Careful Planning Required for Content of Threshold Transaction Reports By Jenny Willcocks | February 2008 Area of Expertise | Insurance & Financial Services, Superannuation & Collective Investments
Summary On 18 December 2007 AUSTRAC released amending rules dealing with information to be included in a threshold transaction report. The rules introduce a new Chapter 19 into the Anti-Money Laundering and CounterTerrorism Financing Rules Instrument 2007 (1) which applies from 12 December 2008. Chapter 19 will be replaced from 1 January 2011 to expand the information to be included in a threshold transaction report to AUSTRAC to include additional details where a person other than the customer conducts the transaction. The level of information to be included is quite onerous and careful planning will be required to ensure all necessary processes are in place to ensure reporting entities can complete their threshold transaction reports and submit to AUSTRAC in the required 10 business days timeframe.
Who Does This Impact? Organisations that are reporting entities under the AML/CTF Act.
What Action Should Be Taken? Reporting entities should familiarise themselves with the requirements of the Rules and develop processes for the collection of the detailed information required to complete a threshold transaction report.
The Anti-Money Laundering and Counter-Terrorism Financing Rules Amendment Instrument 2007 (5) (the Amending Rules) were released on 18 December 2007 and amend the Anti-Money Laundering and Counter-Terrorism Financing Rules Instrument 2007 (1) (the Rules) by inserting a new Chapter 19 to deal with reportable details for threshold transactions. Chapter 19 in Schedule 2 of the Amending Rules commences on 12 December 2008 and will subsequently be repealed and replaced with a different version set out in Schedule 3 to commence from 1 January 2011. The amendments to apply from 1 January 2011 include additional details relating to a person other than the customer that conducts the threshold transaction.
What is a “Threshold Transaction”? Section 43 of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (the Act) requires a reporting entity providing a designated service to a customer involving a threshold transaction to give AUSTRAC a report about the transaction within 10 business days after the day in which the transaction takes place. Chapter 19 specifies the information about the transaction to be included in this report. The term “threshold transaction” is defined in Section 5 of the Act as a transaction involving the transfer of physical currency or e-currency, where the total amount transferred is not less than $10,000. Other transaction thresholds can be imposed on a specified transaction by regulations.
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Careful Planning Required for Content of Threshold Transaction Reports by Jenny Willcocks
Rules to Apply from 12 December 2008 – Schedule 2 of Amending Rules Rule 19.3 sets out the details to be included in the threshold transaction report (the Report) to AUSTRAC. A summary of what needs to be included in the Report is set out in the attachment to this TurkAlert. The information required is quite extensive, but some items are qualified by the words “if known” or “if applicable”. However, it would seem that a reporting entity should still request these details but if unsuccessful it can still complete the Report. Details of name, date of birth and address are mandatory as are the actual details of the monetary amounts of the transaction and those receiving it.
Rules to Apply from 1 January 2011 – Schedule 3 of Amending Rules The only difference between the rules to apply from 12 December 2008 and those to replace them from 1 January 2011, relates to a requirement to include in the Report details of the person conducting threshold transactions where that person is not the customer. The additional information to be included in the Report is set out in Attachment 2 to this TurkAlert.
Conclusion The amount of information to be obtained and reported to AUSTRAC is quite onerous. It will be necessary for it to be available to the reporting entity at a time that will allow it to meet the 10 business days time limit for submitting the Report to AUSTRAC. While some of the information will be available as part of the customer identification process, the more specific information relating to the transaction itself will not. Reporting entities must therefore establish a process for collecting this information either at the time it identifies a transaction as a threshold transaction, or immediately following it. Release of the Rules at this time provides reporting entities with an opportunity to develop the systems and processes needed to collect the necessary information well ahead of these obligations commencing on 12 December 2008, and the additional obligations to apply from 1 January 2011. It also provides an opportunity to raise with AUSTRAC any practical issues relating to meeting these requirements.
