Amendments to Australia's Anti-Money Laundering and Counter Terrorism Financing (AML/CTF) legislation are coming into final effect on 1 January 2016. These changes apply to all financial services provided in Australia. This includes Equity Trustees' Managed Funds. Equity Trustees is fully compliant with these AML/CTF requirements, and we have been in regular contact with all service providers to ensure all fund services are compliant by this deadline.

What is the effect of these changes?

The amendments primarily relate to increased Customer Due Diligence (CDD) when identifying clients. There are two main AML/CTF changes relevant to Equity Trustees which must be incorporated by 1 January 2016:

  1. All beneficial owners (not just the initial investor) of transactions must be verified
  2. Politically Exposed Persons (PEPs) must be identified and managed accordingly

Examples of beneficial owners include:

  • Trusts: any individual who has a 25% or more interest in the Trust, or controls the Trust. This includes the appointor of the Trust, beneficiaries with at least a 25% interest in the Trust, and a settlor who pays at least $10,000 towards the establishment of a trust.
  • Company: any person who controls the company or is authorised to sign on its behalf (for example a director or executive officer), as well shareholders with at least a 25% shareholding in the company.

Implementation

Most Equity Trustees Managed Funds were already compliant in identifying underlying beneficiaries and PEPs. Beneficial owners were previously required on Equity Trustees application forms, but must now provide verification documents. In addition, many Equity Trustees service providers had already been identifying and managing PEPs as part of their existing sanctions checking process.

Equity Trustees have been in regular contact with service providers through the year in order to help them through this transition and monitor their ability to meet the 1January 2016 deadline.

In order to implement this, the standard Equity Trustees application form was updated in May 2015, to reflect the need for beneficial owner information and documents from investors. Also, an Equity Trustees AML/CTF Procedure was introduced to reflect verification requirements for beneficial owners and a management procedure for dealing with PEPs. During the initial investigation stage, it was also established many providers were already performing PEP checks. This was part of their existing sanction checking process (since many Australian sanctions systems already included PEP checks prior to the AML/CTF amendments).

Email correspondence was sent out to all providers in May advising of the upcoming changes, Equity Trustees fund requirements, and confirmation providers had a transition plan in place. Most providers advised they were still in the early processes of developing new services for their clients at this stage, so we kept regular correspondence and then began chasing up formalisation of provider compliance in early October. We have currently received recent responses from all service providers on their current status. The majority of providers have been attested to their full compliance and we are now finalising outstanding service provider offerings.

Contacts

Please contact the Equity Trustees' Corporate Trustees Services or Enterprise Risk staff below if you have any concerns or questions about the AML/CTF process.


In addition, Equity Trustees' AML/CTF Procedure is available upon request. This document forms part of Equity Trustees' AML/CTF Program and provides a useful summary of the financial services provided by Equity Trustees and the verification requirements for particular client types.
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