Anti Money Laundering/Counter Terrorism Financing Risk

Risk Based Assessment & Risk Classification
It is unrealistic that a business would operate in a completely risk free environment in terms of Money Laundering / Terrorist Financing (ML/TF). Therefore it is required that a
business identifies the ML/TF risks it faces then works out the best ways to reduce and manage that risk. Based on the identification information provided by the client and the
relationship with the client, a risk classification must be assigned to each client.
Below are some events/risks that we have provided to assist you with assigning a risk classification to your client.
How to apply the Risk based assessment criteria for your clients
When determining the appropriate risk level and the correct treatment/action for each client, follow these steps:
1.
2.
3.
4.
5.
6.
7.
8.
Ask yourself: Is the client.... (Risks 1 - 19)?
Then note the Risk Score;
Ask yourself: Is the designated service one where.... (Risks 20 - 28)?
Then note the Risk Score;
Ask yourself: Is the delivery of the designated service where.... (Risks 29 - 33)?
Then note the Risk Score;
Ask yourself: Is the jurisdiction.... (Risks 34 - 39)?
Then note the Risk Score;
NB:
 It is essential to make an assessment from each Risk section (Client Type, Designated Service, Delivery and Jurisdiction) remembering that there may be more than one
answer for each Risk section;
 The overall client Identification and Verification requirement is ascertained by identifying each Risk Score as determined by the above process, and apply whichever
Treatment/Action is the highest.
Once this assessment has been undertaken, use the information to complete the ‘AML/CTF CLIENT RISK CLASSIFICATION & CHECKLIST’ and hold on the client file.
NB:
 Only steps 1, 5, 6, 7 and 8 plus the date, client name, adviser name and signature are required when you utilise the above method;
At a minimum verification must be obtained for the client’s name and either date of birth or address.
Risk Classification Library
Risk
Risk Score
Treatment/Action
Client Type
(Ask: Is the Client ...?)
Low/ Medium/
High
Identification & Verification
1.
In an existing relationship with me/firm/practice prior to December 2007.
Low
2.
A new client/s who/that has been referred to me/firm/practice by existing clients.
Low
3.
An Australian or permanent resident/s of Australia.
Low
4.
A trust client/s that is predominantly SMSF or Family Trusts.
Low
5.
6.
A company that is an Australian Registered company/ies and/or a company that is a trading
company/ies with others acting as corporate trustee’s to the trust client.
One whose dealings with government agencies are very limited. Mostly dealing with
employees of government agencies as individuals or where dealing are with agencies that is
limited to corporate superannuation advice or insurance advice or investment advice.
Low
Low
7.
An individual where beneficial ownership of investments is clear.
Low
8.
A retiree with most investments made within the superannuation environment or that is
seeking risk/personal insurance policies or insurances in relation to asset protection.
Low
9.
One where the sources of their income are known.
Low
An Australian or permanent residents of Australia working overseas whose sources of
income are known or identifiable.
A company/ies that is the trustee of trust, which has beneficiaries that are themselves trustee
11.
companies of other trusts.
A trust client/s that is part of a complex business structure or family structure where ultimate
12. ownership and beneficiaries are not clearly determinable in the first instance however
additional verification documents verify the structure.
A company that is an Australian Registered companies but has dealings in foreign
13.
jurisdiction.
10.
ONE Primary ID Document or
TWO Secondary ID Documents
ONE Primary ID Document or
TWO Secondary ID Documents
ONE Primary ID Document or
TWO Secondary ID Documents
ONE Primary ID Document or
TWO Secondary ID Documents
ONE Primary ID Document or
TWO Secondary ID Documents
ONE Primary ID Document or
TWO Secondary ID Documents
ONE Primary ID Document or
TWO Secondary ID Documents
ONE Primary ID Document or
TWO Secondary ID Documents
ONE Primary ID Document or
TWO Secondary ID Documents
Medium
TWO Primary ID Documents
Medium
TWO Primary ID Documents
Medium
TWO Primary ID Documents
Medium
TWO Primary ID Documents
14.
15.
16.
17.
18.
19.
One that is either a company or a trust that has investments made within a broad range of
financial products.
A new client obtained after December 2007 through the firm/practice website.
A Politically Exposed Person (PEP) or related to a Politically Exposed Person.
Other than an Australian citizen or permanent residents of Australia and works overseas or
works in Australia and their sources of income are not identifiable.
A company that is the trustee of trust, which has beneficiaries that are themselves trustee
companies of other trusts and/or the structure is complex, and/or ultimate ownership and
beneficiaries are not clearly determinable.
An overseas registered company that has investments inside and outside Australia.
Designated service
(Ask: Is the designated service one where ...?)
Medium
TWO Primary ID Documents
High
High
TWO Primary ID Documents
TWO Primary ID Documents
High
TWO Primary ID Documents
High
TWO Primary ID Documents
High
Low/ Medium/
High
TWO Primary ID Documents
20. It is limited to ‘arranging on behalf of another’.
Low
21. No client money or property is held on trust and no cash is accepted.
Low
22.
23.
24.
25.
26.
27.
28.
All cheques in relation to investment monies are made by the client directly to the product
provider /issuer.
Services are limited to arranging for another person to receive a designated service including
financial products (e.g. securities or managed investment schemes) that are not issued by
the licensee to clients.
