Explanatory Statement – Anti-Money Laundering and Counter-Terrorism Financing Rules Amendment Instrument 2011 (No. 7) amending the Anti-Money Laundering and Counter-Terrorism Financing Rules Instrument 2007 (No. 1)

1. Purpose and operation of Anti-Money Laundering and Counter-Terrorism Financing Rules (AML/CTF Rules) adding Chapters 54 to 65

Section 229 of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act) provides that the AUSTRAC Chief Executive Officer (AUSTRAC CEO) may, by writing, make AML/CTF Rules prescribing matters required or permitted by any other provision of the AML/CTF Act.

2. Chapters 54 to 61 relate to the Combating the Financing of People Smuggling and Other Measures Act 2011 (CFPSOM Act) and Chapters 62 to 65 relate to the Australian Transaction Reports and Analysis Centre Supervisory Cost Recovery Levy (Consequential Amendments) Act 2011 (Cost Recovery Act).

Combating the Financing of People Smuggling and Other Measures Act 2011

3. The CFPSOM Act is intended to reduce the risk of money transfers by remittance dealers being used to fund people smuggling ventures and other serious crimes by introducing a more comprehensive regulatory regime for the remittance sector.

4. The Act introduces three classes of industry participants:

(a) Registered remittance network provider – a large organisation that facilitates networks of remittance affiliates by providing systems and services that enable their affiliates to provide remittance services;

(b) Registered remittance affiliate – a business that provides remittance services to customers as part of a remittance network facilitated by a remittance network provider; and

(c) Registered independent remittance dealer – a business that provides remittance services to customers using their own systems and processes, independent of a remittance network.

Addition of Chapter 54

5. The CFPSOM Act contains provisions which amend section 49 of the AML/CTF Act. Section 49A of the AML/CTF Act states that the AML/CTF Rules may make provision for obligations to provide reports imposed on registered remittance affiliates to be imposed instead, or in addition, on the relevant registered remittance network provider.

6. Chapter 54 requires that registered remittance network providers must report threshold transaction reports and international funds transfer instructions reports on behalf of their registered remittance affiliates.

7. Chapter 54 also allows remittance network providers to lodge suspicious matter reports on behalf of their registered remittance affiliates subject to a written agreement being in place. Although the remittance network provider may lodge a suspicious matter report on behalf of their registered remittance affiliates, this does not alter the requirement under the AML/CTF Act that only the registered remittance affiliate can form the suspicion.

Addition of Chapter 55

8. Subsection 75(4) of the AML/CTF Act allows AML/CTF Rules to make provisions for the correction of entries on the Remittance Sector Register (Register), the publication of the Register and matters relating to the administration or operation of the Register.

9. Chapter 55 allows the AUSTRAC CEO to correct or make complete entries on the Register if the AUSTRAC CEO believes on reasonable grounds that an entry on the Register is incorrect or incomplete. Chapter 55 also requires the AUSTRAC CEO to give a written notice to the relevant person setting out the changes made to their entry on the Register and the date on which the changes were made. If the relevant person is a registered remittance affiliate, the written notice must also be sent to the relevant registered remittance network provider. The AUSTRAC CEO may also publish on AUSTRAC’s website, either in full or in part, information contained in the Register.

Addition of Chapter 56

10. Paragraph 75B(3)(b) of the AML/CTF Act allows AML/CTF Rules to specify information which must be included in an application for registration by a remittance network provider, a remittance affiliate of a registered remittance network provider or an independent remittance dealer. In addition, subsection 75(4) of the AML/CTF Act allows AML/CTF Rules to make provision for or in relation to the correction of entries on the Register, the publication of the Register and any other matter relating to the administration or operation of the Register.

11. Chapter 56 specifies the information which must be included in an application for registration on the Remittance Sector Register. Schedule 1 relates to applications for registration as a remittance network provider, Schedule 2 relates to applications by remittance network providers in regard to the registration of a remittance affiliate and Schedule 3 relates to applications for registration as an independent remittance dealer or applications for registration as a remittance affiliate made by an independent remittance dealer.

12. The Schedules contain Part A, which specifies information to be provided to AUSTRAC by the applicant, and Part B, which specifies information which must be obtained and retained by the applicant but which is not required to be submitted to AUSTRAC. The information in Part B relates to the enhanced regulation of the remittance sector and may be relevant to whether a remitter may be at risk of facilitating money-laundering, terrorism-financing or people smuggling.

13. In addition, Chapter 56 requires that the authorised individual submitting the application on behalf of the applicant must declare that the information provided is true, accurate and complete.

