GR020 Anti Money Laundering and Counter Terrorism Financing

This course is about Anti-Money Laundering (AML)/ Counter Terrorism Financing (CTF).  It is a Good Return requirement that all staff complete this training at least annually.

What is AML/CTF all about?

Why is the AML/CTF legislation important?

Australia has implemented AML/CTF laws to:

  • Meet international standards and requirements
  • To prevent/impede money laundering and terrorism financing

Money Laundering (‘cleansing’ of illegally acquired funds by passing them through legitimate channels)

Terrorist Funding (funding of domestic or international terrorist activity through raising, transferring and using funds)

Why does GR need to conduct this training of its staff/volunteers?

  • To prevent/impede money laundering
  • To prevent/impede terrorism financing
  • To prevent/impede both money laundering and financing of terrorism

How does Money Laundering work?

The three stages of Money Laundering:

  • Placement (introducing funds into the financial system)
  • Layering (moving funds in complex ways to disguise their source)
  • Integration (using laundered funds to finance legitimate purchases)

Layering’ is one of the key indicators of money laundering

Who does the AML regulatory regime apply to?

  • Providers of ‘Designated Services’, including
    • Providing Loans
    • International Funds Remittance
    • Bullion, Gambling, many Financial Services

What is considered the key indicator of money laundering?

  • Placement
  • Layering
  • Integration

Money laundering is the 'cleansing' of illegally obtained funds by passing them through legitimate channels.

  • True
  • False
Answer true or false.

How does Terrorism Financing work?

The characteristics of Terrorism Financing

  • Often small transactions sent to relatives overseas as financial support
  • Use of ‘conduit’ countries to disguise ultimate destination
  • Commingling illegitimate funds with legitimate

What are the principal means used for transferring funds to terrorists?

  • Cash held by persons travelling overseas
  • International Funds Remittance
  • Portable, high-value property (jewellery, precious stones, antiques)

 

What are the characteristics of Terrorism Financing?

  • Often small transactions sent to relatives overseas as financial support
  • Use of 'conduit' countries to disguise ultimate destination
  • Commingling illegitimate funds with legitimate
  • All of the above

What is/are the principal means used for transferring funds to terrorists?

  • Cash held by persons travelling overseas
  • International Funds Remittance
  • Portable, high-value property (jewellery, preciaous stones, antiques)
  • All of the above

Our response to the obligations:

Client Identification & Verification of:

  • MFIs, donors, lenders and beneficiaries
  • Directors, employees and volunteers
  • Do our partners understand and comply with their obligations?
  • Cross-match against DFAT Consolidated List

Suspicious Transactions:

  • Report suspicious transactions by a lender, MFI, beneficiary to your immediate manager, to the CEO or to the Compliance Adviser.

Record keeping & reporting:

  • Are our systems adequate?

Our AML/CTF Program

  • Given our mode of operation, size and complexity – is adequate to manage our risk

We should:

  • Ensure our MFI partners understand their obligations
  • Conduct regular staff refresher training
  • Raise it, if it seems to be suspicious activity
  • Create a register of any suspicious transactions that arise (these will be reported to AUSTRAC within the required  time limit by the Financial Controller)

How does Good Return address the AML/CTF requirements?

  • We take reasonable steps to ensure that we know our customers
  • We report suspicious and/or large transactions
  • We conduct regular staff training
  • All of the above

If you have discovered a suspicious transaction and the compliance officer is not available, you should:

  • Approach the person you suspect and advise them you are going to report their behaviour.
  • Tell the WEAL/Good Return Compliance Adviser or the CEO
  • Ring the prime minister at home and let him know what you suspect
  • Ignore the matter because you are not allowed to discuss it with any other person/s

What are our obligations?

What are the main obligations?

  • Customer identification and verification - Know Your Customer (KYC)
  • Suspicious & large transaction monitoring/reportingThe Great Piggy Bank Robbery
  • Accurate record keeping
  • Establishing and maintaining an AML/CTF training program

Know Your Customer

  • Who are our customers?
  • How do we identify and verify them?
  • Are they reassessed on a regular basis

What are Good Return's main obligations under the legislation?

