Weaknesses of the AML/CTF program:

• Failed to set out clear methods to identify, mitigate, or manage the Money Laundering and Terrorism Financing (ML/TF) risks the club could reasonably faced. 

• Did not keep a record of all staff who had completed AML/CTF training, including initial and refresher training dates of completion. 

• Failure to apply appropriate enhanced customer due diligence. 

• Failure to monitor suspicious customers to identify, mitigate, and manage the ML/TF risk they pose. 

• Not conducting an appropriate source of wealth or funds check in relation to suspicious customers. 

Each contravention attracts a maximum civil penalty between $21m and $31.3m. 

Key learnings include: 

• Ensure that you have an AML/CTF program that complies with the AML/CTF requirements. 

• Include appropriate risk-based systems and controls to monitor the transactions of customers and clearly identify which staff are responsible. 

• Have clear processes for when Enhanced Customers Due Diligence should be applied. 

• Ensure AML/CTF training meets the requirements of the rules and comply with record-keeping requirements. 

• Relying on a third-party provider to manage aspects of your AML/CTF program does not absolve you from your responsibilities to manage your AML/CTF obligations. 
   

How SW can help

SW will continue to monitor developments in AML/CTF compliance and share insights as they arise. 

Reach out to your SW contact or our specialist advisers for guidance on how these learnings may impact your club

Contributors

Freddie Deegan

The post AML/CTF penalties offer critical lessons for community clubs  appeared first on SW Accountants & Advisors.

The AML/CTF Amendment Bill aims to effectively deter, detect and disrupt money laundering and terrorism financing and strengthen the existing frameworks to better address these evolving threats.

The Australian Transaction Reports and Analysis Centre (AUSTRAC) notes the reforms modernise the regime to reflect changing business structures, technology and illicit financing methodologies. The amendments aim to bring Australia in line with international standards set by the Financial Action Task Force (FATF).

Who is affected?

AML/CTF compliance has been expanded to include:

• lawyers
• accountants
• real estate professionals and
• dealers in precious metals and stones.

If you are an entity already covered by AML/CTF requirements you will need to review and update your program and related processes and procedures.

What are the obligations?

Entities who now are regulated under AML/CTF must ensure they are:

• enrolling with AUSTRAC
• developing an AML/CTF program and risk assessment tailored to your business
• conducting customer due diligence
• reviewing transactions
• reporting on suspicious activity and
• ongoing employee training.

What do you need to do?

Entities under the expansion will need to enrol with AUSTRAC by 31 March 2026 and be compliant with AML/CTF obligations by 1 July 2026. Reforms to tipping-off offence will commence on 31 March 2025.

AUSTRAC can take enforcement action for non-compliance with AML/CTF legislation including civil penalty orders, enforceable undertakings, infringement notices and remedial directions.

How SW can help

We are committed to working with clients to ensure they are prepared for and understand the new requirements.

Get in touch and our team can help with:

• helping you understand the recent AML/CTF reform
• development of a tailored AML/TF program
• AML/CTF review to meet AUSTRAC requirements.

Contributors

Sean Wong

The post Anti-Money Laundering November 2024 reforms appeared first on SW Accountants & Advisors.

With the news regarding SkyCity, AUSTRAC has cited ‘systemic failures’ in the operator’s anti-money laundering and counter-terrorism financing (AML/CTF) programs, particularly regarding the failure to have a transaction monitoring program and to carry out appropriate ongoing customer due diligence, including on some very high-risk customers.

Australia’s thriving pub and club industry is not exempt from scrutiny. Electronic gaming machine operators, including pubs and clubs with electronic gaming machines (EGMs) are required to actively mitigate and manage their money laundering and terrorism financing (ML/TF) risks. Business with entitlement to operate 15 or less EGMs may be exempt from some obligations, however they must still enrol with AUSTRAC and report suspicious matters.

AML/CTF requirements for gaming machines operators

Pubs and clubs with EGMs should ensure they have/do the following:

• Complete a risk assessment to identify money laundering and terrorism financing risks your business faces and tailor your AML/CTF program to the business.
• Collect and verify ‘know you customer’ (KYC) information.
• Have a transaction monitoring program.
• Have ongoing customer due diligence and carry out additional checks on higher risk or suspicious customers.
• Report suspicious matters to AUSTRAC e.g. if you suspect a person is linked to crime or a customer is not who they claim to be. Low reporting compared to peers may indicated an ineffective AML/CTF program.
• Do not tell customers that you have reported them in a suspicious matter report (SMR).
• Maintain accurate records of transactions e.g. a cheque register of payouts.
• Have processes so that staff working on the gaming floor can help to identify and report suspicious behaviour.
• Have an employee due diligence program.
• Submit annual compliance reports to AUSTRAC.
• Notify AUSTRAC of any changes such as a new compliance officer or updated contact information.
• Undertake regular independent reviews of Part A of your AML/CTF program.

How can SW help?

Our highly experienced team works closely with organisations across multiple industries, including the tourism and hospitality sectors, to ensure their AML/CTF programs are compliant  and appropriate to the needs of the business. We can review your current programs and processes, advise where the gaps are, or review your  compliance with AML/CTF requirements.

