australia mutual evaluation report 2015
TRANSCRIPT
Anti-money laundering and counter-terrorist financing measures in Australia – Mutual Evaluation Report – April 2015 1
Anti-money laundering and counter-terrorist financing (AML/CFT) measures in Australia Fourth Round Mutual Evaluation
Key findings, ratings and priority actions 20 April 2015 www.fatf-gafi.org/topics/mutualevaluations/documents/mer-australia-2015.html
Anti-money laundering and counter-terrorist financing measures in Australia – Mutual Evaluation Report – April 2015
Key findings
Australia has a good understanding of its main money laundering (ML) and terrorist financing (TF) risks. – Australia needs to develop ML understanding further. – There is an underlying concern that authorities address
predicate crime, rather than ML. – TF is largely motivated by international tensions and
conflicts. – Australia coordinates very well activities to address ML/TF
risks but some key risks remain unaddressed. Operationally, national AML/CFT coordination is very
comprehensive, but demonstrating its overall success is challenging, despite positive results from national task forces.
2
Anti-money laundering and counter-terrorist financing measures in Australia – Mutual Evaluation Report – April 2015
Key findings
Australia develops and disseminates good quality financial intelligence to a range of law enforcement bodies, customs and tax authorities. – All relevant authorities have access to the Australian
Transaction Reports and Analysis Centre (AUSTRAC) database and can use its integrated analytical tool. This is a strength of Australia’s AML/CFT system.
– Law enforcement makes limited use of the database to trigger ML/TF investigations, which is a weakness in Australia’s AML/CFT system.
21-Apr-15 3
Anti-money laundering and counter-terrorist financing measures in Australia – Mutual Evaluation Report – April 2015
Key findings
Australia’s legal framework to implement target financial sanctions is a good example for other countries. – Automatic, direct legal obligation to freeze assets of new UN
designations. – Numerous designations made under the domestic regime. – Absence of freezing statistics, financial supervision, and
feedback on experience make it difficult to confirm effective implementation of the legal framework.
Australia has not implemented a targeted approach or oversight in dealing with NPOs that are risk of terrorist abuse. It has not reviewed the sector to identify the features and types of NPOs that are at risk of being misused for TF.
21-Apr-15 4
Anti-money laundering and counter-terrorist financing measures in Australia – Mutual Evaluation Report – April 2015
Key findings
Most designated non-financial businesses and professions are not subject to AML/CFT requirements, and do not have adequate understanding of their ML/TF risks, or measures to mitigate them. – This includes real estate agents and lawyers, both identified
as high ML risk in Australia’s National Threat assessment
Major reporting entities have a good understanding of their AML/CFT risks and obligations, but some AML/CFT controls are not in line with the FATF Standards.
21-Apr-15 5
Anti-money laundering and counter-terrorist financing measures in Australia – Mutual Evaluation Report – April 2015
Key findings
AUSTRAC supervision has a range of deficiencies. – There is no supervision or regulation of most higher-risk
designated non-financial businesses and professions because they are not subject to AML/CFT requirements.
– The authorities were unable to demonstrate that they are improving AML/CFT compliance by reporting entities or that they are successfully discouraging criminal abuse of the financial and DNFBP sectors.
21-Apr-15 6
Anti-money laundering and counter-terrorist financing measures in Australia – Mutual Evaluation Report – April 2015
Key findings
Australia has not conducted a formal risks assessment on the TF risks of legal persons and arrangements. – Registration information concerning legal persons is largely
available to competent authorities and the public, but there is only limited verification of this information.
– Beneficial ownership information of legal persons and arrangements is not maintained and accessible to competent authorities in a timely manner.
Australia cooperates well with other countries in MLA matters, including extradition.
Informal co-operation is generally good across agencies.
21-Apr-15 7
Anti-money laundering and counter-terrorist financing measures in Australia – Mutual Evaluation Report – April 2015
Ratings – Effectiveness (1/3)
8
Immediate outcome of an effective system to combat money laundering (ML) and terrorist financing (TF)
Extent to which Australia has achieved this objective
1. ML and TF risks are understood and, where appropriate, actions co-ordinated domestically to combat ML and TF
Substantial
2. International co-operation delivers appropriate information, financial intelligence, and evidence, and facilitates action against criminals and their assets
High
3. Supervisors appropriately supervise, monitor and regulate financial institutions and designated non-financial businesses and professions (DNFBPs) for compliance with AML/CFT requirements commensurate with their risks.
