Consultation into the second exposure draft of the Anti-Money Laundering and Counter-Terrorism Rules

A new rules framework

The new AML/CTF Rules framework will comprise two separate instruments: the Draft Rules contain rules of general application and the AML/CTF (Class Exemptions and Other Matters) Rules 2007 (Cth) (Class Exemption Rules) set out various exemptions.

The Class Exemption Rules have been released for public consultation for the first time.

Some of the exemptions include:

• Issuing or selling a security or derivative in specified circumstances (previously in Chapter 21).
• Certain types of transactions that relate to the over-the-counter derivatives markets in respect of specified commodities or products (Chapter 22).
• The provision of the designated services relates to a risk-only life policy of a member of a superannuation fund that meets specified conditions (Chapter 47).

Significant changes in the second exposure draft

In two key areas, AUSTRAC have taken on the feedback received in the previous round of consultation. Notably this includes removing the requirement to obtain the place of birth of a customer, as transitional arrangements for the internal value transfer service reporting requirements.

The Consultation paper states:

Date and place of birth

Submissions overwhelmingly noted the difficulties involved with requiring collection and verification of place of birth for individuals, and this requirement has been deleted (see item 30 in the feedback and response table for more detail). Nevertheless, where date of birth is included in ‘payer information’ for the purposes of the ‘travel rule’ under Part 5 of the Amended AML/CTF Act, it must be verified in accordance with global standards.

Transitional arrangements for international value transfer reports

The Department of Home Affairs propose to develop transitional rules which will extend the operation of current international funds transfer instruction reports until such time after 2026 as the international value transfer requirements come into force. This will allow time for AUSTRAC and industry to undertake considered and consultative development of reportable details for new international value transfer service report under section 46 of the Amended AML/CTF Act, and reports of transfers of value involving unverified self-hosted virtual asset wallets under section 46A.

Further to the above, the Draft Rules and associated Consultation paper proposes:

• Screening for Politically Exposed Persons and Sanctions - permitted after the commencement of the provision of a designated service if all other relevant customer identity requirements specified by section 28.2 of the Act have been met.
• Initial Customer Due Diligence - Real estate agents and conveyancers are permitted to delay all initial customer due diligence on the purchaser (and previously identified vendors). With initial due diligence required before settlement of the transaction and not at commencement of the provision of the designated service.

Next steps

Given the volume of change being considered under the Draft Rules and this being the last meaningful opportunity to formally take part in the Rules making process, we recommend new and existing reporting entities proactively engage in this Consultation. This can include through Industry Bodies, Industry Forums or direct with AUSTRAC. Submissions are open until Friday 27 June.

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