The International Monetary Fund was quoted as saying that between two and five per cent of the world’s economy is made up of laundered money. It is now thought to be more than one and a half trillion dollars a year; four and a half billion of which is laundered in Australia alone.
That’s a lot of laundry, which is why there is now a lot of legislation aimed at trying to detect and prevent money laundering activities in Australia and around the world.
Laundered money is used to fund criminal and terrorist activities and not only fuels corruption, but has the potential to undermine national economies.
What are the main stages of money laundering?
- Placement (illegal funds enter the financial system)
- Layering (the funds are moved, spread out or disguised)
- Integration (the funds are reintroduced as legitimate funds).
If you operate an Australian business providing financial services (banks, insurance, superannuation etc), gambling services (casinos, pubs and clubs), or you are a bullion or remittance dealer (providing international cash transfers), then you have obligations under the Anti-Money Laundering and Counter Terrorism Financing Act 2006.
Do you know what these obligations are?
If you’re not sure, or your staff are not fully trained in their obligations, then you should undertake compliance training as a matter or urgency, because the penalties for non-compliance can be substantial.
The AML/CTF Act is regulated by the Australian Transaction Reports and Analysis Centre (Austrac), and contains four key obligations which you must meet:
- Customer due diligence – know a customer’s identity and monitor their transactions
- Reporting – report any suspicious transactions
- Record keeping – keep detailed records of all customers and their transactions
- AML/CTF program – establish and maintain an AML/CTF risk management program.
Customer due diligence initially required face-to-face or paper-based verification of a customer’s identity, but this has since been amended to include electronic verification; a change welcomed by financial institutions.
You are also required under the Financial Transaction Reports Act to report to Austrac any suspicious transactions, any cash transactions of $10,000 or more and details relating to transfers of international funds.
To meet company’s AML/CTF obligations:
- confirm the identity of customers, using compliant company procedures
- recognise suspicious behaviour and report it promptly
- keep accurate records as per company and AML/CTF requirements.
Failing to comply with your AML/CTF obligations can leave you open to criminal and civil penalties. There are also severe penalties for breaches of the Charter of the United Nations Act 1945; up to 10 years imprisonment for individuals and substantial fines for companies.
Ensure your staff understand their legal obligations If you don’t have AML/CTF compliance training as part of a learning management system, then now’s the time to do something about it, because being unwittingly involved in money laundering is no defence in the eyes of the law. To be compliant, you are required to be aware of your obligations and to ensure that they are met.
