With a number of high profile cases and inquests into money laundering being played out in the media recently, many directors and Responsible Managers are taking the opportunity to give serious consideration to how to mitigate similar occurrences in their business.
A good starting point is the existing guidance and commentary. Australian Transaction Reports and Analysis Centre ("AUSTRAC") has previously released a report on governance, including key insights developed by AUSTRAC in the course of its regulatory activities. The report is designed to assist reporting entities to understand the expectations AUSTRAC has in relation to governance. In the report, AUSTRAC notes that governance "involves more than just having AML/CTF as a standing item for mention at meetings". They go on to note that all personnel should be aware of the various risks impacting the business and the systems and controls implemented to address these risks.
In order to protect your business and minimise the risk of money laundering ("ML") and terrorism financing ("TF"), reporting entities must have strong leadership and oversight protocols in place. By regularly reviewing the systems and controls you have in place, you can ensure your business is complying with AUSTRAC's expectations regarding governance and oversight obligations.
To adequately address all oversight and governance obligations imposed on your business, responsibilities are shared among senior management and compliance officers.
Board and Senior Management Responsibilities
It is the responsibility of all board and senior management personnel to ensure a business is complying with AML/CTF obligations. AUSTRAC expects that the board and senior management will be fully engaged with the protocols and procedures implemented within the business in relation to AML/CTF compliance.
Some responsibilities of the board and senior management include:
- Approving the AML/CTF program documents;
- Questioning and taking ownership of any ML/TF risks the business faces;
- Updating Risk-based systems and controls according to any newly identified ML/TF risks; and
- Ensuring independent reviews of AML/CTF capabilities and compliance occur at appropriate intervals.
AML/CTF Compliance Officer
The AML/CTF Compliance Officer should oversee all AML/CTF compliance procedures and protocols within the business and report these to the board and senior management. The flow of information to the board and senior management is particularly important and the AML/CTF Compliance Officer must ensure accurate and complete information reaches the board and senior management.
Expectations of the AML/CTF Compliance Officer include:
- Regularly reviewing and updating customer products, services and any other factors that contribute to ML/TF risk;
- Identifying potentially suspicious matters through transaction monitoring;
- Regularly reporting to the board and senior management of the business, including providing updated risk assessments for review; and
- Ensuring independent reviews of the AML/CTF program are completed at regular intervals or when circumstance require it.
The AML/CTF Compliance Officer's role is particularly important as it ensures the board and senior management are apprised of the various risks impacting the business, which allows them to develop the systems and controls which are appropriate for those risks.
The Importance of AML/CTF programs
An AML/CTF program will help a reporting entity identify, mitigate, and manage ML/TF risks. Your AML/CTF program documents the systems and controls in place to manage ML/TF risks and ensures all AML/CTF processes are adequately documented and can be implemented across all relevant teams and personnel. If AML/CTF processes are not adequately documented, then the reporting entity may fail to identify and address ML/TF risks impacting the business.
Complying with these obligations will not only protect your business from criminal exploitation but will also prevent serious penalties applicable under the AML/CTF legislation.
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