The Australian Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) has commenced. It received Royal Assent on 12 December 2006. Some key obligations under the Act commenced on 13 December 2006 as follows.

• Reporting entities must keep all records about the provision of a designated service for seven years.
• Providers of designated remittance services must register with AUSTRAC (Australian Transaction Reports and Analysis Centre).
• Authorised deposit taking institutions (ADIs) must include new information in electronic funds transfer instructions
• There are also new reporting obligations in relation to cross-border movements of physical currency and bearer negotiable instruments.

Other obligations will commence in stages over the next 24 months. The table at the end of this alert shows the implementation timetable.

Details of the Act are contained in our alert: Australian Parliament passes AML/CTF Act.

Obligations that commence immediately

Part 10 - Record keeping

All reporting entities will need to keep a record (or a copy of the record) in the following situations:

• if a record of information relating to the provision of a designated service is made
• if a customer provides the reporting entity with transaction documents
• if a record is obtained relating to transferred ADI accounts
• if a record is obtained relating to closed ADI accounts, or
• if a record is made about electronic funds transfer instructions.

Record keeping provisions relating to applicable customer identification procedures, AML/CTF programs and correspondent banking do not commence for 12 months.

Part 5 - electronic funds transfer instructions

Authorised deposit taking institutions must now include certain originator information about the origin of the transferred money in all domestic and international electronic funds transfer instructions. The equivalent obligations under the Financial Transaction Reports Act (that were due to commence in December 2006) will not commence at all.

Part 6 - register of providers of designated remittance services

Any organisation that provides a registrable designated remittance service must ask to be included on a register administered by AUSTRAC. These provisions are designed to apply to money services businesses and other informal remittance providers.

However, the definition of a designated remittance arrangement is extremely broad and limited guidance has been provided. Many Australian organisations are likely to provide services that technically fall within the definition.

All Australian businesses (other than authorised deposit taking institutions) should consider whether any of their activities involve remittance services, and whether they should register.

Parts 11-18 - administrative provisions

Administrative provisions of the Act commenced on 13 December 2006. These include provisions dealing with AUSTRAC’s powers, audits, offences and enforcement.

Part 9 - countermeasures

Part 9 allows controls to be applied to transactions relating to prescribed foreign countries. This Part commenced on 13 December, but there are not currently any regulations that apply controls.

Part 4 - reports about cross-border movements of physical currency and bearer negotiable instruments

Cross border movements of physical currency and bearer negotiable instruments must be reported to the AUSTRAC CEO.

Prosecution-free period

The Minister for Justice and Customs, Senator Ellison, has indicated that reporting entities will have an additional 15 months to comply with the Act following the phased implementation of differing obligations.

To receive the protection of this non-prosecution period, a reporting entity will need to demonstrate to AUSTRAC that it has made “best endeavours” to comply with its obligations in the legislation. Further information on how this prosecution-free period would operate is likely to be made available by the Government.

Implementation timetable

The commencement timetable for all obligations appears below.

We can help you by

• interpreting this complex legislation and assess its impact on your organisation
• designing your AML/CTF risk based compliance program
• providing solutions to regulatory overlap (eg AML/CTF and privacy)
• advising about the impact on documents, procedures, systems, people and customers
• providing an ongoing framework for your development of new products
• ensuring international consistency and compliance
• assisting in developing employee and third party AML/CTF training programs
• liaising with AUSTRAC
• providing solutions to regulatory action
• designing AML/CTF implementation assessments/reviews.