AUSTRAC position on reporting requirements non-compliance
The international funds transfer instruction, threshold transaction and suspicious matter reporting requirements of Part 3, Divisions 2, 3 and 4 of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act) come into effect on 12 December 2008.
AUSTRAC has received a range of questions from reporting entities on:
- whether the Minister's Policy Principles remove their obligation to report international funds transfer instructions, threshold transactions and suspicious matters after 12 December 2008 and before an entity's full compliance
- what steps AUSTRAC expects reporting entities to undertake where their AML/CTF Act reporting systems will not be fully implemented by 12 December.
For reporting entities who find they are non-compliant with reporting obligations on 12 December 2008, AUSTRAC's view on this matter is:
- The Minister's Policy Principles and related guidance note do not alter the commencement date of Part 3 of the AML/CTF Act. It is still a requirement of the AML/CTF Act to comply with Part 3, irrespective of the Policy Principles.
- To avoid the possibility of enforcement action - including civil penalty orders - in respect of Divisions 2, 3 and 4 of Part 3 of the AML/CTF Act, a reporting entity must, by 12 March 2010 at the very latest:
- be compliant with Divisions 2, 3 and 4 of Part 3
- have given a report to the AUSTRAC CEO on all threshold transactions, international funds transfer instructions and suspicious matters for which this was a legal requirement from 12 December 2008. This applies regardless of the date during the 15-month period at which the reporting entity reached full compliance with these requirements.
- Notwithstanding the application of the Minister's Policy Principles and the guidance note, AUSTRAC has a number of regulatory powers available to it beyond the application of civil penalty orders.
- A reporting entity is required to continue to maintain compliance with Part 3, Divisions 2, 3 and 4 of the AML/CTF Act 2006 after 12 March 2010. Failure to do so will risk enforcement action by AUSTRAC including civil penalty orders.
Importance of submitting reports to AUSTRAC
AUSTRAC has designed a range of reporting methods to meet the size and technology requirements of reporting entities, including data entry and file upload functionality.
It is the responsibility of reporting entities to ensure they implement appropriate systems and controls to meet their AML/CTF Act reporting obligations.
A key objective of the Financial Transaction Reports Act 1988 (FTR Act) and the AML/CTF Act is the reporting of certain financial transactions. The greater the quality, accuracy, and timeliness of these reports, the greater the value they have for the detection, deterrence and disruption of criminal and terrorist activity.
New reporting entities
AUSTRAC expects that new reporting entities will commence reporting under the AML/CTF Act from 12 December 2008, electronically via AUSTRAC online, or through paper-based reporting where they do not have the technical means to report via AUSTRAC Online.
AUSTRAC encourages reporting entities who are implementing file upload tools which will not be fully functional on 12 December 2008 to use the data entry methods during the interim period.
From 12 December 2008, where a suspicious matter reporting obligation arises, reporting entities will be required to give a report to AUSTRAC under the AML/CTF Act about the matter within 3 business days or within 24 hours if the suspicion is related to the financing of terrorism.
New reporting entities who do not commence reporting threshold transactions and/or international funds transfer instructions to AUSTRAC under the AML/CTF Act from 12 December 2008, will be required to have given a report to the AUSTRAC CEO on all required transactions from 12 December 2008 and no later than 12 March 2010. This applies regardless of the date during the 15-month period at which the reporting entity began complying with the reporting obligations.
Reporting entities who have been reporting to AUSTRAC as cash dealers under the FTR Act
Reporting entities who are also 'cash dealers' under the FTR Act will be required to commence reporting under the AML/CTF Act on 12 December 2008. This will result in a number of transactions that are currently being reported under the FTR Act using the EDDSWeb system, to be reported under the revised AML/CTF reporting standards using AUSTRAC Online.
AUSTRAC expects reporting entities that currently submit paper-based reports to commence reporting under the AML/CTF Act from 12 December 2008. AUSTRAC will be contacting affected cash dealers in the coming months to arrange for FTR Act paper reporting forms to be returned and AML/CTF Act forms issued.
AUSTRAC expects those reporting entities that currently direct-enter their reports into EDDSWeb to commence reporting under the AML/CTF Act from 12 December 2008 via AUSTRAC Online.
AUSTRAC encourages reporting entities who are implementing data extraction systems which will not be fully functional on 12 December 2008, to use the direct entry method during the interim period where practicable.
Reporting entities who use the Excel or extraction methods available on EDDSWeb under the FTR Act for a significant number of reports, may continue to use these methods for threshold transaction, international funds transfer instruction or suspicious matter reports after 12 December 2008 and before reaching compliance with the AML/CTF reporting requirements prior to 12 March 2010.
From 12 December 2008, where a suspicious matter reporting obligation arises, reporting entities will be required to give a report to AUSTRAC under the AML/CTF Act about the matter within 3 business days or within 24 hours if the suspicion is related to the financing of terrorism.
Reporting entities who are also cash dealers and who do not commence reporting threshold transactions and/or international funds transfer instructions to AUSTRAC under the AML/CTF Act from 12 December 2008, will be required to have given a report to the AUSTRAC CEO on all required transactions from 12 December 2008 and no later than 12 March 2010. This applies regardless of the date during the 15-month period at which the reporting entity began complying with the reporting obligations.
However, reporting entities who continue to report under the FTR Act will not be required to resubmit these reports under the AML/CTF Act once their AML/CTF Act reporting obligations are implemented.
Where a reporting entity believes it has a particular set of circumstances that will result in significant non-compliance with provisions of the AML/CTF Act, it should approach AUSTRAC with a specific proposal for consideration of these matters. This proposal would need to address a range of issues including:
- details of any unique circumstances which would prevent it from complying with the reporting requirements of the AML/CTF Act
- the nature of the relevant service or product
- detail of what aspects of the reportable details will not be captured or the process that will not be completed
- an estimate of the likely number of customers affected and their profile
- an estimate of the cost in complying with the reporting requirements
- a proposal from the entity for managing the risks (in terms of the AML/CTF Act) associated with non compliance.
The view set out above is based on AUSTRAC's role in promoting compliance with the AML/CTF Act and to ensure competitive neutrality between reporting entities. In particular, it is important that AUSTRAC does not provide a competitive disadvantage to those entities which reach full compliance at an earlier date and provide an incentive to delay implementation of systems and commencement of reporting requirements.
It is AUSTRAC's preference that all reports are submitted electronically using AUSTRAC Online rather than through lodgement of a paper form. However, reporting entities that do not have the technical means to submit reports electronically may use the paper form. For more information, see AUSTRAC's Reporting policy and AML/CTF Act reporting implementation policy.
Reporting entities who are unable to report online should contact the AUSTRAC Help Desk to order paper reporting forms at help_desk@austrac.gov.au or 1300 021 037 (a local call within Australia).
