Australia’s response to the FATF’s 2003 40 Recommendations
| Date | 01 October 2005 |
| Published date | 01 October 2005 |
| DOI | https://doi.org/10.1108/13685200510620849 |
| Pages | 297-304 |
| Author | Jackie Johnson |
| Subject Matter | Accounting & finance |
Australia's Response to the FATF's 2003
40 Recommendations
Jackie Johnson
INTRODUCTION
As a result of the change in money laundering trends
and money laundering's association with terrorist
®nancing, the Financial Action Task Force (FATF),
after broad consultation
1
with members and non-
members, released a substantially revised set of 40
(Anti-Money Laundering) Recommendations in
2003.
2
As a consequence, FATF member countries
are required to update their respective anti-money
laundering (AML) regulations and procedures to
cope with these new obligations. As a FATF
member, Australia is no exception, though early reac-
tions to proposed changes to Australia's AML regu-
lations have labelled them as needlessly intrusive and
draconian with industry groups raising concerns
about the cost of compliance, professional liability
and customer/client con®dentiality.
3
The Australian government's approach to updating
Australia's AML regime is to work with industry to
ensure that Australia's system continues to re¯ect
international best practice while minimising the costs
of compliance. They expect to work with the aected
industries to decide on the best means of implementing
the recommendations to suit Australian conditions.
Part of that consultation process involved the release
by the Attorney General's Department of a series of
industry-speci®c Issues Papers
4
outlining AML regu-
latory options for:
®nancial services providers;
the real estate industry;
dealers in precious metals and stones;
the gambling industry; and
lawyers and accountants.
The Attorney General's department sought responses
from interested parties. The responses were generally
from a range of industry and professional organis-
ations who had canvassed the opinions of their mem-
bers. Individual responses were rare.
Further consultations with industry bodies will
consider a draft exposure Bill which will re¯ect the
key principles in a Policy Principles Paper before
any new legislation is introduced to Parliament.
This was originally proposed for the second half
of 2004.
THE NEW 40 RECOMMENDATIONS
The scope of the FATF's revised 40 Recommendations
extends well beyond the set of principles outlined in its
1996 version. These earlier recommendations were
designedas a set ofstandar ds forcoun tries to implement
according to their domestic circumstances. They were
neither complex nor prescriptive in design.
The 2003 set goes well beyond general principles, is
prescriptive in nature and expands reporting bodies to
many non-®nancial businesses and professions includ-
ing: casinos and internet casinos; real estate agents;
dealers in precious metals or stones; lawyers; notaries;
accountants; and trust and company service providers.
Not all the recommendations apply to all the groups
but each group is bound by a subset of the 40 Rec-
ommendations.
The new recommendations are more detailed, spel-
ling out the precise actions to be taken, leaving little to
each jurisdiction to interpret other than develop a risk-
based approach where leeway is given for the level,
scope or amount of compliance. The risk here being
the risk of money laundering.
Customer due diligence (CDD) has tightened sig-
ni®cantly with detailed measures to be adhered to, at
the time of initial contact. Failure to satisfy the CDD
measures should mean that any business relationship
is terminated. Implementing this on a risk-sensitive
basis does not mean that some CDD measures can be
omitted altogether, merely that the extent to which
the procedures need to be carried out can be reduced
for low risk customers, business relationships or trans-
actions. For higher risk customers it would be
expected that more CDD be performed.
The new recommendations focus on two speci®c
areas of high risk:
CDD when dealing with politically exposed per-
sons (PEPs); and
establishing cross-border correspondent banking
relationships.
Page 297
Journal of Money Laundering Control Ð Vol. 8 No. 4
Journalof Money Laundering Control
Vol.8, No. 4, 2005, pp. 297± 304
#HenryStewart Publications
ISSN1368-5201
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