Explanatory Memorandum
(Circulated by authority of the Minister for Home Affairs, the Honourable Bob Debus MP)Schedule 1 - amendments
Items 1 and 2: Transitional arrangements for reporting significant cash transactions
Division 1 of Part II of the Financial Transaction Reports Act 1988 (FTR Act) requires cash dealers to provide the Australian Transaction Reports and Analysis Centre (AUSTRAC) with reports of significant cash transactions.
Division 3 of Part 3 of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act) requires reporting entities to provide the Chief Executive Officer (CEO) of AUSTRAC with reports about threshold transactions (which include cash transactions over a certain amount).
The threshold transaction reporting obligations commence on 12 December 2008. On the same day, the reporting provisions for those cash dealers under Division 1 of Part II of the FTR Act who are also reporting entities under the AML/CTF Act will cease to apply.
Item 1 amends subparagraph 7(1)(f)(ii) of the FTR Act to establish transitional arrangements for reporting significant cash transactions. The amendment will authorise cash dealers who are also reporting entities under the AML/CTF Act to continue to report significant cash transactions under the FTR Act until they become compliant with Division 3 of Part 3 of the AML/CTF Act or up until the end of 11 March 2010, whichever occurs first.
The date of 11 March 2010 marks the end of the 'policy principles period' for complying with reporting obligations under the AML/CTF Act.
The AML/CTF Act is being implemented over two years from 12 December 2006 to allow businesses time to develop necessary compliance systems in the most cost effective way. Policy principles made under section 213 of the AML/CTF Act also provide for a 15 month period after the commencement of each set of obligations during which the AUSTRAC CEO may only take civil penalty action if he or she is satisfied that the reporting entity has failed to take reasonable steps to comply with its obligations.
Some cash dealers who are also reporting entities under the AML/CTF Act may not be fully compliant with the new reporting obligations when they commence on 12 December 2008. The proposed amendment will give such cash dealers the option of continuing to report under their existing system (under the FTR Act) until they have their new system (under the AML/CTF Act) in place, up until the end of the 'policy principles period'.
Cash dealers will not have to duplicate significant cash transaction reports under the FTR Act and AML/CTF Act during the 'policy principles period'. Item 2 amends section 7 of the FTR Act to provide that a cash dealer who complies with the threshold transaction reporting obligations under section 43 of the AML/CTF Act will not be required to also comply with the significant cash reporting obligations under section 7(1) of the FTR Act for the same transaction.
Item 3: Exemption register
Item 3 amends subsection 11(2A) of the FTR Act to allow a financial institution to
enter a designated service transaction, or a class of designated service transactions, in its exemption register after the commencement of the reporting obligations under the AML/CTF Act up until the end of 11 March 2010.
Some financial institutions are cash dealers under the FTR Act and reporting entities under the AML/CTF Act. Some of these financial institutions may not be fully compliant with the reporting obligations under the AML/CTF Act by 12 December 2008.
The proposed amendments will allow these financial institutions to continue to place relevant transactions in their exemption registers until they become compliant with the new reporting obligations or up until the end of 11 March 2010, whichever occurs first. This will ensure that appropriate records continue to be maintained by financial institutions until such time as the financial institution becomes fully compliant with the new reporting obligations.
Items 4, 5 and 6: Transitional arrangements for reporting of significant cash transactions by solicitors
Division 1B of Part II of the FTR Act imposes obligations on solicitors to report significant cash transactions. 'Solicitor' includes a solicitor corporation, or a partnership of solicitors.
Solicitors who are reporting entities under the AML/CTF Act will also have obligations to report threshold transactions from 12 December 2008. Some of these solicitors may not be fully compliant with the reporting obligations by 12 December 2008.
Items 4 and 5 amend section 15A of the FTR Act to authorise solicitors who are reporting entities under the AML/CTF Act to continue to provide reports about cash transactions to AUSTRAC under the FTR Act until they become compliant with the new reporting obligations or up until the end of 11 March 2010, whichever occurs first.
Solicitors will not have to duplicate significant cash transaction reports under the FTR Act and AML/CTF Act during this period. Item 6 amends section 15A of the FTR Act to provide that where a solicitor complies with the threshold transaction reporting obligations under section 43 of the AML/CTF Act, they will not be required to also comply with the significant cash reporting obligations under section 15A of the FTR Act for the same transaction.
Items 7, 8 and 9: Transitional arrangements for suspect transaction reporting
Division 2 of Part II of the FTR Act requires cash dealers to report suspect transactions to AUSTRAC.
Division 2 of Part 3 of the AML/CTF Act requires reporting entities to report suspicious matters to the AUSTRAC CEO.
Cash dealers who are also reporting entities under the AML/CTF Act will be required to comply with the suspicious matter reporting provisions under Division 2 of Part 3 of that Act from 12 December 2008. On the same day, the obligation for such cash dealers to report suspect transactions under the FTR Act will cease to apply.
Some cash dealers who are also reporting entities under the AML/CTF Act may not be fully compliant with the new reporting obligations by 12 December 2008.
Items 7 and 8 amend section 16 of the FTR Act to establish transitional arrangements for cash dealers who are progressing from reporting under the FTR Act to reporting under the AML/CTF Act. The amendments will authorise cash dealers who are also reporting entities under the AML/CTF Act to continue to provide reports about suspect transactions to AUSTRAC until they become compliant with the suspicious matter reporting obligations under Division 2 of Part 3 of the AML/CTF Act or up until the end of 11 March 2010, whichever occurs first.
Cash dealers will not have to duplicate suspect transaction reports under the FTR Act and suspicious matter reporting under the AML/CTF Act during this period. Item 9 amends section 16 of the FTR Act to provide that a cash dealer who complies with the suspicious matter reporting obligations under section 41 of the AML/CTF Act will not be required to also comply with the suspect transaction reporting obligations under section 16 of the FTR Act for the same transaction.
Items 10 and 11: Transitional arrangements for reports of international funds transfer instructions
Division 3 of Part II of the FTR Act imposes obligations on cash dealers to provide AUSTRAC with reports of international funds transfer instructions (IFTIs). These obligations will cease when the reporting obligations under Division 4 of Part 3 of the AML/CTF Act commence on 12 December 2008.
Division 4 of Part 3 of the AML/CTF Act sets out obligations for reporting to the AUSTRAC CEO about IFTIs. Some cash dealers may not be fully compliant with these reporting obligations by 12 December 2008.
The proposed amendments establish transitional arrangements for cash dealers who are progressing from reporting IFTIs under the FTR Act to reporting IFTIs under the AML/CTF Act. These cash dealers can continue to provide reports about IFTIs under the FTR Act until they become compliant with Part 3 of the AML/CTF Act or up until the end of 11 March 2010, whichever occurs first.
Cash dealers will not have to duplicate IFTIs reporting under the FTR Act and AML/CTF Act during this period. Item 11 amends section 17B of the FTR Act to provide that a cash dealer who complies with the IFTI reporting obligations under section 45 of the AML/CTF Act will not be required to comply with the international funds transfer instructions reporting obligations under section 17B of the FTR Act for the same instruction.