Reach out to our experts for an obligation free discussion about your current program, details about how we can help with a review of your AML/CTF program and provide tailored recommendations.

Contacts

Laura Toscano

The post Gaming machine money laundering: What do operators need to do to comply with AML/CTF Laws appeared first on SW Accountants & Advisors.

This was a landmark transaction for the digital economy, as this is the first time an Australian bank has minted a digital asset linked to the value of the Australian dollar.

In this case, the ‘transaction’ was a proof of concept test case which involved ANZ minting a stablecoin, backed dollar for dollar by an AUD denominated deposit lodged with ANZ by its client, in a quarantined bank account. The stablecoin was then transferred to a digital currency exchange, and to a global digital asset custodian. A separate group provided anti-money laundering assurance for regulatory purposes and another group audited the capabilities of the coin and certified its existence on the blockchain and issuance to the highest security standards.

As this was a proof of concept, the client did not actually transact to purchase digital assets in this instance. The ‘transaction’ was unwound by reversing the process and ultimately ‘burning’ the stablecoin (i.e. removing it from the blockchain) and returning the customer’s fiat currency held in the quarantined ANZ bank account to them.

The next step to finalise prior to an actual transaction being facilitated is for the bank to arrange relevant licensing and ‘prove’ the process to exchange the AUD stablecoin for a USD denominated stablecoin to facilitate the purchase of digital assets by their client.

Potential for broader application

An interesting feature of ANZ’s stablecoin is that it is programmable for different use cases, such as execution and automation of different elements of smart contracts, making the scope for use in due course potentially limitless.

As an example, the bank is separately working on a use case that automates payment of excise duty to a digital wallet with the Australian Taxation Office when stock moves from a manufacturer to a wholesaler in a client’s supply chain.

A key element of the ANZ stablecoin is that it is issued by a regulated approved deposit-taking institution in Australia, which provides a layer of trust and gives clients confidence in the security standards surrounding issue and use of the coin. In the proof of concept transaction, the client’s fiat currency remained securely in the Australian banking system, while the stablecoin was utilised to move value through various elements of the transaction chain.

These types of transactions are only in the early stages of development in Australia, and accordingly are currently only potentially available to our largest institutional businesses. As the technology becomes more familiar over time, it is expected that they will become more mainstream and available to a wider range of users.

How can SW assist?

SW is working with a number of clients in the digital asset space in preparation for regulation of the sector in Australia following issue of the Bragg Report in October 2021  (Senate, 2021).

We anticipate that a licensing regime for the sector could be introduced as early as the end of 2022, and that it will include the establishment of capital adequacy requirements, auditing and responsible person tests, together with anti-money laundering and counter-terrorism financing regulation, in line with recommendations from the Report.

For advisory, tax or accounting assistance with your digital assets, reach out to your SW contact or the SW Digital Assets team to see how we can assist you.

The post A$DC – First Australian dollar stablecoin minted by ANZ Bank appeared first on SW Accountants & Advisors.

Following criticism and concern regarding Australia’s customer due diligence requirements, amendments to the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) (AML/CTF Act) were passed by parliament in December 2020, and these came into force on 18 June 2021.

The changes bring Australia into compliance with the standards published by the Financial Action Task Force (FATF), an international, inter-governmental body which develops and monitors policies to combat money laundering and terrorist financing.

The Act empowers AUSTRAC, Australia’s AML regulator, with a range of measures to detect and deter money laundering and terrorism financing, including monitoring a reporting entity’s AML/CTF program, independent reviews and compliance reporting.

Through working with clients for over 20 years to streamline financial crime prevention processes and controls, our experts have a deep understanding of both the business structures of financial and other reporting institutions, and the regulatory compliance requirements that AUSTRAC will enforce.

What are the changes?

Several changes were made to improve collaboration and information sharing between agencies, increase due diligence obligations, streamline cross-border currency provisions, and in some areas reduce costs and regulatory burden.

Typically when conducting AML /CTF reviews we have helped organisations improve their AML/ CTF control framework in the following areas:

• Appropriate Know Your Customer (KYC) risk assessment processes
• Strengthening of gaps identified in the policy and procedure framework
• Automated controls around monitoring of suspicious transaction activity, and
• Effectiveness of sanctions and Politically Exposed Persons (PEPs) screening including processes in place to monitor Australian blacklists / watch lists.

How we can help?

Reporting entities, particularly ADIs and other financial institutions operating in Australia, must ensure the business has robust policies, procedures and controls in place through an AML/CTF Program to help it prevent, detect and report instances of money laundering and terrorism financing that might occur through the legitimate products and services the business offers.

The Program is required to be independently reviewed for compliance regularly.

• Is your AML/CTF Risk Assessment up to date and does it adequately identify your risks?
• Does your AML/CTF Program cover the updated requirements set out by the AML/CTF Act and Rules?
• Have you commissioned an independent review of your AML/CTF compliance in the last two years?

Contacts

Get in touch to talk to an expert about a specialist AML/CTF program review.

Laura Toscano

For further information see the AUSTRAC reforms guidance.

The post AML/CTF changes now in place appeared first on SW Accountants & Advisors.