Anti-Money Laundering & Counter-Terrorism Financing (AML/CTF) Broker information pack

Transcription

1 Anti-Money Laundering & Counter-Terrorism Financing (AML/CTF) Broker information pack Version November 2015

2 Purpose of the change The recent update to the Anti-Money Laundering and Counter-Terrorism Financing Rules (AML/CTF Rules) imposed a number of additional obligations on the financial sector aimed at preventing money laundering and the financing of terrorism. The primary purpose of the regulatory changes is to prevent money laundering and the financing of terrorism, by better understanding the ownership structure of our non-individual customers, and to bring Australia in line with international standards. Consequences of money laundering and terrorism financing 5% The Group and Licensees * Reputational damage and lack of consumer confidence * Fines and penalties from the regulator * Drop in share price Serious and organised crime is conservatively estimated to cost the Australian economy $17 billion each year Our Community * The consequences of illegal activities * Global and local terrorist attacks * Serious and organised crime Our customers * Victims of crime and violence * Financial instability * Threats to mental and physical well-being, including personal safety 2 Changes to Anti-Money Laundering & Counter-Terrorism Financing (AML/CTF) Broker Information pack V November 2015

3 Beneficial Owners The definition of Beneficial Owner has been expanded to include the concept of control. This means that any individual who owns or controls 25% or more of the customer, either directly or indirectly, is considered a Beneficial Owner. Product Providers also have an obligation to regularly review and update KYC information, including Beneficial Owners. Verifying Beneficial Ownership Proprietary companies 5% In the case of a proprietary company, Beneficial Owners must be identified and verified. Unregulated Trusts Unregulated Trusts All trustees are considered Beneficial Owners by virtue of control and must be identified and verified. 3 Changes to Anti-Money Laundering & Counter-Terrorism Financing (AML/CTF) Broker Information pack V November 2015

4 Beneficial Ownership Example 1 Beneficial Owner by virtue of ownership Company with various individuals as shareholders 5% A. 70% C. 5% Beneficial owner B. 25% Beneficial owner The Beneficial Owners who own or control 25% or more of the customer must be identified and verified according to our revised AML/CTF policies and procedures. 4 Changes to Anti-Money Laundering & Counter-Terrorism Financing (AML/CTF) Broker Information pack V November 2015

5 Beneficial Ownership Example 2 Beneficial Owner by virtue of control A. Company with individual shareholders all less than 25% E. B. 5% 20% No one qualifies as a beneficial owner by ownership, therefore, a beneficial owner by control must be identified. 20% D. C. 20% Beneficial Owner 20% 20% (For this company the Managing Director controls the company) 5 Changes to Anti-Money Laundering & Counter-Terrorism Financing (AML/CTF) Broker Information pack V November 2015

6 Beneficial Ownership Example 3 Beneficial Owner by virtue of ownership Company with individuals and a company as shareholders - all equal shares The four individual beneficial owners must be identified and verified according to our revised AML/CTF policies and procedures. ABC Pty Ltd XYZ Pty Ltd D. 25% A. 25% Beneficial Owner B. 25% Beneficial Owner C. 25% Beneficial Owner E. 100% Shareholder of XYZ Pty Ltd 25% Beneficial Owner 6 Changes to Anti-Money Laundering & Counter-Terrorism Financing (AML/CTF) Broker Information pack V November 2015

7 Beneficial Ownership Example 4 Beneficial Owner by virtue of control F. Trust All trustees must be identified and verified. The settlor name needs to be collected and verified against the trust deed where the amount settled is equal to or greater than $10,000. Settlor If the settlement amount is equal to or greater than $10,000. A. B. C. D. E. 7 Trustee Trustee Trustee Beneficiary Beneficiary Changes to Anti-Money Laundering & Counter-Terrorism Financing (AML/CTF) Broker Information pack V November 2015

8 Settlor of Trust The Settlor of a Trust is the natural person or legal entity who sets up the Trust and signs the Trust Deed to create the trust. In Australia, the Settlor is usually someone in an accountant or lawyer s office and generally has no further involvement in the affairs of the trust. 5% With the updated regulations, if the settlement amount of the Trust is $10,000 or more, we are required to collect the full name of the Settlor and verify the name against the name in the trust deed. There are some exceptions, for example if the Settlor is deceased. 8 Changes to Anti-Money Laundering & Counter-Terrorism Financing (AML/CTF) Broker Information pack V November 2015

9 How are we supporting you? New questions and fields in online applications Customer Identification Checklists Comm Bank MFAA/FBAA Customer Service Partner Support To provide the necessary information required under AML/CTF regulatory changes New customer identification checklists outline what information and documentation needs to be collected and what documentation can be used to verify identification. The checklists will be available on commbank.com.au from November Presented at a number of upcoming broker professional development days to ensure the brokers understand what the changes are and how it impacts you We are working with the industry bodies to ensure our training is aligned and the right standards are met All CommBank websites including CommBroker are being reviewed and will be updated to reflect the changes to AML/CTF Our goal is to limit the impact to brokers and maintain the current level of customer and broker partner service 9 CommBank Support Changes to Anti-Money Laundering & Counter-Terrorism Financing (AML/CTF) Broker Information pack V November 2015

