Customer ID Procedures for Brokers February 2012 - Final ...

ING DIRECT Customer Identification Procedures for Brokers

Managing obligations of the Anti-Money Laundering and Counter-Terrorism Financing Act (“AML/CTF Act”) for the

purpose of Customer Identification Procedures carried out as an agent of ING DIRECT.

ING DIRECT is a division of ING Bank (Australia) Ltd ABN 24 000 893 292

AFSL 229823, Australian Credit Licence 229823

February 2012

ING DIRECT Customer Identification Procedures for Brokers 2

CONTENTS 1 Glossary of Terms .............................................................................................................. 3 2 Introduction......................................................................................................................... 4

2.1 Responsibilities of agents of ING DIRECT ................................................................. 4 2.2 AML/CTF Act............................................................................................................... 4 2.3 Purpose of this manual ............................................................................................... 4

3 Application Process............................................................................................................ 5 3.1 Conduct Standard Identification and Verification............................................................ 6

3.1.1 Individuals................................................................................................................. 6 3.1.2 Companies........................................................................................................... 7 3.1.3 Trusts ................................................................................................................... 8

3.2 Broker assesses product and jurisdiction risk.................................................................. 9 3.2.1 Product Risk .............................................................................................................. 9 3.2.2 Jurisdiction Risk ...................................................................................................... 10

3.3 Conduct Enhanced Identification and Verification ......................................................... 10 3.3.1 Broker assesses customer risk as higher than standard ........................................ 10 3.3.2 ING DIRECT assesses customer risk as higher than standard .............................. 11

3.5 Submit loan application, Identification Form and copies of identification ...................... 11 4 Training............................................................................................................................. 12

4.1 Initial .......................................................................................................................... 12 4.1.1 MFAA Training ................................................................................................... 12 4.1.2 FBAA Training.................................................................................................... 12

4.2 Frequency of training ................................................................................................ 12 4.3 Screening .................................................................................................................. 12

5 Record Keeping................................................................................................................ 13 6 Suspicious Matter Reporting ............................................................................................ 13

6.1 Guidelines to trigger suspicions ................................................................................ 14 6.2 Tipping off.................................................................................................................. 14

7 Where do I go to get clarification on an AML/CTF question? .......................................... 14 8 Appendix A: Identification Form ....................................................................................... 15 9 Appendix B: Verifying your Identity .................................................................................. 17 10 Appendix C: Company & Trust Appendix......................................................................... 19


1 Glossary of Terms Term Meaning Accredited Introducer An introducer who has been accredited with ING DIRECT to

introduce home loan customers. AML/CTF Act 2006 The Anti-Money Laundering and Counter-Terrorism Financing Act,

which was passed in 2006 and which is being implemented under a staggered implementation regime.

Broker The Introducer, its Agent or Intermediary linked to the Introducer with ING DIRECT as defined in the Introducer Agreement

BSU Business Support Unit, ING DIRECT, GPO Box 4094, Sydney NSW 2001

Identification A process to collect information from a customer that assists in understanding who they are.

Identification Form The form released by ING DIRECT is to be used when interviewing a customer face to face. This form outlines the procedure for brokers to follow to appropriately identify and verify potential customers who are individuals. This form (at Appendix A) must be completed before a loan can be approved.

MFAA/FBAA/FPA Mortgage & Finance Association of Australia Finance Brokers Association of Australia Financial Planning Association

Money Laundering Money Laundering (ML) is the processing of criminal profits to disguise their illegal origin. Money laundering can be used to hide the proceeds of serious crime such as drugs trafficking, weapons dealing and people smuggling or other less serious crimes such as tax evasion and fraud.

Politically Exposed Person (PEP)

A politically exposed person is an individual who has been entrusted with prominent public functions in a foreign country, for example Heads of State or of Government, senior politicians, senior government, judicial or military officials, senior executives of state owned corporations, important political party officials. The definition may also extend to family members or close associates of politically exposed persons. This definition is not intended to cover middle ranking or junior individuals in the above mentioned categories.

Real Property Act Prescribes the reasonable steps that a mortgagee must take to confirm the identity of the Mortgagor.

Reporting Entity A business that is captured by the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 as they offer one of the described designated services.

