Answer To: Corporations and Trust Law – Semester 2, 2022 Assessment Event 3: Case Study/Research Report...
Tarun answered on Oct 21 2022
INTRODUCTION
In response to international efforts to improve Australia's capacity to identify and stop money laundering and terrorism funding, the Australian Government passed the Anti-Money Laundering and Counter-Terrorism Financing Act of 2006 (hereinafter referred to as “AML/CTF Act”) and the Anti-Money Laundering and Counter-Terrorism Financing Rules (hereinafter referred to as “AML/CTF Rules”). In addition, the said law will strengthen anti-money laundering and counter-terrorism measures in Australia. The AML/CTF Act and AML/CTF Rules place restrictions on various industries, including the financial sector, the gambling industry, remittance (money transfer) services, bullion dealers, and others (referred to as "reporting entities") that offer specific services (referred to as "services When providing certain services, these requirements include gathering and validating specific "know your customer" (KYC) information regarding a customer's identification. When processing personal information obtained for the purposes of complying with their AML/CTF Act duties, businesses that are obligated to abide by the AML/CTF Act are also expected to abide by the Privacy Act 1988. The Australian Government agency in charge of ensuring adherence to the AML/CTF Act is called Australian Transaction Reports and Analysis Centre (hereinafter referred to as “AUSTRAC”).
1. Outline any breaches that have occurred or could occur of your director duties and Anti-money Laundering and Counter-terrorism Financing legislation. Discuss with reference to case examples: The AML/CTF Act makes it illegal to create false or deceptive information or documentation, fabricate documents to be used in customer identification processes, deliver or receive a designated service using a false customer name or customer anonymity, and set up a transaction in a way that avoids a reporting requirement under the AML/CTF Act. Additionally, the AML/CTF Act normally contains provisions for civil penalties for violations of its requirements. For instance, a reporting company violates a civil penalty provision if it renders a designated service to a client before implementing, or if it fails to maintain, a compliance AML/CTF programme. According to the AML/CTF Act, a reporting body is typically prohibited from telling a client that it has a suspicion about them or that it has reported a suspicious matter to AUSTRAC about them. According to the AML/CTF Act, sharing such a suspect or report would be considered tipping off. In the case at hand before us, the Director has violated Section 123 of the AML/CTF Act by disclosing the information. Two instances of bank employees being found guilty of money laundering have occurred. However, money laundering was an additional charge in both cases. After assuming the identities of bank customers to obtain credit cards, an NSW employee of the Commonwealth bank was found guilty of theft and careless dealing with the proceeds of a crime (Butler v R [2012] NSWCCA 54). After using secret Australian Bureau of Statistics data to execute successful derivatives trades, an associate director of National Australia Bank was found guilty of Handling insider trading and criminal proceeds (Kamay v the Queen [2015] VSCA 296). A former chief of staff to the CEO of the National Australia Bank pleaded guilty to 38 counts of fraud and corruption in a case from 2020 and was sentenced to 80 years in prison. The criminal case against her associate stems from 74 allegations of fraud and corruption, and it is still pending. However, neither accused was charged with money laundering.
In case of non-compliance under the AML/CTF regulations, AUSTRAC can take actions to enforce the compliance with law and/or seek a fine. There are numerous legal measures called as "enforcement actions" to ensure compliance of law by reporting entities. AUSTRAC has several enforcement options at its disposal:
· Order with regard to civil penalties
· enforceable commitments
· notices of violations
· advice for correction.
2. Outline and discuss in what ways the Corporations Act 2001 regulates as well as prohibits the misuse of the information which was disclosed which is not generally available and that would have a material effect on the price of the company’s shares: Companies and registered schemes must maintain a register of members, as well as, if applicable, a register of option and debenture holders, according to Section 168 of the Corporations Act. According to Section 169 of the Act, a register of members must include particular information about each member, such as their...