Name
Global FinTech Guide
Country _ Name
Australia
SectionTitle
KYC requirements
Body
The know your customer or know your client (KYC) guidelines and regulations for financial services require that professionals try to verify the identity, suitability, and risks involved with maintaining a business relationship.

Legal affairs

National regulatory framework regarding AML and effective date of the regulations

The Framework regarding Anti Money Laundering within the Australian Jurisdiction is the Anti Money Laundering and Counter-Terrorism Financing Act (CTH) 2006 (AML/CTF Act) and the Anti Money Laundering and Counter-Terrorism Financing Rules 2007 (AML/CTF Rules).

National regulator or relevant authority for AML controls

The Anti-Money Laundering regulator within Australia is the Australian Transaction Reports and Analysis Centre (AUSTRAC). They are a government agency responsible for ensuring compliance with the AML/CTF Act and Rules.

Customer Due Diligence

Conduct of a typical KYC identification process

The AML/CTF requires all reporting entities to apply the customer identification procedures to all customers. The standard to which identification is required will depend on the customer type and the risk attached. An individual person and a business will provide different documents, depending on the risk assessment made by the reporting entity. The entity is responsible for determining the risk and the level of identification documents they will accept.

For a person, generally, there are three acceptable types of documents if the documentation process is followed, being an original primary photographic identification document, an original primary non-photographic identification document such as a birth certificate, and an original secondary identification document. 

The KYC requirements for a business in Australia are at a minimum the full name of the company, registration status with ASIC, and either the ACN or ARBN. All beneficial owners (owns 25% or more) must also be identified. The standard for verification is that the reporting entity must be reasonably satisfied the customer exists. 

Both electronic and face-to-face documentation-based procedures may be used in Australia.

Possibility to meet customer due diligence requirements by relying on third parties who are obliged by law themselves to comply with AML regulations

Australian legislation does allow for a third party to be relied upon during the due diligence process. Section 37A of the AML/CTF Act permits for an entity to rely on the customer identification procedures of a third party on an ongoing basis where: 

  1. they have entered into a written agreement or arrangement known as a customer due diligence arrangement (CDD); and
  2. have reasonable grounds to believe that the reliable third party has appropriate AML/CTF systems in place to meet the requirements under chapter 7 of the AML/CTF rules, at the time the arrangement is entered.

Possibility to outsource customer due diligence by contract to other third parties who are not obliged by law to meet AML regulations and rely on these (e.g., WebID, IDnow, PostIdent)

If a third party does not meet the obligations under the AML/CTF Act, they are not suitable to provide customer due diligence.

Presence of a license or registration requirement for the third party in case of outsourcing customer due diligence

There is no requirement for the third party to hold a license or registration when carrying out a customer due diligence check. The requirements that must be met are those outlined in sections 37, 37A or 38 of the AML/CTF Act.

Further questions

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