Anti-money laundering and counter-terrorism financing ...€¦ · financing compliance program...

Anti-money laundering and counter-terrorism financing program

Rural Funds Management Limited ACN 077 492 838

History:

Adopted on: 27 / 4 / 2010

Amended: 15 / 10 / 2015

Version: 4

16807789v4 | Anti-money laundering and counter-terrorism financing program i

Table of contents

Background -------------------------------------------------------------------------------------------------- 1

What is money laundering and terror financing? -------------------------------------------------------- 1

1 How is AML/CTF relevant to us? ------------------------------------------------------------------ 3

2 AML/CTF Compliance Officer ---------------------------------------------------------------------- 4

3 Consequences of non-compliance ---------------------------------------------------------------- 5

4 Risk Assessment ------------------------------------------------------------------------------------ 6

5 Employee due diligence program ---------------------------------------------------------------- 12

6 Risk awareness training program ---------------------------------------------------------------- 14

7 Transaction Monitoring --------------------------------------------------------------------------- 16

8 Reporting obligations ----------------------------------------------------------------------------- 17

9 Tipping off offence -------------------------------------------------------------------------------- 19

10 Record Keeping ------------------------------------------------------------------------------------ 20

11 Ensuring ongoing effectiveness of the compliance program ---------------------------------- 20

Part B – Customer identification and verification procedures ----------------------------------------- 22

12 Customer identification procedures ------------------------------------------------------------- 22

Glossary and interpretation ------------------------------------------------------------------------------- 29

13 Definitions ------------------------------------------------------------------------------------------ 29

14 Interpretation -------------------------------------------------------------------------------------- 33

Schedule 1 -------------------------------------------------------------------------------------------------- 35

Investor identification information forms 35

Schedule 2 -------------------------------------------------------------------------------------------------- 36

Certification of original documentation 36

Schedule 3 -------------------------------------------------------------------------------------------------- 38

AML/CTF risk assessment 38

Schedule 4 -------------------------------------------------------------------------------------------------- 50

Red Flag risk indicators 50

Schedule 5 -------------------------------------------------------------------------------------------------- 52

Employee classification 52

16807789v4 | Anti-money laundering and counter-terrorism financing program

Anti-money laundering and counter-terrorism financing compliance program

Background

This Program sets out the key processes, systems and measures the Company will implement to ensure it complies with its obligations under the Anti-Money Laundering and Counter Terrorism Financing Act 2006

(Cth) (Act).

This Program is divided into two parts: Part A and Part B.

Part A sets out measures designed to identify, mitigate and manage the risk that the Company may

unwittingly facilitate money laundering or financing of terrorism by providing Designated Services to its Customers.

Part B sets out the applicable Customer Identification and Verification Procedures that the Company and Employees must comply with in accordance with the Act prior to providing Designated Services to

Customers.

Capitalised terms used in this Program are defined in the Glossary.

What is money laundering and terror financing?

Money laundering

Money laundering is the process by which persons engaged in criminal activities attempt to conceal the

true origin and ownership of the proceeds of their activities. If money laundering is successful, those

proceeds can lose their apparent criminal identity and appear legitimate.

When criminal activity generates substantial profits, the individual or group involved must find a way to

control the funds without attracting attention to the underlying source of those funds. Criminals do this by disguising the sources of funds they control, typically by converting such funds into other assets forms

in the legitimate financial system.

In summary, the money launderer seeks to:

(a) place money into the legitimate financial system or retail economy, without arousing suspicion (a

stage often referred to as ‘placement’);

(b) move the money around, often in a series of transactions so it becomes more difficult to identify

its original source (a stage referred to as ‘layering’); and

(c) reintroduce the money into the legitimate economy as if derived from an apparently clean source

(a stage referred to as ‘integration’).

(d) Businesses such as ours can be knowingly or unwittingly co-opted into facilitating money laundering at any one or more of these stages. For this reason, the law requires we have

processes to either frustrate money laundering activity or failing that at the very least track and record the verified identity of the Customers of our Designated Services so that law enforcement

agencies can later access that information.

