- Introduction and scope This policy and procedure relates to Centra Wealth Pty Ltd and its related bodies corporate (“Centra”, “we”, “us” and “our”). As with any financial institution, there is a risk of Centra’s products and services being used to launder money and finance terrorism. Pursuant to the Anti-Money Laundering and Counter Terrorism Financing Act 2006 (Cth) (‘the Act), it requires us to put training, processes and systems in place to identify, manage and mitigate this risk. We do this to protect our reputation, to comply with relevant laws and to be a good corporate citizen. Failure to do so may result in social harm, significant penalties, including legal and regulatory action.
- Our AML/CTF policy
- Sets out how Centra complies with its legislative obligations.
- Applies to all business divisions and employees (permanent, temporary and third party providers) working in Australia, New Zealand and overseas.
- Definitions Money laundering is the process of hiding or disguising the source of illegally obtained (“dirty”) funds to make them appear legitimate (“clean”), e.g. by filtering them through the financial system. Money laundering reduces the risk of detection and confiscation by authorities. It is just as serious as the criminal activity behind it – and preventing it can help reduce crime. Terrorism financing differs from money laundering in 3 main ways:
- Its primary purpose is to disguise the ultimate use of the funds, as opposed to their origin
- It can involve relatively small sums of money, which can have a huge impact in terms of death, destruction and disruption
- Although terrorists may finance their activities through crime, legitimate funds can also be misappropriated to finance terrorism. Customer identification (KYC) means know your client or client verification by providing proof of identity. The Act provides a list of ‘designated services’, such as opening an account or making a deposit. Before receiving any of these designated services, customers will be required to provide proof of identity or similar documentation. Centra is required to collect and verify this information, depending on the type of customer:
- Personal – an individual person of any nationality
- A sole trader – a person who trades in their own legal right without the use of a company structure, incorporation or partners and who, alone, has full liability for the activities of the business
- Domestic company – incorporated in Australia, including proprietary, public and listed public companies
- Foreign company incorporated outside Australia
- Partnership – a relationship between persons (the partners) carrying on business in common, under a partnership agreement, with a view to profit
- Trust – a relationship where the trustee holds property or assets for a beneficiary. The trustee can be an individual, a group of individuals or a company.
- Association – a group of persons who have agreed to join together in pursuit of one or more common objectives. An association can be incorporated or unincorporated.
- Registered co-operative – a legal entity owned and controlled by the people for whom it was established and who benefit from using its services
- an authorised representative of the licensee; or
- an employee or director of the licensee; or
- an employee or director of a related body corporate of the licensee; or
any other person acting on behalf of the licensee.
An ‘authorised representative’ can be considered to be a subset of the broader representative term. Authorised representatives can be either corporate entities (called Corporate Authorised Representatives) or natural persons
Suspicion – Money laundering and terrorism financing (ML/TF) are sometimes detected because a customer acts or behaves in a suspicious way. For a ‘suspicion’ to be valid, we must have reasonable grounds to believe ML/TF activity may be occurring. To support this, employees receive training in identifying and reporting suspicious matters.
- Centra’s key AML/CTF principles
- Comply with AML/CTF legislation in the countries we operate in.
- Strive to fulfil international standards as detailed in the recommendations of the Financial Action Task Force (FATF).
- Work in conjunction with the Australian Government and the governments of the countries we operate in, and support their objectives in relation to the prevention, detection and control of ML/TF.
- Centra may decide not to provide products or services based upon decisions guided by ML/TF risk appetite and corporate social responsibility.
- Maintain and comply with an AML/CTF program, as required by Australian AML/CTF legislation.
- Centra aims to prevent, detect and not knowingly facilitate money laundering and terrorism financing.
- Expectation This policy is part of a policy framework comprising this policy, relevant policy addendums and business unit procedures. These together will outline the minimum standards that must be followed by all representatives in performing their duties.
The Licensee will make this policy and the attached tools in the appendices available to all relevant representatives.
7. Special program
A special program has been adopted because Centra provides designated services limited to items covered by item 54 of the tables in section 6 of the AML/CTF Act. This program is designated below:
7.1 Customer Identification Procedures
The purpose of this procedure is to assist the Licensee in knowing their client prior to arranging a designated service. The identification and verification process is undertaken in two parts.
- risk classification of the client based on the customer type (an individual, company or other person) and their expected financial activities; and
- identification and verification procedures based on the above risk level.
