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CASH TRANSACTION REPORTS REGULATIONS (AMENDMENT) 1991 NO. 166EXPLANATORY STATEMENT
Statutory Rules 1991 No. 166
Cash Transaction Reports Act 1988
Cash Transaction Reports Regulations (Amendment)
Section 43 of the Cash Transaction Reports Act 1988 provides that the Governor-General may make regulations for the purposes of the Act. The Cash Transaction Reports Regulations prescribe a general method for the verification of the identity of signatories to accounts with cash dealers and a series of supplementary or alternative procedures for signatories in special categories, such as children, recent arrivals in Australia, non-residents of Australia and so on.
The Cash Transaction Reports Regulations are amended in order to refine the procedures for the verification of the identity of signatories. Minor adjustments are made to the general procedure, more significant amendments are made for the procedures relating to children and to nonresidents, and a new procedure is introduced to apply in the case of certain signatories who are recipients of social security benefits.
Details of the Regulations are attached.
Subregulation 2.5 amends subregulation 2(2) of the CTR Regs in such a way that financial institutions (banks, building societies and credit unions) and friendly societies and co-operative societies are also included within the expression "public company". As a result these bodies will also be able to rely upon the special procedure in regulation 5 for the verification of signatories to their accounts with a cash dealer.
Regulation 3: Regulation 3 amends regulation 4 of the CTR Regs, which contains the general procedure for the verification of signatories. This procedure provides for a point scoring method of identification. A wide range of checks of identity are made available under the CTR Regs, each of which is allotted a score according to the reliability of the check. Apart from some minor restrictions (which are set out in subregulations 3(3) and 3(4) of the CTR Regs) the checks may be used in any combination. A person is taken to be verified if he or she scores at least 100 points under the general method of identification set out in regulation 4.
Subregulation 3.1 replaces subparagraph 4(1)(b)(ii) of the CTR Regs, which prescribes a check of identity, worth 25 points, based upon a confirmation of the signatory's name and address by an "acceptable referee". For a person to be an acceptable referee it is necessary that he or she is within one of the classes of persons specified in the Minister's Notice pursuant to the definition of "acceptable referee" under subsection 3(1) of the CTR Act and that he or she has known the signatory for at least 12 months. The effect of the amendment is that the check of identity is available by checking the name and address of the signatory with a person who is within one of the classes of persons specified in the Minister's Notice under subsection 3(1) of the CTR Act but who is not an "acceptable referee" because he or she has not known the signatory for at least 12 months. This 25 point check complements the check provided under subparagraph 4(1)(j)(ii) which has the further requirement that the referee has known the signatory for at least 12 months but which is worth 40 points.
Subregulation 3.2 replaces subsubparagraph 4(1)(j)(i)(B) of the CTR Regs, which is a check of identity involving the production of a written reference from an "acceptable referee". The amendment will require that the written reference bear the dual signatures of both the signatory and the referee, not only the signatory as at present.
Subregulation 3.3 replaces subsubparagraph 4(1)(j)(ii)(B), which is the check of identity involving the production of a written reference from a "verified signatory" (as defined in subregulation 2(1) of the CTR Regs). The amendment will require that the reference bear the dual signatures of the verified signatory/referee and the signatory, not only the verified signatory as at present.
Regulation 4: Regulation 4 amends regulation 5 (Verification: public authorities and public companies) of the CTR Regs.
Subregulation 4.1 amends subregulation 5(1) of the CTR Regs by inserting the words "or a body established or incorporated for a public purpose" after the words "public authority". These words were formerly included in the definition of "public authority" which is replaced by subregulation 2.4. As mentioned above, this definition is omitted in order to avoid confusion with the similar definition in subsection 3(1) of the CTR Act. The overall result of the amendments made by subregulations 2.4 and 4.1 is that the expression "public authority" has a wider meaning in the CTR Regs than in the CTR Act in that, for the purposes of the CTR Regs, it is not necessary that the body was established under a law (which will therefore include Departments of State within the expression) and "rating authorities" are specifically stated to be within the expression.
Subregulation 4.2 adds the words "or body" after the words "the authority" in subregulation 5(1) of the CTR Regs. This amendment is consequential upon that made by subregulation 4.1 which includes a reference to a body after the existing reference to a public authority.
Subregulation 4.3 makes a further amendment to subregulation 5(1) of the CTR Regs. The effect of the amendment will be that the nomination of a person as a verifying officer may be made in relation to more than one account of the public authority, body or public company. The existing language of subregulation 5(1) is such that the nomination must be made in relation to each account separately. The amendment will relieve the authority, body or company of the burden of making numerous nominations of the same person as a verifying officer.
