Chapter 2 - Overview of the bill
2.1
This chapter briefly outlines the main provisions of
the Bill.
Main provisions of the Bill
Schedule 1
Item 1
2.2
Item 1 inserts
'Division 3A of Part II' before the reference to 'Part VIA' in subsection 3(1)
(definition of 'account') into the FTR Act. The purpose of the amendment
is to restrict the new definition of 'account', inserted by item 2 of the Bill, to Division 3A of Part II of the FTR Act.
2.3
Division 3A of
Part II of the FTR Act implements Special Recommendation VII (SR VII), which requires the inclusion, with funds
transfer instructions, of customer information about the customer sending the
funds. According to the EM, SR VII was developed with the objective of
preventing terrorists and other criminals from having unfettered access to wire
transfers for moving their funds and for detecting such misuse when it occurs.[9]
2.4
Currently,
Division 3A of Part II of the FTR Act contains sections 17FA (Customer
information in international funds transfer instructions transmitted out of Australia) and 17FB (Customer information in
international funds transfer instructions transmitted into Australia).[10]
Item 2
2.5
Item 2
inserts a definition of the term 'account' into Division 3A for the purposes
only of Division 3A of Part II of the FTR Act. New section 17FAA will
define the term 'account' to include a credit card account, a loan account
(other than a credit card account) and an account of money held in the form of
units in either a cash management trust or a trust of a kind prescribed by the
regulations. In order to avoid any doubt, it is immaterial whether an
account has a nil balance or whether any transactions have been allowed in
relation to an account.
2.6
It is
intended that the new definition of 'account' should only be applicable, and
confined, to Division 3A of Part II of the FTR Act. The other existing
definitions of 'account' as defined as subsection 3(1) and section 40C (Part
VIA) of the FTR Act will be retained. That is, the meaning of account (as
defined at subsection 3(1)) will still be applicable for all parts of the FTR
Act except for Part VIA of the FTR Act and Division 3A of Part II of the FTR
Act.[11]
Items 3-9 and 11-16
2.7
Items 3-9
and 11-16 omit the reference to 'cash dealer' and substitute the term 'ADI' (Authorised
Deposit Taking Institution) in paragraph 17FA(1)(a), paragraph 17FA(2)(a),
paragraph 17FA(2)(b), subsection 17FA(3), paragraph 17FB(1)(a) and subsections
17FB(2), 17FB(4), 17FB(5) respectively. The term 'ADI' is defined in
subsection 3(1) to mean:
- a body
corporate that is an ADI for the purposes of the Banking Act 1959; or
- the
Reserve Bank of Australia; or
- a
person who carries on state banking within the meaning of paragraph 51(xiii) of
the Constitution.
2.8
Item 4
repeals current paragraph 17FA(1)(b) and substitutes new paragraph 17FA(1)(b)
to state that the ADI is acting on behalf of, or at the request of, another
person who is not an ADI.
2.9
According
to the EM, this amendment is intended to restrict the application of Division
3A of Part II of the FTR Act to ADIs only. The reason for this restriction
is due to problems that have arisen with the current application of Division 3A
of Part II of the FTR Act to non-bank money remittance
businesses. Presently, the FTR Act does not distinguish between non-bank International
Funds Transfer Instructions (IFTIs) which are 'same-institution' funds transfer
instructions and non-bank IFTIs involving 'multiple' institutions.[12]
2.10
The EM
states that it is impracticable to require IFTIs sent from one institution in
one country to the same institution in another country to include originator
information because, in effect, this would require the institution to 'pass on'
the information to itself. In these situations, funds transfer requests
are registered on a single internal system of the institution, while the actual
transfer of funds is effected through net settlements between the institution's
various accounts around the world.[13]
2.11
Presently,
non-bank money remitters report IFTIs to the Australian Transaction Reports and
Analysis Centre (AUSTRAC). This means that ordering customer information is
currently available to law enforcement authorities. The amendment to
restrict Division 3A of Part II of the FTR Act to ADIs will not alter this
position.[14]
Item 10
2.12
Item 10
repeals current paragraph 17A(3)(b) and substitutes a new paragraph 17A(3)(b)
to make clear that either an account number or an identification code can be
used. The EM states that some customers sending money by an IFTI will not
be an account holder with a financial institution and clearly in this instance
an identification code should be able to be used.[15]
2.13
In
practice, financial institutions can transmit multiple numbers of IFTIs in
batch form and even if some or all are on behalf of account holders it is more
practicable to use one identification code to cover all of the IFTIs being transmitted
in a particular batch. This amendment is intended to clarify that an
account number is only required to be included in, or with, the instruction
when the instruction relates to transferring money directly from a single
account held by the customer with the ADI. In all other cases, an
identification code should be permitted instead of an account number.[16]
Item 17
2.14
Item 17
omits the words 'if the ordering customer does not have an account with the
ordering organisation' from subparagraph 17FB(6)(c)(ii) of the FTR Act. The
effect of this amendment is that the customer's account number or the
identification code is now given equal standing for incoming IFTIs received by
Australian ADIs under section 17FB of the FTR Act. The purpose of the
amendment is to overcome the potential practical difficulties faced by
Australian ADIs and AUSTRAC in determining whether a foreign customer has an
account with a foreign ordering organisation.[17]
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