Are Evaluations Mandatory?

• Yes, evaluations are mandatory under section 26F(4)(f) of the Act.

When should we have an Evaluator?

• The frequency of independent evaluation will depend on the nature size and complexity of your business.

• Every registered business must have an evaluation, at least every three years.

• Your business’s AML policies must set out the frequency of independent evaluations.

• You may elect have an interim evaluation. These are not mandated under the act but are available and considered to be a sensible step to consider for practices who have established their AML policies and procedures, have been running under their new policies and procedures for a time and would like an independent evaluator to provide an interim review and feedback on their adherence to the criteria and to identify whether any gaps exist. This will assist by providing a business with time to remedy any deficiencies prior to a formal evaluation and reporting to AUSTRAC.

Who can conduct independent evaluations?

Whilst the Act does not currently require independent evaluators to hold specific qualifications, the Act notes, that amongst other things, an independent evaluator must be:

• Independent and free of bias, influence and conflict of interest;

• Be a sensible choice given the size, nature and complexity of your business;

• An independent evaluator should hold “sufficient experience and knowledge”, specific to your business as this assists with understanding your business and being able to readily identify where risks may exist as well as being able to offer recommendations for any risks or adverse findings.

What do independent evaluators do?

• Independent evaluators are required to undertake:

  • evaluation of steps taken by the reporting entity when undertaking or reviewing the reporting entity’s ML/TF risk assessment, against the requirements of the Act, the regulations and the AML/CTF Rules;

  • evaluation of the design of the reporting entity’s AML/CTF policies, against the requirements of the Act, the regulations and the AML/CTF Rules;

  • testing and evaluation of the compliance of the reporting entity with the reporting entity’s AML/CTF policies;

  • testing and evaluation of whether the reporting entity is appropriately identifying, assessing, managing and mitigating the risks of money laundering, financing of terrorism and proliferation financing that the reporting entity may reasonably face in providing its designated services;

  • production of a written report (an independent evaluation report) containing findings on the matters mentioned in paragraphs above.

What happens if adverse findings are identified as a result of the evaluation?

• If adverse findings are identified following an evaluation, these findings will be reported (in writing) to business. Whilst recommendations about remediation may be offered, the onus is on the business to rectify the shortcomings and that the relevant steps are taken to ensure compliance with the Act and Rules as soon as possible.