AML/CTF customer identification and verification changes for online wagering operators
From 29 September 2024, more stringent customer identification and pre-verification requirements (called Applicable Customer Identification Procedures (Verification)) applicable to WSPs will come into force across all Australian jurisdictions.
Author: Bree Ryan, Senior Associate / Lorna Read, Associate
Wagering service providers (WSPs) provide a range of “designated services” to customers (including, for example, opening an account and accepting a bet) and are, in doing so, subject to detailed regulatory obligations under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act).
From 29 September 2024, more stringent customer identification and pre-verification requirements (called Applicable Customer Identification Procedures (Verification)) applicable to WSPs will come into force across all Australian jurisdictions.
Commencing on 29 September 2024, Verification must be carried out prior to creating the customer account, as opposed to within a period of up to 72 hours afterwards in certain circumstances.
Background and current law
In August 2023, the Australian Transaction Reports and Analysis Centre (AUSTRAC) sought feedback on the Verification requirements relating to customers of a WSP (Feedback), foreshadowing amendments to the Anti-Money Laundering and Counter-Terrorism Financing Rules 2007 (AML/CTF Rules). This consultation stemmed from several online reform initiatives referred to as the National Consumer Protection Framework.
On 28 September 2023, changes to the AML/CTF Rules were implemented to require Verification prior to the account being opened. This also meant no transactions could occur on the account prior to Verification. The feedback resulted in the insertion of Chapter 82 of the AML/CTF Rules setting out special circumstances which allowed WSP to perform Verification up to 72 hours after the betting account being created, prior to any customer transactions occurring on the account.
However, Chapter 82 is a transitional provision that was intended to give WSPs 12 months to implement technology system changes for customer pre-verification.
What’s Changing?
From 29 September 2024 Chapter 82 of the AML/CFT Rules will be repealed and the default position under section 32 of the AML/CTF Act will apply. This means that all WSPs must complete Verification prior to creating a betting account for a customer. In other words, a WSP cannot provide any services to a person until Verification is fully complete. This includes situations even where:
the account number has not been given to the holder of the account; and
the account holder cannot conduct a transaction in relation to the account.
This change only effects betting accounts opened from 29 September 2024 onwards. Existing accounts are unaffected.
What do I need to do to comply?
WSPs are required to have a compliant AML/CTF Program in place, as required by section 82 of the AML/CTF Act. The Program should set out, among other things, the Verification processes required prior to providing gambling services to customers, as well as on an ongoing basis.
WSPs should review their Program to ensure that it reflects the new position, update their training materials, review internal and technological processes and ensure employees are made aware of the changes.
Failure to comply with the new Verification requirements may result in a civil penalty which can attract a pecuniary penalty of up to $31.3 million for a body corporate and $6.26 million for individuals.