Terrorism Financing Includes the financing of terrorist acts, and of terrorists and terrorist organisations. Financial Institutions already have legal obligations preventing us from dealing in any way, with known terrorists.

Verification A process to verify the identification information provided by a customer, traditionally undertaken through the collection of identification documents but can also be done through electronic data.

Verifying your Identity Form

An ING DIRECT form which outlines the procedure for customers to follow to appropriately identify themselves when Brokers are unable to meet with the customer face to face. The form (see Appendix B) and original certified identification documents are to be forwarded by the Broker to the BSU for verification.


2 Introduction The AML/CTF Act 2006 imposes various obligations on Reporting Entities such as ING DIRECT including identifying, managing and mitigating the money laundering and terrorist financing risk that ING DIRECT may reasonably face in relation to the provision of designated services to its customers. The Real Property Act outlines the reasonable steps that a mortgagee must take to confirm the identity of the Mortgagor (customers) prior to settlement of the home loan. Whilst the Real Property Act outlines identification requirements, in Part 3A it also provides the Mortgagee with the option to identify customers by following AML/CTF Act Identification process as outlined in Chapter 4. ING DIRECT has opted to follow the AML/CTF identification procedures as outlined in this document. 2.1 Responsibilities of agents of ING DIRECT As an accredited introducer of ING DIRECT, you are authorised to perform customer identification under the AML/CTF Act and other applicable laws on our behalf as our agent, on the basis that you do so in accordance with the procedures set out in this document and any other relevant procedures specified by ING DIRECT. The “Broker” referred to in this document means the Introducer, its Agent or Intermediary linked to the Introducer with ING DIRECT as defined in the Introducer Agreement. 2.2 AML/CTF Act Section 37 of the AML/CTF Act states that a reporting entity may authorise another person to be its agent for the purposes of carrying out customer identification procedures on its behalf. As a result a reporting entity may authorise a person to be its agent for the purposes of carrying out the applicable customer identification procedure in respect of the customer on the reporting entity’s behalf. 2.3 Purpose of this manual The purpose of this manual is to: a) Set out procedures under the Introducer Agreement that you must comply with for the

purposes of compliance with the AML/CTF Act; b) Specify training that the Introducer and each of its agents and intermediaries must

undergo. The procedures including revised customer identification procedures apply to all customers introduced to ING DIRECT on and after 12 December 2007.


3 Application Process The following diagram represents the customer identification process to be undertaken by the Broker on behalf of ING DIRECT. Each section of this diagram is explained in further detail throughout this guide.

Customer wishes to apply for ING DIRECT home loan

Will the customer’s identity be verified during a face to

face interview?

Broker conducts face to face identification

Broker is unable to complete face to face identification e.g client is

interstate, or the broker is submitting a loan for themselves, a partner, spouse or dependent.

Yes No

Customer to complete Verifying Your Identity Form and forward

the original form and original certified documents to the Broker.

Broker assesses product and jurisdiction risk

Based on industry MFAA training

Does the customer present a higher risk?

Conduct enhanced identification and verification.

Yes

Submit loan application, identification form and legible copies of all identification to ING DIRECT. (if unable to complete face to face identification original Verifying your Identity form along with original certified documents are

to be forwarded to Broker Support Unit for verification.

Upon receipt of the application, ING DIRECT will assess customer risk and may request additional information.

Conduct standard identification and verification

No

Any suspicious matters should be escalated to ING DIRECT Financial Crimes immediately.


3.1 Conduct Standard Identification and Verification The objective of the identification procedure is to determine if the customer is the person or entity they claim to be. Standard identification procedures are different depending on the customer type. ING DIRECT deals with the following customer types: - Individuals and Sole Traders - Companies - Trusts - Partnerships - Associations

