House of Representatives

Explanatory Memorandum

(Circulated by authority of the Attorney-General, the Hon Mark Dreyfus KC MP)

SCHEDULE 8 - TRANSFERS OF VALUE AND INTERNATIONAL VALUE TRANSFER SERVICES

558. This Schedule would amend Part 5 of the AML/CTF Act to streamline the existing concepts relating to transfers of value. The amendments streamline the regulation of telegraphic transfers, remittances, virtual asset transfers, and other transfers of value to ensure consistency between different types of businesses providing similar services. In addition, this Schedule will ensure the end-to-end transparency of payments or value transfers is in line with FATF Recommendations 15 (relating to virtual assets) and 16 (relating to financial institutions and remitters). Additionally, it will update the international funds transfer instruction (IFTI) reporting regime to reduce the complexity of applying these obligations to modern, highly integrated and diversified payment services.

Transfers of value

559. This Schedule removes the outdated distinction between transfers of value for financial institutions and those by remittance service providers. This distinction has caused significant challenges for payment service providers in interpreting their AML/CTF obligations. The distinction between these transfers of value has resulted in four different designated services in the current Act:

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transfers of value facilitated by financial institutions, which are subject to both electronic funds transfer instructions (EFTI) and IFTI obligations, and

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transfers of value to a payee and from a payer facilitated by non-financial institutions, referred to as a 'designated remittance arrangement' which is only subject to IFTI obligations.

560. Further, this Schedule adds transfers of value relating to virtual assets, which have been required by the FATF Standards since 2019.

Travel rule obligations

561. FATF recommendation 16 requires that certain information about the payer and payee be transmitted with telegraphic transfers, remittances, transfers of virtual assets and other similar transfers of value. This is colloquially known as the 'travel rule', and is intended to support end-to-end transparency of value transfers. This transparency supports businesses providing value transfer services in managing and mitigating their money laundering and terrorism financing risks and sanctions risks, and to make information available to law enforcement authorities in appropriate circumstances.

562. Travel rule requirements are currently referred to as EFTIs in the AML/CTF Act. This Schedule updates the existing EFTI requirements to better align with FATF Recommendations 15 and 16 by extending the requirement to all entities that provide a value transfer designated service, instead of previously limiting EFTI requirements to financial institutions. The streamlined value transfer designated services will trigger the travel rule obligation for financial institutions, remittance service providers and VASPs for both domestic and cross-border transfers.

563. This Schedule removes various concepts of funds transfer, including the concept of an 'electronic funds transfer instruction' (Item 6) and its associated concepts of 'multiple institution person-to-person', 'multiple institution same person', 'same institution person-to- person' and 'same institution same person' (Item 13). Instead, the travel rule obligations are set out in the updated obligations for ordering institutions, intermediary institutions and beneficiary institutions.

564. These new definitions of ordering institutions, intermediary institutions and beneficiary institutions are intended to support the concept of the value transfer chain, and to provide a simplified understanding for entities regarding their responsibilities regarding the transmittal of travel rule information.

565. In accordance with FATF Recommendations 15 and 16, the following obligations are set out in this Part for the relevant institution in the value transfer chain:

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collection of travel rule information and verifying payer details, where not already verified, for the ordering institution,

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transmitting travel rule information for ordering and intermediary institutions, and

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keeping records of travel rule information, screening value transfer messages for missing travel rule information and taking appropriate action for all institutions.

566. FATF Recommendation 16 also requires payee information to be included with transfers of value, not only payer information, which is currently the case in the AML/CTF Act. However, as Recommendation 16 is currently under review by the FATF, the information to be included with the transfers of value is subject to be changed. As such, this Schedule does not detail the information to be included with transfers of value and instead includes rule-making power for the AUSTRAC CEO to establish what information must accompany transfers of value for when the changes to Recommendation 16 are concluded. This Part also inserts a rule-making power for travel rule exemptions due to the changes to Recommendation 16.

567. The powers throughout this Schedule to make AML/CTF Rules to specify different types of information to be transmitted in different circumstances also recognises that until some legacy domestic payment systems ^[4] are decommissioned in coming years, technical limitations will prevent the transmission of information about the payer and payee in some circumstances.

568. This Schedule also introduces limited travel rule obligations where virtual asset transfers are in relation to and from a self-hosted wallet, acknowledging the limitations in obtaining travel rule information in these scenarios - as transfers of virtual assets can be unilaterally transferred both within and outside regulated institutions without the consent of the recipient of the virtual asset wallet holder.

Part 1—Transfers of value

Anti-Money Laundering and Counter-Terrorism Financing Act 2006

Items 1 to 3 – Section 4

569. These Items amend existing section 4 of the AML/CTF Act, which contains the simplified outline for the AML/CTF Act.

570. Item 1 omits 'electronic funds transfer instructions' and replaces it with 'transfers of value' in section 4. This terminology change is required given the revised obligations for ordering institutions, intermediary institutions and beneficiary institutions.

571. Item 2 omits 'transferred money' and replaces it with 'transferred value'. This is to reflect that the value transfer concept now includes virtual assets, which do not fall into the definition of money.

572. Item 3 omits 'registrable designated remittance services' and replaces it with 'registrable remittance services' in section 4 of the AML/CTF Act to reflect the changes in terminology as result of removing the concept of a 'designated remittance arrangement' to streamline the value transfer designated services.

Item 4 – Section 5 (definition of batched electronic funds transfer instruction )

573. Item 4 repeals the definition of 'batched EFTIs' from section 5 of the AML/CTF Act. The information that must be passed on with batched value transfers will be specified in the AML/CTF Rules to align with FATF Recommendation 16.

Item 5 – Section 5 (definition of beneficiary institution )

574. Item 5 repeals the existing definition of 'beneficiary institution' in section 5 of the AML/CTF Act, which is no longer required due the new definition detailed in Item 22 of this Schedule (see below).

Item 6 – Section 5

575. Item 6 repeals the definitions of 'complete payer information', 'designated remittance arrangement' and 'electronic funds transfer instruction' in existing section 5 of the AML/CTF Act to streamline transfers of value. The travel rule obligations will now be set out in the updated obligations for ordering institutions, intermediary institutions and beneficiary institutions, as outlined in Item 22 of this Schedule.

576. Item 6 repeals the existing definition of 'funds transfer chain' to be replaced by an updated concept and definition of 'value transfer chain' by Item 22 of this Schedule.

Item 7 – Section 5

577. Item 7 inserts definitions of 'institution' and 'intermediary institution' in section 5 of the AML/CTF Act, which take their meaning from new section 63A of the AML/CTF Act (to be inserted by Item 22 of this Schedule).