Subregulation 4.4 amends subregulation 5(3) of the CTR Regs. This subregulation requires that the identity of the person nominated as a verifying officer shall be verified either by way of the identification reference procedure in section 21 of the CTR Act or by way of the general 100 point method contained in regulation 4 of the CTR Regs. In each case, however, these methods are appropriate only for persons who are signatories to the account. Accordingly, it is necessary that the verifying officer should also be a signatory to the account.
For prudential reasons the public authority, body or public company may not wish the verifying officer to be a signatory. The amendment proposed by subregulation 4.4 will ensure that the verifying officer need not be a signatory but that, nevertheless, the person's identity may be verified by either the identification reference procedure or the general method contained in regulation 4 notwithstanding that the verifying officer may not be a signatory to the account.
Subregulations 4.5 and 4.6 amend subregulations 5(4) and 5(5) respectively. The proposed amendments are similar to that proposed to subregulation 5(1) of the CTR Regs by subregulation 4.1.
Subregulation 4.7 amends paragraph 5(5)(a) of the CTR Regs as a consequence of the amendments made earlier which include a reference to a "body" after each reference to a "public authority".
Subregulation 4.8 inserts a new subregulation 5(5A) into the CTR Regs. The new subregulation will provide that the certificate of identity by a verifying officer may relate to more than one signatory of the account for which it is provided.
Regulation 5: Regulation 5 amends regulation 6 (Verification: children) of the CTR Regs. Regulation 6 enables the identity of a child (as defined) to be verified in two alternative ways. This may be done either by producing a primary identification document relating to the child (paragraph 6(1)(a)) or by producing a "statement" issued on behalf of an educational institution attended by the child which contains the information specified in subparagraphs 6(1)(b)(i)-(iv). In particular, subparagraph 6(1)(b)(i) requires that the "statement" be written on the letterhead of the institution or educational system (subsubparagraph 6(1)(b)(i)(A)) or incorporated in a list of names and bearing the stamp or seal of the educational institution.
Subregulation 5.1 inserts a new subsubparagraph 6(1)(b)(i)(C). This provision will enable the "statement" to be contained in a student card issued by the educational institution if the card bears a copy of the seal or stamp of the institution.
Subregulation 5.2 replaces subparagraph 6(1)(b)(iv), which contains the requirements for certification of the statement. The new subparagraph will enable the certification to be provided by the principal, head teacher, enrolment officer, secretary or chief administrator of the educational institution or the deputy of any of these persons. This extends the existing list contained in subparagraph (iv).
Regulation 6: Regulation 6 amends regulation 7 (Verification: recent arrivals in Australia) by correcting two difficulties in the existing provision.
Subregulation 6.1 replaces paragraph 7(2)(a), which contains the residency requirement for triggering the availability of the procedure contained in regulation 7. This requirement is included in order to prevent the use of the procedure by Australian residents who have returned to Australia following a temporary absence, eg on holidays.
The existing requirement is that the person "is not a resident of Australia". This aspect of the regulation causes difficulty for some new arrivals in Australia who arrive here with, for example, permanent residence visas. In such cases, even though the person may have arrived in Australia that day, it is not possible to regard the person as not being a resident of Australia at that time.
Accordingly, the amendment proposed by subregulation 6.1 will alter the residency test so that it turns on the person's residency immediately before the person most recently arrived in Australia. If the person's place of residence immediately before arrival was outside Australia then the person will be able to employ the procedure contained in regulation 7 (subject to the other requirements of the regulation being satisfied.) The cash dealer will be able to use his or her judgment in determining the person's place of residence immediately before arrival in Australia.
Subregulation 6.2 amends subregulation 7(2) of the CTR Regs. Paragraph 7(2)(c) provides that the procedure is available within 6 weeks of the person's arrival in Australia. This provision also causes some difficulty, particularly in relation to refugees who may be detained for a lengthy period following their arrival in Australia while the claim to refugee status is under consideration. As a result, by the time the refugee is permitted to enter the community the period of 6 weeks will have passed and the procedure contained in regulation 7 will no longer be available.
Subregulation 6.2 will have the effect that the period of 6 weeks runs from the time that the recent arrival is lawfully at large within the community. In the case of refugees this will mean that the period .commences to run once the person is released from detention.
Regulation 7: Regulation 7 amends regulation 8 (Verification: non-residents) of the CTR Regs. Regulation 8 contains a procedure for the verification of the identity of certain non-residents of Australia. This procedure was included for the following reasons:
• In light of the application of the CTR Act outside Australia (section 6 of the CTR Act) consideration was given to the difficulty for Australian financial institutions with branches located outside Australia which are bound by the account opening provisions of the Act;
• Many businesses operating in Australia have signatories to Australian accounts located overseas; and
• Some non-residents operate accounts with Australian financial institutions, for personal reasons (eg for the payment of magazine subscriptions) or for business reasons (eg for the payment of trade supplies) and may have no intention of travelling to Australia.