7.1.1 Risk Classifications for Clients
Precommencement clients (those existing clients prior to 12/12/2007) are not required to have their identity verified unless a suspicious matter subsequently arises or Centra identifies a need to. However all clients are to have been formally assessed and assigned a ‘risk classification’, whether precommencement clients or not. This is part of the Centra’s obligations and should occur on an ongoing basis with a formal analysis occurring at least annually.
Centra has set criteria for determining the level of money laundering and terrorism financial risk that a client may pose. These criteria are provided in the Appendices and are based upon:
- a) customer types e.g. an individual, a company, a charitable trust;
- b) methods of service delivery e.g. is there face to face contact with the client;
- c) types of designated services provided; and
- d) foreign jurisdictions dealt with.
The relevant criteria are to be used to assess the AML/CTF risk of clients which is in turn will drive the appropriate level of identification and verification required.
Politically exposed persons (PEP) are to initially be considered high risk. A PEP is defined as individuals who are or have been entrusted with prominent public functions in a foreign country, for example Heads of State of government, senior politicians, senior government, judicial or military officials, senior executives of state owned corporations, important political party officials. The definition excludes middle ranking or more junior individuals in the foregoing categories.
Anadara expects representatives to explain the PEP definition to clients and request that the customer self identify themselves if they are a PEP.
Anadara requires all representatives that arrange designated services for clients to formally assess and assign a risk classification to all such clients, both existing and new.
Forms are provided at the Appendices that are to be used to facilitate and provide evidence of this process.
Appendix 1 provides a form that is to be used for assessing new clients after 12/12/2008.
The designated AML/CTF Compliance Officer (CO) is to be notified immediately when a client has been assessed as a high risk client.
7.1.2 Identification and Verification
All new clients after 12/12/2007 are to have an appropriate level of identification and verification conducted prior to the arrangement of a designated service. Appendix 2 provides detailed requirements depending on the customer type.
Anadara requires all representatives that arrange designated services for clients to formally conduct such identification and verification and explicitly record the process.
Copies of identification documents are to be ‘certified’ by the representative that sights the original document. This will require either an ID form to be completed with the copied document or a signed statement included with the copied document indicating when the original was sighted and by whom. Where the original document is not sighted by a representative then the copy must have been certified as a true copy of the original document by an authorised person. Authorised persons typically include legal practitioners, justices of the peace and police officers.
Where a client has been determined as a low risk, the standard identification and verification process will be used as per the guidance at Appendix 2.
For low risk clients that are individuals, where the verification document used does not contain the client’s full name, the Licensee requires that both the client’s date of birth and residential address are verified in mitigation.
Where a client has been identified as a medium or high risk, additional identification information and verification documentation must be obtained from the client, including but not limited to the verification of the source of the client’s funds.
For example, where a client has been identified as medium risk, typically the Licensee would require:
- a) conduct standard ID check (as per a low risk client);
- b) verify employer details; and/or
- c) confirm source of funds.
Detailed and more specific additional requirements are provided within Appendix 2.
No financial service will be provided to any client or prospective client if the client wishes to remain anonymous or where the representative knows or has reason to suspect that the client is providing false identification. Nor will any financial service be provided if any client or prospective client is or transacts through a “Shell Bank” (as defined in the AML/CTF Act) or a bank or financial institution which is not properly licensed or a client who may be the subject of economic sanctions.
In such situations the representative is to inform the Compliance Officer immediately who will consider raising a suspicious matter report depending on the circumstances.
7.2 Verification Process
The verification of information must be based on:
- a) reliable and independent documentation;
- b) reliable and independent electronic data; or
- c) a combination of (a) and (b) above.
7.3 Reliable and independent documentation
The licensee must be satisfied that any document produced for verification purposes has not expired (other than in the case of a passport issued by the Commonwealth that expired within the preceding two years).
Additionally, in respect of electronic data used, the Licensee/representative needs to be satisfied that:
- a) the electronic data is reliable and independent, taking into account the following factors:
- the accuracy of the data;
- how secure the data is;
- how the data is kept up-to-date;
- how comprehensive the data is (for example, by reference to the range of persons included in the data and the period over which the data has been collected);
- whether the data has been verified from a reliable and independent source;
- whether the data is maintained by a government body or pursuant to legislation; and
- whether the electronic data can be additionally authenticated;
- b) there are no observable errors and observable matches.