Addition of Chapter 57

14. Subsection 75C(2) of the AML/CTF Act allows AML/CTF Rules to specify matters which the AUSTRAC CEO must consider in regard to the assessment of applications for registration. The AUSTRAC CEO may also consider other non-specified matters if they are relevant to deciding whether there is a significant level of money laundering, terrorism financing or people smuggling risk in registering the applicant.

15. Chapter 57 specifies matters which the AUSTRAC CEO must have regard to in deciding whether it is appropriate to register an applicant, including the declarations made by the applicant’s authorised individual that are required by Chapter 56.

Addition of Chapter 58

16. Paragraph 75G(1)(c) of the AML/CTF Act allows the AUSTRAC CEO to cancel the registration of a person if the AUSTRAC CEO is satisfied that it is appropriate to do so. Subsection 75G(3) of the AML/CTF Act allows the AUSTRAC CEO to publish a list of the names of persons whose registration has been cancelled and the date the cancellation took effect.

17. Chapter 58 specifies the matters that the AUSTRAC CEO must consider when deciding whether or not to cancel the registration of a person who provides registrable designated remittance services or registrable remittance network provider services and also specifies that a list of the persons whose registrations have been cancelled and the dates the cancellations took effect, may be published on the AUSTRAC website.

Addition of Chapter 59

18. Subsection 75H(1) of the AML/CTF Act allows AML/CTF Rules to make provision for and in relation to the suspension of registrations by the AUSTRAC CEO.

19. Chapter 59 specifies the grounds on which a person may be suspended from registration for a period of time as determined by the AUSTRAC CEO. The AUSTRAC CEO must notify the suspended person of the decision and that person may seek a review of the decision.

20. Chapter 59 allows the AUSTRAC CEO to publish the notice of suspension, or extracts of that notice, on AUSTRAC’s website or in any manner considered appropriate. The AUSTRAC CEO may also remove a person from the Remittance Sector Register for the period that the person’s registration is suspended.

Addition of Chapter 60

21. Section 75M of the AML/CTF Act requires registered persons to advise the AUSTRAC CEO of any change in circumstances that could materially affect the person’s registration.

22. Chapter 60 specifies matters (as applicable) that must be notified to the AUSTRAC CEO by a person registered as a remittance network provider, a remittance affiliate of a registered remittance network provider that has applied for registration on its own behalf or an independent remittance dealer, pursuant to subsection 75M(1) of the AML/CTF Act.

23. Chapter 60 also specifies matters (as applicable) that must be notified by a registered remittance affiliate of a registered remittance network provider to that registered remittance network provider, pursuant to subsection 75M(2) of the AML/CTF Act. Such material changes must be notified to the AUSTRAC CEO by the registered remittance network provider.

Addition of Chapter 61

24. Item 50(1) of Part 2 of Schedule 1 of the CFPSOM Act allows AML/CTF Rules to make provision for and in relation to threshold transaction reports (TTRs), international funds transfer instructions reports (IFTIs) and suspicious matter reports (SMR), required by the AML/CTF Act to be given by a remittance affiliate.

25. Chapter 61 provides that an obligation on a remittance affiliate, who is not yet on the Remittance Sector Register but is on the Register of Providers of Designated Remittance Services, in regard to a TTR or IFTI is instead an obligation on the remittance network provider. Under Chapter 61 a suspicious matter reporting obligation upon a remittance affiliate, in regard to the requirement of submitting a report to AUSTRAC, may be undertaken by the remittance network provider when there is a written agreement between the affiliate and the provider.

Australian Transaction Reports and Analysis Centre Supervisory Cost Recovery Levy (Consequential Amendments) Act 2011

26. The Cost Recovery Act is part of a legislative package comprising the Cost Recovery Act, the Australian Transaction Reports and Analysis Centre Supervisory Cost Recovery Levy Act 2011 and the Australian Transaction Reports and Analysis Centre Supervisory Cost Recovery Levy (Collection) Act 2011, which give effect to the 2010-11 Budget announcement that AUSTRAC would recover the costs of its supervisory activities from the 2011-12 financial year.

27. The Cost Recovery Act amends the AML/CTF Act to create a Reporting Entities Roll and makes it mandatory for relevant reporting entities to enrol with AUSTRAC. The efficient and effective collection of the levy requires AUSTRAC to be able to identify and invoice leviable entities. The data used by AUSTRAC to calculate the levy each year must accurately reflect the number of reporting entities and their status as leviable entities.

Addition of Chapter 62

28. Subsection 51C(4) of the AML/CTF Act allows AML/CTF Rules to be made in relation to the correction of entries on the Reporting Entities Roll (the Roll) and any other matter relating to the administration or operation of the Roll, including the removal of names and enrolment details.

