Anti-Money Laundering and Counter-Terrorism Financing Rules Amendment Instrument 2011 (No. 4)

Overview

The Anti-Money Laundering and Counter-Terrorism Financing Rules Amendment Instrument 2011 (No.4) was introduced to extend the operation of Chapter 39 of the Anti-Money Laundering and Counter-Terrorism Financing Rules Instrument 2007 (No. 1). This amendment was enacted to provide additional time for a review of the operation of Chapter 39 by the Australian Transaction Reports and Analysis Centre (AUSTRAC). The original Chapter 39, which provides an exemption from the applicable customer identification procedure for premium funding loans for a general insurance policy, was set to be repealed on 30 June 2011. This legislative instrument, which is a legislative instrument as defined in section 5 of the Legislative Instruments Act 2003, will have an impact on any reporting entity that provides a designated service covered by these rules. The policy objective of this amendment is to offer continued relief from the regulatory burden associated with the customer identification procedure for premium funding loans until 30 June 2012, thereby allowing AUSTRAC sufficient time to complete its review of the chapter's operation. AUSTRAC has already consulted with several relevant bodies and stakeholders, including the Insurance Premium Financiers of Australia, and will continue to consult with stakeholders as the review progresses.

Scope and Application

The Anti-Money Laundering and Counter-Terrorism Financing Rules Instrument 2007 (No. 1) applies to reporting entities involved in designated services under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006. These entities include financial institutions, professional enablers, and other businesses and individuals required to comply with AML/CTF obligations. The geographic reach of this legislation is national, as it applies across Australia. The Act does not specify exclusions or exemptions beyond those detailed within its provisions; however, Chapter 39 provides an exemption from the applicable customer identification procedure for premium funding loans for a general insurance policy, which is temporarily extended from 30 June 2011 to 30 June 2012. The AUSTRAC Chief Executive Officer has the authority to make further amendments and updates through subordinate instruments, as permitted by the AML/CTF Act. The explanatory statement indicates that AUSTRAC has consulted with relevant federal agencies and industry representatives, and further consultation will occur as part of the ongoing review of Chapter 39.

Key Provisions

The main operative sections of this legislation are found in Schedule 1, which amends Chapter 39 of the Anti-Money Laundering and Counter-Terrorism Financing Rules Instrument 2007 (No. 1). Specifically, paragraph 39.3 is amended to extend the repeal date of Chapter 39 from 30 June 2011 to 30 June 2012. This extension provides additional time for a review of the operation of Chapter 39, which currently grants an exemption from the applicable customer identification procedure for premium funding loans for a general insurance policy. The obligations and requirements imposed by the Act on the parties or entities it governs include the duty to comply with the customer identification procedures as prescribed by the AML/CTF Rules. Any reporting entity that provides a designated service covered by these AML/CTF Rules must adhere to the relevant provisions. AUSTRAC, the AUSTRAC Chief Executive Officer, has the authority to make AML/CTF Rules under section 229 of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act). The amendment to Chapter 39 aims to offer relief to premium funders from the regulatory burden associated with conducting the applicable customer identification procedure for premium funding loans for a general insurance policy. The legislation does not explicitly outline specific offences, penalties, or civil/criminal consequences for breach within the provided text. However, failure to comply with the AML/CTF Rules could potentially lead to enforcement actions by AUSTRAC, including the imposition of administrative penalties. It is essential for reporting entities to ensure adherence to the provisions of the AML/CTF Rules to avoid any potential legal or financial repercussions. AUSTRAC has consulted with relevant stakeholders, including the Australian Taxation Office, the Australian Customs and Border Protection Service, the Australian Federal Police, and the Australian Crime Commission, as well as the Insurance Premium Financiers of Australia, to gather input on the operation of the AML/CTF Rules.