These draft AML/CTF Rules provide an exemption allowing reporting entities to .... telephone or other means of communica
Explanatory note for consultation These draft AML/CTF Rules provide an exemption allowing reporting entities to undertake actions in regard to a law enforcement operation which normally would amount to a breach of the AML/CTF Act and AML/CTF Rules. For example, a reporting entity may make an assessment of a customer and conclude that the person poses an unacceptable money-laundering or terrorism-financing risk and therefore they will not provide, or will discontinue providing, a designated service. A law enforcement agency may have an interest in that customer in regard to an operation and request that the reporting entity continue providing the designated service in order to avoid a situation where the person becomes aware that their transactions are the subject of scrutiny. The exemption provides legal certainty to the reporting entity that there will be no breaches of the AML/CTF Act and Rules if they co-operate with the law enforcement operation, under section 235 (Protection from liability) of the AML/CTF Act. The draft AML/CTF Rules do not contain any power to mandate reporting entity co-operation with an operation, this will be a decision undertaken by the reporting entity after a consideration of the request by a law enforcement agency. The exemption relates to the following sections of the AML/CTF Act, as applicable: section 29 (pre-commencement customers), section 32 (customer identification), section 34 (carrying out customer identification after commencement of designated service), section 35 (verification of customer identity), section 36 (ongoing customer due diligence); section 136 (false or misleading information), section 137 (producing false or misleading documents), section 138 (false documents), section 139 (providing a designated service using a false customer name) and section 142 (avoidance of threshold transaction reporting). The draft AML/CTF Rules currently confine applications to the AUSTRAC CEO to those ‘designated agencies’ as defined under section 5 of the AML/CTF Act, which are considered to be ‘law enforcement agencies’. The draft Rules define such designated agencies as being the Australian Federal Police or the police force or police service of a State or Territory or the Australian Crime Commission. AUSTRAC seeks submissions on whether other designated agencies under the AML/CTF Act should be included in these Rules. Calculation of Regulatory Costs It is anticipated that these draft amendments will not impose regulatory burden or additional costs to industry if they are implemented. If there are regulatory costs or savings, AUSTRAC requests that industry provide, in any submission on these draft amendments, an estimate of those costs or savings that may result
from their implementation. It is preferred that such estimates use the Regulatory Burden Measure (RBM) as a basis for the calculation, as the RBM has been mandated by the Australian Government for use by agencies. Further details on the RBM are available at Commonwealth Regulatory Burden Measure (https://rbm.obpr.gov.au). The Australian Government has implemented an annual $1 billion red tape reduction target to which agencies such as AUSTRAC are required to contribute if regulatory action by an agency results in a cost reduction to businesses, community organisations or individuals. Any identified savings may also be used by an agency to ‘offset’ regulatory action which may impose regulatory costs. Further details on the Australian Government policy are available at Cutting Red Tape (www.cuttingredtape.gov.au). Human Rights (Parliamentary Scrutiny) Act 2011 requirements The Human Rights (Parliamentary Scrutiny) Act 2011 requires that Statements of Compatibility must be made by the rule-maker with regard to disallowable legislative instruments, and must contain an assessment of whether the legislative instrument is compatible with the rights and freedoms recognised in the seven core international human rights treaties that Australia has ratified. It is considered that the draft amendments are compatible with the human rights and freedoms recognised or declared in the international instruments listed in the definition of ‘human rights’ in subsection 3(1) of the Human Rights (Parliamentary Scrutiny) Act 2011.
Draft AML/CTF Rules relating to Law Enforcement Operations 1.
These Anti-Money Laundering and Counter-Terrorism Financing Rules are made under section 229 for subsection 247(4) of the Anti-Money Laundering and CounterTerrorism Financing Act 2006 (AML/CTF Act).
2.
Subject to the circumstances specified in paragraph 3, each of the following provisions of the AML/CTF Act do not apply to a designated service provided by a reporting entity:
3.
