Australia's Comprehensive Guide on KYC Requirements (2024)
In the realm of financial compliance, Australia has taken significant strides to strengthen its Anti-Money Laundering (AML) regime. The Anti-Money Laundering Counter Terrorism Financing Act (AML/CTF Act) serves as the cornerstone of these efforts, outlining regulations for various entities and setting requirements for them.
Know Your Customer (KYC): The Foundation of AML Compliance
At the heart of AML compliance in Australia is the KYC process. This procedure involves obtaining and verifying a customer's identity, whether an individual or a business.
For Individuals:
The core information required for KYC includes the individual’s full name, date of birth, and residential address. Verification is typically done by checking a government-issued ID such as a driver's license or passport, and confirming the photograph matches the customer. Reporting entities then assess the individual's risk of money laundering, terrorism financing, and proliferation financing based on the verified KYC data.
For Businesses (Corporate Customers):
For businesses, the initial customer due diligence (CDD) involves collecting the company’s full name, Australian Business Number (ABN), and registered address. Additionally, for proprietary companies, the names of each director and shareholders holding 25% or more of the shares must be collected. Verification involves confirming details by referencing the company’s ASIC registration or business registries.
Businesses must also conduct risk assessments encompassing the likelihood of money laundering or terrorism financing related to the business customer and their associated individuals.
Verification and Risk Assessment: A Comprehensive Approach
KYC for both individuals and businesses is part of a broader AML compliance regime where entities identify and verify customers, assess risk profiles, and implement ongoing monitoring. Enhanced Due Diligence (EDD) applies especially to higher-risk clients, potentially including clients in sensitive industries or from higher-risk jurisdictions. This may involve assessing sources of funds, transaction patterns, and involvement of politically exposed persons (PEPs).
Meeting Regulatory Requirements in Australia
To meet Australian regulatory requirements, companies need to conduct due diligence checks, including KYC, monitoring of user behavior/transactions, reporting, and recordkeeping. They must also provide tools for Customer identification, Liveness check, Verification, Address verification, Risk scoring, and AML screening.
Moreover, companies in Australia must appoint a Money Laundering Reporting Officer (MLRO) and report suspicious activity as Suspicious Matter Reports. They must also keep records for at least seven years from the end date of a business relationship or final transaction.
In the digital age, eKYC solutions can process documents automatically, streamlining the KYC process while maintaining regulatory standards.
The Financial Action Task Force has commended Australia for strengthening its AML regime, and the country continues to improve how risk-based supervision is undertaken in the financial sector. This commitment to combating financial crime ensures a safer and more transparent financial system for all Australians.
- The Financial Action Task Force has commended Australia for its efforts in the industry of banking and insurance, particularly in the strengthening of its Anti-Money Laundering (AML) regime, which includes the foundation of KYC for both individuals and businesses in personal-finance and wealth-management.
- In the realm of AML compliance, entities in Australia, such as those operating in the business sector, are required to conduct due diligence checks that include KYC, monitoring of user behavior/transactions, reporting, and recordkeeping, and moreover, appoint a Money Laundering Reporting Officer (MLRO) and report suspicious activity.
- For businesses seeking to invest in Australia, the AML/CTF Act outlines regulations and sets requirements for them, ensuring thorough initial customer due diligence (CDD) involving the collection of key information like the company’s name, ABN, registered address, and identification of directors and shareholders, followed by risk assessments to prevent money laundering or terrorism financing.
){kind=link}