16807789v4 | Anti-money laundering and counter-terrorism financing program 2

Terrorism financing

The United Nations 1999 International Convention for the Suppression of the Financing of Terrorism

explains terrorist financing as an offence whereby a person:

‘….by any means, directly or indirectly, unlawfully and willingly, provides or collects funds with the intention that they should be used or in the knowledge that they are to be used, in full or in part, in order to carry out:

(a) an act which constitutes an offence within the scope of and as defined in one of the treaties listed in the annex to the Convention; or

(b) any other act intended to cause death or serious bodily injury to a civilian, or to any other person not taking any active part in the hostilities in a situation of armed conflict, when the purpose of such act, by its nature or context, is to intimidate a population, or to compel a government or an international organization to do or to abstain from doing an act.’

Whilst engaging in terrorism financing activity is of itself an offence, the Act is also concerned to ensure that legitimate businesses are not knowingly or unwittingly used in facilitating the commission of such

offences. For this reason, we are required to maintain processes designed to identify and report

suspected terrorism financing activity or, at the very least, track and record the verified identity of the Customers of our Designated Services so that law enforcement agencies may later be able to later access

that information.


Part A – General obligations under AML/CTF Act

1 How is AML/CTF relevant to us?

1.1 Designated service

(a) The following is a table which shows what activities we currently provide that constitute

Designated Services under the Act:

Item Designated service Customer of the

designated service

35 issuing or selling a security or derivative to a person, where:

the issue or sale is in the course of carrying on a business of

issuing or selling securities or derivatives; and

in the case of an issue of a security or derivative—the issue

does not consist of the issue by a company of a security of the company or of an option to acquire a security of the

company; and

in the case of an issue of a security or derivative—the issue does not consist of the issue by a government body of a

security of the government body or of an option to acquire a security of the government body; and

in the case of an issue of a security or derivative—the issue is not an exempt financial market operator issue; and

such other conditions (if any) as are set out in the AML/CTF

Rules are satisfied.

the investor

(b) The designated services are applicable only to unlisted managed investment

schemes where RFM issues, transfers or redeems units in these schemes.

(c) A full list of Designated Services is set out in section 6 of the Act. Under this Program we are required to periodically review (no less than annually) the nature and extent of our

business activities and ascertain whether all Designated Services that we provide are fully covered under this Program. Where necessary, we will record any additional Designated

Services into a revised version of this Program and ensure that measures in this Program are appropriately updated.

1.2 How can our business facilitate money laundering?

(a) Investors may invest funds derived from illegal activities (referred to as ‘proceeds of crime’) in the Scheme in order to legitimise the funds.

(b) Criminal organisations may invest proceeds of crime in the Scheme by using false identity documents or through a third party such as a relative or an unwitting participant

recruited by the criminal organisation as a ‘money mule’.

(c) By having procedures to more effectively identify the Customers of our Designated Services, and a Program to manage and mitigate ML risk, we provide both a deterrent to

persons considering the misuse of our services but also generate records that provide an audit trail that may be relied upon by law enforcement agencies entitled to access the

information.


1.3 How can our business facilitate terrorism financing?

(a) Terrorist organisations derive income from a variety of means, often combining both

lawful and unlawful funding sources. The forms of financing are typically grouped into

the following categories:

(i) financial support – in the form of donations, community solicitation and other

fundraising initiatives; or

(ii) revenue generating activities – income may be derived from criminal activities

but also from legitimate economic activities such as real estate and securities investments or generated via normal business activity.

(b) When acting on directions from Customers to disburse funds in accordance with

instructions received we need to be aware of circumstances where those funds may be intended for TF activity or are paid in a manner in which it may later be difficult to trace

the ultimate destination of those funds. By limiting the manner in which we are permitted to disburse funds and ensuring that the immediate destination of payments by

us are therefore more readily traceable we will be able to better manage and mitigate the

risk of misuse of our services to facilitate TF activity.

1.4 Program coverage

The processes and procedures contained in this Program must extend to all areas of the Company’s business that are involved in the provision of designated services, including in relation

to any function carried out by a third party.

2 AML/CTF Compliance Officer

2.1 What is an AML/CTF Compliance Officer?

(a) An AML/CTF Compliance Officer is someone holding a management position in the

Company that is appointed by the Board, and who is responsible for a ensuring that the Company complies with its obligations under the Act.

