AML & CTF FAQ’s for Accredited Commercial & Asset Finance Brokers.Frequently asked questions and answers relating to the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act) and the Anti-Money Laundering and Counter-Terrorism Financing Rules Instrument (No.1) 2007 (AML/CTF Rules).

All you need to know about:

• Regulatory Information• Broker Obligations• Process & Procedure for Brokers• General Information

For more information go to commbankbrokers.com.au

AML & CTF FAQ’s for Accredited Commercial & Asset Finance BrokersPage 2 of 11

Regulatory Information

No. Question Answer

1 What is the AML/CTF Act? The AML/CTF Act (which is supported by the AML/CTF Rules) was introduced to bring Australia into line with international best practice to deter and detect money laundering and terrorism financing.

A person who provides a “designated service” will be regulated as a “reporting entity” under the AML/CTF Act. Designated services include a broad range of financial services that are offered by CommBank Group members such as providing finance and credit, issuing securities and derivatives, and providing a bank account.

2 Who is the regulator of AML/CTF related matters?

The Australian Transaction Reports and Analysis Centre (AUSTRAC) is the financial intelligence agency with regulatory responsibility for anti-money laundering and counter terrorism financing.

AUSTRAC provides financial intelligence to partner agencies including law enforcement, national security, human services, revenue agencies and certain international partner agencies.

3 How does AML/CTF impact CommBank?

All providers of designated services must comply with the AML/CTF obligations.

Serious and organised crime is a cost to the Australian economy. The financial sector is attractive to money launderers and terrorist financers because of the large number of users and vast financial flows. This provides opportunities to disguise and conceal illicit transactions.

As Australia’s largest financial institution, CommBank has a major role to play in reducing the flow of money used to finance criminal activity.

4 What are the consequences of non-compliance with AML/CTF obligations?

CommBank could be subject to large potential penalties, fines and regulatory intervention. Recent international fines have been in the billions of dollars and CommBank could suffer severe reputational damage and loss of customer confidence.

For Brokers, there are also consequences for non-compliance (refer to Q8).

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Broker Obligations

No. Question Answer

5 What obligation does an accredited Broker have under CommBank’s AML/CTF Program?

An accredited Broker who introduces clients for CommBank products will act on CommBank’s behalf and will therefore need to comply with CommBank’s procedures, including those relating to AML/CTF.

CommBank’s AML/CTF procedures require an accredited Broker to:

• undertake customer identification and verification procedures (otherwise known as “Know Your Customer” or “KYC” checks) on behalf of CommBank;

• report suspicious matters to CommBank;

• undertake AML/CTF risk awareness training.

An accredited Broker will also be subject to due diligence checks conducted by CommBank.

6 What is my role in on-boarding new to bank customers?

As an accredited Broker, you must follow our customer on-boarding and KYC procedures when introducing a customer to CommBank for a designated service.

Undertaking those procedures means that you (and therefore CommBank) can ensure that:

• the customer is who they say they are;

• in relation to a non-individual customer (such as a company or trust):

– the customer exists;

– the identity of certain persons connected to the customer are known;

– CommBank can identify the Beneficial Owners of the customer. A Beneficial Owner includes any individual (natural person) who ultimately “owns” or “controls” 25% or more of the customer, either directly or indirectly (refer to Q25 for full details of how we determine a Beneficial Owner).

Information about the KYC procedure that you need to follow is set out in briefing materials that CommBank issues and provides to you from time to time. CommBank’s Third Party AML-CTF Customer Due Diligence procedures can be found on the CommBank Broker website.

It is important to note that KYC procedures differ for Commercial and Asset Finance lending transactions (refer to the Process and Procedures for Brokers on page 4).

If you have any questions about your role in on-boarding new to bank customers or have any doubts as to the identity of a potential customer, please contact your Business Development Executive.

7 What is my role in reporting suspicious matters?

As an accredited Broker you must report suspicious customer behaviour and transactions to CommBank. This reporting obligation is outlined in CommBank’s Third Party AML-CTF Customer Due Diligence procedures which can be found on the CommBank Broker website. Reports are to be made to Commonwealth Bank Group Security on 1300 706 309.

8 What are the consequences if I do not comply with AML/CTF obligations?

Non-compliance with your AML/CTF obligations is a breach of your agreement with CommBank, which may lead to termination of your accreditation.

