AUSTRAC has published guidance on how to collect information on the source of funds and source of wealth to help reporting entities undertake source of funds and source of wealth checks on customers and mitigate the risk that a customer’s funds relate to money laundering, terrorism financing (ML/TF) or other serious crimes.
‘Source of funds’ refers to how and where the customer obtained the funds for a specific transaction or designated service provided to the customer. Verifying, on a risk-sensitive basis, information collected about the customer’s source of funds will assist in applying risk-based systems and controls in accordance with an AML/CTF program, and help reporting entities to meet transaction monitoring and suspicious matter reporting obligations. This process includes determining if they suspect on reasonable grounds that the customer’s funds could be derived from the proceeds of crime or may be relevant to the investigation of a criminal offence.
‘Source of wealth’ refers to where the customer’s entire body of wealth and assets came from – not just what is involved in a transaction or business relationship. It describes the economic, business, or commercial activities that generated, or significantly contributed to, the customer’s overall net worth.
The guidance incorporates a range of examples to explain how source of funds and source of wealth processes apply across various industry sectors, including superannuation, financial advisers, securities and derivatives dealers, managed investment funds, non-bank loan providers and remittance service providers.
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Author: David Jacobson
Principal, Bright Corporate Law
About David Jacobson
The information contained in this article is not legal advice. It is not to be relied upon as a full statement of the law. You should seek professional advice for your specific needs and circumstances before acting or relying on any of the content.
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