7 Essential Steps to Prepare Your Reporting Entity for Tranche 2

1. Enrol with AUSTRAC: It is a requirement of the AML/CTF Act that all businesses

offering designated services must enrol with AUSTRAC.

2. Develop and maintain an AML/CTF policies tailored to your business:

AML/CTF policies must be in place before a business can provide designated

services, and the business must conduct a risk assessment of its Money Laundering

and Terrorism Financing risks. Under Tranche 2 Reforms, the risk of Proliferation

Financing will also need to be considered.

3. Appoint an AML/CTF Compliance Officer: Businesses providing a designated

service must appoint an AML/CTF Compliance Officer to oversee the operation of

the entity’s AML/CTF Program, policies and updates.

4. Conduct customer due diligence: Tranche 2 entities will need to conduct initial

customer due diligence, which includes the collection and verification of a customer’s

identity as well as assigning each customer a risk rating.

5. Conduct ongoing customer due diligence: Tranche 2 entities will need to

collect, review and update ‘Know Your Customer’ (KYC) information, as well as

monitor their customers for unusual transactions and behaviours that may give rise

to a suspicious matter reporting obligation. They will also be required to conduct

enhanced customer due diligence for high-risk customers (such as politically

exposed persons).

6. Report certain transactions and suspicious activity: Tranche 2 entities will be

required to report certain matters to AUSTRAC, including suspicious matter reports,

threshold transaction reports and international value transfer services.

7. Make and keep records: Tranche 2 entities will need to keep certain records of

the designated services provided to customers. In particular, business’ must keep

records of KYC information and of relevant transactions for up to seven years after

they have been concluded