Moderate
4. Financial institutions and DNFBPs adequately apply AML/CFT preventive measures commensurate with their risks, and report suspicious transactions.
Moderate
Anti-money laundering and counter-terrorist financing measures in Australia – Mutual Evaluation Report – April 2015 9
Immediate outcome of an effective system to combat money laundering (ML) and terrorist financing (TF)
Extent to which Australia has achieved this objective
5. Legal persons and arrangements are prevented from misuse for money laundering or terrorist financing, and information on their beneficial ownership is available to competent authorities without impediments
Moderate
6. Financial intelligence and all other relevant information are appropriately used by competent authorities for money laundering and terrorist financing investigations.
Substantial
7. Money laundering offences and activities are investigated and offenders are prosecuted and subject to effective, proportionate and dissuasive sanctions
Moderate
8. Proceeds and instrumentalities of crime are confiscated. Moderate
Ratings – Effectiveness (2/3)
Anti-money laundering and counter-terrorist financing measures in Australia – Mutual Evaluation Report – April 2015 10
Immediate outcome of an effective system to combat money laundering (ML) and terrorist financing (TF)
Extent to which Australia has achieved this objective
9. Terrorist financing offences and activities are investigated and persons who finance terrorism are prosecuted and subject to effective, proportionate and dissuasive sanctions.
Substantial
10. Terrorists, terrorist organisations and terrorist financiers are prevented from raising, moving and using funds, and from abusing the non-profit sector.
Moderate
11. Persons and entities involved in the proliferation of weapons of mass destruction are prevented from raising, moving and using funds, consistent with the relevant United Nations Security Council Resolutions.
Substantial
Ratings – Effectiveness (3/3)
Anti-money laundering and counter-terrorist financing measures in Australia – Mutual Evaluation Report – April 2015 21-Apr-15 11
Ratings – Effectiveness
1
4 6
0
HighSubstantialModerateLow
21-Apr-15 12
Ratings – technical compliance (1/5)
AML/CFT POLICIES AND COORDINATION 1. Assessing risks & applying a risk-based approach Partially compliant
2. National cooperation and coordination Largely compliant
MONEY LAUNDERING AND CONFISCATION
3. Money laundering offence Compliant
4. Confiscation and provisional measures Compliant
TERRORIST FINANCING AND FINANCING OF PROLIFERATION
5. Terrorist financing offence Largely compliant
6. Targeted financial sanctions related to terrorism & terrorist financing Compliant
7. Targeted financial sanctions related to proliferation Compliant
8.Non-profit organisations Non-compliant
21-Apr-15 13
Ratings – technical compliance (2/5)
PREVENTIVE MEASURES 9. Financial institution secrecy laws Compliant
Customer due diligence and record keeping
10. Customer due diligence Partially compliant
11. Record keeping Largely compliant
Additional measures for specific customers and activities
12. Politically exposed persons Largely compliant
13. Correspondent banking Non-compliant
14. Money or value transfer services Largely compliant
15. New technologies Largely compliant
16. Wire transfers Partially compliant
21-Apr-15 14
Ratings – technical compliance (3/5)
PREVENTIVE MEASURES (continued) Reliance, Controls and Financial Groups
17. Reliance on third parties Partially compliant
18. Internal controls and foreign branches and subsidiaries Partially compliant
19. Higher-risk countries Partially compliant
Reporting of suspicious transactions
20. Reporting of suspicious transactions Compliant
21. Tipping-off and confidentiality Compliant
Designated non-financial Businesses and Professions (DNFBPs)
22. DNFBPs: Customer due diligence Non-compliant
23. DNFBPs: Other measures Non-compliant
21-Apr-15 15
Ratings – technical compliance (4/5)
TRANSPARENCY AND BENEFICIAL OWNERSHIP OF LEGAL PERSONS AND ARRANGEMENTS 24. Transparency and beneficial ownership of legal persons Partially compliant
25. Transparency and beneficial ownership of legal arrangements Non-compliant
POWERS AND RESPONSIBILITIES OF COMPETENT AUTHORITIES AND OTHER INSTITUTIONAL MEASURES
Regulation and Supervision
26. Regulation and supervision of financial institutions Partially compliant
27. Powers of supervisors Partially compliant
28. Regulation and supervision of DNFBPs Non-compliant
Operational and Law Enforcement
29. Financial intelligence units Compliant
