AUSTRAC has updated its statement on the unintended exemption of managed investment schemes from the operation of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act). The revised statement is dated 21 December 2007 (the previous statement dated 11 December 2007 no longer appears on AUSTRAC's website). It can be found by clicking here.

AUSTRAC's revised update states that the Government intends to make a regulation as soon as possible to ensure that businesses that issue interests in managed investment schemes are subject to obligations under the AML/CTF Act. The information update also indicates that these obligations will not be retrospective. The regulation will need to be tabled in Parliament and may be disallowed by either House within 15 sitting days. However, the regulation can take effect immediately on being made.

The AUSTRAC statement does not mention whether the regulation will maintain a carve out for listed trusts and stapled securities, including for pre-listing issues of units. Clarification of this issue appears necessary.

Section 235 of the AML/CTF Act provides a defence against criminal and civil proceedings for persons acting in good faith purported compliance with the Act. Unless the Act is amended, this defence may not be available for issuers who seek to collect customer identification information and manage money laundering and terrorism financing risks in relation to managed investment schemes before the proposed regulation is made.

New Draft Rules

AUSTRAC has also proposed new draft rules which can be found by clicking here. Unfortunately, the explanatory note which accompanies them does not shed much light on the proposed rules.

Proposed Rule

Comment

Application of customer identification procedures to takeovers, schemes of arrangement and mergers and acquisitions.

It is not clear how this Rule would apply given the exemption for issuing securities in item 35(b). The Rule also refers to disposing of part of a business which is not a designated service (unlike selling securities).

Delayed customer identification for issuing securities and accepting retirement savings account (RSA) contributions, roll-overs and transfers.

The rationale for this Rule is also unclear given the exemption for issuing securities and also the customer identification exemption for RSA contributions.

Extension of institutions that make electronic funds transfers to include, among others: lenders, stock brokers, investment managers, security issuers and sellers, investment life insurers, pension and annuity providers, superannuation funds and foreign exchange dealers.

This means that these institutions may be providing a separate designated service when facilitating a payment to another person or an account at another institution. They may also need to pass on name, address and account number details to AUSTRAC or the other financial institution on request.


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