29. Chapter 62 allows the AUSTRAC CEO to correct an entry on the Roll if the AUSTRAC CEO considers on reasonable grounds that an entry on the Roll is incorrect or incomplete or the person no longer provides a designated service. The Chapter lists matters that may be considered by the AUSTRAC CEO when determining whether a person continues to provide a designated service.

30. The AUSTRAC CEO must, if possible, provide notice to the person setting out the change to the entry or reasons for removing the entry and the date on which the change or removal was made.

Addition of Chapter 63

31. Paragraph 51E(2)(b) of the AML/CTF Act relates to information which must be included in an application for enrolment on the Reporting Entities Roll by a person who is proposing to provide, or has commenced to provide, a designated service or services.

32. Chapter 63 specifies the information which must be provided to AUSTRAC or obtained and retained by a person applying for enrolment. Part A of the Schedule to Chapter 63 sets out the information which a person must provide to AUSTRAC in their application for enrolment. Part B of the Schedule sets out the information which a person must obtain and retain relating to their application for enrolment; however, applicants are not required to submit this information to AUSTRAC.

33. Part B information relates to the annual financial statements of the person, details in regard to the legal structure of the applicant and any written agreement between the person and the agent acting on their behalf. This information may be requested by AUSTRAC in regard to setting the appropriate levy or in determining precisely the legal nature of the reporting entity/leviable entity making the application.

34. In addition, Chapter 63 requires that the authorised individual submitting the application on behalf of the applicant must declare that the information provided is true, accurate and complete.

Addition of Chapter 64

35. Subsection 51F(1) of the AML/CTF Act allows AML/CTF Rules to be made that specify matters that a person must report to the AUSTRAC CEO regarding changes to the enrolment details of the person.

36. Chapter 64 specifies that a person must report to the AUSTRAC CEO any change in the person’s enrolment details set out in Part A of the Schedule to Chapter 63, including any updated annual earnings figures. A request for change of a person’s enrolment details may be made by the person, an agent of the person or a person who has authority to make the request where the person or agent of the person cannot make the request, in circumstances such as the incapacity of the person to manage their affairs.

Addition of Chapter 65

37. Paragraph 51G(2)(b) of the AML/CTF Act relates to the removal of entries from the Reporting Entities Roll and allows AML/CTF Rules to specify information which must be provided by a person in their request to the AUSTRAC CEO to remove their name and enrolment details from the Roll.

38. Chapter 65 specifies the information which must be included in a request to remove a person’s name and enrolment details from the Roll. The Chapter also requires that the authorised individual submitting the request on behalf of the person must declare that the information provided is true, accurate and complete. A request for removal may be made by the person, an agent of the person or a person who has authority to make the request where the person or agent of the person cannot make the request, in circumstances such as the incapacity of the person to manage their affairs.

2. Notes on sections

Section 1

This section sets out the name of the instrument, i.e. the Anti-Money Laundering and Counter-Terrorism Financing Rules Amendment Instrument 2011 (No.7).

Section 2

This section specifies that the Instrument commences on 1 November 2011. This is the proclamation date in respect to commencement of certain sections of the CFPSOM and Cost Recovery Acts. These AML/CTF Rules also commence on 1 November 2011, in order to allow reporting entities to enrol on the Reporting Entities Roll, in the 28 day period specified in the Cost Recovery Act.

Section 3

This section contains the details of the amendment:

Schedule 1 amends the Anti-Money Laundering and Counter-Terrorism Financing Rules Instrument 2007 (No.1).

Schedule 1

This schedule adds Chapters 54 to 65.

3. Notes on Paragraphs

Chapter 54

Paragraph 54.1

This paragraph specifies that these AML/CTF Rules have been made under section 229 of the AML/CTF Act for the purposes of subsections 49A(1) and 49A(2) of that Act and rely upon section 4 of the Acts Interpretation Act 1901 with respect to provisions of the Act which will commence on 1 November 2011.

Paragraph 54.2

This paragraph specifies that an obligation imposed by subsection 43(2) or 45(2) of the AML/CTF Act on a registered remittance affiliate is taken instead to be an obligation imposed upon, and must be discharged by, the registered remittance network provider.

Paragraph 54.3

This paragraph specifies that a suspicious matter reporting obligation imposed by subsection 41(1) of the AML/CTF Act on a registered remittance affiliate in regard to the submitting of a report to AUSTRAC may be met by the registered remittance network provider under a written agreement between the affiliate and the provider.

