Anti Money Laundering And Counter Terrorism Financing Act Policy Panania Diggers
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Identify the designated services your club provides
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Identify the AML/CTF risk area/behaviour associated with the designated services your club provides
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Assess the AML/CTF risk posed
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Collect and verify the identity of persons receiving the services
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Implement programmes/procedures to mitigate the risk of money laundering/terrorism financing
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Ensure oversight of the programme by the Club Board and senior management and implement an independent review process
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Implement a Suspicious Activity programme
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Implement procedures to ensure the information and records accumulated as a result of the AML/CTF programmes comply with privacy, secrecy and storage requirements
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Threshold Transaction reporting programme/process
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AML/CTF Program Review Checklist
1. Identify the designated services your club provides:
Designated services provided by the Club are ‘gambling services’. That is, prize payments resulting from wins or accumulated credits on gaming machines or wagering.
2. Identify the AML/CTF risk area/behaviour associated with the designated services your club provides:
In both gaming machine and wagering, money laundering activity involves use of the gaming machine or Tab wagering facility to establish a verifiable transaction (payout) that is used to disguise the origin of the money and give an appearance that the money has been acquired as a prize that has been won as a result of “normal” gaming machine or wagering activity including-
Activity involving third party purchase of significant prize or payout entitlements.
The most common reported money laundering related activity likely to present itself in clubs involves a person (“third party”), different from the person, who placed the bet(s) and won the prize(s), i.e. the actual prize-winner, offering to purchase the prize for cash. The prizes are usually larger prizes with a value of more than a few hundred dollars and can involve linked jackpot or standalone machine prizes.
With the gradual proliferation of ticket in ticket out technology, purchase and redemption of higher value tickets is also likely to provide an opportunity for money laundering activity. Any indication of this activity should be treated as suspicious and should be further investigated.
Such activity is likely to take place without any knowledge of the club management or its staff and the club may only be alerted if outside information is received, staff that happen to witness an event or it is identified by examination of video surveillance records where these are available.
Another scenario might involve collusion between staff and the money launderers to facilitate such activity. This could take the form of staff alerting the money launderer to significant payout situations and facilitating the introduction of the money launderer to the prize winner or simply not reporting suspicious activity to management.
It is likely that such occurrences are infrequent but clubs should still assess the risk posed in their particular case.
Activity involving “abnormal” play and credit redemption i.e. cancelled credit/ticket out.
A typical scenario involves a player(s) inserting significant amounts of cash and after minimal or no play redeeming the playing credit and in the process acquiring a club cheque or cash and establishing a record of the transaction.
Unless more sophisticated electronic monitoring techniques are available this type of behaviour is difficult to detect and requires more detailed investigation to substantiate. It is also likely that this type of activity is infrequent.
Where a player inserts cash and redeems the credit with minimal or no play suspicion would be aroused if an unusually high number of redemptions over a relatively short period of time had taken place and when taken together amounted to a significant amount of money.
Where a player inserts large amounts of cash and turns over (bets) the money or a bets a significant portion of the money by playing the gaming machine then unless there is other independent intelligence/information available it is difficult to conclude that the activity is suspicious.
If there are reasons to suspect that money laundering is occurring and where clubs have electronic player tracking systems and individual player activity can be identified, there is some ability to analyse the data collected to support or dismiss any suspicions. For example it may be possible to review the history of time spent playing in relation to turnover, wins and cancelled credit/money-out records to support or dismiss suspected abnormal behaviour.
In the absence of such information the club would need to rely on independent information which makes the task of confirming suspicious activity due to this type of behaviour difficult.
Multiplayer games
The principle is to attempt money laundering through games of chance where it is possible to distribute the bets so as to cover multiple winning combinations. The expectation is that over a long period of time and a significant amount of money bet the amount won is likely to be an amount equal to that invested minus the “house edge”.
On games where players can readily bet against each other and the house e.g. multiterminal gaming machines (MTGMs) with games such as roulette there is an increased potential to launder money. While not necessarily restricted to MTGMs e.g. a standalone machine with a roulette game could provide a similar facility, it is much less likely as the MTGM bet limit is higher as well as accommodating more than one player which can allow organised groups to undertake the activity.
Spinning reel machines do not readily facilitate this type of activity and if used would involve a significantly higher level of overall risk for the money launderer.