Item 8 – Section 5

578. Item 8 repeals the definitions of 'multiple-institution person-to-person electronic funds transfer instruction', 'multiple-institution same-person electronic funds transfer instruction' and 'non-financier' in section 5 of the AML/CTF Act as they are no longer required under the streamlined value transfer designated services.

Item 9 – Section 5 (definition of ordering institution )

579. Item 9 repeals the existing definition of 'ordering institution' in section 5 of the AML/CTF Act to allow for the new definition that will take meaning with reference to new subsections 63A(1) to (4) (to be inserted by Item 22 of this Schedule).

Item 10 – Section 5

580. Item 10 repeals the definitions of 'payer' and 'payee'. The current definitions are based on the payer or payee's role in the kinds of funds transfer instructions that would be repealed by the amendments in Items 8 and 13 of this Schedule.

581. The intention is that 'payee' and 'payer' are to take on their ordinary meaning where used in the AML/CTF Act.

Item 11 – Section 5 (definition of registrable designated remittance service )

582. This item repeals the existing definition of a 'registrable designated remittance service' in section 5 of the AML/CTF Act, which is replaced a new definition of 'registrable remittance service' (to be inserted by Item 12 of this Schedule).

Item 12 – Section 5

583. Item 12 inserts a simplified definition of 'registrable remittance service' in section 5 of the AML/CTF Act. This definition is intended to cover a designated service that:

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is covered by item 29 and 30 of table 1 in section 6,

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is provided by a person (other than a financial institution or casino) at or through a permanent establishment of the person in Australia,

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does not involve a transfer of virtual assets, and

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is anything prescribed by the rule-making power to be excluded from the definition of 'registrable remittance service'.

584. The definition of 'registrable remittance service' is intended to exclude financial institutions or casinos from having to register as a 'registrable remittance service', because these institutions are already required to be authorised or licensed by other authorities, such as APRA or state and territory gambling regulators. It also excludes the transfer of virtual assets, as this will be captured under the definition of 'registrable virtual asset service' instead. The rule-making power will give the AUSTRAC CEO the ability to specify other of entities that are not considered a 'registrable remittance service' for the purpose of registration.

Item 13 – Section 5

585. Item 13 repeals the existing definitions of 'remittance arrangement', , 'same- institution person-to-person electronic funds transfer instruction', and 'same-institution same-person electronic funds transfer instruction' in section 5 of the AML/CTF Act as these concepts are no longer needed in light of the streamlined value transfer designated services.

586. Item 13 also repeals the definitions of 'tracing information' and 'required transfer information' in section 5 of the AML/CTF Act. Instead, in the relevant provisions in the AML/CTF Act, the amendments in this Schedule provide the AUSTRAC CEO the power to make rules in relation to the travel rule information to accompany the transfer of value. This is required as a result of FATF's current review of Recommendation 16.

Item 14 – Section 5

587. Item 14 inserts a new concept and definition of 'transfer message' in section 5 of the AML/CTF Act, which means a message that contains information relating to the content of the payer's instruction for the transfer of value. The new definition also provides the AUSTRAC CEO the power to make rules that exclude types of messages to clarify the definition.

588. Item 14 also inserts a new definition of a 'transfer of value' in section 5 of the AML/CTF Act, which includes a transfer of money, virtual assets and other property to reflect the range of transfers to be captured as required by FATF Recommendation 16. The definition excludes a transfer of physical currency or other tangible property and provides a rule-making power to clarify the scope and operation of the definition where transfers of value continue to evolve, and unanticipated scenarios emerge.

589. The intention of this definition is, where it refers to property, to cover the transfer of the value of property. For example, the definition will cover the surrender of gold bullion in one place and the making available of equivalent gold bullion in another. However, it will not cover the physical transportation of gold bullion.

Item 15 – Section 5

590. Item 15 removes the existing definitions of 'transferor entity', 'ultimate transferee entity' from the AML/CTF Act as they will be superseded by the simplified institutions involved in the value transfer chain.

591. Item 15 also removes the definition of a 'unique reference number'. This was previously used as part of the information required to be included in EFTIs. This information would instead be provided in the AML/CTF Rules, as details pertaining to the travel rule information to accompany a value transfer is yet to be settled in FATF discussions on Recommendation 16.

Item 16 – Section 5

592. Item 16 inserts a definition of 'value transfer chain' that will take its meaning from new section 63A(11) of the AML/CTF Act (to be inserted by Item 22 of this Schedule).

Item 17 – Subsection 6(2) (table items 29 to 32)

593. Item 17 repeals designated service items 29 to 32 in table 1 of section 6 of the AML/CTF Act that relate to financial institutions and non-financial institutions. Two unified value transfer designated services (new items 29 and 30 in table 1) that apply to transfers of value on behalf of a customer will be created. This will ensure consistent requirements for reporting entities that perform a similar designated service regardless of whether the transfer of value involves financial institutions, remittance service providers or VASPs.

594. Item 17 inserts designated service item 29 in table 1 of section 6 which relates to an ordering institution accepting an instruction for the transfer of value on behalf of a payer.

595. Item 17 also inserts designated service item 30 in table 1 of section 6 which relates to a beneficiary institution making the transferred value available to the payee. For clarity, this designated service intends to include scenarios where a remittance service provider makes cash available to a payee who was not previously a customer, for example, by having the payee come into their office to receive the money.

596. Item 17 also introduces a new limited designated service for intermediary institutions under designated service item 31 in table 1 of section 6 so that broader AML/CTF obligations such as managing and mitigating risk and suspicious matter reporting apply where they take an active role of receiving and passing on a value transfer message between an ordering institution and beneficiary institution. Intermediary institutions will be required to undertake ML/TF risk assessments and develop, maintain and comply with AML/CTF policies to mitigate such risks. However, they will have only limited CDD obligations under new section 39F (detailed in Item 7 of Schedule 10, see below), such as. monitoring for transactions or behaviours that may give rise to SMR obligation. This is in recognition of the fact that intermediary institutions do not have a direct relationship with either the payer or payee in a value transfer chain.

597. Item 17 is supported by the updated definitions of 'ordering institution', 'beneficiary institution', and 'intermediary institution' in section 5 of the AML/CTF Act (to be inserted by Item 22 of this Schedule).

Item 18 – Subsection 6(2) (table item 32A) (table item 32A, column headed "Provision of a designated service", paragraph (a))

598. Item 18 makes consequential amendments to designated service item 32A of table 1 in section 6 which relates to the operations of a remittance network provider, omitting the previous remittance-related services in items '31 or 32' and substituting with items '29 or 30' to reflect the changes to the value transfer designated services.

