AUSTRAC: Regulatory Approach

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AUSTRACRegulatory Approach

• Neil Jensen
• Chief Executive Officer
• 5 June 2007

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Developing Australia's program to meet the global
standards

• AML/CTF Act 2006 General principles and
• high level obligations, including
• A reporting entity must have and comply with an
  AML/CTF Program
• A reporting entity must carry out customer
  identification procedures
• A reporting entity must report suspicious matters

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What does the AML/CTF Act 2006 mean for AUSTRACs
new role?

• Gaining trust and confidence
• Stronger partnerships with industry
• Implementation of a public awareness campaign
• Large increase in education visits and industry
  presentations
• Largely expanded compliance and new enforcement
  role
• Development of AML/CTF Rules and Guidelines
• ongoing industry consultation
• Increased quality and quantity of data gathering
• More emphasis on analysis and prediction of
  AML/CTF trends and typologies
• Relationship with domestic overseas regulators

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Key Deliverables

• Rules
• Guidance notes
• Self Assessment Questionnaire (SAQ)
• Regulatory policies
• Regulatory guide
• External education campaigns
• Internal education campaigns
• Development of regulatory platform and compliance
  reporting framework
• Development of regulatory risk rating systems
• Development of compliance strategy, operating
  procedures and automated workflow
• Enforcement capacity and capability
• Legal interpretative series

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Key Principles of the AUSTRAC approach to
Compliance
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AUSTRAC Surveillance

• On-site inspections (annual or on-going
  depending on risk)
• Desk reviews
• Annual consultations
• Thematic studies
• Systemic data gathering
• Liaison with other financial services regulators
  to coordinate regulatory oversight

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Compliance Methodology

• Reviewing inspection methodologies we are
  developing new techniques progressively that will
  be tailored to business size, complexity and
  AML/CTF profile
• Broader considerations (than FTR compliance)
• Governance
• Roles of CRO (Compliance Officers and Auditors)
• IT systems
• Staff training

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Principles for Enforcement

• Cooperative negotiations before formal
  intervention
• Future deterrence preferred focus rather than
  sanctions
• Early and assertive interventions for serious
  con-compliance
• Most intensive supervision of highest risk
  entities
• Consistency wherever practicable with sound
  commercial practice
• Remedies consistent with deterrent purpose and
  proportionate to the compliance problem

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Enforcement
AUSTRACs new role and indications for the future
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