What are my AML/CFT obligations?
A reporting entity has additional obligations under the AML/CFT Act. This will require more than just knowing about the AML/CFT Act.
Key AML/CFT obligations of a reporting entity
If you are a reporting entity, your key AML/CFT obligations are:
- A written risk assessment.
- An AML/CFT programme including your policies, procedures, and controls for:
- Managing and mitigating the risks identified in the risk assessment.
- Vetting of staff (if you have any).
- Training of relevant staff (if you have any).
- Applying appropriate customer due diligence (CDD).
- Reporting suspicious activities (SAR) and prescribed transactions
- Ensuring adequate record keeping.
- Keeping the AML/CFT programme up-to-date.
- Preventing products and/or transactions that favour anonymity being used for money laundering or financing of terrorism.
- Ensuring adherence to the AML/CFT programme.
- Reviewing your AML/CFT programme and getting it audited.
Consequences for non-compliance with the AML/CFT Act
A reporting entity that fails to comply with the various requirements of the AML/CFT Act may face penalties ranging from a formal warning or enforceable undertakings (this is an undertaking of a certain course of action a reporting entity makes to an AML/CFT Supervisor, which is enforceable by law) to serious criminal and civil penalties. These could range from fines up to $200,000 for an individual (up to $2 million for entities). Examples of breaches could include failure to conduct CDD as prescribed, failure to establish, implement, or maintain an AML/CFT programme, failure to keep records, etc.
Certain offences (e.g. relating to suspicious activity reports) could attract a fine up to $300,000 and/or a term of imprisonment up to 2 years for individuals and a fine up to $5 million for an entity.
Note: The information on offences and penalties provided above is simply for illustrative purposes and not an exhaustive list of offences and penalties under the AML/CFT Act. Refer to Part 3, ‘Enforcement’, of the AML/CFT Act for complete information relating to offences and penalties.
Strategi Institute has produced a comprehensive manual which will assist owners of small to medium-sized reporting entities to understand their AML/CFT obligations and to undertake and document an acceptable risk assessment and AML/CFT programme. The manual guides the user via a series of checklists, guidance notes, templates and appendices along the route to AML/CFT compliance.
Strategi Institute also offers AML/CFT training for reporting entities and their staff.