To ensure the highest level of confidence in Australia’s real-time payments infrastructure, NPPA takes active steps to monitor and enforce compliance with its published operating Regulations. When activity is identified that does not meet these requirements, NPPA will quickly take action to ensure ongoing compliance although specific details of compliance activities remain confidential.
Australia’s Anti-Money Laundering and Counter Terrorism Financing Act requires local institutions to apply additional due diligence to cross-border payments. In order to meet these obligations, financial institutions:
- have to report these payments to AUSTRAC;
- typically, identify them as cross-border transactions before sending them to the receiving bank; and
- ensure specific information is carried all the way through to the receiving bank so it can conduct any necessary screening.
In order to manage regulatory risk, most financial institutions sanctions screen inbound cross-border payments and in order to do this they need to firstly be able to identify which of the payments they receive are from cross-border systems – and also enable their systems to screen them before making funds available to recipients. For a platform like NPP, that screening would have to be done in real-time and to the standards that domestic and foreign regulators set for Australian banks.
The NPP has been established as a domestic system, but also could be used in future to send cross-border payments to end beneficiaries who hold an NPP-reachable account. The published rules for NPP include requirements that cater for cross-border payments. The NPP Regulations (as published on our website under Regulation 3.5(a)(iii) and Regulation 6.1(b)(vi)) define the conditions for sending cross-border payments to payees via the NPP, including coding and identifying them as cross-border payments so the receiving bank’s systems can screen them automatically and in real time against applicable lists, and if necessary can take appropriate action to manage any risk.
The need to ensure appropriate treatment of cross-border payments and the importance of sanctions screening and compliance with anti-money laundering requirements has only increased in the past few months.
The requirements we have established apply to all NPP Participants and apply to all inbound cross-border payments across the NPP – regardless of their origin.
As the operator of a real-time payment system, its critical that we establish and enforce rules and requirements for the use of the system which enable all banks connected to the system to meet their regulatory obligations – particularly ones that relate to money laundering and counter-terrorism financing.