The existing procedure in regulation 8 permits a financial body to nominate a person, resident overseas, as a verifying officer. The identity of that person must be verified in accordance with the identification reference procedure in section 21 of the CTR Act or the general 100 point method in regulation 4 of the CTR Regs. Thereafter the verifying officer may introduce to the identifying cash dealer (within Australia) persons who are non-resident signatories to accounts with the financial body and who wish to become signatories to an account in Australia with the identifying cash dealer. This procedure does not adequately cover all of the eventualities outlined in the previous paragraph and, accordingly, a number of amendments to the provision are proposed.
Subregulation 7.1 replaces subparagraph 8(5)(b)(ii). The new subparagraph will extend the availability of the existing procedure to those non-residents who are signatories to an account with the financial body, which is a wider group of persons than those presently within the ambit of regulation 8.
Subregulation 7.2 adds new subregulations 8(7) and 8(8). New subregulation 8(7) provides that the identity of a non-resident may be verified by the non-resident approaching an officer of a bank carrying on business outside Australia (including both banks that do not carry on business within Australia and overseas branches of banks that have an authority under section 9 of the Banking Act 1959) being a bank officer who is authorised by the bank to open accounts with the bank. The non-resident would produce to the bank officer documents that are equivalent to those referred to in regulation 4 (eg a foreign driver's licence, passport, birth certificate and so on) being documents which total at least 100 points. The bank officer will then sign a statement that he or she has sighted the documents and shall attach a copy of each to the statement (or record the details of the documents in the statement).
New subregulation 8(8) provides that the certificate of identity provided by the bank officer may relate to more than one signatory to the account. This will avoid the need to obtain a separate certificate for each non-resident where more than one of the signatories is a non-resident.
Regulation 8: Regulation 8 inserts a new regulation 10A (Verification: certain recipients of social security benefits) into the CTR Regs. The new procedure is necessary because of difficulties that have been encountered in verifying the identity of certain categories of persons, such as:
• "street kids";
• victims of domestic violence (who have fled the home leaving behind all documentary ID);
• drug and alcohol abusers; and
• some Aboriginal persons who do not live in an isolated area as defined.
Such persons may require an account for the direct payment of benefit by the Department of Social Security but may be unable to satisfy the requirements of the 100 point method of identification. The new regulation 10A will provide a separate procedure for the verification of identity of these persons.
Subregulation 10A(1) provides that a person may verify his or her identity by producing to the identifying cash dealer a letter of introduction issued by the Department of Social Security not more than 3 months previously. Production of the letter of introduction will satisfy the identity verification requirements of the Act.
Subregulation 10A(2) interprets the expression "letter of introduction". The expression means a letter signed by the signatory and an officer of the Department of Social Security which certifies that the signatory is the payee of a specified Social Security cheque and that the signatory's signature has been verified from Department records.
Regulation 9: Regulation 9 amends regulation 9 (Verification: Aboriginal persons resident in an isolated area) of the CTR Regs. Subregulations 9.1 and 9.2 alter the references to "aboriginal" and "aborigine" to "Aboriginal" and "Aboriginal person" respectively.
Details of the Regulations
Cash Transaction Reports Act 1988
Cash Transaction Reports Regulations (Amendment)
Details of the Regulations are:
Regulation 1: Regulation 1 identifies the Cash Transaction Reports Regulations (CTR Regs) as the principal Regulations to be amended by the Regulations.
Regulation 2: Regulation 2 makes a number of amendments to regulation 2 of the CTR Regs, which is the interpretation provision.
Subregulation 2.1 replaces the word "aborigine" with the words "Aboriginal person". This alteration reflects a more correct practice in the reference to members of the Aboriginal race and to Torres Strait Islanders.
Subregulation 2.2 amends the definition of "child" by increasing the maximum age from 16 years to 18 years. The will extend the availability of the special procedure for children contained in regulation 6 of the CTR Regs to a wider group of persons. The existing age limit of 16 years has resulted in difficulty for children aged 17 or 18 opening accounts, for example for the payment of wages or the direct credit of social security benefits, after leaving school.
Subregulation 2.3 amends the definition of "isolated area" by reducing the necessary radius from the nearest "urban centre" from 100 kilometres to 20 kilometres. This definition is relevant in the procedure for Aboriginal persons living in an isolated area, which is contained in regulation 9 of the CTR Regs. The existing radius has resulted in the special procedure being unavailable for certain Aboriginal persons living in fringe communities.
Subregulation 2.4 replaces the definition of "public authority". As the expression "public authority" is defined in subsection 3(1) of the Cash Transaction Reports Act it is undesirable to have an independent definition in the CTR Regs. The new definition will ensure that "rating authorities", which are municipal and shire councils and the like, are included within the meaning of the expression. As a result, rating authorities will be able to employ the special . procedure contained in regulation 5 of the CTR Regs for public authorities and public companies.