Obligations of Financial Service Providers in Money Laundering & Statement of Advice

2 Questions

Table of Contents
MAIN BODY..................................................................................................................................3
Q2. Obligations of Financial Service Providers in case of Money Laundering:.........................3
Q4. Statement of Advice:............................................................................................................5
REFERENCES................................................................................................................................1

MAIN BODY
Q2. Obligations of Financial Service Providers in case of Money Laundering:
Money laundering basically means conversion of illegally earned money to appear as have been
earned from legal sources (Chaikin, 2018). Now there are various parties involved in such money
laundering process and thus to keep a check on the financial service providers Australia’s
AML/CTF regulator – Australian Transaction Reports & Analysis Centre (AUSTRAC) is
responsible. Such financial service providers are called ‘reporting entity’ under the AML/CTF
Act. Following are the obligations that the reporting entities need to meet to minimise money
laundering –
 Compulsory registration with AUSTRAC within a period of 28 days of when a designated
service is provided.
 Implementation of AML/CTF Program which can be of 3 types like Standard program
(applicable to individual reporting entities), Joint program (applicable to those reporting
entities who are members of a ‘designated business group’) and Special program (applicable
only to Australian Financial Services Licence Holder providing a specified designated
service) (Spicer, 2018). It is to be noted that such AML/CTF programs consists of 2 major
parts namely – Part A (includes identifying, managing and reducing the risk of ML/TF which
does not includes operations of special program) and Part B (includes procedures relating to
the identification of the customers commonly known as KYC or know your customer).
 There is a risk involved in such activities therefore, AML/CTF are said to be risk based and
thus designated reporting entities shall know the various risks that they are exposed to while
carrying out their activities of transacting with the customers who have the motive of money
laundering or terrorism financing (Amour, 2019). Such risks can be assessed by taking into
consideration various factors like types of the customers the business have like how much
politically exposed they are, their sources of funds and their wealth, the nature of the
relationship with the business and also the purpose of such business relationship and the
complexity of the structure of the business of the customers of the business, types of goods or
services rendered by the businesses, channel of distribution utilized by the businesses to
provide the goods and services and the geography and the jurisdiction of the area in which
the business is operating.