AUSTRAC's work in combating money laundering, the financing of terrorism and other major crime has taken on increasing importance in the contemporary global environment. This is due to both the increasingly international nature of organised crime and the heightened threat of terrorism.
Money laundering is the process by which criminals use the legitimate financial system to try to disguise the proceeds of crime by converting their illegal funds into seemingly legitimate funds and/or assets.
Terrorist financing is defined as `'the act of providing financial support to terrorists or terrorist organisations to enable them to carry out terrorist acts' (UN Convention for the Suppression of the Financing of Terrorism, 2002).
The AML/CTF Act strengthens Australia's AML/CTF regime and brings Australia further in line with international standards set by the Financial Action Task Force (an international organisation that has been set up to combat global financial crime).
A core component of the legislation is a requirement for businesses to identify, mitigate and manage the risk of money laundering and terrorism financing activities.
The AML/CTF Act applies to businesses providing specific financial, gambling and bullion activities known as `designated services'. Such `designated services' include: opening an account, accepting deposits, making a loan, issuing a debit card, issuing traveller's cheques and electronic transfers of funds.
All businesses that provide one or more designated services will need to have in place an AML/CTF Program from 12 December 2007. This requirement is central to the new legislative system. It includes having in place processes and procedures for:
- assessing the money laundering risk of customers, products and services
- ongoing customer due diligence
- employee due diligence and
- customer identification and re-verification
The implementation of the AML/CTF Act will occur over a two-year period during which time AUSTRAC will assist businesses to meet their requirements through awareness raising, ongoing education, advisory visits and compliance monitoring.