If your charity is at risk of being caught by the provisions of the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (the Act), you should be seeking advice now on whether you could qualify for an exemption.
The Act will not come fully into effect until late 2012 but the Ministry of Justice has advised charitable organisations which think they might be affected to start preparing for it now.
This Brief Counsel looks at the Act and at the exemption process.
Charities which might come within the Act
Charities which are engaged in the ordinary course of business in a range of financial activities, including lending (for example for housing or new enterprises), or investing, administering or managing funds on behalf of other persons, may come within the Act.
Reporting entities under the Act will face significant compliance costs as they will be required to comply with a range of obligations, such as; preparing a written risk assessment, having an AML/CFT programme and officer, reporting suspicious transactions and carrying out a range of customer due diligence procedures.
The Ministerial exemption
The Act provides the Minister of Justice with the power to exempt organisations from unintended consequences of the legislation on a case by case basis.
Before deciding to grant an exemption, and whether to attach any conditions, the Minister must have regard under section 157 of the Act to:
the intent and purposes of the Act (and its soon-to-be predecessor, the Financial Transactions Reporting Act 1996)
the risk of money laundering and the financing of terrorism associated with the reporting entity
the impacts on prevention, detection, investigation and prosecution of the money laundering offences
the level of regulatory burden to which the reporting entity would be subjected to in the absence of an exemption
whether the exemption would create an unfair advantage for the reporting entity or disadvantage third party reporting entities, and
the overall impact that the exemption would have on the integrity of, and the compliance with, the AML/CFT regulatory regime.
If you would like further information on the exemption process, or on the requirements under the Act, please contact the lawyers featured.