AML/KYC and identity verification in Australia

AUSTRAC, the Australian Government agency responsible for fighting financial crimes, requires reporting entities to perform customer identification procedures for all customers.

With even more stringent rules coming into effect as of June 18, 2021, the need to Know Your Customer (KYC) and perform due diligence has ramped up for financial institutions and other entities that report to AUSTRAC. Understanding identity requirements and having compliant procedures while still delivering on customer onboarding and fraud prevention needs is fundamental for ongoing success.

KYC in Australia for a person

At a minimum, when verifying a person in Australia, you must collect and verify their full name and either their residential address or date of birth. The verification process can either use documentation or electronic data (or both); in terms of Trulioo solutions, these correspond to ID Document Verification and (electronic) Identity Verification. In either case, the critical factor is that the information is reliable and independent.

Under the reforms that are now in effect, reporting entities can’t provide the service until after completing Customer Due Diligence. It’s important to note that it is up to the reporting entity to determine the level of risk for a customer, service and transaction type to gauge what identity to accept.

If using the documentation method, there are three acceptable types of documents:

• Original primary photographic identification document (for example, a driver’s license or passport)
• Original primary non-photographic identification document (for example, a birth certificate)
• Original secondary identification document (for example, notifications from an Australian government agency)

A passport is acceptable up to two years after expiry, but all other documents should be current.

For the data method, AUSTRAC provides verification factors to consider; is the data:

• Accurate
• Secure
• Kept up-to-date
• Comprehensive
• Verified by a reliable and independent source
• Maintained by a government body under legislation
• Able to be additionally authenticated

If using this method, the reporting entity needs to analyze the vendor and understand the reliability and independence of the data on a holistic level.

KYC in Australia for entities

Just as you need to verify personal accounts, you also need to verify the identities of entities, including companies, associations or trusts. You must also verify the identity of anyone that is a beneficial owner of an entity.

The standard for business verification is that you need to be reasonably satisfied the customer actually exists. You must collect and verify:

• Full name of the company
• Registration status with the Australian Securities & Investments Commission (ASIC) (public or proprietary company)
• Australian Company Number (ACN) or Australian Registered Body Number (ARBN)

In Australia, a beneficial owner owns 25% or more of the entity or has control to make decisions about the entity’s finances and operations.

AML/CTF programs in Australia

KYC is part of an overall Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) program. The whole point of performing KYC is to understand the risk a customer poses and quickly assess if the activities they perform are suspicious and perhaps linked to financial crimes (for example, money laundering or terrorist financing).

Some additional AML/CTF steps you need to take:

• Create identity procedures that correspond to the risk of the customer
• Have strategies to identify politically exposed persons (PEPs)
• Consider information discrepancies and how to deal with them
• Implement ongoing Customer Due Diligence that monitors and keeps customer and beneficial ownership up to date
• Document program procedures
• Have proper employee and management commitment, including board/senior-level approval and oversight, a dedicated compliance officer, employee due diligence and risk awareness training
• Develop systems and controls to help ensure compliance
• Assess and review your programs

Trulioo and Australia

Trulioo has had a long history of providing identity verification services for Australian organizations and those organizations that want to do business there. If you are looking for electronic data, document or business verification in the Australian market, Trulioo has rigorous solutions for each. Our identity verification experts can help you determine how to best meet your specific AML/KYC requirements and identity verification needs in Australia.