Chapter 55

Paragraph 55.1

This paragraph specifies that these AML/CTF Rules have been made under section 229 of the AML/CTF Act for the purposes of subsection 75(4) of that Act and rely upon section 4 of the Acts Interpretation Act 1901 with respect to provisions of the Act which will commence on 1 November 2011. This Chapter comes into effect on the date that section 75 of the Act comes into effect, which is 1 November 2011.

Paragraph 55.2

This paragraph specifies that the AUSTRAC CEO may correct or make complete an entry on the Remittance Sector Register (Register) if the AUSTRAC CEO believes on reasonable grounds that the entry is incorrect or incomplete.

Paragraph 55.3

This paragraph specifies that if the AUSTRAC CEO corrects or makes complete a person’s entry on the Register, the AUSTRAC CEO must give written notice to the person.

Paragraph 55.4

This paragraph specifies that if the AUSTRAC CEO corrects or makes complete an entry of a registered remittance affiliate on the Register, the AUSTRAC CEO must also give written notice to the registered remittance network provider of the registered remittance affiliate.

Paragraph 55.5

This paragraph specifies that the AUSTRAC CEO may publish any or all of the information on the Register on AUSTRAC’s website.

Chapter 56

Paragraph 56.1

This paragraph specifies that these AML/CTF Rules have been made under section 229 of the AML/CTF Act for the purposes of subsection 75(4) and paragraph 75B(3)(b) of that Act and rely upon section 4 of the Acts Interpretation Act 1901 in respect to provisions of the Act which will commence on 1 November 2011. This Chapter comes into effect on the date that section 75B of the Act comes into effect, which is 1 November 2011.

Paragraph 56.2

This paragraph specifies that an application by a person for registration as a remittance network provider must be made by an authorised individual. The application must contain the information set out in Part A of Schedule 1 of the Chapter and include declarations made by the authorised individual.

Paragraph 56.3

This paragraph specifies that an application made by a registered remittance network provider for another person to be registered as a remittance affiliate must be made by an authorised individual of the registered remittance network provider. The application must contain the information set out in Part A of Schedule 2 of the Chapter and include declarations made by the authorised individual.

Paragraph 56.4

This paragraph specifies that an application by a person for registration as an independent remittance dealer must be made by an authorised individual. The application must contain the information set out in Part A of Schedule 3 of the Chapter and include declarations made by the authorised individual.

Paragraph 56.5

This paragraph specifies that an application by an independent remittance dealer for registration as a remittance affiliate must be made by an authorised individual. The application must contain the information set out in Part A of Schedule 3 of the Chapter and include declarations made by the authorised individual.

Paragraph 56.6

This paragraph specifies that a reference to being convicted of an offence in this Chapter includes a reference to a person in respect of whom an order has been made under section 19B of the Crimes Act 1914 or an equivalent provision.

Paragraph 56.7

This paragraph specifies that the spent convictions scheme under Part VIIC of the Crimes Act 1914 applies so that spent convictions are not required to be disclosed under this Chapter. Spent convictions are defined in section 85ZM of the Crimes Act 1914. A person’s conviction of an offence is spent if the person has been granted a pardon for a reason other than that the person was wrongly convicted of the offence or the person was not sentenced to imprisonment for the offence, or was not sentenced to imprisonment for the offence for more than 30 months, and the waiting period for the offence has ended.

Paragraph 56.8

This paragraph defines the terms ‘associated entity’, ‘authorised individual’, ‘beneficial owner’, ‘body’, ‘company’, ‘control’, ‘destination’, ‘disclosable convictions’, ‘employee due diligence program’, ‘enforcement action’, ‘entity’, ‘fraud’, ‘key personnel’, ‘National Police Certificate’, ‘people smuggling’, ‘person’, ‘serious offence’, ‘subsidiary’ and ‘terrorism’.

Paragraph 56.9

This paragraph identifies terms which have the same meaning as in Chapter 1 of the AML/CTF Rules.

Schedule 1

Part A

This Part contains a list of information which a person applying for registration as a remittance network provider must provide to AUSTRAC. The information requested includes details of the person, the contact details of the person and its key personnel, the nature of the person’s business and whether it is part of a related bodies corporate. Collecting this information will enable AUSTRAC to identify its regulated population within the remittance sector. This Part also requests information regarding whether the applicant or any of its key personnel have been charged, prosecuted and/or convicted in relation to certain offences. Collecting this information is relevant to the AUSTRAC CEO’s determination of whether registering the applicant would involve a significant level of money laundering, terrorism financing or people smuggling risk.