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Careful Planning Required for Content of Threshold Transaction Reports by Jenny Willcocks
Attachment 1 [SUMMARY OF DETAILS FOR INCLUSION IN THRESHOLD TRANSACTION REPORT FROM 12 DECEMBER 2008 – CHAPTER 19 OF RULES, RULE 19.3] 1.1
Individual Customer 1.1.1 1.1.2 1.1.3 1.1.4
1.2
Non-individual Customer 1.2.1 1.2.2 1.2.3 1.2.4 1.2.5 1.2.6 1.2.7
1.3
name; date of birth; address; phone number (if known).
name and any business name under which it operates; the type of legal entity; business structure for main business activities (e.g. partnership, trust or company) (if known); address of principal place of business (if applicable); address of registered office (if known); ACN/ARBN and/or ABN of the customer (if known); Customer’s telephone number (if known);
Industry or occupation, code(s) applicable to customer’s occupation or business (if known) including; 1.3.1 1.3.2 1.3.3 1.3.4
Australian Bureau of Statistics (ABS) in the Australian and New Zealand Standard Classification (ANZSIC) 2006 (as amended from time-to-time); or the relevant industry code applicable to the customer’s business, published by the ABS in the Australian Standard Classification of Occupations (ASCO); date of the threshold transaction; type of designated service involving the threshold transaction and if applicable where a cheque is given to the customer, the name of the drawer and drawee name and the amount;
1.4
amount of the threshold transaction in Australian Dollars;
1.5
following details of the threshold transaction where applicable: 1.5.1
physical currency: (a) (b) (c) (d) (e)
1.5.2
e-currency: (a) (b) (c) (d) (e)
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amount in Australian dollars; if foreign currency involved – amount and description of currency; recipient’s name; recipient’s address and date of birth (if known); description of purpose of transfer;
amount in Australian dollars; if foreign currency involved – amount and description of currency; description of e-currency including details of backing asset or thing (if known) recipient’s name; recipient’s address and date of birth (if known);
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1.5.3
where specified in regulations involving money: (a) (b) (c) (d) (e) (f )
1.5.4
amount in Australian dollars; if foreign currency involved – amount and description of currency; description of type of specified transaction; recipient’s name; recipient’s address and date of birth (if known); description of purpose of transfer;
where specified in regulations involving property: (a) (b) (c) (d) (e)
description of type of specified transaction value of transferred property in Australian dollars or if involves foreign currency, description and amount of that currency; recipient’s name; recipient’s address and date of birth (if known); description of purpose of transfer;
1.6. description of account opened by reporting entity involving the threshold transaction including identifying number;
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1.7
name, and if applicable identifying number of reporting entity, and of the reporting entity at which the threshold transaction was conducted and its address;
1.8
any identifying or transaction number assigned to threshold transaction;
1.9
description of the reliable and independent documentation and/or electronic data source(s) relied on to verify customer’s identity, if applicable.
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Attachment 2 [SUMMARY OF ADDITIONAL INFORMATION TO BE INCLUDED IN THRESHOLD TRANSACTION REPORTS FROM 1 JANUARY 2011 (IN ADDITION TO INFORMATION SET OUT IN ATTACHMENT 1) – CHAPTER 19 OF RULES, RULE 19.3 (14) AND (15)] 2.1
If person conducting the threshold transaction is not the customer, the following details of that person must be included in the Report: 2.1.1
Individual Customer (a) (b) (c) (d) (e)
2.1.2
Non-individual Customer (a) (b) (c) (d) (e) (f ) (g) (h) (i) (j)
2.1.3
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name; date of birth, address and phone number (if known); a statement indicating whether that person is conducting the threshold transaction on behalf of another person who is the customer of the reporting entity; a description of evidence of agency authorisation of the person (if any and known); and the person’s occupation, business, or principal activity (if known);
name and any business name under which the entity operates (if known); describe legal form of entity and any business structure it is part of, for purpose of its main business activities (e.g. partnership, trust or company) (if known); address of principal place of business and registered office (if known); ACN or ARBN and/or ABN of the entity (if known); telephone number (if known); a statement indicating whether person conducting the threshold transaction does so as a representative of the entity acting on behalf of the customer of the reporting entity; if the entity is a customer of the reporting entity – all details in rule in 19.3(2)(a) to (f ) (See item 1.2 of Attachment 1); a description of evidence of agency authorisation of the person (if any and known); and the person’s occupation, business, or principal activity (if known); name of person purporting to act for or on behalf of this entity and title, role or position held with the entity;
details of the reliable and independent documentation and/or electronic data used to verify the person conducting the threshold transaction when that person is not the customer.
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For more information, please contact: Jenny Willcocks Partner T: 03 8600 5001 jenny.willcocks@turkslegal.com.au
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