Explanatory Statement – Amendment of Anti-Money Laundering and Counter-Terrorism Financing Rules Instrument 2007 (No. 1)

1.         Purpose and operation of Anti-Money Laundering and Counter-Terrorism Financing Rules (AML/CTF Rules) amending Chapter 39

Section 229 of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act) provides that the AUSTRAC Chief Executive Officer (AUSTRAC CEO) may, by writing, make AML/CTF Rules prescribing matters required or permitted by any other provision of the AML/CTF Act.

Amendment to Chapter 39

Chapter 39 of the AML/CTF Rules provides an exemption from the applicable customer identification procedure relating to premium funding loans for a general insurance policy.  Insurance premium funding involves a loan to a customer to pay for the premium of an insurance policy, where the lender and the insurer are not the same entity.

Currently, paragraph 39.3 of Chapter 39 will repeal the Chapter on 30 June 2011.  The amendment to Chapter 39 will extend the operation of the Chapter until 30 June 2012 while a review of the operation of the Chapter is undertaken by AUSTRAC.

2.         Notes on sections

Section 1

This section sets out the name of the instrument, i.e. the Anti-Money Laundering and Counter-Terrorism Financing Rules Amendment Instrument 2011 (No.4).

Section 2

This section specifies that Schedule 1 commences on the day after it is registered.

Section 3

This section contains the Schedule which amends Anti-Money Laundering and Counter-Terrorism Financing Rules Instrument 2007 (No.1) as follows:

Schedule 1

This schedule amends Chapter 39.  

3.         Notes on paragraph

Paragraph 39.3

This paragraph amends the date on which Chapter 39 is repealed from 30 June 2011 to 30 June 2012.

4.         Legislative instruments

These AML/CTF Rules are legislative instruments as defined in section 5 of the Legislative Instruments Act 2003.

5.         Likely impact

These AML/CTF Rules will have an impact on any reporting entity that provides a designated service covered by these AML/CTF Rules.

6.         Assessment of benefits

Chapter 39

The amendment to Chapter 39 will extend the exemption contained in Chapter 39 from 30 June 2011 to 30 June 2012.  This amendment will afford premium funders continued relief from the regulatory burden associated with conducting the applicable customer identification procedure relating to premium funding loans for a general insurance policy until 30 June 2012.

7.         Consultation

AUSTRAC has consulted with the Australian Taxation Office, the Australian Customs and Border Protection Service, the Australian Federal Police and the Australian Crime Commission in relation to these AML/CTF Rules.

AUSTRAC also consulted with the Insurance Premium Financiers of Australia, the industry body which represents reporting entities most directly affected by Chapter 39.

8.         Ongoing consultation

As AUSTRAC will be undertaking a review of the operation of Chapter 39, further consultation with relevant stakeholders on the operation of these AML/CTF Rules will be undertaken.