Part B

This Part contains a list of information which must be obtained and retained by a person applying for registration as a remittance network provider. Applicants are not required to submit this information to AUSTRAC unless AUSTRAC requests it. The information to be obtained and retained includes National Police Certificates for each of the key personnel of the applicant and more detailed information relating to the applicant. Applicants are required to obtain and retain this information as part of AUSTRAC’s enhanced regulation of the remittance sector.

Schedule 2

Part A

This Part contains a list of information which a registered remittance network provider must provide to AUSTRAC in its application for registration of a remittance affiliate. The information requested includes details of the remittance affiliate, the contact details of the remittance affiliate and its key personnel, the nature of the remittance affiliate’s business and whether it is part of a related bodies corporate. Collecting this information will enable AUSTRAC to identify its regulated population within the remittance sector. This Part also requests information regarding whether the remittance affiliate or any of its key personnel have been charged, prosecuted and/or convicted in relation to certain offences. Collecting this information is relevant to the AUSTRAC CEO’s determination of whether registering the remittance affiliate would involve a significant level of money laundering, terrorism financing or people smuggling risk.

Part B

This Part contains a list of information which must be obtained and retained by a registered remittance network provider applying for registration of a remittance affiliate. The registered remittance network provider is not required to submit this information to AUSTRAC unless AUSTRAC requests it. The information to be obtained and retained includes National Police Certificates for each key personnel of the remittance affiliate and the report of the most recent due diligence assessment carried out by the registered remittance network provider of the suitability of the remittance affiliate to be a remittance affiliate of the registered remittance network provider. This Part also requires the registered remittance network provider to retain its consent for the other person to be registered as a remittance affiliate of it and to obtain and retain more detailed information relating to the remittance affiliate.

The information required to be obtained relates to the enhanced AML/CTF regulation of the remittance sector. In particular, registered remittance network providers must conduct due diligence assessments of their remittance affiliates to assess their suitability to be remittance affiliates. It is intended that the registered remittance network provider will assess the money laundering, terrorism financing risk associated with the affiliate, assess the affiliate’s employees and conduct ongoing customer due diligence as required. It is also intended that any other due diligence which the registered remittance network provider considers is appropriate should also be undertaken as a result of applying the risk-based approach.

Schedule 3

Part A

This Part contains a list of information which must be provided to AUSTRAC by a person applying for registration as an independent remittance dealer or an independent remittance dealer applying for registration as a remittance affiliate. The information requested includes details of the person, the contact details of the person and its key personnel, the nature of the person’s business and whether it is part of a related bodies corporate. Collecting this information will enable AUSTRAC to identify its regulated population within the remittance sector. This Part also requests information regarding whether the applicant or any of its key personnel have been charged, prosecuted and/or convicted in relation to certain offences. Collecting this information is relevant to the AUSTRAC CEO’s determination of whether registering the applicant would involve a significant level of money laundering, terrorism financing or people smuggling risk.

Part B

This Part contains a list of information which must be obtained and retained by a person applying for registration as an independent remittance dealer or an independent remittance dealer applying for registration as a remittance affiliate. Applicants are not required to submit this information to AUSTRAC unless AUSTRAC requests it. The information to be obtained and retained includes National Police Certificates for each key personnel of the applicant, consent from the registered remittance network provider for the independent remittance dealer to register as a remittance affiliate of the registered remittance network provider (if applicable) and more detailed information relating to the applicant. Applicants are required to obtain and retain this information as part of the enhanced regulation of the remittance sector.

Chapter 57

Paragraph 57.1

This paragraph specifies that these AML/CTF Rules have been made under section 229 of the AML/CTF Act for the purposes of subsection 75C(2) of that Act and rely upon section 4 of the Acts Interpretation Act 1901 in respect to provisions of the Act which will commence on 1 November 2011. This Chapter comes into effect on the date that section 75C of the Act comes into effect, which is 1 November 2011.

Paragraph 57.2

This paragraph specifies that the AUSTRAC CEO must consider the matters specified in paragraph 57.2 in determining whether to register an applicant.

Paragraph 57.3

This paragraph specifies that the AUSTRAC CEO must have regard to the information and declarations set out in Chapter 56.

Chapter 58

Paragraph 58.1

This paragraph specifies that these AML/CTF Rules have been made under section 229 of the AML/CTF Act for the purposes of paragraph 75G(1)(c) and subsection 75G(3) of that Act and rely upon section 4 of the Acts Interpretation Act 1901 in respect to provisions of the Act which will commence on 1 November 2011. This Chapter comes into effect on the date that section 75G of the Act comes into effect, which is 1 November 2011.

Paragraph 58.2

This paragraph specifies that the AUSTRAC CEO must have regard to the matters specified in the Schedule to the Chapter in deciding whether to cancel a person’s registration.

