What is an Anti-Money Laundering and Counter-Terrorism Financing Programme?

At present, Australian reporting entities who provide designated services must have an Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) programme contained as a written document of policies, procedures and controls that outlines how the entity complies with the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) (AML/CTF Act) and Anti-Money Laundering and Counter-Terrorism Financing Rules Instruments 2007 (No. 1) (Cth) (AML/CTF Rules).

An AML/CTF programme must address how the entity identifies, mitigates and manages the risk of its products or services being used for money laundering or terrorism financing.

Australia’s AML/CTF regulator, AUSTRAC provides that an AML/CTF programme consists of two parts:

• Part A must include processes and procedures to help you identify, mitigate and manage the money laundering and terrorism financing risks that you may reasonably face.
• Part B is focused on the ‘know your customer’ (KYC) procedures for identifying customers and beneficial owners including those that are politically exposed persons (PEPs), and verifying their identity.

The necessary processes and procedures on Money Laundering (ML) and Terrorism Financing (TF) risks requires a compliant reporting entity to address five key obligations:

1. Determine the extent of an entity’s exposure to reasonable risk and appropriate mitigating measures (ML/TF Risk Assessment);
2. Implement controls to mitigate and manage identified ML/TF risk (Risk Management Process);
3. Implement employee training to inform employees on AML/CTF statutory obligations, the consequences of non-compliance, the types of ML/TF risks involved, and the processes and procedures to be followed (AML/CTF Risk Awareness Training);
4. Address the specific processes to be undertaken by the entity in high risk ML/TF circumstances (Enhanced Customer Due Diligence Programme); and
5. Implement a manual or automated transaction monitoring programme to identify suspicious customer transactions (Transaction Monitoring).

Whether customers engage in one-off transactions or a series of consecutive transactions, a compliant reporting entity’s AML/CTF programme must:

1. Identify all of its customers;
2. Assess whether any customers are politically exposed persons;
3. Assess any transactions dealing in or from high-risk countries and regions; and
4. Reasonably verify all information.

If your business is required to implement an AML/CTF programme or you are unsure if you provide one of the designated services, contact one of or expert Commercial Lawyers to discuss.