Anti-Money Laundering and Counter-Terrorism Financing and Other Legislation Amendment Act 2020 (133 of 2020)

Schedule 1   Amendments

Part 2   Correspondent banking

Anti-Money Laundering and Counter-Terrorism Financing Act 2006

11   Sections 94 to 99

Repeal the sections, substitute:

94 Simplified outline of this Part

• A financial institution must not enter into a correspondent banking relationship with:

(a) a shell bank; or

(b) another financial institution that has a correspondent banking relationship with a shell bank; or

(c) another financial institution that permits its accounts to be used by a shell bank.

• A financial institution must carry out due diligence assessments before it enters into, and while it is in, a correspondent banking relationship with another financial institution involving a vostro account.

95 Prohibitions on correspondent banking relationships involving shell banks

Entry

(1) A financial institution must not enter into a correspondent banking relationship with another person if:

(a) the other person is a shell bank; or

(b) the other person is a financial institution that has a correspondent banking relationship with a shell bank; or

(c) the other person is a financial institution that permits its accounts to be used by a shell bank.

Note: For geographical links, see section 100.

Termination

(2) If a financial institution (the first institution ) is in a correspondent banking relationship with another person and the first institution becomes aware that:

(a) the other person is a shell bank; or

(b) the other person is a financial institution that has a correspondent banking relationship with a shell bank; or

(c) the other person is a financial institution that permits its accounts to be used by a shell bank;

the first institution must, within 20 days after becoming so aware or such longer period (if any) as the AUSTRAC CEO allows, do one of the following:

(d) terminate the correspondent banking relationship;

(e) if paragraph (b) applies - request the other financial institution to terminate the correspondent banking relationship mentioned in that paragraph.

Note: For geographical links, see section 100.

(3) If:

(a) the first institution makes a request under paragraph (2)(e) of another financial institution; and

(b) at the end of the period (the first period ) of 20 business days after the request was made, the other financial institution has not complied with the request;

the first institution must terminate its correspondent banking relationship with the other financial institution within 20 days after the end of the first period or such longer period (if any) as the AUSTRAC CEO allows.

Note: For geographical links, see section 100.

Civil penalty

(4) Subsections (1), (2) and (3) are civil penalty provisions.

96 Due diligence assessments and records of correspondent banking relationships

Entry

(1) A financial institution (the first institution ) must not enter into a correspondent banking relationship with another financial institution that will involve a vostro account unless:

(a) the first institution carries out a due diligence assessment in accordance with the AML/CTF Rules and prepares a written record of the assessment; and

(b) a senior officer of the first institution approves the entering into of that relationship, having regard to such matters (if any) as are specified in the AML/CTF Rules.

Note: For geographical links, see section 100.

(2) If a financial institution (the first institution ) enters into a correspondent banking relationship with another financial institution that involves a vostro account, the first institution must, within 20 business days after the day of entering into the relationship, prepare a written record that sets out:

(a) its responsibilities under that relationship; and

(b) the responsibilities of the other financial institution under that relationship.

Ongoing assessments

(3) If a financial institution (the first institution ) is in a correspondent banking relationship with another financial institution that involves a vostro account, the first institution must:

(a) carry out due diligence assessments in accordance with the AML/CTF Rules; and

(b) carry out those assessments at the times worked out in accordance with the AML/CTF Rules; and

(c) in relation to each assessment, prepare a written record of the assessment within 10 business days after the day of completing the assessment; and

(d) in relation to each assessment, ensure that, within 20 business days after the preparation of the written record, a senior officer of the first institution reviews the written record and makes a decision about whether the first institution should remain in a correspondent banking relationship with the other financial institution.

Note: For geographical links, see section 100.

Civil penalty

(4) Subsections (1), (2) and (3) are civil penalty provisions.