Introduction to the Policy
As with any financial institution, there is a risk of Aurora Capital Markets (ACM) products and services being used to launder money and finance terrorism. Therefore, Australian law and applicable foreign jurisdictions in which we operate, requires us to have a nominated Officer to ensure that there is up-to-date knowledge of issues relating to Anti-Money Laundering and Counter-Terrorist Financing throughout the organisation, implement appropriate policies and procedures, training, process and systems in place to receive reports of suspicious activity, manage and mitigate this risk. ACM is committed to do this to protect its reputation, to comply with relevant laws in Australia and foreign jurisdiction and to be a good corporate citizen. Failure to do so may result in social harm, significant penalties, including legal and regulatory action.
Money laundering is the process through which proceeds of crime and their true origin and ownership are changed so that the proceeds appear legitimate. Money laundering reduces the risk of detection by authorities. It is a serious offence and preventing it can help reduce criminal activities.
Terrorist financing is providing or collecting funds, from legitimate or illegitimate sources, to be used to carry out an act of terrorism. It differs from money laundering in three ways in particular:
- It disguises the use of the funds, as opposed to their origin.
- Small amount of funds could be involved, but it can have massive impact in terms of death, and catastrophic effect.
- Terrorists may finance through crime, but legitimate funds can also be used to finance their activities.
Money laundering and terrorism financing are sometimes detected because a client acts or behaves in a suspicious way.
Any client activity outside the normal or expected activity should be considered unusual and must be investigated. Understanding the business or client profile is crucial. Unusual activity or transactions outside the established profile should be considered as a potential indicator of suspicious activity. Investigations should establish the reasons for the unusual activity or transaction. This may either remove or confirm the suspicion. If it is confirmed, must report it to the Money laundering Reporting Officer (MLRO). Failure to do so is an offence that could result in fines or imprisonment or both.
For a ‘suspicion’ to be valid, we must have reasonable grounds to believe money laundering and terrorism financing activity may be occurring. To support this, employees receive training in identifying and reporting suspicious matters.
The AML/CTF Act provides a list of designated services including opening an account, making deposit, and withdrawing funds. Before ACM can provide these designated services, clients will be required to provide government issued proof of identity to satisfy 100 points of identification. ACM is legally required to collect and verify the information provided and retain the information up to 7 years.
Someone who trades in their own personal legal right without the use of a company structure, incorporation, or partnership and who, alone, has full liability for the activities of the business.
Two or more persons carrying on business in common, under a partnership agreement, with a view to generate profit.
A group of persons who have agreed to join together in pursuit of one or more common objectives. An association can be incorporated or unincorporated.
A company incorporated in Australia, which includes proprietary, public and listed public companies.
A company incorporated outside of Australia.
A relationship where the trustee holds property or assets for a beneficiary. The trustee can be an individual, a group of individuals or a company.
A legal entity owned and controlled by the people for whom it was established and who benefit from using its services.
It can be domestic including Commonwealth, State, Territory, or foreign government body.
Why is anti-money laundering and counter-terrorist financing important to Aurora Capital Markets?
We facilitate significant financial transactions on a daily basis. The anti-money laundering (AML) and counter-terrorist financing (CTF) regime is designed to prevent our services being used by criminals. You have obligations under the AML/CTF regime to spot and report money laundering and terrorist financing. Failure to meet these obligations can lead to criminal penalties, substantial fines, and untold damage to your own and Aurora Capital Markets’ reputation.
How does money get laundered?
Typically, money laundering involves three stages:
The process of placing criminal property into the financial system. This might be done by breaking up large sums of cash into smaller amounts or by using a series of financial instruments (such as cheques or money orders) which are deposited at different locations.
The process of moving money that has been placed in the financial system in order to obscure its criminal origin. This is usually achieved through multiple complex transactions often involving complicated offshore company structures and trusts.
Once the origin of the money is disguised it ultimately must reappear in the financial system as legitimate funds. This process involves investing the money in legitimate businesses and other investments such as property purchases or setting up trusts.
