Chinese Investment and AML/CTF Obligations

Given the large volume of clients and funds being received from China, Australian FX and CFD brokers should take heed

AUSTRAC has recently released a statement in relation to guidance on Chinese investment in Australian property markets of which FX and CFD brokers should take heed given the large volume of clients and funds being received from China.

The release states that “China is now Australia’s biggest source country of approved foreign investment flows, mainly driven by a large increase in residential real estate approvals.”

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However, AUSTRAC has found that a small number of Chinese investors continue to circumvent the Chinese and Australian regulation regarding investment.

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AUSTRAC is encouraging all financial service providers to have robust Anti-Money Laundering and Counter Terrorism Financing (AML/CTF) procedures in place, particularly where international investment occurs. This includes monitoring transactions and reporting suspicious matters, international finds transfer instructions and threshold transactions. In addition to their reporting obligations, is important that financial service providers are aware of their other ongoing obligations under the AML/CTF Act, these include:

  • Enrolling the business as a reporting entity with AUSTRAC;
  •  Submitting an annual compliance report to AUSTRAC;
  •  Adopting and maintaining a written AML/CTF Program;
  •  Developing and implementing Customer Due Diligence procedures;
  •  Appointing an AML/CTF Officer;
  •  Training staff in relation to AML/CTF risk awareness;
  •  Record keeping; and
  •  Screening of employees upon employment and promotion.

AUSTRAC’s role in the industry is to detect fraud and this is primarily done through receiving information from reporting entities. Financial service providers who classified as reporting entities under the AML/CTF Act are required to submit suspicious matter reports, international funds transfer instruction reports and threshold transaction reports. These reports are key sources of information for AUSTRAC in detecting fraud and AUSTRAC investigates all reports submitted.

AUSTRAC’s role also includes disseminating information and the results of their analysis to other agencies across Australia, including ASIC. This support of the industry helps to raise awareness of the various issues which impact the provision of financial services in Australia and helps to identify patterns and suspicious behaviours associated with money laundering and terrorism financing.

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