Preparing for the Anti-Money Laundering Review

When the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF) was first established, obligations were placed on reporting entities across the financial, gambling, money transfer and bouillon sectors in a bid to combat money laundering and the financing of terrorism.

In 2016, Austrac tightened the AML/CTF legislation around implementation of Ongoing Customer Due Diligence (OCDD) processes.

As part of OCDD, reporting entities are required to review all customers and categorise them according to their risk, measured as low, medium and high. Depending on the risk category, review periods are put in place to ensure that customer information is still correct, as well as determining whether a customer could have gone up a risk category. Typically, high-risk companies are reviewed every year, medium-risk companies every three years, and low-risk companies every five years.

In January 2019, the three-year anniversary will be looming for many organisations, meaning their medium-risk customers are due for review. In light of the recent Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, organisations, particularly banks, are being urged to review their medium-risk customers sooner rather than later.

As anyone working in the financial services industry knows, a lot can change in three years. However, often these changes are not obvious. For example, a company may have new beneficial owners, but lenders may be none the wiser about the fact that the company has changed hands.

Although many changes in company structures or partnerships are benign, in some cases they may cause a customer to go up a risk category. This increases banks’ and lenders’ risk exposure – especially if they’re not aware that any change has occurred.

In order to prepare for all possible contingencies around AML, it’s important to act now – it’s a lengthy process to review customers and leaving it to the last minute can have dire consequences.

Reporting entities that find themselves approaching their three-year deadline should be putting their strategy for re-examining their medium-risk customer base in place now so they have the right tools available to them when the time comes. With a number of product solutions, Equifax is able to guide businesses through the AML lifecycle, including the implementation of OCDD process to keep on top of any changes to customers.

To find out more about our AML/CTF compliance solutions, email us.