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Exceptions to verifying a customer before providing a designated service

There are circumstances when you may provide a designated service without carrying out the complete applicable customer identification procedures (ACIP).

Exceptions under the AML/CTF Act

You are not required to carry out the complete ACIP for a customer if you have previously done so, for example when providing another designated service.

However, if the money laundering and terrorism financing risks associated with providing a new or additional designated service to a customer is higher, you may need to obtain further information and undertake additional verification to ensure you comply with the risk-based systems and controls outlined in Part B of your AML/CTF program.

There are also exceptions when:

  • there are special circumstances that justify carrying out the ACIP after the commencement of the provision of a designated service (section 33 of the AML/CTF Act)
  • identification procedures for certain pre‑commencement customers (section 28 of the AML/CTF Act) or identification procedures for certain low‑risk services (section 30 of the AML/CTF Act), apply to the provision of the designated service.

Exemptions under the AML/CTF Rules

Delaying finalisation of ACIP

Finalising ACIP can be delayed in the following specific circumstances:

  • Opening and allowing an initial deposit to be conducted on an online wagering account. An online wagering operator has 14 days to carry out ACIP on a customer who has opened an account See Part 10.4 of the AML/CTF Rules - Accounts for online gambling services
  • Securities transactions on an Australian stock exchange in specific circumstances. See paragraph 46.2 of the AML/CTF Rules.

Exemptions from other customer identification requirements

Pre-commencement customers

Pre-commencement customers are customers who received a designated service before 12 December 2007, when identification procedures became mandatory.

You are not required to identify and verify these pre-commencement customers for any new or existing designated services that you provide them. These customers are, however, subject to ongoing customer due diligence (OCDD) requirements, including transaction monitoring and enhanced customer due diligence, which may include collecting KYC information and verifying in accordance with your risk-based systems and controls.

If a suspicious matter reporting obligation arises for a pre-commencement customer, you must take one or more of the following actions as soon as practicable so you can be reasonably satisfied the customer is the person they claim to be.

  • Complete ACIP for the customer, unless you have previously carried out the procedure or a comparable procedure for the customer.
  • Collect any other relevant customer information about the customer.
  • Verify any customer information obtained with a reliable and independent source.

Pre-commencement customers

The AML/CTF Act and Rules does not modify the character of a pre-commencement customer to a general customer. Therefore a pre-commencement customer remains a pre-commencement customer throughout the life of your relationship with the customer.

Low-risk designated services

The AML/CTF Rules can specify a designated service as 'low risk'. In this case, you are not required to carry out the ACIP when providing that service unless a suspicious matter reporting obligation under section 41 of the AML/CTF Act arises for the customer.

There are no designated services currently specified as low risk.

Exemptions from certain customer identification requirements

There are further exemptions from certain customer identification requirements in accordance with the AML/CTF Act and Rules. Refer to the following table for more details.

AML/CTF Rules Chapter

Title of Chapter

Chapter 10.4

Certain transactions and activities applicable to gambling services - casinos, oncourse bookmakers, Totalisator agency boards, gaming machines and online gaming services.

Chapter 14

Thresholds for certain designated services:

  • issuing a cheque (item 17, table 1, section 6 of the AML/CTF Act)
  • cashing or redeeming a travellers cheque (items 25 or 26, table 1, section 6 of the AML/CTF Act)
  • exchanging one currency for another (item 50, table 1 or item 14, table 3, section 6 of the AML/CTF Act).

Chapter 28

Exemption from applicable customer identification procedures in certain circumstances - assignment, conveyance, sale or transfer of a business.

Chapter 33

Exemption from applicable customer identification procedures for the purchase and sale of bullion valued at less than $5,000.

Chapter 35

Exemption from applicable customer identification procedures for correspondent banking relationships.

Chapter 38

Exemption from applicable customer identification procedures for the sale of shares for charitable purposes.

Chapter 39

Exemption from applicable customer identification procedures - premium funding loans for a general insurance policy.

Chapter 41

Exempts trustees of a superannuation fund from carrying out the applicable customer identification requirements where the balance of the customer’s account balance is not greater than $1,000.

Chapter 45

Exempts Debt Collectors from all obligations under the AML/CTF Act including ACIP, other than suspicious matter reporting.

Chapter 49

Exempts reporting entities that are executing brokers from the applicable customer identification procedure (ACIP) of the AML/CTF Act, if they provide the item 33 designated service (as an agent, acquiring or disposing of a security or derivative or a foreign exchange contract).

Chapter 50

Exemption from applicable customer identification procedures in certain circumstances:

  • for a member of a DBG where another member of the group treats the same customers as pre-commencement customers
  • for a member of a DBG where the same customers are pre-commencement customers of another member of the group.

Chapter 52

Exempts licensed gaming machine operators with 15 gaming machines or less from all obligations including ACIP, other than suspicious matter reporting.

Chapter 66

Exempts applicable customer identification procedures in certain circumstances - compulsory partial or total transfer of business made under the Financial Sector (Business Transfer and Group Restructure) Act 1999.

Chapter 67

Provides an exemption from the applicable customer identification procedure in regard to ‘warrants’. A warrant is a financial instrument issued by banks and other institutions and traded on the Australian Stock Exchange.

Chapter 74

Exempts licensed trustees Division 4 of Part 2 of the AML/CTF Act, including ACIP, in certain circumstances.

The content on this website is general and is not legal advice. Before you make a decision or take a particular action based on the content on this website, you should check its accuracy, completeness, currency and relevance for your purposes. You may wish to seek independent professional advice.

Last updated: 26 Aug 2021
Page ID: 686

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