Item 19 – Subsection 6(2) (table item 32A, column headed "Provision of a designated service", paragraph (b))

599. Item 19 makes consequential amendments omitting the repealed term of 'non- financier' and substituting it with 'not a financial institution'. 'Financial institution' is defined in section 5 of the AML/CTF Act.

Item 20 – Sections 8 to 10

600. Item 20 repeals current sections 8 to 10 of the AML/CTF Act, which relate to 'person-to-person electronic funds transfer instructions', 'same-person electronic funds transfer instructions' and 'designated remittance arrangements' as a result of streamlining the value transfer designated services to remove the distinction between transfers of value facilitated by financial institutions and non-financial institutions.

Item 21 – Part 5 (heading)

601. Item 21 makes a consequential amendment to the heading of 'Part 5' to 'Part 5 – Obligations relating to transfers of value' to incorporate the simplified value transfer concept.

Item 22 – Divisions 1 to 3 of Part 5

602. Item 22 repeals and replaces Divisions 1–3 of Part 5 of the AML/CTF Act.

603. New Division 1 of Part 5 (section 63) provides a simplified outline and the key terms used throughout the new Part. While this simplified outline is included to assist a reader's understanding of the substantive provisions to follow, it is not intended to be comprehensive. Readers are advised to rely on the substantive provisions for full comprehension.

604. New section 63A provides key terms relating to transfers of value. These terms include 'value transfer chain', and the institutions that are taken to form said value transfer chain. Those institutions include the 'payer', 'payee', 'ordering institution', 'beneficiary institution', and 'intermediary institution'.

Ordering institution

605. An ordering institution is generally the institution in a value transfer chain that accepts the instruction from the payer, whether directly or indirectly. In recognition of the wide variety of value transfer services and methods of providing them, subsection 63A(1) sets out a mechanism to determine which institution, in any value transfer chain, is the ordering institution. Subsection 63A(1) clarifies that an ordering institution is an entity in a value transfer chain to satisfy a criterion set out in subsection 63A(2), with a criterion higher in the list taking priority over subsequent criteria. For clarity, the intention is that 'the first person to satisfy' does not relate to the first at a point in time but rather the first criterion to be satisfied in the list outlined in subsection 63A(2).

606. For example, if the criterion satisfied by Person A in subsection 63A(2) is at paragraph (a) and the criterion satisfied by Person B in subsection 63A(2) is at paragraph (d), the ordering institution would be Person A.

607. The listed criteria in subsection 63A(2) are intended to reflect the reality that transfers of value are done by different businesses in different ways, and therefore different entities may be the ordering institution for AML/CTF purposes. For example, some payment businesses do not hold the funds that they transfer on behalf of customers, but may instead be authorised to draw these funds from a linked bank account. This payment business would fall under criterion at paragraph 63A(1)(b) above and be an ordering institution for AML/CTF purposes. This may be distinguished from services which only pass on a request to the ordering institution to transfer funds, but are not involved in the transfer itself, under an arrangement with the ordering institution rather than by establishing a customer relationship with the payer.

608. In many cases, a series of related value transfers may involve multiple value transfer chains, with multiple payers instructing different institutions in relation to different value transfers. For example, an Australian resident may instruct an Australian remitter to transfer value to a relative offshore via an overseas remitter. The Australian remitter may separately instruct its bank to transfer money to the overseas remitter's bank account, before the offshore remitter makes the money available to the overseas relative. In this case, there will be two value transfer chains—one triggered by the Australian resident's instruction to the remitter, and one triggered by the Australian remitter's instruction to its bank. However, depending on the facts, if the Australian remitter had an arrangement with its bank under which it 'passed on' the transfer message to its bank, rather than issuing a separate instruction, there may be a single value transfer chain.

609. Subsection 63A(3) provides the AUSTRAC CEO the ability to make rules for additional criteria to be stipulated in paragraph 63A(2)(e) and which entity would constitute the 'ordering institution'. This is intended to provide flexibility given the evolving nature of payments and to cover those unanticipated emerging scenarios. It also provides the AUSTRAC CEO the ability to specify the order of priority where there is more than one criterion set out in the AML/CTF Rules.

610. The updated concept of an 'ordering institution' is intended to include what was previously captured under a designated remittance arrangement and is extended to VASPS to ensure the technology neutrality of the AML/CTF Act.

611. Subsection 63A(4) clarifies the scope of what would constitute an ordering institution by excluding most value transfers that are done incidentally to the provision of another service, unless the ordering institution is a:

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a financial institution (63A(4)(a)(i)),

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a business providing an international value transfer service incidentally to a designated service covered by item 50, 50A or 50B of table 1 in section 6 (63A(4)(a)(ii)), or

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a business providing an international value transfer service incidentally to a gambling service (contained in table 3 of section 6) (63A(4)(a)(iii)).

612. New subsection 63A(4) is intended to address the regulatory uncertainty created by the current broad definition of 'designated remittance arrangement' in section 10 of the AML/CTF Act. As a measure to confine the regulatory perimeter of who is a 'remitter', the incidental remittance exception is not relevant to financial institutions—the scope of businesses that constitute financial institutions in Australia is already clearly defined.

613. The treatment of international value transfer services incidental to currency exchange and gambling services will ensure such activities continue to trigger international value transfer service reporting obligations where previously they triggered IFTI reporting obligations. For example, a customer may request a currency exchange business to accept Australian dollars in Sydney and make pounds sterling available in London—the currency exchange business would be an ordering institution and providing a value transfer service. With the introduction of such reporting for virtual asset transfers, the equivalent virtual asset exchange services that are incidental to an international value transfer service will be treated in the same way as international value transfer services incidental to currency exchange services.

614. Further, paragraph 63A(4)(b) provides the AUSTRAC CEO with the ability to make rules that further exclude persons from the definition of 'ordering institution'.

615. When considering if a transfer is incidental to the provision of another service, the question to consider is whether the other service is a type of value transfer service, in which case it is irrelevant to consider whether the value transfer is incidental. However, if the other service is of a different nature (for example, managing a fleet of cars), then the transfer of value will be excluded.

Beneficiary institution

616. Subsection 63A(5) defines a 'beneficiary institution', and clarifies that a beneficiary institution is the person who is the first person in a value transfer chain to satisfy the highest priority criterion set out in subsection 63(6).