How do I know if my matter involves money laundering or terrorist financing?
You do not have to behave like a police officer, but you do have to remain alert to the warning signs of money laundering and terrorist financing and make the sort of enquiries that a reasonable person with the same qualifications, knowledge and experience as you, would make.
Typical signs of money laundering and terrorist financing are:
- Obstructive or secretive clients.
- Instructions outside our usual range of expertise, i.e. why is the client using us?
- Clients based a long way from us with no apparent reason for using us.
- Cases or instructions that change unexpectedly or for no logical reason, especially where:
- The client has deposited funds with us.
- The source of funds changes at the last moment.
- You are asked to return funds or send funds to a third party.
- Loss-making transactions where the loss is avoidable.
- Complex or unusually large transactions.
- Transactions with no apparent logical, economic or legal purpose.
- Large amounts of cash being used.
- Money transfers where there is a variation between the account holder and signatory.
- Payments to or from third parties where there is no logical connection to the client.
- Movement of funds between accounts, institutions or jurisdictions without reason
- Retainers involving high risk jurisdictions.
- Large payment on account of fees with instructions terminated shortly after and the client requesting the funds are returned.
Criminals are always developing new techniques so this list can never be exhaustive.
What to do if you have a suspicion?
Any suspicion must be report it to the MLRO straightway. Do not carry out the transaction or proceed unless the consent received from the MLRO. They will review the suspicion and, if required, submit a Suspicious Matter Report (SMR) to AUSTRAC. Only the MLRO or deputy may submit an SMR.
If the MLRO gives the consent to proceed with a transaction, then that consent only applies to that specific transaction. If the client requests further activities or transactions, further consent is required from the MLRO even if there is no suspicion.
In most jurisdictions it is an offence for someone to tip off (inform) a person suspected of money laundering that a Suspicious Matter Report (SMR) has been made or there is a money laundering investigation taking place. There are a number of defences and exceptions that apply, but in general a tipping off offence would occur when the action is likely to prejudice an investigation that is taking place.
A tipping off offence cannot be committed if a report has not been submitted and you liaise with clients or colleagues as part of your enquiries into an unusual activity. However, you cannot mention the word suspicious.
Aurora Capital Markets’ 5 key AML/CTF principles
- Comply with AML/CTF legislation in local and foreign jurisdictions.
- Fulfil international standards as detailed in the recommendations of the Financial Action Task Force (FATF).
- Work in conjunction with the Australian regulatory body and the foreign regulatory bodies where we operate, and fully support their objectives in relation to the prevention, detection and control of ML/TF.
- Aurora Capital Markets may decide not to provide products or services based upon decisions guided by ML/TF risk appetite and corporate social responsibility.
- Maintain and comply with an AML/CTF program, as required by Australian AML/CTF legislation.
Policy roles and responsibilities
Aurora Capital Markets directors and Senior Management have ongoing oversight of our AML/CTF policy and procedures. All permanent, temporary and casual employees must comply with these, attend training specific to their role, and report suspicious matters or behaviours.
We have a dedicated Money Laundering Reporting Officer for AML/CTF, responsible for monitoring the status and effectiveness of the company’s AML/CTF risk management and compliance and reporting it to our Executive team.
The Money Laundering Reporting Officer also leads the AML/CTF team, which maintains company’s AML/CTF policy framework, and provides subject matter expertise and advice to our businesses.
Aurora Capital Markets’ AML/CTF program
The design and implementation of the program was tailored to our ML/TF risk profile, applying specific systems and controls, including:
- ML/TF risk assessment
- Employee training
- Employee and client due diligence
- Transaction monitoring
- Internal auditing
- Liaise with regulatory bodies
Monitoring and reporting
- We also report the following information to Australia’s AML/CTF regulator AUSTRAC:
- Transactions with a cash component of AUD10,000 or more
- Electronic transfers of funds into or out of Australia
- Any transactions or other activities regarded as suspicious.