AML : Did you miss the deadline?

From 12 December 2007, reporting entities under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) (Act) are generally required to adopt and implement an AML/CTF Program which includes risk-based identification and verification procedures that must be undertaken in respect of new customers.

A reporting entity is generally a legal person who provides designated services. The Act provides for a wide range of designated services (54 in total!) and include banking and finance related services, life insurance, annuities, superannuation, stockbroking, financial planning and others.

If you are a reporting entity and have missed the 12 December 2007 deadline what should you do?

Don’t panic! The Act provides a 15 month prosecution-free period, subject to certain conditions.

On 31 January 2007, the Policy (Civil Penalty Orders) Principles 2006 (Policy Principles) were released and provide that the Australian Transaction Reports and Analysis Centre (AUSTRAC) will only apply for a civil penalty order against a reporting entity during the 15-month prosecution-free period if AUSTRAC is satisfied the reporting entity has failed to take ‘reasonable steps’ to comply with the relevant provision in the Act.

AUSTRAC have recently released a Guidance Note that provides some practical direction as to what will constitute ‘reasonable steps’. It states that a reporting entity is required to make ‘a steady progression towards compliance’, rather than ‘no progression or minimal progression’.

AUSTRAC’s assessment will include whether a reporting entity can demonstrate (amongst other considerations):

  • that it has taken responsibility for ensuring it understands and complies with its obligations under the Act
  • a commitment to fostering a culture of voluntary compliance and
  • that it has taken preparatory steps to implement systems and controls relevant to its identified risks and the extent to which those systems and controls have been implemented.

AUSTRAC has also indicated that it would prefer to resolve non-compliance issues in a cooperative manner through negotiation and guidance, and accordingly encourages reporting entities to contact it in relation to its compliance shortcomings and to resolve their issues in an upfront manner.

Therefore, if you have already started putting systems and procedures in place for AML/CTF, you may be able to take advantage of the prosecution-free period. If you haven’t started yet, its never too late! The sooner you begin the more chance you will have to demonstrate that you have taken reasonable steps to comply with the AML/CTF Act.


Harry New

Harry leads our financial services team and focuses extensively on financial services law and corporate advisory.

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