related information

05-MAR-2013

AML/CTF Act

AUSTRAC Online

AUSTRAC Regulatory Guide

Brochure series

E-learning courses

Public Legal Interpretations

Reporting obligations

07-MAR-2013

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