Paragraph 58.3

This paragraph specifies that the AUSTRAC CEO may publish a list of the names of persons whose registrations have been cancelled and the dates the cancellations took effect.

Paragraph 58.4

This paragraph defines the terms ‘beneficial owner’, ‘enforcement action’, ‘fraud’, ‘key personnel’, ‘people smuggling’, ‘person’, ‘serious offence’ and ‘terrorism’.

Schedule

This Schedule specifies the mattes which the AUSTRAC CEO must have regard to in deciding whether to cancel a person’s registration. The specified matters are whether the person or any of its key personnel have been charged, prosecuted and/or convicted of certain offences, the report of the most recent due diligence assessment carried out on the person by the registered remittance network provider (if applicable) and whether the information provided in the application for registration was not true and correct at the time the application was made. AUSTRAC considers that these matters are relevant to determining whether the continued registration of the person is a significant money laundering, terrorism financing or people smuggling risk.

Chapter 59

Paragraph 59.1

This paragraph specifies that these AML/CTF Rules have been made under section 229 of the AML/CTF Act for the purposes of subsection 75H(1) of that Act and rely upon section 4 of the Acts Interpretation Act 1901 in respect to provisions of the Act which will commence on 1 November 2011. This Chapter comes into effect on the date that section 75H of the Act comes into effect, which is 1 November 2011.

Paragraph 59.2

This paragraph specifies that the AUSTRAC CEO may suspend the registration of a person for a specified period, subject to paragraphs 59.3, 59.4 and 59.5.

Paragraph 59.3

This paragraph specifies the grounds for suspending a person’s registration.

Paragraph 59.4

This paragraph specifies that if the AUSTRAC CEO decides to suspend the registration of a person, the AUSTRAC CEO must give written notice to that person. The paragraph also sets out what the notice must contain.

Paragraph 59.5

This paragraph specifies that a suspension cannot commence before the suspension date specified in the written notice.

Paragraph 59.6

This paragraph specifies that the AUSTRAC CEO may publish notices of suspension.

Paragraph 59.7

This paragraph specifies that the AUSTRAC CEO may inform a registered remittance network provider of the suspension of one of its registered remittance affiliates and it may inform a registered remittance affiliate of the suspension of its registered remittance network provider.

Paragraph 59.8

This paragraph specifies that the AUSTRAC CEO may remove a person’s entry from the Register for the period that their registration is suspended.

Paragraph 59.9

Paragraph 59.10

This paragraph defines the terms ‘beneficial owner’, ‘enforcement action’, ‘fraud’, ‘key personnel’, ‘people smuggling’, ‘person’, ‘serious offence’ and ‘terrorism’.

Chapter 60

Paragraph 60.1

This paragraph specifies that these AML/CTF Rules have been made under section 229 of the AML/CTF Act for the purposes of paragraph 75M(1)(e) and 75M(2)(b) of that Act and rely upon section 4 of the Acts Interpretation Act 1901 in respect to provisions of the Act which will commence on 1 November 2011. This Chapter comes into effect on the date that section 75M of the Act comes into effect, which is 1 November 2011.

Paragraph 60.2

This paragraph specifies as material any change in the registration details of the person as set out in Part A of Schedules 1, 2 and 3 of Chapter 56, excluding any change to the information specified in paragraph 19 of Part A of Schedules 1, 2 and 3. This paragraph specifies examples of material changes which a person must advise the AUSTRAC CEO of. AUSTRAC has provided these as a guide to reporting entities of the types of changes in circumstances which must be advised to the AUSTRAC CEO.

Paragraph 60.3

This paragraph specifies that a person (the requestor) who is not the person registered on the Register or an agent of that person may advise the AUSTRAC CEO of a material change in person’s registration details if the requestor provides evidence that they are authorised to do so.

Paragraph 60.4

This paragraph specifies matters which a registered remittance affiliate of a registered remittance network provider must advise the provider. The Paragraph specifies as material any change in the registration details of the person as set out in Part A of Schedules 1, 2 and 3 of Chapter 56, excluding any change to the information specified in paragraph 19 of Part A of Schedules 1, 2 and 3. This paragraph specifies examples of material changes which an affiliate must advise their provider of. AUSTRAC has provided these as a guide to affiliates of the types of changes in circumstances which must be advised to the provider.

Paragraph 60.5

Paragraph 60.6

Paragraph 60.7

This paragraph defines the terms ‘control’, ‘enforcement action’, ‘entity’, ‘key personnel’ and ‘subsidiary’.