617. Subsection 63A(6) provides the criteria in descending order of priority for the purposes of subsection 63A(5). The inclusion of 'in descending order of priority' in subsection 63A(6) is intended to further clarify the operation of subsection 63A(5), similar to that in subsection 63A(1) for 'ordering institutions', The intention of providing the various criteria in subsection 63A(6) is to reflect the reality that value can be made available to the payee by different businesses in different ways, but that it is still necessary to designate a 'beneficiary institution' for AML/CTF purposes.

618. New subsection 63A(6) allows the AUSTRAC CEO to make rules that provide exclusions to the definition of 'beneficiary institution'.

619. Subsection 63A(7) provides the AUSTRAC CEO the ability to make rules for additional criteria to be stipulated in paragraph 63A(6)(e) for where a person would constitute a 'beneficiary institution'. This is to acknowledge the evolving nature of payments and to cover for emerging scenarios. It also provides the AUSTRAC CEO the ability to make rules that specify the order of priority where there is more than one criterion set out in the AML/CTF Rules.

620. Subsection 63A(8) also clarifies the scope of the definition of a 'beneficiary institution' by excluding most value transfers that are done incidentally to the provision of another service. The only exceptions of the incidental remittances to be captured are transfers of value involving:

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a financial institution (63A(8)(a(i))

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a business providing an international value transfer service incidentally to a designated service covered by item 50, 50A or 50B of table 1 in section 6 (63A(8)(a(ii)), or

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a business providing an international value transfer service incidentally to a gambling service (contained in Table 3 of section 6) (63A(8)(a(iii)).

621. These exceptions to the incidental remittance provisions are intended to bring them in scope for reporting obligations under international value transfer services.

622. The definition of a 'beneficiary institution' excludes most value transfers that are done incidentally to the provision of another service (not just a designated service). When considering if a transfer is incidental to the provision of another service, consider whether the other service is a type of value transfer service or if the service is of a different type, in which case the transfer of value will be excluded.

623. The updated concept of a 'beneficiary institution' includes what was previously captured under a designated remittance arrangement and is extended to VASPS to supplement the technology neutrality of the AML/CTF Act.

Intermediary institution

624. New subsection 63A(9) provides an updated definition of 'intermediary institution', which means a person who, in the course of carrying on a business receives and passes on a message in a value transfer chain. The intention is to capture those intermediary institutions that take a more active role in 'passing on' a value transfer message to another institution in the value transfer chain.

625. Paragraph 63A(10)(a) clarifies the scope of the definition of 'intermediary institution' to exclude businesses that solely provide messaging infrastructure to allow ordering and beneficiary institutions to communicate with each other. In this context, a 'message' is intended to mean the communication of the elements of the payer's instruction that are passed on to other institutions in the value transfer chain. Here the term 'instruction' is intended to refer to the request from the payer to the ordering institution, which triggers the start of a value transfer chain.

626. Further, paragraph 63A(10)(b) provides the AUSTRAC CEO the ability to make rules to exclude a person from the definition of an 'intermediary institution'.

Value transfer chain

627. New subsection 63A(11) provides the simplified 'value transfer chain' that replaces the previous concept of a 'funds transfer chain'.

628. Replacing the concept of 'funds transfer chain' with that of a 'value transfer chain' is intended to make the AML/CTF Act technology neutral. The concept of value includes money, property and virtual assets and recognises the array of businesses that provide these services.

629. An example of the operation of the value transfer chain includes where a customer (the payer) instructs their bank (the 'ordering institution') to transfer money to the account of another bank (the 'beneficiary institution') that is held on behalf of another person (the payee). Any correspondent bank between the payer's bank and the payee's bank would be intermediary institutions.

630. New subsection 63A(12) provides that each person in the value transfer chain is considered to be an institution. Further, subsection 63A(13) clarifies that a single person or business may be the same institution for the purposes of the value transfer chain.

631. For example, a person may seek to have money from a bank account in Australia made available to them via a correspondent bank in the United Kingdom when they travel. The person would be the payer and the payee. Likewise, if a customer seeks to move funds from one bank account to another held with the same bank, the bank would be both the ordering and beneficiary institution.

New Division 2—Obligations of institutions

632. Item 22 also inserts a new Division 2 that relates to obligations of institutions which outlines the travel rule obligations required by each institution along the value transfer chain.

New section 64 – Obligations of ordering institutions

633. New section 64 relates to the obligations of ordering institutions. Subsection 64(1) provides that the obligations apply if an ordering institution commences to provide the designated service covered by item 29 of table 1 in section 6. Note 1 provides that there may be exemptions to satisfying the obligations in this section under section 67. Note 2 provides other obligations that ordering institutions may have under the Autonomous Sanctions Act 2011 and the Charter of the United Nations Act 1945 in relation to persons designated for targeted financial sanctions.

634. Subsection 64(2) provides that before the ordering institution passes on a value transfer message, the ordering institution must have collected and verified information specified in the AML/CTF Rules. Where an ordering institution has already collected and verified information about its customer (that is, the payer), for example under CDD obligations, it should not be required to do so again.

635. The rule-making powers in paragraphs 64(2)(a) and (b) provide the AUSTRAC CEO the ability to specify the information the ordering institution must have collected and verified. The information specified for collection and the information specified for verification may be different as, for example, the ordering institution would not be required to verify information collected about the payee unless the payee is also the ordering institution's customer and initial CDD is triggered under new section 28. Further, the ability to specify information in the AML/CTF Rules provides flexibility for any future changes that may be made to FATF Recommendation 16, noting it is currently undergoing review by the FATF.

636. Subsection 64(3) provides that the ordering institution must pass on information specified in the AML/CTF Rules to the next institution in the value transfer chain, where the ordering institution and beneficiary institution are not the same person. The intention is not, however, to mandate the ordering institution to give effect to the payer's instruction where it determines in accordance with its AML/CTF program or for some other reason that is should not. If the ordering institution does decide to provide the value transfer service it must pass on the information specified in the AML/CTF Rules. For clarity, the intention is that where an ordering institution cannot comply with subsection 64(3), it must not pass on the information (subject only to the exception for virtual asset transfers which are outlined below in relation to new section 66A of the AML/CTF Act to be inserted by Item 22 of this Schedule).

637. Subsection 64(4) provides that where the value transfer message does not give effect to the transfer of value, the message must be passed on before or at the same time as, the ordering institution gives effect to the transfer of value. For example, where a virtual asset transfer is made on the Blockchain, the message must be passed on before, or at the same time as, the ordering institution giving effect to the actual transfer of value.

638. Subsection 64(5) provides that the ordering institution must provide the information specified by the AML/CTF Rules for the purposes of subsection 64(3) to another institution in the value transfer chain as soon as practicable after receiving a request from the institution for that information. This subsection provides other institutions in the value transfer chain the ability to request information for the purpose of subsection 64(3) from the ordering institution.