Certain contraventions under the AML/CTF Act could result in imprisonment (i.e. tipping-off).

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Process and Procedures for Brokers

No. Question Answer

9 I am an accredited Commercial Broker lodging a Commercial Loan Application for a new to bank customer. What process do I need to follow?

A new to bank Borrower, Guarantor, Sole Trader, Partner of an Informal Partnership and Account Signatory who is an individual must complete the AML/CTF KYC Information for Individual’s form which is to accompany the Commercial Loan Application. You can also obtain a copy of the form from the CommBank Broker website.

For all new to bank Organisation customers, a Contact Person must be nominated. It could be one of the above individuals or another Contact Person (refer to Q12 for details of who can be an authorised Contact Person).

If it is a new individual they must complete and sign an AML/CTF KYC Information for Individual’s form.

The accredited Broker is to facilitate the collection and certification of identification/verification documents.

An accredited Broker must tell the Contact Person that the following process will be followed:

• During the approval process and/or before loan documents are issued, CommBank’s Customer Establishment Team who specialise in KYC procedures & processes will call the Contact Person to obtain all of the necessary information in order to on board the customer;

• The Contact Person may be asked to submit identification documents to CommBank. These documents are required so that CommBank can verify the information provided. The documents may be given to an accredited Broker for on-forwarding to CommBank’s Approving Officer;

• CommBank may ask a customer to provide certified copies of identification documents. In which case, a customer may ask an accredited Broker to certify those documents (refer to Q21 for information on how to certify documents).

Note: Loan Documents will not be able to be ordered until all AML/CTF KYC on boarding requirements for individuals and organisations are complete.

10 I am an accredited Asset Finance Broker lodging an Asset Finance Application for a new to bank customer. What process do I need to follow?

As an accredited Asset Finance Broker, you are responsible for:

• ensuring that a new to bank customer completes the correct AML/CTF KYC information form/s available at the CommBank Broker website;

• providing fully completed and signed AML/CTF KYC information form/s together with any certified identification to CommBank along with the loan documentation. It will be included as a condition on the approval advice (refer Q21 for information on how to certify documents).

Settlement will not be able to take place until all AML/CTF KYC on-boarding requirements are complete.

11 Who can complete the Collection and Verification of Know Your Customer Information Forms?

An accredited Broker or a customer can complete the AML/CTF KYC information form/s. In all instances the customer must sign the form declaring the information is true and correct.

Note: Brokers lodging application forms for Commercial products will only be required to submit the AML/CTF KYC Information for Individual’s form/s.

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12 Can a Broker be nominated as a Contact Person or Authorised Representative of a customer?

A Contact Person or Authorised Representative for a customer is the person authorised to provide information to a Broker/CommBank for on boarding purposes.

The below persons are considered to be acceptable as a Nominated Contact Person or Authorised Representative of a customer:

• Public Company: CEO, Director, Senior Manager;

• Private Company (Foreign or Domestic): Director or Company Secretary;

• Trust: Individual Trustee or Individual with authority under the Corporate Trustee;

• Partnership: Individual Partner or Individual with authority under a Non-Individual Partnership;

• Registered or Unregistered Association: Chair, Secretary, Treasurer or equivalent*;

• Registered Co-Operative: Chair, Secretary, Treasurer or equivalent*;

• Individual/Sole Trader: Individual unless under Power of Attorney;

• Joint Trader: Individuals unless under Power of Attorney (Both Individuals will need to be identified as they will be contacted separately by the CommBank Customer Establishment Team);

• Informal Partnerships: Individuals unless under Power of Attorney &/or the Contact Person as acceptable based on the above organisation types. (All capital Partners must have a Contact Person (individuals and organisations) identified as they will be contacted separately by the CommBank Customer Establishment Team).

*Equivalent roles may include President (Chair), Vice President, Finance or Executive Officer or Board Member.

Note: Accountants and Brokers are not considered acceptable as a Contact Person or Authorised Representative of a customer and cannot sign the declaration section on the form.

13 If I complete the forms on behalf of my customer can I sign the Customer Declaration section?

No, a Broker cannot sign the Customer Declaration under any circumstances.

Only the customer or their Authorised Representative can sign the Customer Declaration.

14 Which section of the form do I sign?

As an accredited Broker, if you collected the information, the identification documents and have verified the information, you are to sign the “Bank Use Only” verification section, located towards the end of each form.