(b) Part 8.5 of the Rules requires that at all times we have an AML/CTF Compliance Officer appointed for the purpose of overseeing and supervising compliance with this Program.

(c) The AML/CTF Compliance Officer will be assisted by the Manager – Corporate Services (employee due diligence program and training), Client Services Manager (customer

identification and verification and liaison with our agents) and RFM Compliance Officer

(reporting to the Board and AUSTRAC, policy review).

2.2 Purpose

Our AML/CTF Compliance Officer will be responsible for:

(a) maintaining a training Program to give all Employees appropriate training at appropriate

intervals to identify the ML and TF risks that we face;

(b) reporting to the Board the suitability of the training program at least once annually;

(c) designing and establishing an Employee due diligence program and seeking approval

from the Board;


(d) providing written reporting to the Board and senior management of any detected instances of non-compliance with this Program;

(e) overseeing our transaction monitoring program and conducting, where required,

enhanced due diligence checks on Existing Customers;

(f) disclosing, where required, in reports to AUSTRAC:

(i) all Suspicious Matters in accordance with section 7.1 of Part A of this Program; and

(ii) confirmation of our compliance with the Act applying AUSTRAC’s standard periodic reporting template;

(g) establishing a procedure to incorporate feedback received from AUSTRAC into the

Program;

(h) at least bi-annually, obtain an independent review of the Program and provide the Board

and relevant senior management with a copy of this report.

The AML/CTF Compliance Officer may delegate any of their duties to an appropriately

trained and skilled RFM employee as they see fit (also refer 2.1 c) and if appropriate, in the context of the Company’s business operations.

3 Consequences of non-compliance

3.1 Liability of reporting entities

(a) In the course of our activities as responsible entity of the Schemes certain activities

which we undertake will constitute ‘designated services’ for the purposes of the Act.

(b) Breaches of the Act may result in criminal or civil penalties. The penalties for criminal

offences include imprisonment for up to ten years and fines of up to $1.1 million.

(c) Breaches of the civil penalty provisions in the Act can attract a pecuniary penalty of up to $11 million for a body corporate and $2.2 million for individuals. Contraventions of the

following obligations may give rise to application of civil penalty orders:

(i) providing a Designated Service to a Customer before carrying out an applicable

Customer identification procedure;

(ii) not carrying out ongoing transaction monitoring and Customer due diligence;

(iii) failure to report Suspicious Matters, Threshold Transactions or International Fund

Transfer Instructions;

(iv) providing a designated service without having adopted a Program under the Act;

(v) failure to keep records in relation to compliance with the Act including the performance of Customer Identification and Verification Procedures.

(d) In responding to instances of detected non-compliance with the Act, AUSTRAC has a

broad range of enforcement powers which include undertaking criminal prosecutions, seeking injunctions and civil penalty orders, negotiating enforceable undertakings and

issuing mandatory remedial directions against reporting entities.


4 Risk Assessment

4.1 Risk based approach

(a) In developing and updating our Program, we must conduct an assessment of risks that we may reasonably face that the provision by us of Designated Services might involve or

facilitate ML or TF activity.

(b) Our Program is intended to identify, mitigate and manage such risks.

4.2 Main types of ML and TF risks

The main categories of risks that relate to an AML/CTF framework include:

(a) regulatory risk;

(b) business risk; and

(c) reputational risk.

4.3 Regulatory risk

A Reporting Entity must manage regulatory risks associated with breaches of relevant provisions

of the Act and the Rules. This requires implementation of a robust program that encompasses

relevant obligations and defines the control and review mechanisms needed to ensure compliance.

4.4 Business risk

(a) Business risk is the risk that designated services may be used to facilitate ML or TF. It is

important to note that regulatory and business risk may overlap. Business risk may be

categorised as:

(i) an inherent risk; or

(ii) a residual risk.

(b) Reporting entities may examine the inherent ML and TF risk across their business as a

whole having regard to the factors identified in section 4.6 below. Within each of the categories below, reporting entities should implement procedures and processes to

mitigate its exposure to these ML and TF risks.

