Reliance on a case-by-case basis (Reform)
Learn about reliance on a case-by-case basis.
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Important information:
It’s a criminal offence to disclose certain types of information to another person, where it would or could reasonably be expected to prejudice an investigation.
Learn more about tipping off.
Case-by-case reliance in detail
This section refers to the Act section 38 and the Rules sections 6–31.
You can rely on know your customer (KYC) information that’s been collected and verified by another Australian reporting entity or a foreign business subject to anti-money laundering and counter-terrorism financing (AML/CTF) regulation on a case-by-case basis.
The reliance must be appropriate to the money laundering, terrorism financing and proliferation financing risks (we refer to these as ML/TF risks) you may reasonably face in providing designated services, considering the:
- nature, size and complexity of the third party’s business
- services the third party provides
- kinds of customers they provide services to
- delivery channels the third party uses to provide services
- level of ML/TF risks in the country or countries where they operate or are a resident.
You must have reasonable grounds to believe that you can get both:
- all the KYC information the third party collected, before you begin to provide a designated service or, if applicable, within the required timeframe to complete delayed initial CDD
- copies of the data the third party used to verify the customer’s KYC information immediately or as soon as practicable after you request it.
You must document why you believe this reliance:
- is appropriate to the ML/TF risks you may face
- enables you to get a customer’s KYC information and the data used to verify it in the timeframes required.
You must also consider whether you need to obtain the customer’s consent before disclosing KYC information to a third party. Learn more about your obligations under the Privacy Act at the Office of the Australian Information Commissioner.
Important note:
The third party’s ML/TF risk assessment and AML/CTF policies may not match your own. For example, your identification of the customer’s ML/TF risk may be different to that identified by the reliable third party. This might be because the customer poses a different level of risk to your businesses. For example, you may be providing the customer with different designated services or providing the services in a different way.
Initial CDD, including enhanced CDD if required, must be conducted in a manner that’s appropriate to the ML/TF risks that the customer presents to your business. Otherwise, you’re unlikely to be able to demonstrate that the CDD arrangement is appropriate to the risks you may face.
Specific case-by-case reliance scenarios
Reliance on customer identification and verification carried out by licensed financial advisers can continue under section 38 of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (the Act). Reliance on the adviser must continue to be appropriate having regard to the ML/TF risk you face in providing the designated service to a particular customer.
Example: Reliance on a financial advisor (Item 54)
Waterland Financial Advisory Services (Waterland) is approached by a new customer who has requested advice to invest a recently obtained $50,000 inheritance. The customer expresses an interest in investing the entire amount into a high performing managed fund.
Based on this request, Waterland requires the customer to fill out a customer information form. This includes the KYC information required to be collected under their AML/CTF policies.
Waterland verifies the customer’s KYC information and, following a review of the customer’s circumstances, recommends that the funds be invested into the Dover House Managed Investment Fund (Dover House).
Waterland has an agreement with Dover House and invests many of its customers into their products. Waterland helps the customer to complete Dover House’s application for the investment by completing the application form on the customer’s behalf. Waterland then passes on the completed application form, including the completed KYC documents to Dover House.
Dover House is comfortable and satisfied with the KYC information collected and verified by Waterland. This is because:
- the customer falls within the low-risk customer profile in Dover House’s ML/TF risk assessment
- the amount to be invested by the customer is within the ordinarily expected range for such investments
- there are no higher-risk indicators.
Therefore, they’re satisfied no additional CDD or information is required for the customer. They document their reasoning.
Related pages
This guidance sets out how we interpret the Act, along with associated Rules and regulations. Australian courts are ultimately responsible for interpreting these laws and determining if any provisions of these laws are contravened.
The examples and scenarios in this guidance are meant to help explain our interpretation of these laws. They’re not exhaustive or meant to cover every possible scenario.
This guidance provides general information and isn't a substitute for legal advice. This guidance avoids legal language wherever possible and it might include generalisations about the application of the law. Some provisions of the law referred to have exceptions or important qualifications. In most cases your particular circumstances must be taken into account when determining how the law applies to you.