You must include your name and your 10 digit Broker Business Intermediary Number (BIN) which was allocated to you at time of your accreditation.

If you do not know your BIN, please contact your Business Development Executive.

For a full list of contacts visit the CommBank Broker website.

Note: Brokers lodging application forms for Commercial products will only be required to complete the AML/CTF KYC Information for Individual’s form/s.

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15 What identification documents am I required to collect from the customer and submit along with the AML/CTF KYC Information forms?

The identification documents that will need to be collected from the customer and provided with the AML/CTF KYC Information form/s will depend on who the customer is and in respect of whom you are required to carry out the AML/CTF KYC procedures.

Please refer to the dedicated AML information section on the CommBank Broker website which contains checklists that will assist in ensuring you collect right information.

Items required may include:

• Trust Deed;

• Partnership Agreement;

• Articles of Association;

• Certificate of Incorporation.

Note: Failure to submit these items may result in processing delays.

16 What is meant by “verification” and can I verify?

Verification is what we must do to check that a customer is who they say they are, and that the information they have provided is correct.

This generally means that you need to check information provided by the customer against documentation provided by the customer or obtained from publicly available information.

The Broker is able to verify the customer’s information by completing the check boxes in the “Bank Use Only” section of the AML/CTF KYC information form/s verifying against the acceptable source or identification document.

Note: For Organisation customers established for Commercial Finance, the Bank’s Customer Establishment Team will complete all verification activities.

17 Should the “name of the Company and/or Registered Office” collected match the Verification documents?

Yes, all details collected from the customer must match the verification documents such as the ASIC database.

If any details do not match (i.e. there is a discrepancy), then:

• For Asset Finance – The Broker needs to inform the customer in writing/email of the discrepancy and request customer rectify within 20 business days. Evidence is to be provided to the Bank;

• For Commercial Finance – CommBank’s Customer Establishment Team will review the verification documents during customer on-boarding, and where a discrepancy is identified, they will contact the customer to resolve.

18 What if the Broker/Customer does not complete the forms correctly?

Broker/Customers are required to complete the forms entirely and correctly.

If any details are incomplete, CommBank will contact the relevant accredited Broker and ask them to confirm the details with the customer; providing evidence of how the information was obtained (i.e. obtain a new completed form or email).

Any missing information must be corrected before we can proceed.

19 I have an existing CommBank customer wanting to borrow additional funds. Do I need to complete any KYC checks again?

No, but you should ask the customer if any of the information that was collected from them during the on boarding process (KYC information) has changed.

If the customer’s KYC information has changed (for example the customer’s name, or the control/ownership structure of the customer, including Beneficiaries of Trusts or Beneficial Owners), you will need to ask them to complete a new AML/CTF KYC Information form/s. Follow the applicable Commercial Loan or Asset Finance application process referred to in Q9 or Q10.

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20 I’ve met the customer in person and sighted original documents? Do I need to ask the customer to complete the AML/CTF KYC Information for Individual’s form?

Yes, the AML/CTF KYC Information for Individual’s form must be completed by the customer.

The sighting of original documents (for verification purposes) does not negate the requirement to complete the AML/CTF KYC Information for Individual’s form.

An accredited Broker can sight original identification documents and should use the following process:

• Sight the original document;

• Make a copy of the document;

• Certify that the copy of the identification documents is a true copy of the original sighted by the Broker (see Q21);

• Send the certified identification documents to the Bank.

21 Can I certify ID and Trust Deeds? Yes, an accredited Broker can certify identification documents and Trust Deeds as being true copies of the originals.

Prior to forwarding to the Bank the documents are to be noted with the following:

• Written confirmation “Original Documents Sighted”;

• Broker Signature;

• Broker Full Name and Business Intermediary Number (BIN no);

• Certified date.

22 What happens if the information I supply for my client is not compliant?

We will be unable to finalise account opening or settle any facilities until all AML/CTF KYC on-boarding requirements have been satisfied.

23 Where do I find other information and resources on the AML/CTF KYC processes and procedures?

The CommBank Broker website has a dedicated AML information section which provides:

• checklists to help you gather the right information from customers;

• scenarios to assist in identifying all Beneficial Owners;

• forms and instructions required to assist in the completion of AML/CTF.

You can contact your Business Development Executive (BDE) for more information.