  • Customer identification and verification - Know Your Customer
  • Suspicious & large (>$10,000) transaction monitoring/reporting
  • Accurate record keeping
  • Establishing and maintaining an AML/CTF training program
  • All of the above

Suspicious transaction monitoring/reporting

What types of transactions would be suspicious for WEAL/GR?

Examples may be frequent use of a child’s Good Return loan account to make donations, multiple small transactions, all below the $10,000 reporting limit, to the same entity, and/or frequent changes to a beneficiary's bank account details

Record keeping & reporting

  • What do we have to report?
  • Who do we report to?
  • At what time do we make the report?

Establishing and maintaining an AML/CTF program

  • Ensure all relevant staff receive training
  • Keep training program in line with changing law/circumstances​

What constitutes a suspicious transaction?

  • Frequent use of a child’s Good Return loan account to make donations
  • A large amount from David Jones on your bank statement
  • An unexpected credit from your bank in your account
  • Multiple small transactions, all below the $10,000 reporting limit, to the same entity
  • Frequent changes to a beneficiary's bank account details
Mark the statements below as True if they may be a suspicious transaction or mark them as False if not.

How do we assess risk?

Risk can be assessed in four categories

  • Customers – likelihood of terrorist connections
  • Services – use of banking, remittance services
  • Methods – emergency aid funding
  • Jurisdiction – sending funds to countries with low score on Corruption Perceptions Index

What are some potential risks?

  • diversion of funds for illegitimate purposes
  • reputational harm

Match the risk categories with their definition

  • Customers
    likelihood of terrorist connections
  • Services
    use of banking, remittance services
  • Methods
    emergency aid funding
  • Jurisdiction
    sending funds to countries with low score on Corruption Perceptions Index

A major risk for Not for Profits

The Risk:

  • That either WEAL or an MFI partner will be used either directly or indirectly as a “front organisation” of a terrorist or criminal group.

The Consequences include:

  • Loss of reputation, status and donor confidence
  • Possible criminal proceedings

Terrorist organisations are known to target NFPs because NFPs:

  • Enjoy public trust and support
  • Have access to relatively large sums of money
  • Deal in ‘hard currency’
  • Often work within or near areas that are exposed to terrorist activity

If WEAL or an MFI partner is used as a "front organisation" of a criminal group, what are the possible consequences for Good Return?

  • Loss of reputation, status and donor confidence
  • Possible criminal action
  • Both A and B

The government believes it is necessary to regulate Not For Profits in relation to AML/CTF. There is evidence that terrorist organisations have used NFPs because they:

  • Enjoy public trust and support
  • Have access to relatively large sums of money
  • Deal in 'hard currency'
  • Often work within or near areas that are exposed to terrorist activity
  • All of the above

Increased risk for NFPs

The Risk increases if an NFP:

  • Conducts, contributes to or funds overseas aid programs
  • Donates funding to other NFPs or projects overseas and/or
  • Works with, or provides funding to, NFPs that conduct programs or projects overseas

There is evidence that NFPs have been misused in other countries:

  • Fraudulent solicitation of donations in a donor region for use in a beneficiary region.
  • NFP employee misuse of position.

Best Practice for Not for Profits

The Guidance Best Practice Principles :

  • Take “all reasonable efforts” to ensure that funds are not directed to terrorist activities &/or to individuals or organisations linked to terrorism (refer Consolidated List);
  • Ensure that management, employees and volunteers are aware of their obligations;
  • Conduct background checks on management, employees and volunteers involved with the NFP;
  • Conduct sufficient inquiries to know prospective customers, their beneficial owners and any Politically Exposed Persons (enhanced Customer Due Diligence requirements from 2014);
  • Conduct all financial transactions through regulated financial institutions;
  • Retain records in relation to all transactions; &
  • Conduct follows-ups to ensure the intended recipient received the funds and they were used as intended.