Following the negative publicity caused by the release of the Panama Papers and the findings of the subsequent Shewan Report, the Ministry of Justice released a consultation paper on the 17 August 2016 to improve and extend anti money laundering/countering financing of terrorism (AML/CFT) legislation.
This consultation paper proposes to expand the coverage of legislation to the following business sectors:
- real estate agents
- high value dealers (e.g. antique/art dealers, auctioneers, motor vehicle and boat dealers, jewellers and precious metal dealers)
- providers of gambling services (excluding pokie machines)
Money laundering involves transforming money from crime, or ‘dirty money’, into money that appears to come from a legitimate source. Laundering money enables criminals to disguise their criminal activities and enjoy the benefits of their crimes, including investing their profits for future criminal activity.
The financing of terrorism follows similar methods to money laundering in order to disguise the source and ultimate destination of funds.
Whilst the exact compliance requirements haven’t yet been defined for the new business sectors, they will certainly be required to implement some AML/CFT prevention and detection measures, at the very least measures relating to the verification of customer identity, the monitoring of both customer behaviour and individual transactions for unusual or suspicious activity, and compliance with record keeping, reporting and audit requirements.
Organisations already subject to the legislation (financial institutions, casinos, financial advisers, dealers, brokers etc) are required to have the following in place:
- A documented risk assessment of the money laundering and financing of terrorism risk that could be expected in the course of running the business.
- A documented AML/CFT compliance programme that includes procedures to detect, deter, manage and mitigate money laundering and the financing of terrorism.
- A compliance officer appointed to administer and maintain the AML/CFT programme.
- Customer due diligence processes including customer identification and verification and monitoring of customer transactions to identify and report suspicious activity.
An external compliance audit to be undertaken every two years.
At Crowe Horwath, we provide a comprehensive range of AML/CFT services including documenting and designing risk assessments and compliance programmes, providing technology solutions for customer and transaction monitoring where the volume of activity requires this or undertaking the two yearly compliance audits.
If you would like more information on our AML/CFT services, please contact Martyn Solomon, senior internal audit manager.