Financial fraud is not new to the digital world. The emergence of the digital economy has made it easy for fraudsters to commit financial crimes. So to prevent financial fraud, various regulatory agencies are instituted by countries to keep a tab on the transactions of businesses. And AUSTRAC is one such agency instituted by the government of Australia to prevent financial offences and protect businesses and consumers from fraud.
Various reports need to be submitted by organisations to AUSTRAC as mandated by the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF act). These include threshold transaction reports, cross-border movement reports, suspicious matter reports, and international funds transfers. The reporting process is mandatory for businesses, and they should be able to manage end-to-end reconciliation and assurance for the timely submission of reports. So, this article briefs you about the details of IFTI reporting.
Why Submit IFTI Reports?
Businesses should submit an IFTI report to AUSTRAC per the Financial Transaction Reports Act (FTR Act) requirements and the AML/CTF Act, 2006. The latter requires the business that sends or requests a financial transfer of either property or money from a foreign country to submit an IFTI report. Apart from that, the business entities must also submit a TTR report if they are involved in a currency transfer of A$10,000 or more or its equivalent in foreign currency. The report of IFTI has to be submitted within ten business days from the day the instruction of the transaction is being received or sent as per section 45 of the AML/CTF Act.
Types of IFTI Reports
Two types of IFTI reporting exist for compliance, and they are:
1 IFTI-Es
These are reported by the financial institutions and take into account the money transfers. Money can be transacted to or from another country using IFTI-E, an electronic funds transfer instruction. It involves the transfer of instruction within the financial organisation or between institutions such as credit unions, banks, or building societies. These are further divided into two categories.
- Incoming: The reporting institution receives the instructions from overseas and sends the money via a beneficiary institution present in Australia.
- Outgoing: The reporting institution receives instruction within the country and transfers funds to the payee through a beneficiary organisation present overseas.
Required Information for Filing an IFTI-E
Detailed information on the following entities is required:
- Payer
- Ordering Institution
- Beneficiary Institution
- Payee
- Intermediary Institution
- Sender.
2 IFTI-DRAs
These are reported by organisations, businesses, or individuals who do not come under financial institutions. Examples include casinos, remittance service providers, etc. These are applicable to property and money.
It is the instruction for money or property transfer from or to another country in compliance with the designated remittance arrangement (DRA). This means the business or organisation receiving the instruction from the customer who is arranging for the property or money should not be a financial institution.
Required Information for Filing an IFTI-DRA
Detailed information on the following entities is required:
- Transferor
- Sender
- Transmitter
- Disbursing Entities
- Transferee
Penalty
If any organisation or individual fails to submit an IFTI report on time, the penalty can be 100,000 units for a corporate body and 20,000 units for non-corporate bodies.
To avoid any financial fraud, businesses should comply with AUSTRAC rules and regulations to prevent any great risk posed by financial misdeeds and, thus, provides a safe environment both for companies and individuals. And to avoid any penalty, hiring a third-party reporter who will submit the IFTI reports to AUSTRAC within the stipulated time is advisable.
