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Chapter 9 - Exemptions from obligations under the AML/CTF Act

Contents


Introduction

The Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act) imposes a range of compliance and reporting obligations on reporting entities. However, the AML/CTF Act allows for exemptions for some reporting entities from AML/CTF obligations. These exemptions may be brought into effect by the AML/CTF Act or the AML/CTF Rules, or prescribed by an exemption instrument or modification issued by the AUSTRAC CEO. Exemptions may be granted to address an unintended or overly burdensome impact of the AML/CTF Act, while ensuring that the integrity of the AML/CTF regime is maintained.

This chapter provides an overview of the exemption framework under the AML/CTF Act. It also provides links to AUSTRAC resources for reporting entities that wish to apply for an exemption from or modification to their AML/CTF Act obligations.

'Cash dealers' with obligations under the Financial Transaction Reports Act 1988 (FTR Act) may apply for an exemption under section 41A of the FTR Act. Exemptions under the FTR Act are discussed in Chapter 10 - Financial Transaction Reports Act.


Existing exemptions under the AML/CTF Act and AML/CTF Rules

Exemptions specified by the AML/CTF Act

The following table sets out the provisions in the AML/CTF Act which allow for exemptions to certain AML/CTF obligations.

Table 1: Exemptions specified by the AML/CTF Act

AML/CTF obligation

AML/CTF Act section

Description of exemption

Identification of pre-commencement customers

Subsection 28(2)

This provision exempts a reporting entity from carrying out customer identification procedures for a customer who received a designated service from the reporting entity before 12 December 2007.

 

Customer identification and ongoing customer due diligence (OCDD)

 

Subsection 36(3)

Ongoing customer due diligence (OCDD) obligations do not apply to reporting entities that only provide the designated service covered by item 54 of table 1 in section 6 of the AML/CTF Act.

The 'item 54' designated service involves an Australian financial services licence (AFSL) holder arranging for a person to receive another designated service. This service is most commonly associated with financial planners and advisers.

Subsections 39(5) and 39(7)

An exemption from the obligations to conduct customer identification/verification and OCDD applies to the following designated services:

  • services provided by a reporting entity at or through a permanent establishment of the entity in a foreign country
  • an AFSL holder arranging for a person to receive the designated services covered by items 40, 42 or 44 of table 1 in section 6 of the AML/CTF Act.

Subsection 39(6)

An exemption from the obligations to conduct customer identification/verification applies to the following designated services:

  • accepting payment for the purchase of a new pension or annuity (under item 40 of table 1 in section 6 of the AML/CTF Act) 
  • accepting contributions, rollovers or transfers for members as a trustee of a fund (item 42)
  • accepting contributions, rollovers or transfers for Retirement Savings Account (RSA) holders as an RSA provider (item 44).

Note that the services offered under items 40, 42 and 44 are not exempt from OCDD obligations (under Division 6 of the AML/CTF Act).

Suspicious matter report (SMR) reporting

Subsection 42(5)

An exemption from the SMR reporting obligation applies to designated services provided by a reporting entity at or through a permanent establishment of the entity in a foreign country, with the exception of a service covered by item 32A (remittance network provider) of table 1 in section 6 of the AML/CTF Act.

Threshold transaction report (TTR) reporting

Subsections 44(5) and 44(6)

An exemption from the obligation to report TTRs applies to:

  • designated services provided by a reporting entity at or through a permanent establishment of the entity in a foreign country (other than a service covered by item 32A, table 1, section 6)
  • an AFSL holder arranging for a person to receive another designated service (item 54).

Electronic funds transfer instructions (EFTI) reporting

Section 67

An exemption from EFTI obligations applies for certain instructions arising from:

  • approved third-party bill payment systems
  • the use of debit and credit card in specified circumstances
  • cheques
  • ATMs
  • merchant terminals
  • inter-financial institution transfers.

Compliance reporting

Subsection 47(5)

An exemption to the obligation to submit an annual AML/CTF compliance report applies to an AFSL holder arranging for a person to receive another designated service (item 54).

Record keeping

Subsection 118(5)

An exemption from the record-keeping obligations applies to designated services provided at or through a permanent establishment of the reporting entity in a foreign country.

Exemptions made under the AML/CTF Rules

The AUSTRAC CEO can make AML/CTF Rules that exempt certain designated services from some or all obligations of the AML/CTF Act.

AUSTRAC develops AML/CTF Rules in consultation with industry, partner agencies and other areas of government. AML/CTF Rules are a legislative instrument and must be registered and tabled in Parliament.

See the Exemptions by designated service page for a full list of exemptions under the AML/CTF Rules.

How does a reporting entity apply for an exemption?

A reporting entity seeking an exemption or modification under the AML/CTF Act or Rules must apply in writing to AUSTRAC. The following documents will assist reporting entities applying for an exemption or modification:

  • AUSTRAC Exemptions policy - This policy sets out AUSTRAC's approach to issuing exemptions under the AML/CTF Act and the FTR Act. It includes information on the types of exemptions available and the factors AUSTRAC considers when deciding whether to issue an exemption.
  • AUSTRAC guidance note 14/01 - Application for exemptions and modifications under the AML/CTF Act - This guidance note provides information on:
    • the types of applications for exemptions available and the information each application must include and the matters to be addressed
    • AUSTRAC's approach to assessing applications for exemptions or modifications
    • the requirement for AUSTRAC to consult with reporting entities, or their representatives and other stakeholders
    • the requirement for AUSTRAC to publish details of exemptions or modifications granted
    • changes to, and revocation of, section 248 exemptions.

What types of exemptions can a reporting entity apply for?

The reporting entity may apply for either an:

  • exemption by the AML/CTF Rules; or
  • exemption or modification under section 248 of the AML/CTF Act.

Exemption by AML/CTF Rules

Under section 247 of the AML/CTF Act, the AUSTRAC CEO may make AML/CTF Rules which provide that the legislation does not apply to a designated service, or that the specified provisions of the legislation do not apply to a designated service in the circumstances specified in the AML/CTF Rules.

Exemptions and modifications under section 248 of AML/CTF Act

Under section 248 of the AML/CTF Act the AUSTRAC CEO may, by written instrument:

  • exempt specified person(s) from one or more provisions of the AML/CTF Act generally subject to conditions, or
  • modify one or more provisions of the AML/CTF Act as they are to apply to a specified person and not subject to conditions.

AUSTRAC must publish exemptions and modifications on its website. A full list of exemptions and modifications issued by AUSTRAC can be found on the Exemptions and modifications page of the AUSTRAC website.

 

Last modified: 16/10/2015 15:48