If the representative has suspicions or doubts about the authenticity of the above or any other verification sources, (including whether the document has been forged, tampered with, cancelled or stolen) then further independent inquiries are to be made including:
- a) whether Centra will use any authentication service that may be available in respect of a document; and
- b) whether to independently initiate contact with the person that the client claims to be.
If not completely satisfied the representative will decline to arrange any designated service and must notify the designated Compliance Officer who will consider if a suspicious matter report should be lodged with AUSTRAC.
Every representative of Centra has compliance and operational risk related obligations that vary according to their job. Non-compliance with the obligations set out in this policy may be considered a breach. A breach of this policy may result in additional training, disciplinary action or might require dismissal if the breach is serious. If you are aware of or believe another employee or authorised representative is not complying with this policy, you should advise the AML/CTF Compliance Officer.
Examples of situations that will be considered as non-compliance with this policy include but are not limited to the following:
- a) arranging a designated service for a customer before conducting risk classification, identification and verification;
- b) failure to notify the AML/CTF Compliance Officer of a suspicious matter without reasonable excuse;
- c) failure to recognise and take appropriate action with regard to threshold transactions or international funds transfers; and
- d) failure to attend relevant training sessions when called upon to do so.
9. Culture of Compliance
Excluding negligence, Anadara has adopted a ‘no blame’ policy with regard to implementing the program. Representatives are encouraged to be open about any shortfalls they identify in their practices so that these may be discussed and actions taken to prevent such shortcomings in the future.
Senior management will endeavour to provide adequate time, resources and support for AML/CTF compliance activities.
10. AML/CTF Compliance Officer
It is appropriate that for the purpose of managing and the oversight of this program that an AML/CTF Compliance Officer (hereafter referred to simply as the Compliance Officer) is appointed. Centra Management define these duties in an appropriate Position Description at management level which may include other duties and reporting obligations.
The existence of a Compliance Officer does not remove the responsibility of each representative to discharge their obligations under the AML/CTF Act competently and diligently.
11. Management Oversight
The Compliance Officer will report directly to the Board with regard to the program on a periodic basis. The Board in turn will review the continuing adequacy of the program on an annual basis or when significant risks are identified or changes required.
12. Program Review
The Compliance Officer is to continually monitor the AML/CTF rules and any notifications by AUSTRAC to ensure changes are reflected in this Anti Money Laundering & Counter Terrorism Financing Program.
This policy will also be reviewed at least annually by the Compliance Committee to determine the continuing adequacy of the AML/CTF Program.
13. Reporting obligations
There are three types of reports that the Licensee may be obligated to lodge with AUSTRAC.
- suspicious matters;
- threshold transactions; and
- international funds transfer instructions.
Anadara expects all representatives to notify the Compliance Officer immediately where any of the above three items occur. The Licensee will then determine if a report is required and lodge using AUSTRAC Online.
It is important to note that any one of the following events and the reports raised will not exclude the necessity to raise an additional report if the event applies to more than one reporting obligation.
Nominated Compliance Officer – Alita Cartwright
In the event that the Compliance Officer is unavailable, Shaun Cartwright will become responsible in their absence.
13.1 Suspicious Matter Reports (SMR)
The Licensee has an obligation to report suspicious matters to AUSTRAC if these matters are connected to the actual or potential provision of a designated service. Therefore the responsibility arises as soon as initial contact with a potential new client is made, including where the client is merely exploring whether or not to engage the Licensees services.
The obligation to submit an SMR to AUSTRAC is triggered when the Licensee forms a ‘suspicion on reasonable grounds’.
Factors that may be considered in deciding whether or not a matter is suspicious include (but are not limited to):
- the behaviour of the person or persons receiving or requesting the designated service (for example, unusual nervousness);
- the known business background of the person;
- the use of aliases and a variety of similar addresses;
- transactions involving known tax havens, narcotic source or transit countries;
- attempts on the part of an individual or group to avoid filing a threshold transaction report for amounts of $10,000 or more by structuring transactions; and
unusual business dealings, particularly where significant amounts of cash are involved in
circumstances that are difficult to explain. Some examples of unusual business dealings include (but are not limited to):
- a) regular large cash transactions by a customer who does not have an account with the Licensee;
- b) movements by a customer of large amounts of cash that have no apparent legitimate source;
- c) accounts receiving frequent deposits of bearer negotiable instruments (e.g. bank cheques, money orders, bearer bonds), particularly in amounts of less than $10,000;
- d) cashing of unusually large amounts in traveller’s cheques;
- e) unusual account holdings, for example:
- a customer with an inordinately large number of accounts for the type of business they are supposedly conducting;
- accounts under one or more names with regular inter-account;
- transfers of aggregated funds not related to any legitimate business or commercial purpose; or
- a personal account into which many different persons, perhaps in different places, are depositing cash;
- f) unusual or irregular transfers of funds overseas, for example:
- accounts used as a temporary depository for funds regularly transferred offshore
- loans and securities dealings that appear to be a device to disguise the transfer of funds
It is important to note that circumstances that seem unusual are not necessarily suspicious. For example, clients will occasionally, for good reasons, diverge from their regular patterns of transactions. Unusual circumstances may initially result only in increased vigilance or further enquiry. Representatives will need to use their common sense and judgement when deciding whether they should report a matter to the Compliance Officer. WHEN IN DOUBT then it should be reported and the Licensee will decide on the matter.