639. Subsection 64(6) provides that the AUSTRAC CEO may make different rules in relation to different kinds of institutions, information, circumstances or any other matter for the purposes of subsection 64(3). The intention of the broad rule-making power is to provide for flexibility to account for future changes that may be made to FATF Recommendation 16, noting it is currently being reviewed by the FATF.

640. Subsection 64(7) provides that subsection 64(2), (3) and (5) are civil penalty provisions. These penalties are outlined in Division 2 of Part 15 of the AML/CTF Act. The maximum civil penalty under the AML/CTF Act is set at the highest amount allowed, which is 100,000 penalty units for a corporation and 20,000 penalty units for individuals. While the penalties can be substantial, AML/CTF enforcement actions can involve serious systemic failures by a reporting entity where the number of contraventions is immeasurable. The amount of any civil penalty will be determined by the court. Courts will decide the appropriate penalty (subject to the statutory maximum) based on the circumstances of a contravention. In determining the appropriate amount for a civil penalty, the courts will consider the impact of these violations on the Australian community, the financial system, and law enforcement efforts.

New section 65 – Obligations of beneficiary institutions

641. New section 65 sets out the obligations of beneficiary institutions. Subsection 65(1) notes this section applies to a beneficiary institution providing designated service item 30. Note 1 states there may be exemptions to this under section 67.

642. Subsection 65(2) outlines the obligation of a beneficiary institution to take reasonable steps to monitor whether it has received the information specified in the AML/CTF Rules in relation to the transfer of value (subsection 65(2)(a)), and whether the information received about the payee is accurate (subsection 65(2)(b)).

643. In recognition of the volume of value transfers, this obligation is restricted to 'reasonable steps', which could include sampling of transfer messages and other assurance activities, as opposed to reviewing every transfer message individually.

644. Subsection 65(3) imposes the obligation on the beneficiary institution (in accordance with its AML/CTF program) to do at least one of the following where the beneficiary detects that it has not received all of the information mentioned in paragraph 65(2)(a) or that some or all of the information is inaccurate:

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refuse to make the transferred value available to the payee, unless until the issue is resolved (65(3)(a)), or

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to make the transferred value available and take such other action as the beneficiary institution determines 65(3)(b)).

645. A beneficiary institution acting under this obligation in good faith will not be liable due to the protection from liability offered by section 235 of the AML/CTF Act.

646. Subsection 65(4) provides the AUSTRAC CEO with a power to make rules to provide for flexibility when the review of FATF Recommendation 16 is settled. Further, the rule- making power may be used to make AML/CTF Rules to specify a more limited set of information. This may be needed due to the decommissioning of the Bulk Electronic Clearing System (BECS).

647. Subsection 65(5) provides that subsection 65(2) is a civil penalty provision. These penalties are outlined in Division 2 of Part 15 of the AML/CTF Act. The maximum civil penalty under the AML/CTF Act is set at the highest amount allowed, which is 100,000 penalty units for a corporation and 20,000 penalty units for individuals. While the penalties can be substantial, AML/CTF enforcement actions can involve serious systemic failures by a reporting entity where the number of contraventions is immeasurable. The amount of any civil penalty will be determined by the court. Courts will decide the appropriate penalty (subject to the statutory maximum) based on the circumstances of a contravention. In determining the appropriate amount for a civil penalty, the courts will consider the impact of these violations on the Australian community, the financial system, and law enforcement efforts.

New section 66 – Obligations of intermediary institutions

648. Subsection 66(1) provides that the obligations apply if an intermediary institution provides the limited designated service covered by item 31 of table 1 in section 6. Note 1 provides that there may be exemptions to satisfying the obligations in this section under section 67, as well as providing in note 2 other obligations that intermediary institutions may have under the Autonomous Sanctions Act 2011 and the Charter of the United Nations Act 1945 in relation to persons designated for targeted financial sanctions.

649. Subsection 66(2) outlines the obligation for intermediary institutions to take reasonable steps to monitor whether they have received the information specified in the AML/CTF Rules in relation to the transfer of value. In accordance with FATF Recommendation 16, this obligation should be distinguished from the same obligation applicable to beneficiary institutions.

650. In recognition of the volume of value transfers, this obligation is restricted to 'reasonable steps', which could include sampling of transfer messages and other assurance activities, as opposed to reviewing every transfer message individually

651. Subsection 66(3) imposes the obligation on the intermediary institution (in accordance with its AML/CTF Program) to refuse to pass on the transfer message or take such other action as the intermediary institution determines where the intermediary institution detects that it has not received all of the information mentioned in subsection 66(2).

652. An intermediary institution acting under this obligation will not be liable for anything that they do, or omit to do, in good faith due to the protection from liability offered by s 235 of the AML/CTF Act.

653. Subsection 66(4) provides that an intermediary institution in passing on a transfer message for a transfer of value must include:

•

information specified by the AML/CTF Rules received from the previous institution (paragraph 66(4)(a)), or

•

information obtained in accordance with is AML/CTF Program that is relevant to the transfer, for example if the intermediary institution followed up with the ordering institution to obtain missing information (paragraph 66(4)(b)).

654. Subsection 66(5) provides that the intermediary institution must provide the information to another institution in the value transfer chain as soon as practicable after receiving a request for that information. The intention is to provide other institutions in the value transfer chain the ability to request for information referred to in subsection 66(4) from the intermediary institution.

655. Subsection 66(6) also provides the AUSTRAC CEO with a power to make rules for the different circumstances in new section 66 of the AML/CTF Act when FATF Recommendation 16 is settled. Further, the rule-making power may be used to make rules to specify a more limited set of information, in anticipation of the decommissioning of the Bulk Electronic Clearing System (BECS).

656. Subsection 66(7) provides that subsections 66(2) and 66(3) are civil penalty provisions. These penalties are outlined in Division 2 of Part 15 of the AML/CTF Act. The maximum civil penalty under the AML/CTF Act is set at the highest amount allowed, which is 100,000 penalty units for a corporation and 20,000 penalty units for individuals. While the penalties can be substantial, AML/CTF enforcement actions can involve serious systemic failures by a reporting entity where the number of contraventions is immeasurable. The amount of any civil penalty will be determined by the court. Courts will decide the appropriate penalty (subject to the statutory maximum) based on the circumstances of a contravention. In determining the appropriate amount for a civil penalty, the courts will consider the impact of these violations on the Australian community, the financial system, and law enforcement efforts.