Further information can be obtained via the AUSTRAC website. There is also customer information available on the CommBank website.

24 Who should I contact if I have specific questions about CommBank’s AML/CTF KYCprocess and procedures?

Please contact your Business Development Executive (BDE).

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General Information

No. Question Answer

25 What is a Beneficial Owner? A Beneficial Owner is any individual (natural person) who ultimately “owns” or “controls” the customer, either directly or indirectly. In order to determine who the Beneficial Owner/s is, CommBank has adopted the following cascade approach:

1. Ownership: all person/s who directly or indirectly own 25% or more of shares,

OR (if none identified here);

2. Control: all person/s who directly or indirectly control 25% or more of the shares, e.g. through voting rights,

OR (if none identified here);

3. Decision-maker: a natural person who exercises primary control over the strategic or financial decisions of the entity through the position they hold.

26 How do I identify who is a Beneficial Owner?

For Commercial Finance – CommBank’s Customer Establishment Team will call the nominated Contact Person for the Organisation and will obtain all of the details in order to identify the Beneficial Owner/s and will advise the customer what documents (if any) need to be collected by the Bank in order to verify.

For Asset Finance – it is the customer’s responsibility to provide the details of all Beneficial Owner/s by completing details on the appropriate AML/CTF KYC Information form/s. It is the Broker’s responsibility to obtain verification evidence to ensure that all of the correct Beneficial Owner/s have been identified.

If you are unsure how to identify a Beneficial Owner, please refer to CommBank’s dedicated Broker AML information webpage which contains Beneficial Owner scenarios.

If you have further questions, please contact your Business Development Executive.

27 What is the difference between a Beneficial Owner and a Beneficiary of a Trust?

Beneficial Owners of a Trust control the property and assets of the Trust.

Beneficial Owners are one or a combination of the following:

• Individual Trustees of the Trust;

• The Beneficial Owners of any Non Person Trustees.

A Beneficiary of a Trust is a person(s) for whom the trust was created and who receives the benefits of the trust. Beneficiaries can be listed by name (e.g. John Smith) or class (e.g. John Smith descendants). Beneficiaries are not Beneficial Owners of the Trust.

28 What is a Settlor of a Trust? The Settlor of a Trust is the person or entity who provides the initial contribution (financial or property) to establish the Trust. In Australia the Settlor is generally a representative in an Accountant’s or Solicitor’s office.

When on-boarding a Trust we need to capture the name of the Settlor where $10,000 or more was originally settled. There is an exception if the Settlor is deceased.

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29 Is the Settlor of a Trust always a natural person?

No, on occasions it can be a person that is not an individual (such as a company). However, this makes no impact to the process of capturing the name of the Settlor.

30 Is there only one Settlor per Trust? No, on occasions there can be more than one.

31 If the customer is a Trust and the Trustee is a Company do we need to complete both forms for a Trust and another for a Company?

No, the KYC Information for Trusts form has the provision to add the Trustee Company details, therefore a KYC Information for Companies form would not be required.

Note: The forms are only required for Asset Finance transactions. For Commercial Finance – CommBank’s Customer Establishment Team will call the nominated Contact Person who has provided their AML/CTF KYC Information for Individual’s form to collect this information.

32 Do we need to collect information of a Beneficiary?

Yes, the named Beneficiaries on a Trust Deed need to be collected. For Asset Finance they need to be listed on KYC Information for Trusts form however these named Beneficiaries do not need to be identified for AML/CTF purposes, unless they are signatories to the account, wish to borrow in their own right, or provide a guarantee.

Note: For Commercial Finance – CommBank’s Customer Establishment Team will call the nominated Contact Person for the Organisation who has provided their AML/CTF KYC Information for Individual’s form to collect this information.

33 Are Fixed/Hybrid and Unit Trusts included under the 25% Beneficial Owner rule?

If the Trust is unregulated, Beneficial Owners must be established.

34 Do I need to determine whether shares are Beneficially or Non- Beneficially held?

Yes, under AML/CTF (KYC) processes the Broker and Bank need to establish whether shares in a corporate entity are held Beneficially or Non-Beneficially.

The definition of “Non-Beneficially held” is shares held by a person as Trustee, Nominee or on account of another person (refer to Q35, Q36, Q37 for further information on requirements).