An illustrative example might involve two players conspiring to launder money using a roulette type MTGM. They could undertake a playing session where one bets on say red and the other on black. At the conclusion of the session it is reasonable to expect, although it is not certain, that the amount of money won by both players would sum to be about the same as the bets made (turnover) minus the expected return to venue. Of course a single player could achieve the same
result but distributing over a number of players makes the process more efficient and can reduce the likelihood of suspicion.
This activity is difficult to detect unless independent information regarding the players is available and/or their behaviour is significantly different from that normally expected.
Stolen or counterfeit money
In these cases the motivation is to exchange the stolen or counterfeit money for legal currency with or without a transaction record.
Depending on the circumstances, note acceptors may not be able to discriminate between stolen or counterfeit notes and unless there are other reasons to suspect abnormal behaviour e.g. a large amount of money deposited in the gaming machine and redeemed with minimal or no play or other reasons to suspect the players intentions such as unusual behaviour, then this activity is unlikely to be detected until the cash held in the machine is cleared and counted.
An example of this activity in NSW involves the discovery of stolen notes in gaming machines. The notes were marked with dye but the extent of the marking did not allow the note acceptor to reject the notes.
Wagering
Tabcorp has prepared AML/CTF material for clubs. This material is incorporated into the TAB operation manual and should be referred to as part of this document.
3. Assess the AML/CTF risk posed:
The AML/CTF Rules state that in identifying its ML/TF risk a reporting entity must consider the risk posed by the following factors:
- its customer types, including any politically exposed persons;
- the types of designated services it provides;
- the methods by which it delivers designated services; and
- the foreign jurisdictions with which it deals.
The risk level of AML&CTF activity for Panania Diggers is assessed as low.
4. Collect and verify the identity of persons receiving the services:
In the case of an individual, a club must have a program/process in place to collect and verify the identity of any person who receives a payout for an amount of $10,000 or more. The information must consist of:
- the customer’s full name;
- the customer’s date of birth; and
- the customer’s residential address.
This information must be collected using reliable sources.
AML/CTF Rules provide for a “documentation based safe harbour” process. Safe harbour identification consists of:
- verifying the customer’s name and either the customer’s residential address or date of birth, or both, from:
- (a) an original or certified copy of a primary photographic identification document e.g.drivers licence or passport (with photograph); or
- (b) both:
- (i) an original or certified copy of a primary non-photographic identification document e.g. birth certificate; and
- (ii) an original or certified copy of a secondary identification document e.g. Australian Taxation Office assessment notice (less than 12 months old), rate electricity bill (less than 3 months old); and
- verifying that any document produced by the customer has not expired (other than in the case of a passport issued by the Commonwealth that expired within the preceding two years). The “safe harbour” identification standard needs to be applied to wagering and gaming machine payouts for amounts of $10,000 or more.
Panania Diggers already have an established recording process for gaming machine prize payouts e.g. recording cancelled credits or gaming machine “tickets” however you must ensure that records are made of the customer’s full name, date of birth and residential address, utilising reliable sources where the transaction amount is $10,000 or more.
Tab payout transactions of $10,000 or more are also affected and your Tab operation manual will have further information on procedures you should follow.
Responding to discrepancies
From time to time clubs may encounter a discrepancy with the documentation produced by customers or insufficient documentation to meet AML/CTF requirements.
The AML CTF Rules require a club to have a program/process in place that will assist the club to be “reasonably satisfied that the customer is the person that he or she claims to be”.
A suggested approach is to implement a process with the following features:
- withhold the payout until such time as satisfactory identification is produced.
- consider whether there are any grounds for generating a suspicious activity report.
5. Implement programmes/procedures to mitigate the risk of money laundering/terrorism financing:
Management should ensure that new staff deployed in gaming or wagering areas are made aware or existing staff are refreshed about:
- Procedures applying under state legislation regarding entry requirements i.e. identification and sign in procedures;
- Procedures under state legislation regarding prize payment procedures i.e.identification and records to be kept;
- Specific AML/CTF requirements for identification applying to payouts over $10,000 (see “safe harbour” identification requirements).
- Awareness and reporting of “suspicious” activity to the compliance officer or designated management persons. This includes awareness of requirements related to privacy and secrecy.
- Awareness that a maximum penalty of 100,000 units ($11 million) for a company and 20,000 units ($2.2 million) for a person can be incurred if the CEO of AUSTRAC undertakes proceedings in the Federal Court and a civil penalty order is issued. Panania Diggers will review the need for additional training on an annual basis.
