These requirements are designed to prevent money laundering or the financing of terrorist organisations by establishing an ‘audit trail’, or transaction history, which provides evidence linking criminal acts and their organisers. These audit trails can produce vital information in the detection and investigation of criminal activities.
The Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act) regulates financial transactions in order to detect and prevent money laundering and terrorism financing.
The Australian Government has stated that the AML/CTF Act will bring Australia into line with international standards, including those set by the Financial Action Task Force (FATF).
What is money laundering?
Money laundering is the process where criminals use financial systems to try to hide or disguise the proceeds of crime. By doing this they turn "dirty" money into "clean" laundered money, which reduces the risk of detection and confiscation by the authorities.
Criminals are less likely to engage in illegal activity if they are unable to profit from it without avoiding detection. Preventing money laundering can therefore help prevent organised crime.
What is terrorism financing?
Terrorism financing differs from money laundering in two ways:
- Terrorist organisations often use relatively small sums of money to finance their operations.
- Although terrorists may finance their activities through crime, particularly fraud involving stolen or fake credit cards or identity theft, legitimate funds can also be used to finance terrorism.
These reasons highlight the importance of reporting all suspicious activity, even if the sum of money involved is relatively small.
What does this mean for People's Choice?
The laws require us to:
- Verify the identity of our members before providing services such as opening a membership or account, depositing or withdrawing money or approving a loan;
- Report certain transactions above a threshold; and
- Report suspicious transactions.
- Most members will not notice a big difference to the way they transact with People's Choice.