3.1.1 Individuals The following procedure should be applied to individual borrowers, guarantors, authorised signatories and agents such as persons acting under authority of a Power of Attorney. 3.1.1.1 Identification For the purposes of identification under the AML/CTF Act, a customer’s application for a home loan can not proceed unless at a minimum, the following information is provided for each loan applicant who is an individual: - Full name and/or - Residential address - Date of Birth In addition, if the customer is applying as sole trader, we also require: - Full business name - Full business address (or residential address) - Australian Business Number (Additional information will be collected as part of credit assessment procedures however the information above is mandatory for every application.) 3.1.1.2 Verification when conducting a face to face interview ING DIRECT has developed an “Identification Form” see (Appendix A) to enable brokers to easily satisfy the verification of customer’s identity. To correctly complete the form, follow the steps below: 1. Record details of the person being identified (including all of the details in 3.1.1.1 above) 2. Collect the required identification documents (originals only) and make a copy of them 3. Record the identification documents provided and verify the customer's name and either

the customer’s residential address or date of birth from the required identification documents

4. Sign the form 5. Provide a copy of the customer's original identification documents and the completed

Identification Form to ING DIRECT. Please note: Brokers can not identify themselves, their spouse, partner or a dependant.

Documents that can be used to verify the identity of a customer are described in the list below. You must sight and copy either: a) One original photographic identification documents from List A; or


b) One original non-photopraphic document from List A and one original document from List B.

List A List B

An Australian Passport (either a

current passport or a passport that expired within the last 2 years)

A current Drivers Licence (which shows a photograph)

International Passport or identity card (must be issued by a foreign Government, the UN or related agency and must be accompanied by a translation if not in English)

A Birth Certificate or Birth Extract (issued by a State or Territory in Australia)

A Citizenship Certificate (issued by the Commonwealth of Australia)

A current Pension Card (issued by Centrelink entitling financial benefits)

An Australian Tax Office Tax Assessment Notice (issued in the last 12 months and shows current residential address)

A water rates or council rates notice (issued by a local government body or utilities provider within the last 3 months and shows current residential address)

A landline telephone, gas or electricity notice (issued by a utilities provider within the last 3 months and shows current residential address)

A government financial benefits notice; e.g. Centrelink (issued in the last 12 months and shows current residential address)

3.1.1.3 Verification when unable to conduct a face to face interview ING DIRECT has developed a “Verifying your Identity Form” see (Appendix B) to enable brokers to satisfy the verification of customer’s identity when unable to meet with the customer face to face. Please note every effort should be made to conduct a face to face interview. This form should also be used if the applicant is also the broker or spouse, partner or dependant of the broker. To correctly complete the form, the customer will need to follow the steps below: 1. Collect the required identification documents (originals only) as described in the table

located in 3.1.1.2 and make copies of them 2. Take the originals and copies of these documents to a certifier as described in Step 3 of

the form 3. Request the certifier to complete Step 4 of the form and certify these documents as per

instructions in Step 4, Section B 4. Provide Broker with completed form and original certified identification documents 5. Broker to forward completed form and original certified identification documents (noting

the deal number) to BSU for verification.

3.1.2 Companies 3.1.2.1 Identification For the purposes of identification under the AML/CTF Act, a customer’s application for a loan if applying in the capacity of a proprietary or private domestic company must include the following information: - Full name of the company as registered by ASIC - Full Address of the company’s registered office


- Full Address of the company’s principal place of business (if any) - ACN - Whether the company is registered by ASIC as public or proprietary - For proprietary company’s, the full name of each Director of the company - For proprietary or private companies, the full name of each beneficial owner of the

company (any individual owning 25% or more of the issued capital of the company through one or more shareholdings). This is not required for a proprietary company that is licensed and subject to the regulatory oversight of a Commonwealth, State or Territory statutory regulator in relation to its activities as a company.

- For proprietary or private companies, the full address of each beneficial owner of the company (any individual owning 25% or more of the issued capital of the company through one or more shareholdings). This is not required for a proprietary company that is licensed and subject to the regulatory oversight of a Commonwealth, State or Territory statutory regulator in relation to its activities as a company.

(Additional information will be collected as part of credit assessment procedures however the information above is mandatory for every application for a domestic company.) 3.1.2.2 Verification ING DIRECT will verify the required information about the company. However, it is the broker’s responsibility to ensure all individual Director’s, guarantors and authorised signatories who will have access to the loan are identified according to the procedure described in paragraph 3.1.1.2 or 3.1.1.3 above for verification of individuals.