10 10 Appendix: Additional Beneficial Owner Case Studies

11 Individuals

12 Individuals Part A: Determining the Beneficial Owner(s) Q. Who is the Beneficial Owner of an individual? A. In the majority of cases, the individual opening the account, is the beneficial owner. B. However, there may be some reasonable grounds to consider that another person controls the customer & is subject to KYC. This could include: A parent/guardian of a minor A person appointed under a Power of Attorney Enduring Power of Attorney/guardian for an incapacitated person Part B: Collection and Verification of information Note: Beneficial owners should be identified and verified in accordance with the KYC procedure for individuals. COLLECTED Full name Residential address Date of birth Occupational/Industry code Beneficial Owner (where applicable) VERIFIED Full name Residential address or Date of Birth 12

13 Sole Traders

14 Sole trader Account Signatory A John Smith t/a John s Plumbing John Smith B Part A: Determining the Beneficial Owner(s) Q. Who are the Beneficial Owners of John Smith trading as John s Plumbing who need to be identified and verified? A. Person B - John Smith Signatories are not necessarily controllers, but are still required to be identified and verified, following existing procedures. For sole traders, you can assume the individual is the Beneficial Owner, unless there are reasonable grounds to consider otherwise. Part B: Collection and Verification of information COLLECTED Full name Residential address or principal place of business Date of birth Occupational/Industry code Full business name (if any) Australian Business Name (if any) VERIFIED Full name Residential address or Date of Birth 14

15 Domestic Proprietary Companies:

16 Domestic proprietary company (example 1) Company with individuals as shareholders Part A: Determining the Beneficial Owner(s) ABC Pty Ltd Q. Who are the Beneficial Owners of ABC Pty Ltd who need to be identified and verified? A. Person A and B both own 25% or more of the company A B Beneficial Owners - Companies In the first instance identify all individuals that own, directly or indirectly, 25% or more of the company If no person owns 25% or more, identify each person who controls 25% or more of the shares (for example, through voting rights) If no person who owns or controls 25% or more of the company can be identified, identify and verify the natural person who exercises primary control through the position they hold, i.e. strategic/financial decision maker. e.g. Managing Director, CEO or equivalent. 50% 50% 16

17 Domestic proprietary company (example 2) Company with individuals as shareholders ABC Pty Ltd Part A: Determining the Beneficial Owner(s) Q. Who are the Beneficial Owners of ABC Pty Ltd who need to be identified and verified? A. Person A and B both own 25% or more of the company A B C Beneficial Owners - Companies In the first instance identify all individuals that own, directly or indirectly, 25% or more of the company If no person owns 25% or more, identify each person who controls 25% or more of the shares (for example, through voting rights) If no person who owns or controls 25% or more of the company can be identified, identify and verify the natural person who exercises primary control through the position they hold, i.e. strategic/financial decision maker. e.g. Managing Director, CEO or equivalent. 70% 25% 5% 17

18 Domestic proprietary company (example 3) Company with individuals as shareholders ABC Pty Ltd F Part A: Determining the Beneficial Owner(s) Q. Who are the Beneficial Owners of ABC Pty Ltd who need to be identified and verified? A. Person F - the natural person who exercises primary control. There is no person who owns 25% of the company or controls 25% or more of the company. A CEO B C D E e.g. 20% 20% 20% 20% 20% Beneficial Owners - Companies In the first instance identify all individuals that own, directly or indirectly, 25% or more of the company If no person owns 25% or more, identify each person who controls 25% or more of the shares (for example, through voting rights) If no person who owns or controls 25% or more of the company can be identified, identify and verify the natural person who exercises primary control through the position they hold, i.e. strategic/financial decision maker. Managing Director, CEO or equivalent. 18

19 Domestic proprietary company (example 4) Company owned by another domestic proprietary company 100% ABC Pty Ltd XYZ Pty Ltd Part A: Determining the Beneficial Owner(s) Q. Who are the Beneficial Owners of ABC Pty Ltd who need to be identified and verified? A. Persons A, B, C, and D each person indirectly owns 25% or more of ABC Pty Ltd. Company XYZ Pty Ltd is 100% owned by Company ABC Pty Ltd. Company XYZ Pty Ltd has Persons A, B, C and D, who each own 25% of shares in Company XYZ Pty Ltd. Therefore, Persons A,B,C and D are indirect owners of ABC Pty Ltd, each owning 25% of the shares. Indirect ownership of ABC Pty Ltd 19 A B C D 25% 25% 25% 25% 25% 25% 25% 25% If one or more shareholder is a non-individual, who owns 25% or more, for example a company, you must identify and verify that partner, as per the relevant KYC procedures for a company and then identify the individual beneficial owners of that company. Beneficial Owners - Companies In the first instance identify all individuals that own, directly or indirectly, 25% or more of the company If no person owns 25% or more, identify each person who controls 25% or more of the shares (for example, through voting rights) If no person who owns or controls 25% or more of the company can be identified, identify and verify the natural person who exercises primary control through the position they hold, i.e. strategic/financial decision maker. e.g. Managing Director, CEO or equivalent.

