AUSTRAC warns clubs about their level of AML/CTF compliance

AUSTRAC warns clubs about their level of AML/CTF compliance

AUSTRAC has commenced warning clubs about their level of AML/CTF compliance based on the club’s responses to the annual compliance report, stating: 

“AUSTRAC’s records indicate that when completing the 2018 compliance report your responses in our view indicate that you are likely in breach of your  obligations under the Anti-Money Laundering and  Counter-Terrorism Financing Act 2006 (AML/CTF Act).”

AUSTRAC are clearly drawing a line in the sand that all clubs should consider.  To help you understand this new and increased level of regulatory activity by AUSTRAC targeted at the clubs sector, we have provided extracts from the warning notices sent by AUSTRAC to clubs:

“AUSTRAC’s records indicate that when completing the 2018 compliance report your responses in our view indicate that you are likely in breach of your  obligations under the Anti-Money Laundering and  Counter-Terrorism Financing Act 2006 (AML/CTF Act).”

“AUSTRAC notes that an AML/CTF program must be subject to regular independent review. Your response to the 2018 compliance report indicates that you
are in breach of your obligation to undertake regular independent reviews.”

“AUSTRAC notes that an AML/CTF program must contain an enhanced customer due diligence program. Your response to the 2018 compliance report indicates that you are in breach of obligations to have an enhanced customer due diligence program.”
 
It is clear that AUSTRAC are drawing on information supplied through the compliance report to assess the level of compliance and identify indicators of non-compliance or weakness in compliance.

“AUSTRAC requires your business to take immediate action to ensure that it meets its obligations under the AML/CTF Act going forward.”

AUSTRAC are making it clear that they expect clubs to urgently address any gaps in their AML/CTF compliance arrangements.

“Under section 81 ofthe AML/CTF Act, a reporting entity must not commence providing designated services (including gaming services) unless it has adopted and maintains an anti-money laundering and counter-terrorism financing program (an AML/CTF program). This is a civil penalty provision.”

AUSTRAC are warning that continued non-compliance will compound the breaches and that if a reporting entity is offering a designated service without an adequate AML/CTF Program that may result in a civil penalty.

“AUSTRAC will be undertaking targeted reviews later this year of the compliance of businesses that have disclosed breaches in their compliance report.”

AUSTRAC are announcing that they will be making follow up reviews of the level of compliance later in the year on clubs that have sub-standard AML/CTF compliance arrangements. This indicates that clubs have only a small window to address any failing identified through their compliance reporting.

“If we review your business and identify non-compliance, we will consider whether it is appropriate to take action to ensure your ongoing compliance with the AML/CTF Act.”

AUSTRAC are warning clubs that if weaknesses and gap sare not addressed, they will consider using their enforcement powers.  AUSTRAC have publically and privately indicated that if issues are not addressed when they undertake a review later this year they will seek to appoint external auditors at the club’s expense.

If, when reflecting on your own responses to the recent annual compliance report, you believe that the responses indicate areas where AML/CTF compliance could be improved, our advice is to address them now before AUSTRAC possibly take action.