(c) Residual risk is the risk which remains after the controls have been implemented.

4.5 Reputational risk

Reputational risk is the risk associated with damage to the Reporting Entity’s reputation as a result of non-compliance with the Act or Rules which may give rise to a perception that the

Reporting Entity has facilitated ML or TF activity. This may have a detrimental effect on:

(a) the profitability of the Reporting Entity due to a loss of confidence by investors; and

(b) the goodwill associated with the business.


4.6 ML and TF risk assessment

The ML and TF risks which our business may be exposed to when providing the Designated

Services can be categorised into the following groups:

(a) customer types, including beneficial owners of customers and any politically exposed persons, and relationships;

(b) customers’ sources of funds and wealth;

(c) the nature and purpose of the business relationship with customers, including, as

appropriate, the collection of information relevant to that consideration;

(d) the control structure of non-individual customers;

(e) delivery methods;

(f) designated services; and

(g) foreign jurisdictions.

Schedule 3 of the Program identifies, assesses and evaluates our exposure to each of the ML and TF risk categories identified above in the context of the Designated Services we provide.

Our categorisation of relevant ML or TF risks as either a low, medium or high risk will be based

upon the risk matrix illustrated below.

Lik

eli

ho

od

Po

ssib

le

Medium risk High risk

Un

lik

ely

Low risk Medium risk

Minor Major

Consequence

Our response to each ML or TF risk will be proportionate to whether the risk is categorised as

high, medium or low.

4.7 Factors applicable to assessment of risk

(a) We will consider the following factors when reviewing, implementing or reviewing our internal procedures which aim to identify, mitigate and manage ML and TF risk:

(i) the types of Designated Services we provide from time to time and the method

by which those services are delivered;


(ii) our Customer types and risks unique to particular types of Customers, including their sources of funds and the ownership structure of their investment holding;

(iii) the vulnerability of particular transactions to ML and TF risks and in particular any

transactions involving the receipt or disbursement by us of cash, or other payments not otherwise readily traceable to or from an identifiable and verifiable

bank account;

(iv) unique vulnerabilities in delivering Designated Services or involving persons or

transactions in foreign jurisdictions and in particular jurisdictions known or reasonably suspected to have increased ML or TF risks.

(b) In continuing to review and, where necessary, revise this Program, we will aim to:

(i) identify and recognise significant changes in ML and TF risk that affect us; and

(ii) assess the ML and TF risk posed by:

(A) all new Designated Services, prior to their introduction to the market by us;

(B) all new methods of Designated Services delivery, prior to adoption by us

of those delivery methods; and

(C) all new or developing technologies used for the provision of a Designated

Service prior to adoption by us.

(c) In monitoring changes in ML and TF risks facing our business we will aim to ensure

changes to our procedures are periodically undertaken where necessary to take into account of changes in ML and TF risks that we may reasonably face.

(d) In addition to this, we will aim to keep up to date with information that is published by

AUSTRAC, FATF and other organisations in respect to ML and TF trends as such information may be useful in illustrating how various designated services have been used

to facilitate to ML or TF. The AML/CTF Compliance Officer will be responsible for ensuring the Program is up to date and must recommend any proposed changes to the

Board for their approval.

4.8 Risk mitigation procedures

(a) We proceed on the general assumption that the substantial majority, if not all, of our

Customers who have been identified and verified in accordance to the Customer Identification and Verification Procedures set out in Part B of this Program can be

assessed to be of low to medium risk of using our Designated Services for ML and TF

activity. However, there may be circumstances in which we may assess a person or entity to be at higher risk. In such instances, we must carry out in relation to that person

or entity whichever of the following is appropriate:

(i) heightened Customer Identification and Verification Procedures as set out in

section 12.3 of this Program (in relation to prospective Customers); or

(ii) further due diligence as set out in section 6.6 of this Program (in relation to

Existing Customers).