Note: For Commercial Finance – CommBank’s Customer Establishment Team will call the nominated Contact Person for the organisation who has provided their AML/CTF KYC Information for Individual’s form to collect this information.

35 What do I need to collect and send to the Bank if I identify shares are Non-Beneficially held?

The customer is to provide confirmation via share certificate/register which must include:

• the date of every portion (or issue) of share;

• the number of shares in each portion;

• the class (or classes) of shares;

• the share numbers or share certificate numbers (if any) of the shares;

• whether or not the shares are fully paid (including the amount paid on the shares and the amount unpaid on the shares, if any).

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36 What if the share register outlines that the Non-Beneficially held shares are held by a Trust?

You are required to obtain from the customer a copy of the Trust Deed/Schedule page to provide verification evidence of who is the Trustee/Ultimate Beneficial Owner.

If this Trust entity is a Borrower or Guarantor then the copies of the Trust Deed or extract are to be certified.

37 How do I treat Beneficially owned shares vs. Non-Beneficially owned shares if owned by the same Individuals? Do we combine the total number of shareholdings?

If shares are Beneficially owned then they should be added to the overall shareholding for that Individual. If shares are Non-Beneficially held you will need to cascade further, asking the customer who they hold the shares on behalf of and obtain a copy of the share register. The Owner/s of these shares would then be determined as Beneficial Owner/s if they directly or indirectly own; or control 25% or more of shares. These shares would also be added to the overall shareholding for that Individual.

38 How do we identify Beneficial Owners if there are different classes of shares?

If the ASIC records show there are different classes of shares and/or there are no individuals that own 25% or more shareholding, to ascertain whether a person has 25% or more control of a Company’s shares, such as by voting rights (step 2 of the cascade approach - Q25), you can ask the customer for a certified copy of the Company Constitution or Memorandum of Association to substantiate the control that the Shareholders possess.

If the customer is unable to provide a copy of the Company Constitution or Memorandum of Association the Broker must provide evidence that they have tried to obtain a copy of this documentation before moving to the 3rd level of the cascade Decision-maker. (I.e. a natural person who exercises primary control over the strategic or financial decisions of the entity through the position they hold).

39 Do we need to collect Certified Trust Deeds for Trusts?

Yes, we are required to collect a certified Trust Deed (if the Trust is borrowing or providing a guarantee) which must include the name of the Trust, Trustees, Beneficiaries and Settlor Name, and settlement amount. This must include the executed pages.

40 What if the customer is a Partnership but there is no Partnership Agreement?

The customer should be on-boarded as a Trading Entity/Joint Traders and the AML/CTF KYC Information for Individual’s form is to be used for each proprietor.

Note: For Commercial Finance – all proprietors will be contacted separately by the Bank’s Customer Establishment Team who will obtain all of the details in order to on board the trading entity. For individual proprietors, the individuals will be contacted directly and for Organisation proprietors the nominated Contact Person.

41 If a Company borrows, what form is required to be completed?

KYC Information forms for Organisations only need to be collected for Asset Finance Transactions.

In this instance you only need to complete the KYC Information for Companies forms.

All signatories to accounts need to be individually identified. If they are new to CommBank and/or have not been identified previously they will each need to complete the AML/CTF KYC Information for Individual’s form.

Note: For Commercial Finance the Organisation will need to nominate a Contact Person who will need to complete the AML/CTF KYC Information for Individual’s form. CommBank’s Customer Establishment Team will call the Contact Person who has provided the form to on-board the Organisation over the phone.

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42 What happens if the Company (Primary Customer) is owned by another Parent, Non-Customer Company?

In this scenario you would ask the customer to look through to the ownership of the Parent, Non-Customer Company to determine the Beneficial Owners. Using the cascade approach, you would continue searching until the Beneficial Owner/s are found (i.e. natural person/s).

That is, Beneficial Owners by virtue of:

1. Ownership: all person/s who directly or indirectly own 25% or more of shares,

OR (if none identified here);

2. Control: all person/s who directly or indirectly control 25% or more of the shares, e.g. through voting rights,

OR (if none identified here);

3. Decision-maker: a natural person who exercises primary control over the strategic or financial decisions of the entity through the position they hold.

commbankbrokers.com.au

Commonwealth Bank of Australia ABN 48 123 123 124 AFSL and Australian credit licence 234945.

For more information, contact your Business Development Executiveor visit the AML Information section on the CommBank Broker website

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