1. 2-1 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev This is the prescribed textbook for your course. Available NOW at your campus bookstore!

2. 2-2 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev The Financial Transaction Reports Act 1988 and the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 Chapter 6

3. 2-3 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev Learning objectives At the end of this chapter you should understand: the objectives of the FTR Act and the AML/CTF Act to whom the Acts apply the types of transactions that must be reported the requirements that must be met for customer identification the penalties imposed by the Acts the impact of the Acts on businesses and trade the role of AUSTRAC in relation to the Acts.

4. 2-4 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev Introduction Object of the Financial Transactions Report Act 1988 (Cwlth): To assist in the detection of tax evasion and other criminal activity, such as corporate crime and the ‘laundering’ of money obtained from drug trafficking and organised crime.

5. 2-5 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev The Australian Transaction Reports and Analysis Centre (AUSTRAC) Body responsible for administering the Act: –Collects –Compiles –Analyses –Distributes information Makes information available to: –Australian Tax Office –Australian Federal Police –Australian Customs Service –National Crimes Commission –Australian Securities and Investments Commission

6. 2-6 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev Obligations and reporting requirements Cash dealers—s3(1): –Banks and building societies –Insurance and finance companies –Securities and futures dealers –Casinos, bookmakers and totalisator agency board (TAB) –Solicitors To report: –Cash transactions (i.e. the physical transfer of currency from one person to another of not less than $10 000 within Australia) –Suspect transactions Within: –1 or 2 days of suspect transaction –15 days of transaction involving Australian currency (1 or 2 days if suspect) –day after transactions involving foreign currency.

7. 2-7 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev Exemptions from the requirement to report Must involve a financial institution The transaction can be: –entered in an exemptions register –be in an exceptional category that is automatically exempt, e.g. withdrawals for payroll purposes.

8. 2-8 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev Reporting the importing and exporting of currency Where members of the community personally convey into or out of Australia, Australian currency or foreign currency not less than A$10 000, it must be reported to a customs officer at the time.

9. 2-9 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev Reporting on ‘suspect transactions’ Suspect transactions are those that cause the cash dealer to feel apprehensive or mistrustful about the transaction (non-cash and cash transactions), and may be relevant with respect to: –tax evasion or attempted evasion –an offence against the law of the Commonwealth or a territory –the Proceeds of Crimes Act 1987 (Cwlth). They must be reported as soon as practicable.

10. 2-10 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev Opening new accounts Signatory to account must be identified via: identification reference primary or secondary identification document.

11. 2-11 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev International funds transfer instructions Money transferred into or out of Australia: –Electronically –Telegraphically Requires reporting

12. 2-12 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev Identifying cash dealer Approved by director of AUSTRAC as a cash dealer who can verify the identity of signatories to accounts, utilising the 100 points system.

13. 2-13 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev Penalties for failure to comply Natural personBody corporate Failure to provide information Fine up to $5000 Imprisonment up to 2 yrs Fine up to $25 000 Breach of currency transfer requirements Fine up to $10 000 Imprisonment up to 5 yrs Fine up to $50 000 Opening bank account in false name Fine up to $5000 Imprisonment up to 2 yrs Fine up to $25 000 Contravention of Act Injunction

14. 2-14 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev Impact of the act on business and consumer trade Businesses wishing to open an account may find the requirements imposed by the Act time-consuming and difficult. Businesses may need to employ additional staff and give staff training to ensure compliance with the obligations imposed by the Act, which will increase the costs of operating a business.

15. 2-15 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev The Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cwlth) (AML/CTF Act) Objective of the AML/CTF Act: To bring Australia in line with international best practice in detecting and deterring money laundering and the financing of terrorism. It supplements the Financial Transactions Reports Act.

16. 2-16 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev To whom does the AML/CTF Act apply? Broadens the range of the FTR Act Includes the financial sector, the gambling sector, bullion dealers and other professionals or businesses providing ‘designated services’ ‘Designated services’ include: –opening an account –accepting money on deposit –making a loan –sending and receiving instructions on electronic funds transfers.

17. 2-17 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev Obligations imposed by AML/CTF Act on providers of designated services Extends reporting obligations for both significant cash transactions and suspicious transactions Broadens reporting requirements beyond just cash to include e-currency and bearer negotiable instruments Obliges providers to use risk assessment approach to monitoring transactions Introduces legally binding documented compliance programs: –Part A (General) –Part B (Customer Identification)

18. 2-18 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev Civil penalties for breach of AML/CTF Act Body Corporate—maximum $11 million All other cases—maximum $2.2 million

19. 2-19 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev AUSTRAC’s role under the AML/CTF Act AUSTRAC: –has expanded its role to include the administration of the AML/CTF Act –has supervisory, monitoring and enforcement functions –seeks to educate relevant industries to facilitate compliance and co-operation with the Act.