New section 66A – Obligations of ordering and beneficiary institutions relating to virtual asset transfers

657. Subsection 66A(1) provides that the application of section 66A applies only to the transfer of a virtual asset. Subsection 66A(2) requires ordering institutions to conduct counterparty due diligence to determine on reasonable grounds whether the virtual asset wallet to which the virtual assets are to be transferred is:

•

a custodial wallet controlled by a person who is licensed or registered under a law giving effect to the FATF Standards (regulated institution) (paragraph 66A(2)(a)), or

•

a custodial wallet controlled by a person not required to be licensed or registered under a law giving effect to the FATF Standards (unregulated institution) (paragraph 66A(2)(b)), or

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a custodial wallet controlled by a person who is required to be licensed or registered under a law giving effect to the FATF Standards, but is not licensed or registered (prohibited institution) (paragraph 66A(2)(c)), or

•

a self-hosted wallet controlled by the recipient of the digital assets (paragraph 66A(2)(d)).

658. Institutions are required by subsection 66A(2) to conduct counterparty due diligence regarding virtual assets due to the disparate status of different jurisdictions in relation to regulation. For example, an entity may be transferring virtual assets to a wallet that is located in a jurisdiction that does not yet require the regulation of virtual assets.

659. Subsection 66A(3) requires ordering institutions to pass on the information specified in the AML/CTF Rules in relation to a virtual asset transfer to a beneficiary institution that is:

•

a custodial wallet controlled by a person who is licensed or registered under a law giving effect to the FATF Standards (regulated institution), or

•

a custodial wallet controlled by a person not required to be licensed or registered under a law giving effect to the FATF Standards (unregulated institution).

660. Subsection 66A(4) prohibits an ordering institution from providing designated service item 29 to a person who is required to be licensed or registered under a law that gives effect to the FATF Recommendation 15, but is not so licensed or registered.

661. Subsection 66A(5) requires beneficiary institutions to conduct counterparty due diligence to determine on reasonable grounds whether the virtual asset wallet from which the virtual asset has been transferred is:

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a custodial wallet controlled by a person who is licensed or registered under a law giving effect to the FATF Standards (regulated institution) (66A(5)(a)), or

•

a custodial wallet controlled by a person not required to be licensed or registered under a law giving effect to the FATF Standards (unregulated institution) (66A(5)(b)), or

•

a custodial wallet controlled by a person who is required to be licensed or registered under a law giving effect to the FATF Standards, but is not licensed or registered (prohibited institution) (66A(5)(c)), or

•

a self-hosted wallet controlled by the recipient of the digital assets (66A(5)(d)).

662. Subsection 66A(6) prohibits a beneficiary institution in making the value available to a payee until the beneficiary institution has obtained the information specified in the AML/CTF Rules for the purposes of subsection 64(3).

663. Subsection 66A(7) prohibits a beneficiary institution from making virtual assets available to the payee, where the virtual asset wallet is a custodial wallet controlled by a person who is required to be licensed, but is not licensed or registered.

664. Subsection 66A(8) provides that subsections 66A(2) to (7) are civil penalty provisions. These penalties are outlined in Division 2 of Part 15 of the AML/CTF Act. The maximum civil penalty under the AML/CTF Act is set at the highest amount allowed, which is 100,000 penalty units for a corporation and 20,000 penalty units for individuals. While the penalties can be substantial, AML/CTF enforcement actions can involve serious systemic failures by a reporting entity where the number of contraventions is immeasurable. The amount of any civil penalty will be determined by the court. Courts will decide the appropriate penalty (subject to the statutory maximum) based on the circumstances of a contravention. In determining the appropriate amount for a civil penalty, the courts will consider the impact of these violations on the Australian community, the financial system, and law enforcement efforts.

665. Subsection 66A(9) provides an exception to subsection 66A(3) where ordering institutions are required to pass on the information specified in the AML/CTF Rules in relation to a virtual asset transfer to a beneficiary institution that is a regulated institution or unregulated institution, unless:

•

the beneficiary institution is not capable of receiving the information securely, or

•

the ordering institutions reasonably believes that there is a risk the beneficiary institution is not capable of safeguarding the confidentiality of the information, and the ordering institution makes and keeps a record of the reasons for not passing on the information.

666. Subsection 66A(10) provides exceptions to subsection 66A(6), where a beneficiary institution is prohibited from providing designated service item 30 of table 1 in section 6 of the AML/CTF Act until it has obtained the information specified in the AML/CTF Rules. The beneficiary institution must also establish on reasonable grounds that an institution in the value transfer chain is not capable of passing on the information securely, and, in accordance with their AML/CTF program, they identify, assess, mitigate and manage the money laundering, terrorism financing and proliferation financing risks that the beneficiary institution may reasonably face in making the virtual assets available to the payee.

667. Subsection 66A(11) provides that if an ordering institution or beneficiary institution wishes to rely on subsection 66A(9) or 66A(10), they will carry the evidentiary burden. The reversal of the burden of proof is reasonable in relation to these provisions, as evidence regarding the beneficiary institution's capacity to receive information, or evidence that it is not capable of safeguarding the information, will be particularly in the knowledge of either the beneficiary or ordering institutions, depending on the circumstance.

Item 23 – Section 67

668. Item 23 repeals existing section 67 of the AML/CTF Act and inserts a new section 67 that provides a power for the AUSTRAC CEO to make rules that this Part or a specified provision of this Part does not apply to a specified kind of designated service or transfer of value. The intention of this broad rule-making power is to provide flexibility to make AML/CTF Rules when FATF Recommendation 16 is settled.

669. Item 23 also inserts a new section 67A to bring the existing provisions in Chapter 23 of the AML/CTF Rules into the AML/CTF Act. The effect of the exemption is that businesses that provide escrow services who are, or use, qualified accountants and legal practitioners do not need to comply with travel rule and international value transfer services, as their offering of escrow services will be separately captured under the new designated services table 6 in section 6 of the AML/CTF Act (see Item 10 of Schedule 3).

670. An escrow agreement for the purpose of this section is intended to take its ordinary meaning. Escrow services provided by reporting entities that are not qualified accountants or legal practitioners will continue to be required to meet obligations under new Part 5 of the AML/CTF Act relating to international value transfer services.

Item 24 – Subsection 68(1)

671. Item 24 omits 'or 3' from subsection 68(1) so that section 68 applies to section 175 proceedings for a contravention of a civil penalty provision of Division 2 (and not Division 3).