3.1.3 Trusts 3.1.3.1 Identification For the purposes of customer identification of customers who wish to apply for a loan in their capacity as a Trust the following information must be collected at a minimum: - Full name of the trust - Full business name (if any) of the trustee in respect of the trust - Type of trust - Country in which the trust was established - For trusts with individual trustees:

- See the requirements of individuals in paragraph 3.1.1.1 above - For trusts with company trustees:

- See the requirements for companies in paragraph 3.2.1.1 above1 - For trusts with individual trustee(s) and company trustee(s):

- The identification information for individuals and trustees in paragraphs 3.1.1.1 and 3.2.1.1 above must be collected.

- Full name and address of each trustee in respect of the trust - Full name of each beneficiary in respect of the trust (or if the terms of the trust identify the

beneficiaries by reference to membership of a class - details of the class). The last 2 details do not need to be collected in relation to a trust that is:

- a managed investment scheme registered by ASIC; - a managed investment scheme that is not registered by ASIC and that only has

wholesale clients and does not make small scale offerings to which section 1012E of the Corporations Act applies;

- a government superannuation fund established by legislation; - a trust registered and subject to the regulatory oversight of a Commonwealth statutory

regulator in relation to its activities as a trust. (Additional information will be collected as part of credit assessment procedures however the information above is mandatory for every application.)


3.1.3.2 Verification ING DIRECT will verify the required information about the trust. However, it is the broker’s responsibility to ensure all individual Trustees, guarantors and authorised signatories who have access to the loan are identified according to the procedure described in 3.1.1.1 above for verification of individuals. It is also the responsibility of the broker to obtain from the customer the original or a certified copy of the Trust Deed and make and provide a copy of that document to ING DIRECT’s solicitors. This information should be provided to ING DIRECT by completing the Company and Trust Appendix form and forwarded with the Application.

3.2 Broker assesses product and jurisdiction risk ING DIRECT has assisted in the development of the Mortgage and Finance Industry (MFAA) AML/CTF training and accreditation package. One of the key tasks within this accreditation process is developing an understanding of the risk-based approach. The risk-based approach is a principle adopted in the legislation that permits a Reporting Entity to tailor their procedures based on the risk introduced by different: - customer types; - products; - channels of delivery; and - jurisdictions (eg of the customer, product, service, reporting entity or transactions) In order to assess the risk of the customer for the purposes of identification, you should consider two of the four factors above, product and jurisdiction. For the purposes of introducing a home loan customer to ING DIRECT, the broker only needs to consider product and jurisdiction risk. Upon receipt of the application, ING DIRECT will assess the customer risk and determine if additional customer due diligence is required.

3.2.1 Product Risk As described in the MFAA training package, the following table outlines the product risk associated with different product types in the mortgage lending industry. Should the customer be applying for any product in the standard risk category, apply the standard customer identification procedure. At this stage, ING DIRECT does not offer products that are higher risk.

Standard Risk Higher Risk

- Standard Variable Rate Residential Mortgage

- Letter of Credit

- Equity Release Mortgage - Pre-shipment finance

- Standard Fixed Rate Residential Mortgage

- Standard Capped/Floored/Belted Residential Mortgage

- Equity Finance / Shared Appreciation Mortgage

- Residential Mortgage with tied credit card facility

- Novated lease (vehicle)


Standard Risk Higher Risk

- Bank Guarantee

- Business Loan

- Construction Loan

- Offset Residential Mortgage

- Chattel mortgage

- Hire Purchase

- Novated lease (property)

- Partnership commercial loan

- Reverse Novation

- Commercial Overdraft

- Lo-doc Residential Mortgage*

- Commercial Line of Credit

3.2.2 Jurisdiction Risk The following factors should be considered in determining if the customer presents a higher than normal jurisdictional risk: - Customer is not located in Australia - Asset purchased with the loan is not located in Australia In the event a factor above is evident during the risk assessment, a higher standard of identification and verification is required. Refer to Section 3.4 below for enhanced customer verification requirements. 3.3 Conduct Enhanced Identification and Verification In the event the customer poses a higher than normal risk or additional information is required to satisfy know your customer reporting obligations, additional due diligence is required.