20 Domestic proprietary company (example 5) Company with multiple domestic proprietary companies as shareholders CEO A ABC Pty Ltd X Pty Ltd Y Pty Ltd Z Pty Ltd 5% 25% 70% B A 100% B C 100% D 50% C 50% Indirect ownership of ABC Pty Ltd 5% 25% 35% 35% E Part A: Determining the Beneficial Owner(s) Q. Who are the Beneficial Owners of ABC Pty Ltd who need to be identified and verified? A. Persons C, D and E each own 25% or more of the company Person C owns 25% (calculated as 100*25/100=25) of ABC Pty Ltd Person D owns 35% (calculated as 50*70/100=35) of ABC Pty Ltd Person E owns 35% (calculated as 50*70/100=35) of ABC Pty Ltd There is no need to look for the controller (e.g. CEO) as Beneficial Owners by shares have been identified Beneficial Owners - Companies In the first instance identify all individuals that own, directly or indirectly, 25% or more of the company If no person owns 25% or more, identify each person who controls 25% or more of the shares (for example, through voting rights) If no person who owns or controls 25% or more of the company can be identified, identify and verify the natural person who exercises primary control through the position they hold, i.e. strategic/financial decision maker. e.g. Managing Director, CEO or equivalent. 20

21 Domestic proprietary company Part B: KYC information to be collected and verified What information needs to be COLLECTED, in addition to the beneficial owner requirements? Full company name (as registered with ASIC) Full address of the company s registered office address Full address of the company s principal place of business (if any) Australian company number issued to the company Whether the company is registered with ASIC as a proprietary company The name of each director of the company Industry code (where possible) What information needs to be VERIFIED, in addition to the beneficial owner requirements? Full company name (as registered with ASIC) Australian company number issued to the company Whether the company is registered with ASIC as a proprietary company What DOCUMENTATION can be used to verify the KYC information? ASIC company or business searches ASIC Certificates of Incorporation or business name registration in the previous 12 months 21

22 Trusts

23 Unregulated Trust (example 1) Discretionary trust with individuals as trustees Settlor D Trustee A Smith Family Trust Trustee B C Beneficiary Part A: Determining the Beneficial Owner(s) Q. Who are the Beneficial Owners of Smith Family Trust who need to be identified and verified? A. Person A and B. For Unregulated Trusts, all Trustees are Beneficial Owners, by virtue of control. The Trustees control the property or assets in the Trust. Beneficiary C is not a Beneficial Owner in this case, as they don t have control over the trust. Part B: KYC information to be collected and verified What information needs to be COLLECTED, What information needs to be VERIFIED, in in addition to the beneficial owner addition to the beneficial owner requirements? requirements? Full name of the trust The full name of the Settlor of the trust, if the settlement amount is $10,000 or more (unless the settlor is deceased)* The type of trust The country in which the trust was established Full name of each beneficiary of the trust or if beneficiaries are identified by reference to a class, details of the class Occupation code/industry Code Full name of the trust The full name of the Settlor of the trust, if the settlement amount is $10,000 or more (unless the settlor is deceased)* What DOCUMENTATION can be used to verify the KYC information? A Trust Deed, certified copy or certified extract of the trust deed which must include the name of the Trust, Trustees, Beneficiaries and Settlor (where applicable) 23

24 Unregulated Trust (example 2) Discretionary trust with both individuals and a private company as trustees D The Smith Family Trust Part A: Determining the Beneficial Owner(s) Q. Who are the Beneficial Owners of Smith Family Trust who need to be identified and verified? A. Persons A, B, and C as they are all Beneficial Owners of The Smith Family Trust. Persons A and B are direct Beneficial Owners and Person C is an indirect Beneficial Owner. Person C is a direct beneficial owner of ABC Pty Ltd, which is a trustee of The Smith Family Trust. ABC Pty Ltd is not subject to SVP, therefore you must ID&V all its beneficial owners. For unregulated trusts, all Trustees are Beneficial Owners of the Trust. Where the Trustee is a company, apply the relevant company KYC procedure to the corporate trustee including identifying the corporate trustee s beneficial owners. Settlor Part B: KYC information to be collected and verified ABC Pty Ltd What information needs to be COLLECTED, in addition to the beneficial owner requirements? What information needs to be VERIFIED, in addition to the beneficial owner requirements? Full name of the trust Full name of the trust Trustee A Trustee B Trustee C 100% The full name of the Settlor of the trust, if the settlement amount is $10,000 or more (unless the settlor is deceased)* The type of trust The country in which the trust was established Full name of each beneficiary of the trust or if beneficiaries are identified by reference to a class, details of the class Occupation code/industry Code The full name of the Settlor of the trust, if the settlement amount is $10,000 or more (unless the settlor is deceased)* What DOCUMENTATION can be used to verify the KYC information? A Trust Deed, certified copy or certified extract of the trust deed which must include the name of the Trust, Trustees, Beneficiaries and Settlor (where applicable) 24

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