The Licensee must submit an SMR to AUSTRAC within:
- 24 hours after the time the relevant suspicion was formed if it relates to the financing of terrorism; or
three business days after the day the relevant suspicion was formed in all other cases.
The Licensee and its representatives will not disclose to any non-AUSTRAC person, and particularly not to the client in question that an SMR has been submitted or that a suspicion on reasonable grounds has been formed. This is described as the offence of ‘tipping off’, and is prohibited by the AML/CTF Act.
13.2 Threshold Transaction Reports (TTRs)
A threshold transaction is a transaction involving the transfer of physical currency, or money in the form of e-currency, where the total amount is not less than AUD$10,000 or its equivalent in a foreign currency.
The definition of the term e-currency in the AML/CTF Act is actually quite limited. It is defined as an internet-based, electronic means of exchange that is:
a) known as any of the following: e-currency, e-money, digital currency (or some other name specified in the AML/CTF Rules); and
- b) backed either directly or indirectly by precious metal or bullion; and
- c) is not issued by or under the authority of a government body.
The Compliance Officer will ensure there are processes/systems in place to identify any ‘structuring’ of transactions. Structuring involves splitting transactions into separate amounts under $10,000 to avoid the threshold transaction reporting requirements of the AML/CTF Act. It is known to be common for money launderers to rely on this placement technique because numerous deposits can be made in that way without triggering the reporting requirements.
A TTR must be submitted to AUSTRAC within 10 business days after the day on which the transaction took place.
13.3 International Funds Transfer Instruction (IFTI) Reports
These obligations apply when the representatives of the Licensee accept or send an instruction for money or property to be transferred into or out of Australia, either electronically or through a designated remittance arrangement.
Property refers to a possession or possessions owned by a person that can be tangible or intangible. The Act defines a ‘designated remittance arrangement’. In essence, a designated remittance arrangement is one where a person who is not an authorised deposit-taking institution, bank, building society or credit union accepts money or property from another person and transfers the money or property through another person, who is not an authorised deposit-taking institution, bank, building society or credit union, to the ultimate recipient. Often the actual movement of funds will take place through the formal banking system. However, the instruction is transmitted outside the formal banking system.
Other alternative remittance systems are usually based on trust and rarely issue receipts. Funds can be transferred from one location to another in a manner that is convenient and often cheaper than the formal banking system.
The alternative remittance process for an outgoing IFTI involves three steps:
- A customer places an order with their chosen remitter;
- The remitter transmits the details of this order (the payment instruction) to their overseas agent;
- The agent delivers the funds according to the instruction.
The payment instruction can be transmitted in a variety of ways, including an SMS message, email, fax or telephone call.
The Licensee becomes responsible for submitting the IFTI Report where it is the sender of an IFTI transmitted out of Australia, or it is the Licensee that receives an IFTI transmitted into Australia.
An IFTI report must be reported to AUSTRAC within 10 business days after the day on which the instruction was sent or received.
14. Retention of records
Under the AML/CTF Act, all records pertaining to the business risk classifications, client risk classification, identification, ongoing customer due diligence, reports to AUSTRAC, training records etc. must be kept for a minimum of seven years from when they were created.
Superseded versions of this Program will also be archived and retained for seven years.
Staff and representatives external to Centra are responsible for maintaining their own records in either hard copy or electronic format. Electronic copies are to be ‘true copies’ of the actual document when completed and maintained in an unalterable format such as PDF.
The methods used by representatives external to Centra to retain records i.e. security of hard copy records or backup systems for electronic files will be examined and reported on.