6. Ensure oversight of the programme by the Club Board and senior management and implement an independent review process:
The Compliance Officer is the Chief Executive Officer. The AML/CTF rules require that the Board approve and provide continuing oversight of the program. Panania Diggers will report to the Board yearly.
The AML/CTF Act and Rules place a requirement on reporting entities for a process that incorporates independent program review. Panania Diggers will implement a review process annually consisting of a “check list – tick box” approach (Attachment 1) to ensure that:
- State requirements relating to gaming machine and wagering payouts are in place and observed;
- Federal legislative obligations arising from AML/CTF suspicious activity and information collection/recording are in place and observed.
7. Implement a Suspicious Activity programme:
The Chief Executive Officer will oversee completion, dispatch and storage/privacy of Suspicious Activity Reports.
The Suspicious Activity Report will contain the following information:
- A description of the “reasonable grounds” used to form the suspicion.
- If known, the full name, address and telephone number, occupation, citizenship, of the individual and the documentation used to establish the identity.
- If the identity is not known then a description of the person and availability of any video information or other documentation that could be used in assisting to identify the individual.
8. Implement procedures to ensure the information and records accumulated as a result of the AML/CTF programmes comply with privacy, secrecy and storage requirements:
Record Keeping
In relation to designated services clubs are required to keep records of:
- Their AML/CTF program It’s initial adoption of the program this is noted in the Board minutes. Any subsequent changes to the program should also be noted at the time the changes are adopted. A copy of the program should be stored and kept.
- Suspicious Activity and Threshold Transaction (if any) reports. From time to time clubs may generate suspicious activity reports. Records of the Reports must be kept securely and attention is drawn to the need for privacy and secrecy.
- Records of transactions with a value of $10,000 or more.
Under AML/CTF Act “Identification” requirements transactions with a value of $10,000 or more must use “reliable documentation” to identify the customer and
make a record of the transaction. Records must be readily accessible, may be kept as hardcopy or electronic and must be kept for a period of 7 years.
Privacy and Secrecy
All clubs considered reporting entities under the AML/CTF Act will have obligations under the Privacy Act 1988. The obligations only apply in relation to AML/CTF activities, that is, information related to suspicious activity reports, records of payouts for amounts of $10,000 or over and threshold transaction reports (if any) need to be kept secure, up-to-date and de-identified when no longer needed.
Under National Privacy Principle 6 ‘access and correction’ businesses are required to provide individuals with access to all personal information held on that individual by the business. However, the secrecy obligations under the AML/CTF Act override this obligation.
In relation to Secrecy (“tipping off”) the AML/CTF Act requires that:
A reporting entity must not disclose that it has:
- (a) reported, or is required to report, information to the AUSTRAC CEO under section 41 or
- (b) formed a suspicion, under section 41, about a transaction or matter.
It is suggested that clubs include a statement such as “This club may collect personal information in order to comply with obligations under the AML/CTF Act. The personal information collected will be kept secure at all times and only passed on to external bodies if required or authorised by law” in their privacy policy statement.
9. Threshold Transaction reporting programme/process:
Threshold transactions are defined as transactions of $10,000 or more where the transaction utilises “physical currency” or “e-currency”. Electronic Funds Transfer (EFT) to a bank account nominated by a customer is not regarded as “e-currency”.
Gaming Machine Threshold Transactions
In relation to gaming machine payouts most Australian states and territories legislate the maximum cash payout with the balance being paid by cheque or EFT. The maximum legislated cash payout levels are significantly below the $10,000 threshold. This means that most clubs will never be required to submit a “threshold transaction report” that arises from gaming machine transactions.
Wagering Threshold Transactions
In the case of wagering payouts (ClubTab) it may be possible to trigger the threshold transaction reporting requirements unless the operational processes/procedures preclude cash transactions of $10,000 or more. Clubs will receive further information on wagering transactions from their respective Tab service providers or the Tab operations manual.
Timeframe for Reporting Threshold Transactions
Within 10 business days and in a form approved by AUSTRAC, a club must report a threshold transaction.
It should be noted that while most clubs are not likely to encounter situations where a threshold transaction reporting process will be required, there are still obligation to collect information for transactions for amounts of $10,000 or more.