Businesses need to move on customer due diligence processes

The deadline for compliance for those businesses that fall under the second tranche of the AML | CTF Act is rapidly approaching, with phase two expected to come into play in early 2009. This means real estate agents, legal, accounting and trust firms, and dealers in precious metals and stones need to develop appropriate standards for fraud prevention and risk mitigation.

Ask the right questions to ensure the stringency of your risk mitigation program

There is a series of key questions that businesses should answer before they develop an AML | CTF program. These questions will help to develop an appropriate risk threshold for your particular organisation:

• What is the risk profile of our current customers?
• What level of money laundering and counter terrorism risk is associated with the services we provide?
• What methods do we use to deliver services which are classified as designated services under the Act?
• What foreign jurisdictions do we deal with and what is the risk profile associated with these countries?
• What risk is associated with the provision of designated services through permanent offices in foreign countries?

Understand the critical components of an AML | CTF program

AML | CTF programs have two key components:

1. Part A - General

2. Part B - Customer Identification

Part A: relates to the identification, management and reduction of risk as related to money laundering and terrorism financing. The systems and processes that need to be incorporated into this component of a compliance program include:

• Systems that can assess the risk of the products and designated services the business offers
• Employee and third party screening - this should be an ongoing process however in the first instance it must occur prior to engagement or employment in a relevant position 
• Employee and third party training - this should include an understanding of AML | CTF trends, risk-based processes and the consequences of non-compliance 
• Systems that allow for ongoing customer due diligence, including the monitoring of customer transactions.

Part B: relates to customer identification procedures. The systems and processes that need to be incorporated into this component of a compliance program include:

• Customer identification procedures which allow the business to be satisfied that the customer is who they say they are
• Systems that enable the collection of Know Your Customer (KYC) information.

Ensure your customer verification techniques will satisfy AML obligations - call D&B on 13 23 33 to find a solution that meets your needs.

More information about your obligations under the Act can be found at www.austrac.gov.au