30. Responsibilities of law enforcement and investigative authorities Largely compliant
31. Powers of law enforcement and investigative authorities Largely compliant
32. Cash couriers Largely compliant
21-Apr-15 16
Ratings – technical compliance (5/5)
TRANSPARENCY AND BENEFICIAL OWNERSHIP OF LEGAL PERSONS AND ARRANGEMENTS (continued)
General Requirements
33. Statistics Largely compliant
34. Guidance and feedback Largely compliant
Sanctions
35. Sanctions Partially compliant
INTERNATIONAL COOPERATION
36. International instruments Largely compliant
37. Mutual legal assistance Compliant
38. Mutual legal assistance: freezing and confiscation Compliant
39. Extradition Compliant
40. Other forms of international cooperation Compliant
Anti-money laundering and counter-terrorist financing measures in Australia – Mutual Evaluation Report – April 2015 21-Apr-15 17
Ratings – technical compliance
12
12
10
6
CompliantLargely compliantPartially compliantNon-compliant
Anti-money laundering and counter-terrorist financing measures in Australia – Mutual Evaluation Report – April 2015
Priority Actions for Australia to strengthen its AML/CFT System
Re-assess Australia’s money laundering (ML) risk and formalise ongoing processes to re-assessing risks. – Australia should identify metrics and processes to
monitor and measure success. More emphasis on pursuing ML investigations and
prosecutions at federal and State/Territory level. Increase efforts to address ML risks associated with
– Predicate crimes, other than drugs and tax, including foreign predicates
– Abuse of legal persons and arrangements, and the real estate sector
– Identity fraud – Cash intensive activities
21-Apr-15 18
Anti-money laundering and counter-terrorist financing measures in Australia – Mutual Evaluation Report – April 2015
Priority Actions for Australia to strengthen its AML/CFT System
Ensure that DNFBPs are subject to AML/CFT requirements and understand their ML/TF risk – Ensure that reporting entities implement preventive
measures in line with FATF Standards, and obligations on enhanced CDD, beneficial owner and politically exposed persons.
– Improve feedback & guidance to reporting entities on reporting quality and volume.
Continue good early work to confiscate the proceeds and instrumentalities of crime, and demonstrate the effectiveness of this work over time.
21-Apr-15 19
Anti-money laundering and counter-terrorist financing measures in Australia – Mutual Evaluation Report – April 2015
Priority Actions for Australia to strengthen its AML/CFT System
Besides data analysis from field reports, incorporate more (inherent) risk factors to identify and assess the risk of reporting entities. Consider judicious use of enforcing authority to promote further compliance by reporting entities.
Ensure that financial institutions are actively supervised for compliance with targeted financial sanction requirements. – Most likely through a legislative amendment to the statute
identifying and authorising the agency responsible for supervision (Department of Foreign Affairs and Trade)
21-Apr-15 20
Anti-money laundering and counter-terrorist financing measures in Australia – Mutual Evaluation Report – April 2015
Priority Actions for Australia to strengthen its AML/CFT System
Australia should implement a targeted approach in relation to preventing non-profit organisations from terrorist financing (TF) abuse. – As a first step, undertake a thorough review of the TF
risks that NPOs are facing and the potential vulnerabilities of the sector to terrorist activities.
Ensure that lawyers, accountants, real estate agents, precious stones dealers, and trust and company service providers understand their ML/TF risks and are required to effectively implement AML/CFT obligations and risk mitigating measures.
21-Apr-15 21
Anti-money laundering and counter-terrorist financing measures in Australia – Mutual Evaluation Report – April 2015
Priority Actions for Australia to strengthen its AML/CFT System
Ensure that reporting entities implement as early as possible the obligations on enhanced customer due diligence (CDD), beneficial owners, and politically exposed persons introduced on 1 June 2014.
Australia should assess the risks of TF posed by all forms of legal persons and arrangements.
Australia should also take measures to ensure that beneficial ownership information for legal persons is collected and available. Trustees should be required to hold and maintain information on the constituent elements of a trust including the settlor and beneficiary.
21-Apr-15 22