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.

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.

Following engagement with bank representatives and industry experts, and analysis of transaction reports and partner agency intelligence reports, the four new ML/TF risk assessments offer insights into ML/TF activity in the subsectors and details of key risks each subsector is exposed to.

Major banks

The AUSTRAC risk assessment found that major banks face a high risk of ML as the subsector has a very large customer base with customers in high-risk categories, high exposure to cash, increases in remote service delivery channels and high exposure to foreign jurisdiction risk.

Red flags for cash-related ML risks include successive cash deposits at ATMs to the same account by different individuals, and use of the same mobile number for verifying deposits to multiple beneficiaries.

Other domestic banks

Other domestic banks are also exposed to individuals charged with money laundering-related offences, as well as members of serious and organised crime groups.

Common concerns include unexplained wealth, where the source of funds could not be determined and was inconsistent with the customer’s profile; multiple transactions when one transaction would suffice; and rapid or complex movement of funds through multiple accounts.

Foreign bank branches

The average value associated with money laundering in the foreign bank branches subsector is much higher than other banking subsectors.

Clients with complex company ownership structures and intricate onshore and offshore banking arrangements are assessed to be the highest risk for money laundering.

Risk factors include obscuring beneficial ownership or source of funds; receipt of high-value international transfer of funds, and rapid and complex movement of funds between multiple companies linked by shareholders; trusts and beneficial owners and companies moving funds to high-risk and tax secrecy jurisdictions.

Foreign bank branches often follow AML/CTF programs that are developed by the head office, and may not always be suitable for the Australian market.

Foreign subsidiary banks

Money-laundering for foreign subsidiary banks predominantly relates to cash and transaction account-based services.

Suspicious transaction activity includes multiple transactions (potentially without economic rationale); and large and unusual transactions and activity inconsistent with a customer’s profile.

The subsector’s large retail banking footprint enables customers to place cash directly into the financial system, and offers multiple products and services that enable fast and efficient movement of funds.

Red flags include unclear source of funds; multiple large cash transactions, particularly in a short period of time; and multiple third-party deposits.

Risk mitigation strategies

• Remain vigilant of key criminal trends in Australia
• Perform a risk assessment where a new system is introduced, or where there is a change in a system, product or service
• Tailor off-the-shelf risk assessment tools to be business specific and reflect the risks posed
• Understand the customer’s source of funds and wealth, expected account activity, ownership structure and associated and controlling parties
• Proactively detect higher-risk customers, and have elevated risk mitigation strategies for Politically Exposed Persons (PEP)
• Perform high-quality investigations for the submission of Suspicious Matter Reports (SMR) to AUSTRAC
• Provide appropriate staff training and screen employees.

How we can help

Whichever banking subsector your business falls into, our teams are across anti-money laundering and counter-terrorism financing (AML/CTF) regulations in Australia and highly experienced in conducting reviews and providing recommendations for your AML/CTF program.

Reach out to our experts for:

• an obligation free discussion regarding your current program
• an AML/CTF gap analysis
• a full review of your AML/CTF program, and expert recommendations.

Contributors

Laura Toscano

E ltoscano@sw-au.com

Sean Wong

E sewong@sw-au.com

The post AUSTRAC assesses Money Laundering and Terrorism Financing risks for the Australian banking sector 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.