Chapter 61

Paragraph 61.1

This paragraph specifies that these AML/CTF Rules have been made under section 229 of the AML/CTF Act for the purposes of items 50(1) and 50(2) of Part 2 of Schedule 1 of the Combating the Financing of People Smuggling and Other Measures Act 2011.

Paragraph 61.2

This paragraph specifies that a threshold transaction report or international funds transfer instructions report obligation on the remittance affiliate, is an obligation on the remittance network provider, and therefore the report must be submitted by the provider to AUSTRAC.

Paragraph 61.3

This paragraph specifies that the remittance network provider may submit a suspicious matter report on behalf of the remittance affiliate.

Paragraph 61.4

This paragraph provides definitions of ‘remittance affiliate’ and remittance network provider’.

Chapter 62

Paragraph 62.1

This paragraph specifies that these AML/CTF Rules have been made under section 229 of the AML/CTF Act for the purposes of subsection 51C(4) of that Act and rely upon section 4 of the Acts Interpretation Act 1901 in respect to provisions of the Act which will commence on 1 November 2011. This Chapter comes into effect on the date that section 51C of the Act comes into effect, which is 1 November 2011.

Paragraph 62.2

This paragraph specifies that the AUSTRAC CEO may correct or complete an entry on the Roll.

Paragraph 62.3

This paragraph specifies that if the AUSTRAC CEO takes this action, a notice must be sent to the reporting entity.

Paragraph 62.4

This paragraph specifies that the AUSTRAC CEO may remove an entry from the Roll.

Paragraph 62.5

This paragraph details matters that the AUSTRAC CEO may take into account in deciding whether to remove a reporting entity’s details from the Roll.

Paragraph 62.6

This paragraph specifies that the AUSTRAC CEO must give a notice to the person whose details have been taken off the Roll, or if the person is deceased, to the administrator of that person’s estate.

Chapter 63

Paragraph 63.1

This paragraph specifies that these AML/CTF Rules have been made under section 229 of the AML/CTF Act for the purposes of subsection 51C(4) and paragraph 51E(2)(b) of that Act and rely upon section 4 of the Acts Interpretation Act 1901 in respect to provisions of the Act which will commence on 1 November 2011. This Chapter comes into effect on the date that sections 51E and 51C of the Act come into effect, which is 1 November 2011.

Paragraph 63.2

This paragraph specifies that the enrolment details are contained in Part A of the Schedule to the Chapter.

Paragraph 63.3

This paragraph specifies that a person making an application must declare that the information provided to AUSTRAC and the information obtained and retained by the applicant, is true, accurate and complete.

Paragraph 63.4

This paragraph specifies that an application may be made by an agent of the person if there is a written agreement or written authority in place between the agent and the person. The agent making the application must declare that the information is true, accurate and complete.

Paragraph 63.5

This paragraph defines the terms ‘annual financial statements’, ‘Australian Government Entity’, ‘authorised individual’, ‘beneficial owner’, ‘company’, ‘consolidated documents’, ‘earnings’, ‘employee’, ‘financial report’, ‘foreign company’, ‘group of leviable entities’, ‘ultimate holding company’, ‘leviable entity’, ‘levy’, ‘person’, ‘Registered Financial Corporation’, ‘related bodies corporate’, ‘significant items’ and ‘subsidiary’.

Paragraph 63.6

This paragraph specifies that certain terms have the same meaning as in Chapter 1 of the AML/CTF Rules.

Schedule

Part A

This Part sets out the information which must be provided (where applicable) to AUSTRAC in regard to enrolment on the Reporting Entities Roll. The information will ensure that accurate information is held by AUSTRAC with respect to reporting entities which are obliged to pay the levy under the Cost Recovery Legislation.

Part B

This Part sets out information that must be obtained and retained by the reporting entity. This information will ensure that the relevant legal persons of the leviable entity are accurately identified.

Chapter 64

Paragraph 64.1

This paragraph specifies that these AML/CTF Rules have been made under section 229 of the AML/CTF Act for the purposes of subsection 51F(1) of that Act and rely upon section 4 of the Acts Interpretation Act 1901 in respect to provisions of the Act, which will commence on 1 November 2011. This Chapter comes into effect on the date that section 51F of the Act comes into effect, which is 1 November 2011.

Paragraph 64.2

This paragraph specifies what must be notified to the AUSTRAC CEO in regard to changes in enrolment details of the reporting entity.

Paragraph 64.3

This paragraph specifies that notification of changes in details may be made by an agent of the person if there is a written agreement or written authority in place between the agent and the person. The agent must declare in the notification that the information provided is true, accurate and complete.