3.3.1 Broker assesses customer risk as higher than standard This would occur if either the product or jurisdiction factors described are applicable to the loan. a) If the customer is not located in Australia, perform the following:

- Determine the customer’s reason for wanting the product - Record response on application (or attach separate paperwork) - Collect the country of residence - Collect “additional know your customer” information or request “additional verification”

evidence to confirm information provided (see below)

b) If the customer wishes to purchase assets not located in Australia:

- Determine the type of asset being purchased - Determine the country of purchase - Record response on application


Note: Additional know your customer information may include (depending on the customer type): - any other name the customer is known by; - the customer’s country of citizenship; - the customer’s country of residence; - the customer’s occupation or business activities; - the nature of the customer’s business with ING DIRECT including -

- the purpose of specific transactions; or - the expected nature and level of transaction behaviour;

- the income or assets available to the customer; - the customer’s source of funds including the origin of funds; - the customer’s financial position; - the beneficial ownership of the funds used by the customer with respect to products held;

the beneficiaries of the transactions being facilitated by the reporting entity on behalf of the customer including the destination of funds

- the full business name (if any) of the business as registered under any State or Territory business names legislation;

- the name of any individuals involved in the business; - collection of identification information of individuals behind the business; - the nature of the business activities conducted; - the name and address of any beneficial owner (eg shareholder or beneficiary); - the date of incorporation or registration of the business. Additional verification may include additional documents or data to verify the information provided by the customer.

3.3.2 ING DIRECT assesses customer risk as higher than standard ING DIRECT may instruct you to collect additional information from the customer. These additional requirements will become general conditions required before the loan can proceed to full approval. The following list includes examples of areas that ING DIRECT may request further information on: - Additional documentation to verify information about individuals or the borrowing entity in

the event of a company or trust borrower - Responses to various questions to ascertain areas such as the source of funds, reason

for borrowing etc… - Additional information surrounding customers who are not residents of Australia - Customer name matches on a Politically Exposed Person’s list and enhanced due

diligence is required This list in not exhaustive however serves to provide examples of information that may be required. 3.5 Submit loan application, Identification Form and copies of identification ING DIRECT will continue to accept applications as per the current process. ING DIRECT will also require copies of all identification documents before the loan can proceed. It is also important the Identification Form, Verifying your Identity Form and/or the Company & Trust Appendix are correctly completed and signed. Your broker number must be provided on the Forms. Verifying your Identity Form must be submitted via the BSU and include your Broker number and the deal number.


4 Training

4.1 Initial ING DIRECT is a Reporting Entity and is responsible for ensuring all our employees and agents are AML/CTF trained and compliant. ING DIRECT is using the Mortgage & Finance Association of Australia (MFAA) AML/CTF compliance training program as the training vehicle for ING DIRECT’s broker training. ING DIRECT has also recently endorsed the Finance Brokers Association of Australia (FBAA) training package. Either of these industry association training packages will meet the training requirements for brokers acting for ING DIRECT.

4.1.1 MFAA Training Brokers must sit the course, complete the online assessment and obtain a 90% pass mark for each of the five topics presented. Once Brokers have achieved a pass grade, the system will prompt them to print out their ‘online course certificate’. The Broker must send ING DIRECT a copy of the certificate via email or fax: Email: [email protected], or Fax: (02) 9028 4779 The MFAA has also recently prepared a brochure that outlines their AML eLearning accreditation program and assessment, for Brokers. Refer to the MFAA website for further information at http://www.mfaa.com.au

4.1.2 FBAA Training Brokers who complete the FBAA training module will need to provide ING DIRECT their course completion certificate. Brokers must complete the modules 101 and 102 in order to satisfactorily meet ING DIRECT’s obligations. The Broker must send ING DIRECT a copy of the certificate via email or fax: Email: [email protected], or Fax: (02) 9028 4779. New Brokers As at 12th December 2007, no new broker will be accredited with ING DIRECT, unless the AML/CTF training has been completed. All existing brokers are encouraged to complete this training as soon as possible. 4.2 Frequency of training It is important to keep your knowledge of AML/CTF up to date and current. Therefore ING DIRECT will require all Accredited Introducers to complete the training on an ongoing basis. The frequency will be communicated to you once determined by ING DIRECT. 4.3 Screening ING DIRECT has an obligation to perform due diligence on all third parties who assist with undertaking their obligations under the AML/CTF Act. For this reason, ING DIRECT requires all accredited introducers to be members of a professional association to ensure this screening is performed. Any introducer who is accredited via an aggregator must be appropriately screened by that aggregator. Screening should comply with the requirements of Australian Standard 4811 Employment Screening, you should advise ING DIRECT if you do not comply with this standard.