Client money or property is held on trust however funds held on trust are limited to premium
amounts, or investment amounts i.e. all payments are forwarded to product issuer and
instructions are not accepted from the client to forward monies or payments to other third
parties.
A large volume of transactions are undertaken by the client but limited to the share market
transactions and the client operates as an aggressive trader so as to profit from market
fluctuations.
It includes both arranging for another person to receive a designated service and the
issuance of financial products (e.g. securities or managed investment schemes).
Client money or property is held on trust and instructions are accepted from clients to pay
third parties.
A large volume of transactions are undertaken by clients directly, with limited advice sought.
Low
Identification & Verification
ONE Primary ID Document or
TWO Secondary ID Documents
ONE Primary ID Document or
TWO Secondary ID Documents
ONE Primary ID Document or
TWO Secondary ID Documents
Medium
TWO Primary ID Documents
Medium
TWO Primary ID Documents
Medium
TWO Primary ID Documents
High
TWO Primary ID Documents
High
TWO Primary ID Documents
High
TWO Primary ID Documents
Delivery
(Ask: Is the delivery of the designated service where...?)
Services are provided the majority of the time through face-to-face meetings, with some
29.
telephone conversations and email correspondences.
The first appointments and advice meetings are always conducted face to face.
30.
31.
The advice is never provided by email.
Low/ Medium/
High
Low
Low
Low
Services are provided the majority/some of the time through telephone conversations and
email correspondences.
33. All services are provided through email correspondences.
Jurisdiction
(Ask: Is the jurisdiction one where ...?)
All products or investments on the Licensee Approved Product List are Australian Registered
34.
Investments regulated by either ASIC, APRA or the ATO.
The client has no connection with non-cooperating countries or territories.
35.
Medium
All products or investments on the Licensee Approved Product List are Australian Registered
Investments regulated by either ASIC, APRA or the ATO, but some investments are
undertaken in overseas markets but limited to jurisdictions with a like financial regulatory
system.
The client has had a previous connection with a non-cooperating countries or territories as
defined in AUSTRAC’s guidelines.
The investments are undertaken in overseas markets and may be considered noncooperating countries or territories or tax havens.
The client has a connection with a non-cooperating countries or territories as defined in
AUSTRAC’s guidelines or resides in a non-cooperating countries or territories.
Medium
32.
36.
37.
38.
39.
High
Low/ Medium/
High
Low
Low
Identification & Verification
ONE Primary ID Document or
TWO Secondary ID Documents
ONE Primary ID Document or
TWO Secondary ID Documents
ONE Primary ID Document or
TWO Secondary ID Documents
TWO Primary ID Documents
TWO Primary ID Documents
Identification & Verification
ONE Primary ID Document or
TWO Secondary ID Documents
ONE Primary ID Document or
TWO Secondary ID Documents
TWO Primary ID Documents
Medium
High
High
TWO Primary ID Documents
TWO Primary ID Documents
TWO Primary ID Documents
AML/CTF Risk Classification v1.1
A M L / C T F C L I E N T R I S K C L A S S I F I C AT I O N & C H E C K L I S T
Date :
Client/s Name:
1. Step 1: Identify the main Money Laundering/Terrorist Financing risks:
Consider your customer types, designated services provided, methods of delivery, jurisdictions in which you deal with.
Completed process using the Risk Classification Library - Item reference number(s): _____________________ Go to Step 5
OR
Identify your own ML/TF Risk(s) – Detail below and complete remainder of checklist
1. Step2: What is the likelihood that the identified event(s)/risk(s) will occur?
2.
Frequency
Likelihood of a ML/TF risk
Very likely
Almost certain: it will probably occur several times a year
Likely
High probability it will happen once a year
Unlikely
Unlikely, but not impossible
Very likely
Likely
Unlikely
Step 3: What would be the seriousness of the damage which could occur should that event/risk happen?
Consequence
Major
Moderate
Minor
Impact of a ML/TF risk
Huge consequences – major damage or effect. Serious terrorist act or large-scale money laundering.
Moderate level of money laundering or terrorism financing impact.
Minor or negligible consequences or effects.
Step 4: Combine LIKELIHOOD and IMPACT to obtain a risk score.
High
Medium
Low
Moderate
Impact
3. Step 5: Select which customer identification procedure has been adopted.
Likelihood
Very Likely
Likely
Unlikely
Medium
Low
Low
Minor
Major
Moderate
Minor
Extreme
Extreme
High
Medium
Major
Low Risk - Identification and verification of ONE Primary ID Document or TWO Secondary ID Documents
Medium Risk - Identification and verification of TWO Primary ID Documents
High Risk - Identification and verification of TWO Primary ID Documents
Extreme Risk - Identification and verification of TWO Primary ID Documents
Other Identification and verification procedures undertaken (if any e.g. additional questions, ID document)
High
Medium
Low
Refer to
Capstone ID
Forms for
acceptable ID
Documents
Step 6: Complete the relevant Capstone Identification Form.
Yes
Step 7: Copy of the Client’s ID Document retained on file.
Yes
Step 8: Do you need to complete a Suspicious Matter Report? If Yes, please notify Head Office immediately.
Yes
Adviser Signature:
__________________________________
Adviser Name:
__________________________________
Authorised Representative of Capstone Financial Planning Pty Ltd.
No