Item 25 – Sections 69 to 72

672. Item 25 repeals existing sections 69–72 of the AML/CTF Act, which deal with the 'complete payer information' and 'tracing information' requirements. These requirements are no longer required to be detailed in the AML/CTF Act, as they will instead be provided in the AML/CTF Rules. This is because of the FATF's review of Recommendation 16, which may require changes to the type of information required.

Items 26 to 30

673. These Items omits 'designated' from 'registrable designated remittance services' to reflect the changes in concept and terminology in new section 74 of the AML/CTF Act (to be inserted by Item 12 of this Schedule).

Item 31 – Division 4 of Part 10

674. Item 31 repeals existing Division 4 of Part 10 of the AML/CTF Act, which relates to the retention of records about EFTIs. These provisions are no longer required as they are covered by the amended section 107 (to be amended by Item 10 of Schedule 10).

675. Item 31 will repeal existing section 115 of the AML/CTF Act. The purpose of section 115 is currently to ensure that interposed persons were retaining records about EFTIs. The section is no longer required as the reforms in this Bill bring intermediary institutions into AML/CTF Act. Intermediary institutions would now be subject to new section 107 of the AML/CTF Act (to be amended by Item 10 of Schedule 10), which require transaction records to be retained in relation to individual transactions relating to the provision of the designated service to the customer, including information received or passed on as part of a value transfer chain.

Item 32 – Section 118

676. Item 32 omits references to section 115 in section 118 wherever occurring.

Item 33 – Subsection 184(4) (after paragraph (fb) of the definition of designated infringement notice provision )

677. This Item inserts three new paragraphs in subsection 184(4) of the AML/CTF Act, which provide that the obligations of ordering, beneficiary and intermediary institutions are subject to designated infringement notices. This amendment adds these provisions to the current list of provisions in existing section 184 that are suitable for designated infringement notices.

Part 2—International value transfer services

678. Part 2 of this Schedule updates the terminology of 'international funds transfer instruction' to align with the changes to transfers of value and value transfer chain to 'international value transfer services' (IVTS).

679. The current framework for submitting IFTIs is outdated and increasingly complex to apply to modern payment services.

680. This Part amends Division 4 of Part 3 of the AML/CTF Act to ensure IFTI reporting obligations lie with the reporting entity closest to the Australian customer. This is opposed to the previous 'first-in last-out' principle where the obligation fell on the sender of an instruction to transfer funds out of Australia or the recipient of an instruction sent into Australia, which caused regulatory uncertainty. Shifting the reporting obligation would enable more accurate customer information to be included in IFTI reports, as reporting entities will have a closer business relationship with the customer. This Schedule would also provide that IVTS reports would relate to the movement of value rather than movement of instructions.

681. This Schedule would extend reporting to international transfers of virtual assets including those incidental to virtual asset exchange designated services in Items 50A and 50B of table 1 in section 6. Certain incidental international remittances, such as those relating to currency exchange or gambling services, will continue to trigger reporting to AUSTRAC.

682. It also streamlines the current framework into a single IVTS report, so regardless of the type of value, there will no longer be a distinction made between the two types of reports, IFTI-Es for financial institutions and IFTI-DRAs for remitters.

Anti-Money Laundering and Counter-Terrorism Financing Act 2006

Item 34 – Section 4

683. Item 34 replace references to 'international funds transfer instructions' and substitutes it with 'information about international value transfer services' in section 4 to reflect the changes in terminology.

Item 35 – Section 5 (definition of international funds transfer instruction )

684. This Item repeals the definition of 'international funds transfer instruction'.

Item 36 – Section 5

685. This Item inserts a definition of 'international value transfer service' and provides that it has the meaning given by section 45.

Item 37 – Section 40

686. This Item omits and inserts existing section 40 of the AML/CTF Act. Section 40 is the simplified outline of Part 3 of the AML/CTF Act. Item 23 adds to the simplified outline 'if a person provides a designated service involving a transfer of virtual assets to or from an unverified self-hosted virtual asset wallet, the person must give the AUSTRAC CEO a report about the provision of the service'. This is to capture the new requirements regarding the provision of reports in relation to self-hosted wallets.

687. While this simplified outline is included to assist a reader's understanding of the substantive provisions to follow, it is not intended to be comprehensive. Readers are advised to rely on the substantive provisions for full comprehension.

Item 38 – Division 4 of Part 3

688. Item 38 repeals Division 4 of Part 3 of the AML/CTF Act and substitutes it with a new Division 4 which relates to 'International value transfer services and transfers of value involving unverified self-hosted virtual asset wallets.'

New section 45 – International value transfer services

689. Section 45(1) defines an 'international value transfer service' to mean a service that is covered by designated services item 29 and 30 of table 1 in section 6, and either the value to be transferred moves between Australia and another country as a result of the provision of the designated service. The intention for the changes in subsection 45(1) is to reflect the updated value transfer designated services.

690. Subsection 45(2) provides the AUSTRAC CEO with the power to make AML/CTF Rules CEO to clarify when value is in a country at a particular time. The intention is to provide clarification given the non-physical nature of value, for example, by looking at the location of the permanent establishment of the institution at which the value is held or dealt with.

New section 46 – Reports of international value transfer services

691. Section 46 sets out requirements for a reporting entity to provide a report about the provision of the international value transfer service within 10 business days.

692. Subsection 46(1) provides that it applies to a reporting entity if it commences to provide an international value transfer service at or through a permanent establishment of the reporting entity in Australia as defined in section 45 of the AML/CTF Act. It also provides a rule-making power for the AUSTRAC CEO to prescribe other conditions that would bring in other entities for the purposes of reporting international value transfer services.

693. Subsection 46(2) provides that a reporting entity must give the AUSTRAC CEO a report about the provision of the international value transfer service within 10 business days after the reporting entity passes on the value transfer message or receives the value transfer message. The concepts of 'passing on' or 'receiving' a value transfer message should be read as aligning with the amendments to transfers of value, value transfer chain and obligations of institutions.

694. Subsection 46(3) provides that a report will not need to be given to the AUSTRAC CEO if, within 10 business day period, the reporting entity reasonably determines that the transfer of value will not occur and take reasonable steps to ensure that the transfer will not occur. This addresses an issue raised by stakeholders where transfers that were cancelled or aborted could still trigger a reporting obligation. However, where a transfer of value is cancelled due to a reasonable suspicion of criminal activity, the reporting entity will be required to submit a SMR instead.

695. Subsection 46(4) provides that a report must be in the approved form, and contain information as is specified in the AML/CTF Rules. The intention is to provide the AUSTRAC CEO the power to make AML/CTF Rules that will specify broad categories of information to be reported with the approved form setting out the specific information to be provided in the respective reports.