You must keep records of screening undertaken, and make these available to ING DIRECT upon request.

5 Record Keeping The AML/CTF Act outlines record-keeping requirements for records relating to identification procedures. All records collected by brokers from and on behalf of customers on and after 12th December 2007 must be sent to ING DIRECT. This includes every document collected for the purpose of identifying and verifying the customer and all other required documents to approve the loan (including but not limited to those specified in Section 3). ING DIRECT will hold all records and we do not require the brokers to retain these records under the AML/CTF Act. Records relating to identification procedures include all of the following: - procedures regarding how identification is carried out - the copies of documents made as specified in Section 3 and other documents obtained

from the customer including any further information or documents requested by ING DIRECT

- results of electronic verification - any other information obtained during the identification procedure Record-keeping requirements extend to all customers who are identified, even if they do not proceed with taking up the designated service or product. ING DIRECT reserves the right to request further copies of documents from brokers where the copies received are not clear and/or not completed. Length of time to retain records: We are required to retain identification records for a period of seven years commencing from the time we cease to have a relationship with the customer (ie seven years after the account is closed.)

6 Suspicious Matter Reporting As our agents, brokers are in some cases best equipped to identify suspicious matters on behalf of ING DIRECT. ING DIRECT has an obligation to report certain suspicious matters to AUSTRAC within three days of a suspicion being formed or within 24 hours if the suspicion relates to the financing of terrorism. Suspicious matters must be reported even if the transaction or account does not proceed. Matters that AUSTRAC requires us to report include suspicions that: - the customer (or their agent) is not who they claim to be - information provided may be relevant to an investigation or prosecution of a person for:

(a) evasion or attempted evasion of tax (whether Commonwealth, State or Territory) (b) an offence against a State, Territory or Commonwealth Law (c) a money laundering offence; and/or (d) a financing of terrorism offence.

- the person is or may be attempting to disguise the proceeds of crime - the person is or may be attempting to finance terrorist activities - the person is or may be attempting to launder money. If you have a suspicion about a customer, you must escalate it immediately to the ING DIRECT Financial Crimes Team [email protected]


Please note, it is an offence for ING DIRECT to disclose the outcome of any investigation into a suspicious matter including whether or not the suspicious matter was reported to AUSTRAC. 6.1 Guidelines to trigger suspicions Suspicious activity can come in many forms, Below are some examples to help you identify suspicious activity. The list is not exhaustive but aims to serve as a guide. - An individual with discrepancies between their identification documentation; - An individual who presents seemingly false identification; - Any case when there is no obvious reason why a person is using the Bank’s services; - Any use of false names; - An individual with a variety of similar, but different, addresses; - An individual who requests to be anonymous and makes unusual requests or wishes to

disguise their purpose for requesting the account - A business with account turnover or large transactions inconsistent with the size of their

business; and - Restructuring large transactions into smaller transactions to avoid having the transactions

reported to AUSTRAC. 6.2 Tipping off Where a suspicious matter comes to your attention you have an obligation to report this to ING DIRECT immediately. However you may not, in any circumstances inform any one else (including the customer or their agent) that the matter has been reported to ING DIRECT. Severe penalties apply for persons found guilty of tipping off, these penalties include imprisonment for two years.

7 Where do I go to get clarification on an AML/CTF question? Your first point of contact is the Introducer Website. Please check for updates. You can also contact your Business Development Manager. For accreditation related matters, please contact Intermediary Services by e-mail: [email protected] References The Mortgage & Finance Association of Australia (MFAA) Search for AML to go to the AML link www.mfaa.com.au The Australian Transaction Reports & Analysis Centre (AUSTRAC) www.austrac.gov.au Attorney General’s Department http://www.ag.gov.au


8 Appendix A: Identification Form


9 Appendix B: Verifying your Identity


10 Appendix C: Company & Trust Appendix

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