Forming a Reporting Group

The AML/CTF reforms replace the previous concept of a ‘designated business group’ (“DBG“), with the ‘reporting group’ regime. A reporting group must have a ‘lead entity’ and other ordinary members.

There are a range of reasons to form a reporting group, including:

  • sharing resources, policies and procedures;
  • reducing and sharing compliance costs;
  • identifying and managing money laundering, terrorism financing, and proliferation financing (“ML/TF/PF“) risk more effectively;
  • enabling the sharing of ML/TF/PF risk information and compliance information between members;
  • reducing the risk of breaching the tipping off offence when information is shared regarding suspicious matter reports;
  • enabling non-reporting entity group members to conduct AML/CTF compliance-related activities on behalf of reporting entity members.

How to form a reporting group

There are two methods to form a reporting group:

  1. via control; or
  2. through election.

 

Reporting groups formed via control

Reporting groups which are formed via control are referred to as Business Groups. A Business Group exists where a control relationship or structure exists between multiple entities.

A Business Group cannot exist where there is no control relationship or structure. Therefore, the first step is to consider whether there is an entity which controls all of the other members of the group. If so, the Business Group (including all members in it) becomes a reporting group by meeting the following criteria:

  • at least one member must provide designated services; and
  • no member of the group has given notice to the others declining membership of the Business Group.

A Business Group must also have a lead entity and it must not operate without a lead entity for a period of more than.

The lead entity must satisfy all of the following:

  • it must not be controlled by any other member of the group that provides a designated service;
  • it must be either a body corporate, a registered foreign company, a trust that has at least one Australian resident trustee or resident in Australia;
  • the entity which controls all members of the group has appointed the lead entity, or otherwise all members of the group have agreed in writing that the lead entity meets these two criteria above; and
  • it must have the authority and capability to develop and maintain the AML/CTF policies of the reporting entity members.
Business-Groups-Lead-entity

Reporting groups formed through election: Elective Reporting Groups

Reporting groups formed through election are referred to as elective reporting groups. This type of group exists where two or more reporting entities agree to form a reporting group.

Elective reporting groups must satisfy all of the following criteria:

  • each member must have elected in writing to be a member of the reporting group;
  • no member is also a member of another elective reporting group;
  • each member is either a reporting entity, a member of a Business Group, or an entity which discharges obligations imposed on other members by the AML/CTF Act and Rules.

An elective reporting group must also have a lead entity, and it must not operate without a lead entity for a period of more than 28 days. The lead entity must satisfy all of the following:

  • it must not be controlled by any other member of the group that provides a designated service;
  • if the elective reporting group includes members of one or more Business Groups – it must be a member of one of the Business Groups;
  • it must be either a body corporate, a registered foreign company, a trust that has at least one Australian resident trustee or resident in Australia; and
  • all members of the reporting group agree that it has the capacity to determine the outcome of decisions about the AML/CTF policies applicable to other members of the reporting group.

If the lead entity wants to leave the group, it must provide all members with written notice.

When a member joins or leaves an elective reporting group, they must:

  • obtain the lead entity’s consent to join an existing reporting group; or
  • provide written notice to the lead entity to leave a reporting group.
Elective-reporting-groups-Lead-entity

Updating the AUSTRAC Business Profile Form

When a reporting group is formed, all members must update their AUSTRAC Business Profile Form to notify AUSTRAC of:

whether it is a member of a reporting group
if it is the lead entity of the reporting group and if not, provide details of the lead entity
provide details of the members of the reporting group (lead entity only)

Further Information

To assist you with forming a reporting group, appoint a lead entity and keep the required records, Sophie Grace has developed a Reporting Group and Lead Entity Checklist. This is available as part of our AML/CTF Program package, or as an individual document.

AML/CTF Reforms

Sophie Grace can provide you with an AML/CTF Program and can assist you to tailor it to your business’ needs. We have three different options available to suit your business and finance needs.

Template Documents

You can purchase template documents from our online shop. The template is an instant download and includes prompts to help you tailor the document yourself. We have template documents for:

  • Tranche 1 Reporting Entities;
  • Item 54 Providers; and
  • Tranche 2 Entities.
Compliance Portal

Sign up to the Compliance Portal and receive the template AML/CTF Program Package, and obtain access to updated documents in light of any updates we make as new guidance or amended legislation is released. Choose between:

  • document-only plans;
  • consultation-only plans;
  • video and regulatory update plans; or
  • a combination of all three.
Tailored Documents

Sophie Grace can assist you to prepare the AML/CTF Program package based on your business’ specific requirements. Contact us to discuss further. 

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