Paragraph 64.4

This paragraph specifies that the notification of change may be made by a person (the requestor) who is not the reporting entity or an agent of the reporting entity, in circumstances where the person no longer has the capacity to manage their affairs or where the corporate body ceases to exist, if the requestor provides evidence that they are authorised to do so.

Chapter 65

Paragraph 65.1

This paragraph specifies that these AML/CTF Rules have been made under section 229 of the AML/CTF Act for the purposes of paragraph 51G(2)(b) of that Act and rely upon section 4 of the Acts Interpretation Act 1901 in respect to provisions of the Act which will commence on 1 November 2011. This Chapter comes into effect on the date that section 51G of the Act comes into effect, which is 1 November 2011.

Paragraph 65.2

This paragraph specifies that a request in regard to the removal of a person’s name and enrolment details by the person must contain the information contained in the Schedule to the Chapter.

Paragraph 65.3

This paragraph specifies that requests for the removal of names and enrolment details may be made by an agent of the person if there is a written agreement or written authority in place between the agent and the person. The agent must declare in the notification that the information is true, accurate and complete.

Paragraph 65.4

This paragraph specifies that requests for the removal of names and enrolment details may be made by a person (the requestor) who is not the reporting entity or an agent of the reporting entity, in circumstances where the person no longer has the capacity to manage their affairs or where the corporate body ceases to exist, if the requestor provides evidence that they are authorised to do so.

Paragraph 65.5

This paragraph defines the terms ‘authorised individual’, ‘beneficial owner’, ‘company’, ‘employee’ and ‘person’.

Schedule

This Schedule sets out the information that must be provided in a request for removal of a person from the Reporting Entities Roll.

4. Legislative instruments

These AML/CTF Rules are legislative instruments as defined in section 5 of the Legislative Instruments Act 2003.

5. Likely impact

These AML/CTF Rules will have an impact on any reporting entity that provides a designated service covered by these AML/CTF Rules.

6. Assessment of benefits

Chapters 54 to 61

The AML/CTF Rules relating to the CFPSOM Act (Chapters 54 to 61) will support amendments to the AML/CTF Act to strengthen the Commonwealth legislative framework on the regulation of remittance dealers and remittance network providers. The remittance sector is recognised by the international anti-money laundering and counter-terrorism financing community, and domestically by law enforcement and national security authorities, as being vulnerable to money laundering and terrorism financing.

The CPFSOM Act amended the AML/CTF Act to require providers of remittance networks, their affiliates and independent remittance dealers to be registered with AUSTRAC. The AML/CTF Rules facilitate the registration scheme introduced by the AML/CTF Act, which requires a person seeking registration on the Remittance Sector Register to provide the AUSTRAC CEO with information relevant to their suitability for registration, and to allow the AUSTRAC CEO to obtain information from other persons for the purposes of determining whether the person is suitable to be registered. The AML/CTF Rules also set out matters that the AUSTRAC CEO may consider in determining whether to refuse, suspend, cancel or impose conditions on the registration of a remittance network provider, remittance affiliate or independent remittance dealer. The AML/CTF Rules also provide a benefit to reporting entities providing designated remittance services as AUSTRAC’s assessment of the suitability of applicants to register on the Remittance Sector Roll will ensure that such reporting entities are less vulnerable to money-laundering, terrorism-financing and people smuggling risk as a result of that assessment.

These AML/CTF Rules support the intent of the CPFSOM Act to reduce the risk of money transfers by remittance dealers being used to fund people smuggling ventures and other serious crimes by introducing a more comprehensive regulatory regime for the remittance sector.

Chapters 62 to 65

Chapters 62 to 65 of the AML/CTF Rules relate to the Cost Recovery Act. The AML/CTF Rules facilitate the collection and maintenance of reporting entities’ enrolment and earnings details on the Reporting Entities Roll. The AML/CTF Rules allow AUSTRAC to correctly identify and invoice leviable entities, which enables AUSTRAC to efficiently and effectively collect the levy.

7. Consultation

AUSTRAC has consulted with the Australian Taxation Office, the Australian Customs and Border Protection Service, the Australian Federal Police, the Australian Crime Commission and the Office of the Australian Information Commissioner in relation to these AML/CTF Rules.

AUSTRAC also published the draft AML/CTF Rules relating to the CFPSOM Act on AUSTRAC’s website for public consultation, with one Rule (Chapter 56) being published a second time, due to the substantial changes made to the Chapter as a result of the first period of public consultation. The draft AML/CTF Rules relating to the Cost Recovery Act were published on AUSTRAC’s website for a period of public consultation.

8. Ongoing consultation

AUSTRAC will conduct ongoing consultation with stakeholders on the operation of these AML/CTF Rules.