(b) In addition to applying these procedures, we will apply the following further policies designed to further control the risk of our Customers engaging in ML and TF activity:


(i) where (either directly or through our agents) not having face to face contact with a prospective Customer always treating the Customer as potential high risk;

(ii) not permitting payments to a third party other than the identified Customer

unless that third party can be clearly established to be the authorised legal representative of the Customer (e.g. proving executorship of a deceased estate,

capacity as a liquidator of a company or trustee in bankruptcy);

(iii) where requested to effect payment by either a cheque or direct payment into a

foreign-domiciled bank or other deposit account, to make further inquiries to satisfy ourselves that the account is not in a Non-compliant Jurisdiction;

(iv) where we have reason to believe that payment by us may not be readily

traceable, to consider our enhanced due diligence and Suspicious Matter Reporting Obligations in section 4 of this Program; and

(v) never accepting payment from a Customer in physical currency.

4.9 ML and TF risk analysis

(a) (Designated services) Based upon AUSTRAC’s determination of high risk activities,

the following selected designated services relevant to the financial services industry have been risk assessed as follows:

Low Medium High

Managed funds* Unsecured loans Negotiable instruments

(for example bearer bonds)

Secured loans Life insurance products Bank accounts

Listed securities Low doc loans

Superannuation

Those marked with an asterisk are applicable to the Company.

(b) The Company has analysed its ML and TF risk profile for the designated services it provides and has assessed them as generally low risk on the basis that:

(i) as responsible entity of the Schemes, the Company issues interests in managed investment schemes mainly to Australian residents, individuals, Australian

Companies, Registered MIS and Regulated Trusts;

(ii) the majority of funds invested in the Schemes are sourced from ADIs

(customers’ sources of funds and wealth);

(iii) none of the following designated services are provided by the Company:

(A) designated remittance arrangements;

(B) electronic funds transfer where the Company is the ordering or beneficiary institution;

(C) correspondent banking relationships; and

(D) international fund transfers;


(iv) no cash or endorsed cheques are accepted for the provision of its services;

(v) internal controls are in place for the segregation of duties and functions; and

(vi) a custodian is engaged to segregate and hold the Schemes’ assets.

(c) (Customers types) AUSTRAC considers the Customer types relevant to the financial industry to be categorised for risk assessment purposes as follows:

Low Medium High

Individuals Unincorporated associations Politically exposed persons

Regulated Trusts Private company trusts

(other than Regulated Trusts)

Foreign companies

(except where listed company)

Government agency Foreign Customers Customers from non-compliant

jurisdictions

Listed company

Registered MIS

Public company

Partnerships

Incorporated associations

(d) The Schemes’ Customer composition is as follows:

Description Percentage (%)

Individuals 51%

Self managed superannuation funds 43%

Private companies 2%

Unregulated trusts (unit trusts, family trusts) 4%

(e) The majority of the Schemes’ customers are individuals, regulated trusts or regulated

superannuation funds. Both of these customer types are considered a low ML/TF risks.

A relatively small minority of the Schemes’ customers invest through unregulated trusts and private companies and so are considered to be medium risk (control structure of

non-individual customers).

(f) (The nature and purpose of the business relationship with our customers) The

nature and purpose of the business relationships with our customers is limited to the

provision of the designated service. We do not enter into commercial relationships with our customers.

(g) On balance, we assess our Customer ML/TF risk profile to be low to medium.

(h) (Method of delivery of services) AUSTRAC’s assessment of ML and TF risks for the

methods of delivery relevant to the financial services industry is set out below.


Low Medium High

Face to face Internet and email

(Australian Customers only)

Internet and email

(foreign Customer)

Regular contact with client Mail

Written agreements Phone

Referral by financial advisers

(where financial adviser has entered into written agency

agreement)

Facsimile

Referral by financial adviser where financial adviser has

not entered into written agency agreement

(i) Generally, initial contact by Employees with new Customers is made by the following

means:

Method of

contact

Always Most of the

time

Sometimes Rarely Never

Face to face

Telephone

Email / mail / fax

Referral by intermediaries

such as financial advisers

(j) Our product distribution channels rely upon financial advisers recommending that their

clients acquire interests in the Schemes. We rely upon financial advisers to implement Customer Identification Verification Procedures on our behalf, in accordance with the

requirements of the Act.