696. Subsection 46(5) provides that the AML/CTF rules may specify circumstances in which the reporting obligation imposed on a reporting entity by subsection 46(2) must be discharged by an intermediary institution and if so, the obligation must be discharged by the intermediary institution in accordance with the AML/CTF Rules

697. Subsection 46(6) provides that the obligation in subsection 46(5) to report international value transfer services may be discharged by an intermediary institution if:

•

the intermediary institution is an intermediary institution that provides, or will provide, the designated service covered by item 31 of table 1 in section 6 (paragraph 46(6)(a)), and

•

the reporting entity has entered into a written agreement with the intermediary institution that enables the intermediary institution to comply with the obligation (paragraph 46(6)(b)).

698. Though the obligation to report international value transfer services may be discharged by an intermediary institution, it is the intention that the ordering institution or beneficiary institution remains liable for any contravention of subsection 46(2).

699. Subsection 46(7) provides that subsection 46(2) and subsection 46(5) are civil penalty provisions. These penalties are outlined in Division 2 of Part 15 of the AML/CTF Act. The maximum civil penalty under the AML/CTF Act is set at the highest amount allowed, which is 100,000 penalty units for a corporation and 20,000 penalty units for individuals. While the penalties can be substantial, AML/CTF enforcement actions can involve serious systemic failures by a reporting entity where the number of contraventions is immeasurable. The amount of any civil penalty will be determined by the court. Courts will decide the appropriate penalty (subject to the statutory maximum) based on the circumstances of a contravention. In determining the appropriate amount for a civil penalty, the courts will consider the impact of these violations on the Australian community, the financial system, and law enforcement efforts.

700. Subsections 46(8) and 46(9) provides the AUSTRAC CEO the ability to exempt in the AML/CTF Rules an international value transfer service or a transfer of value from having to report international value transfer services. As mentioned, the FATF is currently reviewing Recommendation 16. The intention behind the broad rule-making power is to provide flexibility to make AML/CTF Rules when FATF Recommendation 16 is settled.

New section 46A – Reports of transfers of value involving unverified self-hosted virtual asset wallets

701. Subsection 46A(1) provides that a report will need to be made in relation to an unverified self-hosted wallet where:

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a reporting entity commences to provide designated services item 29 or 30 at or through a permanent establishment of the reporting entity in Australia (46A(1)(a))

•

the service involves the receipt of digital assets from an unverified self-hosted digital wallet or the transfer of digital assets to an unverified self-hosted digital wallet (46A(1)(b)), and

•

the ownership or control of the self-hosted virtual asset wallet has not been verified in accordance with its AML/CTF policies. Verifying ownership involves linking the virtual asset wallet either to the reporting entity's own customer or a known third party (46A(1)(c)).

702. Transfers of virtual assets to or from unverified self-hosted wallets present particular risks. The amendments in the Bill would introduce the reporting of such transfers as a risk mitigation measure, while permitting such transfers to continue to occur.

703. Subsection 46A(2) provides that a reporting entity must give the AUSTRAC CEO a report about the provision of designated services item 29 or 30 relating to virtual asset transfers to and from unverified self-hosted virtual asset wallets (under subsection 46A(1)) within 10 business days after commencing the services. This is required as in self-hosted wallet scenarios no message is likely to be transmitted or received.

704. Subsection 46A(3) provides that a report under subsection 46A(2) must be in accordance with the approved form or in a manner specified in the AML/CTF Rules, and contain the information required by the AML/CTF Rules. The intention is to provide the AUSTRAC CEO the power to make rules that will specify broad categories of information to be reported with the approved form setting out the specific information to be provided in the report.

705. Subsection 46A(4) provides that subsection 46(2) is a civil penalty provision. These penalties are outlined in Division 2 of Part 15 of the AML/CTF Act. These penalties are outlined in Division 2 of Part 15 of the AML/CTF Act. The maximum civil penalty under the AML/CTF Act is set at the highest amount allowed, which is 100,000 penalty units for a corporation and 20,000 penalty units for individuals. While the penalties can be substantial, AML/CTF enforcement actions can involve serious systemic failures by a reporting entity where the number of contraventions is immeasurable. The amount of any civil penalty will be determined by the court. Courts will decide the appropriate penalty (subject to the statutory maximum) based on the circumstances of a contravention. In determining the appropriate amount for a civil penalty, the courts will consider the impact of these violations on the Australian community, the financial system, and law enforcement efforts.

706. Subsections 46A(5) and 46A(6) provides the AUSTRAC CEO the ability to exempt in the AML/CTF Rules transfers of value relating to section 46A (that is, transfers of virtual assets to and from unverified self-hosted virtual asset wallets) from having to report international value transfer services.

Item 39 – Before section 49

707. Item 39 inserts subsections 48A(1) and (2) to provide the AUSTRAC CEO the power to make rules in relation to the amendment or withdrawal of a report given under sections 41, 43, 46 or 46A of the AML/CTF Act. This is required as IVTS reports may need to be withdrawn or amended where the transfer of value was rescinded or aborted, but the report was not.

Items 40 and 41

708. Items 40 and 41 amend existing sections 49 and 51 of the AML/CTF Act to omit references to section '45' wherever occurring and substitute '46 or 46A' in sections to reflect the changes to this Part.

Item 42 – Subparagraph 51G(3)(c)(ii)

709. Item 42 makes consequential amendments by repealing subparagraph 51G(3)(c)(ii) and substituting it with:

•

section 46 (reports of international value transfer services);

•

section 46A (reports of transfers of value involving unverified self-hosted virtual asset wallets);

Item 43 – Subsection 184(1C)

710. Item 43 omits '45(2)' and substitute it with '46(2) or (5), 46A(2)' in subsection 184(1C) to reflect the changes to Part 3 of the AML/CTF Act made by this Schedule.

Item 44 – Subsection 184(4) (paragraph (d) of the definition of designated infringement notice provision )

711. Item 44 makes consequential amendments to the definition of 'designated infringement notice provision' in subsection 184(4)(d). This Item repeals paragraph (d) and substitutes it with:

•

subsection 46(2) or (5) (which deals with reporting about international value transfer services);

•

subsection 46A(2) (which deals with reporting about transfers of value involving unverified self-hosted virtual asset wallets);

to reflect the changes in this Part.

Item 45 – Paragraph 191(2)(b)

712. Item 45 omits '45(2)' in paragraph 191(2)(b) of the AML/CTF Act and substitutes it with '46(2) or (5), 46A(2)' to reflect the changes to Part 3 of the AML/CTF Act made by this Schedule.