Explanatory Statement – Anti-Money Laundering and Counter-Terrorism Financing Rules Amendment Instrument 2013 (No. 1) amending the Anti-Money Laundering and Counter-Terrorism Financing Rules Instrument 2007 (No. 1)

1. Purpose and operation of Anti-Money Laundering/Counter‑Terrorism Financing Rules (AML/CTF Rules) repealing and inserting a new Chapter 29 and amending relevant privacy notices in the AML/CTF Rules

1. 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.

Amendments to Chapter 29

2. Under section 107 (Transaction records to be retained) of the AML/CTF Act, if a record of information relating to the provision of a designated service to a customer is made by a reporting entity, then the reporting entity must retain the record, a copy of the record or an extract from the record for a period of 7 years, unless the record is declared exempt by the AML/CTF Rules.

3. Chapter 29 specifies those records which are exempt from the record-keeping requirements of section 107. The repeal and insertion of a new Chapter 29 adds two classes of records to the exemption list:

• records of information created by the use of an optical surveillance device (commonly referred to as Closed Circuit Television (CCTV)); and

• electronic files created solely for the purpose of submitting electronic reports to AUSTRAC.

4. In regard to CCTV footage, AUSTRAC considers that it is appropriate to exempt such footage from the record-keeping requirement as most footage is kept by reporting entities for an average of 30 days. To require such footage to be kept for seven years is considered an unnecessary regulatory burden on industry.

5. The electronic files relate to those files created by reporting entities in order to submit reports to AUSTRAC. Such files are records under the AML/CTF Act, however, AUSTRAC considers that they do not need to be kept by industry for seven years as they duplicate information held by AUSTRAC as a result of the submitted reports.

Amendments to relevant privacy notices

6. These amendments relate to the privacy notices contained in the AML/CTF Rules, which alert reporting entities to their obligations under the Privacy Act 1988. An examination of the current privacy notices in Anti-Money Laundering and Counter-Terrorism Financing Rules Instrument 2007 (No.1) resulted in privacy notices being added to some chapters, updated in others and omitted where appropriate.

Statement of Compatibility with the Human Rights (Parliamentary Scrutiny) Act 2011

7. The Human Rights (Parliamentary Scrutiny) Act 2011 was passed on 25 November 2011 and came into effect on 4 January 2012.  It introduced a requirement for a Statement of Compatibility to accompany all new Bills and disallowable legislative instruments.

8. The Statement of Compatibility for Anti-Money Laundering and Counter-Terrorism Financing Rules Amendment Instrument 2013 (No.1) is included in this Explanatory Statement at page 7.  The AUSTRAC CEO as the rule-maker of this legislative instrument has stated that it is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011. 

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 2013 (No.1).

Section 2

This section specifies that Schedules 1 and 2 commence on the day after the instrument is registered.

Section 3

This section contains the details of the amendment:

Schedules 1 and 2 amend the Anti-Money Laundering and Counter-Terrorism Financing Rules Instrument 2007 (No.1).

Schedule 1

This schedule repeals and inserts a new, amended Chapter 29.

Schedule 2

This schedule inserts, substitutes or omits privacy notices in regard to the AML/CTF Rules other than Chapters 11, 29 and 41 which contain the up-to-date privacy notice.

3. Notes on Items

Schedule 1

Chapter 29

Item 1

This item repeals Chapter 29.

Item 2

This item substitutes an amended Chapter 29 which contains exemptions for records of information created by the use of an optical surveillance device, and electronic files created solely for the purpose of submitting electronic reports to AUSTRAC. It also inserts a definition of the term ‘optical surveillance device’.  The privacy notice to the chapter has been updated by specifying the current website address of the Office of the Australian Information Commissioner.

Schedule 2

Chapters 3, 5, 6, 7, 9, 10, 24, 25, 26

Item 1

This item adds a privacy notice regarding the obligations of reporting entities under the Privacy Act 1988 to those chapters which previously did not contain a privacy notice.

Chapters 14, 15, 17, 18, 19, 23, 31, 33, 35, 45, 46, 48, 49

Item 2

This item replaces a redundant privacy notice in the specified chapters with an updated privacy notice which contains the current website address of the Office of the Australian Information Commissioner.

Chapters 27, 39, 51, 56, 57, 63, 68

Item 3

This item replaces the privacy notice in the specified chapters, with the updated privacy notice to ensure that the citation of the website address of the Office of the Australian Information Commissioner is consistent throughout the AML/CTF Rules.

Chapters 16, 20, 21, 22, 28, 30, 32, 34, 36, 37, 38, 40, 42, 43, 44, 47, 50, 52, 53, 54, 55, 58, 59, 60, 61, 62, 64, 65, 66, 67

Item 4

This item replaces a redundant privacy notice in the specified chapters with an updated privacy notice which contains the current website address of the Office of the Australian Information Commissioner.

Chapter 1

Item 5

This item removes a redundant privacy notice.

Item 6

This item adds a privacy notice regarding the obligations of reporting entities under the Privacy Act 1988 to the end of the chapter.

Chapter 2

Item 7

This item removes a redundant privacy notice.

Item 8

This item replaces a redundant privacy notice at the end of the chapter with an updated notice which contains the current website address of the Office of the Australian Information Commissioner.

Chapter 4

Item 9

This item removes a redundant privacy notice.

Item 10

This item adds a privacy notice regarding the obligations of reporting entities under the Privacy Act 1988 to the end of the chapter.

Chapter 8

Item 11

This item removes a redundant privacy notice.

Item 12

This item adds a privacy notice regarding the obligations of reporting entities under the Privacy Act 1988 to the end of the chapter.

Chapters 12 and 13

Item 13

This item adds a privacy notice regarding the obligations of reporting entities under the Privacy Act 1988 to the end of the chapter.

4. Legislative instruments

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

5. Likely impact

The amendments to Chapter 29 will have a positive impact on reporting entities as they will no longer be required to retain for a period of seven years the records specified.

The amendments in respect to the privacy notices will have a positive impact on reporting entities as they provide up to date information relating to the Office of the Australian Information Commissioner.

6. Assessment of benefits

Amendments to Chapter 29

The amendments to Chapter 29 provide regulatory relief to reporting entities, including reduced compliance costs, as they will no longer be required to retain for seven years, records in regard to CCTV footage and electronic files.

Amendments relating to privacy notices

These amendments will provide up-to-date information to reporting entities regarding the Office of the Australian Information Commissioner.

7. Consultation

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

AUSTRAC published the amendments to Chapter 29 of the AML/CTF Rules for public consultation on two occasions, from 27 March 2012 to 23 April 2012 and from 3 January 2013 to 15 February 2013.  The amendments relating to the privacy notices were not published for public consultation as they are minor in nature.

8. Ongoing consultation

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