(k) RFM has appointed an external agent, Boardroom Limited, to provide services relating to

administration of a Member Registry. The appointment is subject to a written

agreement. We rely on the registry provider to implement and carry out Customer Verification Procedures, consistent with the AML/CTF Program requirements, on our

behalf, for all new customers and existing customers, where required. The registry provider supplies quarterly statements verifying compliance with these procedures.

(l) The ML/TF risk associated with the Designated Service delivery methods have been

assessed as low to medium.

(m) (Permanent establishment in foreign jurisdictions) The Company has no

permanent establishments in a foreign jurisdiction as at the date of this Program.


5 Employee due diligence program

5.1 What is employee due diligence?

(a) Part 8.3 of the Rules requires that we carry out Employee due diligence.

(b) Employee due diligence is carried out by performing checks during the recruitment phase

for new Employees, and on an ongoing basis for continuing Employees. The purpose of Employee due diligence is to reduce the risk of Employees being involved in

the facilitation of ML or TF activity in connection with the provision of our Designated Services.

(c) The Manager – Corporate Services (with the oversight of the AML/CTF Compliance

Officer) is responsible for establishing and maintaining the Employee due diligence in accordance with this Program.

5.2 Employee due diligence process - new employees

(a) Before making any employment offer to a person, our human resources department (or

officer with equivalent responsibility) must give the AML/CTF Compliance Officer details

of the applicant and a description of the role that the applicant will undertake if employed.

(b) Having regard to the ML and TF risks the Company is exposed to, the Manager –Corporate Services must assign the proposed role a low, medium or high risk rating,

having regard to whether the role would be reasonably likely to allow the person a

significant opportunity to facilitate ML or TF activity.

(c) If the Manager – Corporate Services assigns a low risk to the role, we will obtain the

results of at least one character reference check and one past employment reference check of the person and maintain a record of the results of those checks in accordance

with our record keeping obligations set out in section 10 of this Program.

(d) If the Manager – Corporate Services assigns a medium to high risk to the role, we must

obtain prior to making any offer of employment to the person, and as far as practicable

to obtain, the following information in relation to the person:

(i) the results of at least one, and where possible two, reference checks from

previous employers of the person;

(ii) at least one character reference from a non-family member who has known the

applicant for a period of at least two years;

(iii) where the person has resided in Australia for a combined period of at least three years in the previous five years, the results of both an Australian criminal history

search and bankruptcy search of the person obtaining, where required, the consent of the person to undertake the search;

(iv) where applicable, the results of similar searches to that referred to in section 5.2(d)(iii) above conducted with the government authorities in any

country in which the person has resided for any combined period in excess of

one year in the previous five years).

(e) If the searches or reference checks are unable to be obtained or reveal any adverse or

seriously inconsistent results, the AML/CTF Compliance Officer and human resources


department will meet to consider whether it is appropriate to employ the person. A record of all searches conducted and any discussions in relation to a decision to employ

must be recorded and maintained in accordance with our record keeping obligations set

out in section 10 of this Program.

5.3 Employee due diligence process - existing employees

(a) If an Employee is offered a promotion, or is offered a role which increases their level of responsibility or autonomy, the human resources department must give the AML/CTF

Compliance Officer a description of the role.

(b) Having regard to the Company’s ML/TF risks, the Manager – Corporate Services must

assign the proposed role a low, medium or high risk rating, having regard to whether the

role would be reasonably likely to allow the person a significant opportunity to facilitate ML or TF activity.

(c) If the Manager – Corporate Services assigns a high risk to the role, the Manager –Corporate Services must ensure we obtain, to the extent that they have not earlier been

obtained in relation to the Employee, the results of the same checks as set out in

paragraph 5.2(d) above.

(d) If these checks reveal any adverse or seriously inconsistent results, the AML/CTF

Compliance Officer and human resources department will meet to consider whether it is appropriate to promote the applicant. A record of all searches conducted and any

discussions in relation to a decision to employ must be recorded and maintained in accordance with our record keeping obligations set out in section 10 of this Program.

5.4 Employee risk assessment

‘High risk roles’ will include senior management, the AML/CTF Compliance Officer, Directors and other roles assigned by the Manager – Corporate Services and/or the AML/CTF Compliance

Officer from time to time. ‘Medium risk roles’ will include Employees responsible for the provision of Designated Services.