(1)
section 29;
(2)
section 32;
(3)
section 34;
(4)
section 35;
(5)
section 36;
(6)
section 136;
(7)
section 137;
(8)
section 138;
(9)
section 139; or
(10)
section 142.
The exemption in paragraph 2 only applies if: (1)
4.
the AUSTRAC CEO has received an application from: (a)
a designated agency listed in Schedule 1 to this Chapter;
(b)
the application relates to a serious crime;
(c)
the application contains the information set out in Schedule 2 to this Chapter; and
(d)
the AUSTRAC CEO has approved the exemption application.
The application may be: (1)
a formal application which is a written document signed by the applicant; or
(2)
(3)
(a)
in circumstances where the success of an operation may be affected through the delay in submitting a formal application; and
(b)
that, as soon as practicable after making such an application, the designated agency must submit a written application to the AUSTRAC CEO;
The application must: (a)
provide sufficient information to enable the AUSTRAC CEO to decide whether or not to grant the exemption; and
(b)
must contain an undertaking from the designated agency that it will not publicly disclose information about the notice or its operation during the period of the exemption;
(4)
The AUSTRAC CEO may request further information in regard to the application from the designated agency;
(5)
An exemption approved by the AUSTRAC CEO will operate for a period of six months commencing on the day of the decision;
(6)
The exemption period specified in subparagraph 4(5) may be extended as determined by the AUSTRAC CEO after consideration of any further submission from the designated agency;
(7)
The AUSTRAC CEO must give notice to the designated agency and the reporting entity to which it applies for:
(8)
5.
an urgent application which may be made orally in person or by telephone or other means of communication by the designated agency:
(a)
a formal application – in writing signed by the AUSTRAC CEO; or
(b)
an urgent application - orally in person or by telephone or other means of communication;
The notice must specify: (a)
the designated service or services to which the exemption applies;
(b)
that the exemption operates for a period of six months or as extended as determined under subparagraph 4(6); and
(c)
any conditions which may apply.
In respect to an urgent application, the AUSTRAC CEO will give the designated agency and the reporting entity to which it applies, a written notice after
communicating with them orally in person or by telephone or other means of communication advising them of the result of the application. 6.
In this Chapter: (1)
(2)
‘authorising officer of the designated agency’ means: (a)
the head of the agency;
(b)
a member of the agency who is an SES employee; or
(c)
a member of the agency who holds the rank of Superintendent or higher and is authorised in writing by the head of the agency for the purposes of the application;
‘serious crime’ means conduct that, if engaged in within, or in connection with, Australia, would constitute an offence against the law of the Commonwealth, a State or a Territory punishable by imprisonment for a period exceeding 12 months.
Schedule 1 Designated Agencies 1
the Australian Federal Police;
2.
the police force or police service of a State or Territory;
3.
Australian Crime Commission.
Schedule 2 Information to be provided to AUSTRAC CEO 1.
The name of the reporting entity;
2.
The name of the person to whom the reporting entity provides or will provide the designated service;
3.
The name of the designated agency;
4.
A statement of the reasons why the designated agency is of the opinion that the AUSTRAC CEO should determine that an exemption will operate;
5.
A declaration made by an authorising officer of the designated agency that:
6.
(a)
the information contained in the application is true, accurate and complete;
(b)
that the designated agency will not publicly disclose information about the notice or its operation during the period of the exemption; and
(c)
that an exemption under this Chapter is necessary for the investigation by the designated agency of a serious crime;
Any other matters that are relevant to the AUSTRAC CEO’s assessment of whether the exemption should be granted.
Reporting entities should note that in relation to activities they undertake to comply with the AML/CTF Act, they will have obligations under the Privacy Act 1988, including the requirement to comply with the Australian Privacy Principles, even if they would otherwise be exempt from the Privacy Act. For further information about these obligations, please go to the OAIC website or call 1300 363 992.
