AML/CTF Rules update

The Anti-Money Laundering and Counter-Terrorism Financing Rules Amendment Instrument 2021 (No. 3) was registered on 13 December 2021 and commenced on 14 December 2021.

The instrument adds Chapters 79 and 80 to, and amends Chapter 48 of the Anti-Money Laundering and Counter-Terrorism Financing Rules Instrument 2007 (No. 1).

Chapter 79 of the AML/CTF Rules sets out the special circumstances in which a reporting entity may carry out the applicable customer identification procedure (ACIP) in respect of a customer, including any person purporting to act on behalf of the customer and any beneficial owner of the customer, after commencing to provide a designated service described in item 1 of table 1 in subsection 6(2) of the AML/CTF Act (opening an account).

The reporting entity, for a period of 15 business days after commencing to open the account, may accept deposits to the account and provide a designated service described in an item of table 1 in subsection 6(2) of the Act, other than item 1 or item 3, which is incidental to the account opening or deposit. No other designated services can be provided by the reporting entity to the customer until the ACIP has been completed. Furthermore, after the end of the 15-business day period no deposits can be accepted and no other designated services provided until ACIP is completed.

Chapter 80 has been added to allow the AUSTRAC CEO to make AML/CTF Rules to exclude specific things from being a stored value card (SVC).

Chapter 80 excludes certain types of products, unintentionally caught by the definition of a SVC in the AML/CTF Act.

Paragraph 80.2(1) prescribes that an account is not a SVC for the purposes of the AML/CTF Act. This means that all accounts, including those provided by reporting entities in relation to designated services in Tables 1 and 3 of subsection 6(2) of the AML/CTF Act, will not be captured by the SVC definition. ‘Account’ is defined in section 5 of the AML/CTF Act.

Paragraph 80.2(2) prescribes that a card or other instrument used only for the purposes of purchasing an entry into a lottery, or redeeming winnings in respect of a lottery, is not a SVC.

The AML/CTF Act excludes lottery type games such as instant scratchies, keno, powerball and lotto. As these products are provided as a gambling service and are designed to be used for the purposes of entering a lottery, Chapter 80 exempts these products from the SVC definition.

Chapter 48 of the AML/CTF Rules includes exemptions of specified designated services relating to salary packaging administration services from the AML/CTF Act. This Instrument amends Chapter 48 by expanding the current exemption relating to salary packaging services to include the specified designated services when they relate to payroll and superannuation clearance services. The amendment does not change the existing definition of salary packaging in Chapter 48.

Preventing the exploitation of emergency and disaster support payments

During or following an emergency or disaster (including bushfires, cyclones, flooding or health emergencies), the Australian Government provides multiple forms of assistance in the form of Australian Government Disaster Recovery Payments.

Austrac has published a guide to provide financial indicators to help financial services businesses to detect and report potential fraud and misuse of taxpayer funds through Services Australia administered emergency and disaster payments.

Sophisticated fraud networks or individuals acting alone can conduct fraud against emergency and disaster payments.

These fraud networks recruit willing participants to falsely claim payments or compromise unknowing victims’ identity data to create and control fake customer profiles.

Pubs and Clubs

Austrac has published a guide for pubs and clubs who have entitlements under licence to operate
electronic gaming machines (EGMs).

The AML obligations for pubs and clubs will depend on the number of EGM entitlements they have under licence to operate (regardless of how many are actually in operation at the time).

If the business has entitlements under licence to operate 15 or less EGMs it may be exempt from having an AML/CTF program, customer due diligence and submitting certain reports to AUSTRAC, but it must still enrol with AUSTRAC and report suspicious matters.

As proceeds of crime is often in the form of cash, o EGMs can provide an opportunity for criminals to launder their funds.

Austrac’s guide warns that gaming staff, including management and owners, need to be aware of the ML/TF risks and take steps to mitigate and manage them.

Some examples of how gaming businesses are exploited by criminals include:

  • Offering to pay cash to a legitimate player who has accumulated credits or has winning tickets. The criminal then claims the legitimate credits or winnings as their own.
  • Inserting large amounts of cash or credits into EGMs or multi–terminal gaming machines and engaging in minimal or no game play to appear like a real player, before cashing out.
  • Deliberately using multiple cashiers or only using cash redemption terminals (CRTs) to avoid observation or monitoring by staff.
  • Individuals or groups working to gain the trust of gaming staff, or colluding with staff to avoid detection or providing identification when collecting winnings.

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David Jacobson

Author: David Jacobson
Principal, Bright Corporate Law
About David Jacobson
The information contained in this article is not legal advice. It is not to be relied upon as a full statement of the law. You should seek professional advice for your specific needs and circumstances before acting or relying on any of the content.

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