Australian Military Bank is required to conduct a risk assessment, and then work to improve its KYC, transaction monitoring, EDD, and reporting systems.
AUSTRAC has issued a remedial direction to Australian Military Bank (AMB), requiring the mutual bank to review and uplift its compliance with Australia’s AML/CTF laws.
The action follows ongoing regulatory engagement with the bank, which identified concerns related to the effectiveness of its AML/CTF systems and controls.
The remedial direction requires AMB to conduct an ML/TF risk assessment of its business, with the assistance of an independent auditor, within 10 weeks, i.e. by 12 July.
A report prepared by the auditor of the risk assessment must be submitted to AUSTRAC.
Within six months of submitting the risk assessment report, AMB is required to
- design, document and implement systems and controls appropriate to its ML/TF risks, including for ongoing quality assurance and record keeping. This includes measures to improve the collection and verification of KYC information, transaction monitoring programme, and enhanced customer due diligence programme.
- review, document and address deficiencies in its risk awareness training programme, particularly in relation to beneficial owners and PEPs (politically exposed persons).
- review its governance and oversight arrangements relating to its AML/CTF obligations and fix any deficiencies to ensure its senior management and board maintain active ongoing oversight.
- review its obligations relating to the reporting of suspicious matters, threshold transactions, and IFTIs (international funds transfer instructions) – and design, document and implement appropriate systems and controls to ensure compliance with reporting obligations.
A report on each of the above reviews must be sent to AUSTRAC within two weeks of their completion.
A second independent auditor needs to be appointed to assess whether AMB has implemented measures and addressed any deficiencies in its compliance. A report of the assurance review, prepared by the second auditor, must be submitted to AUSTRAC within three months of the appointment.
“The Australian Military Bank has demonstrated a commitment to uplifting its AML/CTF controls,” said AUSTRAC chief Nicole Rose. “It is encouraging that AMB has already started implementing a remediation action plan and this remedial direction will help to ensure AMB meets its compliance and reporting obligations.”
In 2019, AUSTRAC released Australia’s mutual banking sector risk assessment which found the overall money laundering and terrorism financing risk for the industry is ‘medium’. The report also provides information and guidance to support mutual banks to assess their level of risk, strengthen their controls and report suspicious activity to AUSTRAC.
The remedial direction issued to AMB is available in full here.