Positions that are considered high risk roles and medium risk roles are listed separately in

Schedule 5 of this Program.

5.5 Breaches and non-compliance

(a) The AML/CTF Compliance Officer must monitor and immediately report to the Board any breaches or non-compliance with this Program by any Employee.

(b) If the Employee fails without reasonable excuse to comply with any system control or

procedure contained in this Program, they will be required to attend a relevant training program.

(c) The Board will consider whether any disciplinary action is appropriate having regard to the breach or failure to comply and the Employee’s history of compliance with the

Program.

(d) All breaches or non-compliance with the Program must be recorded and periodically

reviewed in accordance with section 11.2 below.

(e) The AML/CTF Compliance Officer must regularly (and at least annually) review and sample at random an Employee’s compliance with the systems, controls and procedures


contained in this Program and report any breaches or non-compliance in accordance with section 5.5(a) above.

6 Risk awareness training program

6.1 What is a risk awareness training program?

(a) A risk awareness training program is a program, developed by the AML/CTF Compliance

Officer in order to provide Employees appropriate training in relation to identifying

transactions or clients which may be using our Designated Services to launder money or finance terrorism.

(b) Part 9.2 of the Rules requires that Part A of the Program include an AML/CTF risk awareness training program.

6.2 Requirements

(a) With the ML/TF risk that we face, a risk awareness training program must (where

relevant) give Employees appropriate training at appropriate intervals;

(i) for new Employees upon induction;

(ii) when an existing Employee’s ML/TF risk profile changes as a result of the taking

on a new role within the Company; and

(iii) for all other Employees at least bi-annually.

(b) If the Company’s ML or TF risk profile materially changes or new designated services or

delivering methods are implemented updated training may be required to address this.

(c) The training required will depend on the scope of an Employee’s role within the Company

and the level of responsibility they have been given which puts them on the front line of ML/TF risk detection.

(d) Under the training program, Employees need to be made aware of:

(i) our obligations as a Reporting Entity under the Act and Rules including, but not limited to the requirement to report Suspicious Matters (this could include making

a list of the ‘Red Flags’ and distributing them to Employees), Threshold Transactions and other compliance matters;

(ii) procedures and processes which must be carried out by the Employee in accordance with this Program including, but not limited to the Customer

Identification and Verification Procedures;

(iii) the consequences of non-compliance with this Program; and

(iv) the type of ML/TF risks that we face and the consequences of failing to address

these risks.

6.3 Implementation phase

(a) All Employees must be given training in relation to the matters listed in section 6.2(d).


(b) If the Employee’s role within the Company is one which has been assigned a medium or high risk by the Manager – Corporate Services and/or the AML/CTF Compliance Officer,

then, in addition to the training outlined in section 6.2 above, that Employee must be

given further training as appropriate.

(c) Part of the training that the AML/CTF Compliance Officer or the Manager – Corporate

Services must provide to Employees must include extra training to help Employees detect the likely occurrence of ML or TF activity.

(d) Under the training program, the Manager – Corporate Services must provide ongoing training at appropriate intervals and ensure Employees are fulfilling their training

obligations.

6.4 Updating training program

(a) The Manager – Corporate Services must keep a training register which records all

relevant training undertaken by Employees and the relevant date the training was undertaken.

(b) The AML/CTF Compliance Officer must amend the training program where appropriate to

ensure updated information relevant to that training (typically determined via awareness of information provided through the AUSTRAC website) is taken into account. AUSTRAC

may, for example, provide updates on the type of transactions requiring extra checks or monitoring if industry practice shows evidence of a higher risk for certain transactions

over other transactions.

(c) The AML/CTF Compliance Officer should also check the AUSTRAC website regularly for

case scenarios that have been provided which assist in explaining the requirements that

we, as a Reporting Entity, must follow in order to ensure that our risk awareness training program is compliant.

6.5 Breaches and non-compliance

The AML/CTF Compliance Officer will regularly check that Employees are attending all required

training sessions. The Manager – Corporate Services must report to the AML/CTF Compliance

Officer all instances of non-compliance with the training program and any failures by Employees to undertake training at appropriate times. Those Employees who fail to attend training sessions

must attend the next available training session. The Manager – Corporate Services will be responsible for ensuring all Employees attend all required training.

