Changes to customer due diligence requirements under the Second Exposure Draft AML/CTF Rules

Changes arising in the Second Exposure Draft AML/CTF Rules (ED2 Rules) include changes to customer due diligence including some relaxation on the timing of due diligence involving low risk trusts and deemed compliance in mergers and acquisitions.

Substantial updates to the ED2 Rules include:

• The requirement for collection and verification of place of birth for individuals has been removed.

• Delayed verification for reporting entities for designated services in relation to beneficiaries of trusts, beneficial owners and other matters specified in the ED2 Rules in defined circumstances.

• Reporting entities do not need to undertake beneficial ownership due diligence where:

  • it establishes a customer is, or is controlled by:

    • a government body; or

    • an entity that is subject to oversight by a prudential, insurance, or investor protection regulator through registration or licensing requirements; or

    • a corporation or association of homeowners in a strata title or community title scheme; or

    • a listed public company that is subject to public disclosure requirements (however imposed) that ensure transparency regarding the identity of any beneficial owners; and

  • the ML/TF risk of the customer is low and none of the triggers for enhanced customer due diligence under section 32 of the Amended AML/CTF Act applies.

• Deemed compliance where a reporting entity is involved in mergers or acquisitions.