AUSTRAC is seeking submissions on draft updated guidance on alternative identification processes reporting entities can use to assist customers who may have difficulty providing standard identification.
The guidance provides information about using a flexible, risk-based approach to customer identification to ensure that those with diverse backgrounds or facing challenging circumstances can access the financial services that they need, resulting in better financial inclusion.
This guidance will update the current page Assisting customers who don’t have standard forms of identification.
Summary of the proposed changes
The guidance has been updated to support financial inclusion outcomes and address industry feedback.
The updates would clarify that reporting entities:
- Are not limited to use alternative identification procedures for low risk customers only. They must assess and take appropriate steps to mitigate and manage the money laundering and terrorism financing (ML/TF) risks associated with accepting alternative identification.
- Can continue to rely on alternative identification when a customer faces systemic and long term barriers to accessing standard identification.
- Can apply ongoing customer due diligence based on a customer’s overall ML/TF risks, rather than applying a higher level of ongoing customer due diligence solely on the basis that a customer has been identified using alternative procedures.
- Should use reliable and independent documents or data to verify a customer’s identity to reduce ML/TF risk, rather than stating they must do this.
- Can use recently expired identification documents as a form of alternative identification.
More information has also been included on how reporting entities may verify alternative identification such as checking to see that a reference actually came from the person it is stated to come from.
It’s important to note that using alternative identification procedures must always be a risk-based decision by the reporting entity, based on the circumstances and information available.
Questions for stakeholders
We welcome your general feedback on the draft updated guidance.
We also seek responses to the following guiding questions to help us improve the guidance:
- Does this guidance achieve its intended purpose to support reporting entities to use flexible and compassionate approaches to customer identification processes while still maintaining appropriate systems and control to mitigate and manage risks? Why or why not?
- How does your business use this guidance and apply a flexible approach to customer identification processes?
- What barriers or challenges do reporting entities face applying a flexible approach to identify customers who don’t have standard identity documents?
- Do you have feedback on the impact of the guidance and/or improvements that could support greater financial inclusion for customers facing challenging circumstances or from diverse backgrounds?
- In line with AUSTRAC’s commitment to support reconciliation, do you have feedback on the impact of this guidance and/or improvements that could support greater financial inclusion for Aboriginal and Torres Strait Islander peoples?
We encourage all stakeholders including reporting entities, community groups, industry groups and associations, and those that may require a flexible approach to access financial services, to make a submission.
How to make a submission
The consultation period is open from 18 September 2024 and will close at 30 October 2024 (AEST).
You should make your submission in writing and email it to: Guidance_Consultation@austrac.gov.au.
We will accept submissions in Word (DOCX) or Portable Document Format (PDF).
Next steps
Consultation submissions will not be published. Please note that we will not respond to individual submissions unless we require more information or clarification.
AUSTRAC will consider all submissions on the draft guidance and make changes as required. We will publish the final version on our website.