6.6 Enhanced customer due diligence process

(a) We proceed on the assumption that the substantial majority, if not all, of our Customers should generally be assessed as low to medium risk. This assumption is based upon our

assessment of the ML and TF risks which the Company is exposed to, as set out in section 4 above.

(b) The Customer Identification and Verification Procedure set out in Schedule 1 of this program should be applied to all prospective new Customers without exception.

(c) The heightened procedures set out in sections 12.5, 12.6 and 12.7 of this Program must

be applied in relation to a particular Customer where we suspect that the Customer may be at a higher risk of engagement in ML or TF activity.


(d) In assessing whether a prospective new Customer may be a higher risk, we will have particular regard to the existence of any one or more of the ‘Red Flag’ risk indicators set

out in Schedule 4 of this Program.

7 Transaction Monitoring

7.1 Monitoring customers

We will monitor transactional activity by our Customers on an ongoing basis in order to detect

activity or behaviour that may be indicative of Suspicious Matters (which may give rise to a Suspicious Matter Reporting Obligation) or other abnormal or atypical activity that may be

suggestive of any of the following:

(a) circumstances that indicate the Customer may not be who they initially had claimed to

be;

(b) circumstances that directly indicate the Customer may be seeking the delivery of our

services:

(i) in connection with the commission of a ML or TF offence;

(ii) in connection with the commission of any other offence against any laws of the

Commonwealth, States or Territories of Australia;

(c) the existence in relation to a prospective Customer of one or more of the ‘Red Flag’ risk

indicators set out in Schedule 4 of this Program.

7.2 Monitoring procedures

Customers that are subject to transaction monitoring may:

(a) be required to provide additional KYC information (see sections 12.4 to 12.8);

(b) be subject to enhanced due diligence;

(c) result in a Suspicious Matter Reporting Obligation; or

(d) be subject to termination of the Customer’s relationship.

7.3 Need to re-verify customers

If at any time, we have reasonable grounds to doubt whether an Existing Customer is the person they claim to be, we must within 14 days of formation of that opinion, take appropriate and

reasonable steps to satisfy ourselves as to the true identity of the Customer including undertaking Customer Identification and Verification Procedures. Failure to satisfy ourselves as

to the true identity of a Customer will give rise to a Suspicious Matter Reporting Obligation as set

out in section 8.1 of this Program.


8 Reporting obligations

8.1 Suspicious matters

(a) Section 41 of the Act provides that, we are required to report to AUSTRAC ‘Suspicious Matters’ that fit any of the descriptions set out in section 8.2 of this Program. The Act

also imposes prescribed time frames for us to complete that reporting.

(b) For the purpose of this Program, a ‘Suspicious Matter’ will be deemed to have occurred

when there are reasonable grounds for us to suspect:

(i) that a Customer, or an agent purporting to act on their behalf, is not who they

claim to be;

(ii) we have information that may be relevant to the investigation of an evasion of tax law, or the prosecution of a person for an offence against the laws of the

Commonwealth, States or Territories of Australia, or may be of assistance in the enforcement of the Proceeds of Crimes Act 2002 (Cth) (or equivalent State or

Territory legislation);

(iii) the provision by us of a Designated Service has been used or may be used to assist the financing of a ML or TF offence; or

(iv) the provision by us of a Designated Service may be relevant to the investigation or prosecution of a person for a ML or TF offence.

8.2 How do we determine and report a suspicious matter?

(a) Each Employee who forms a belief, or becomes aware of information to indicate that a Suspicious Matter may have occurred must notify the AML/CTF Compliance Officer of that

belief.

(b) Within 2 hours of receipt of a notification from an Employee, or if otherwise becoming

aware of a possible Suspicious Matter the AML/CTF Compliance Officer must:

(i) review and investigate the issue in order to decide whether or not a Suspicious

Matter Reporting Obligation has been triggered within the meaning of the Act

and Rules;

(ii) consider whether it is appropriate to make the Customer subject to the enhanced

due diligence procedure as set out in sections 12.3 to 12.8;

(iii) ensure that any further enquiries made under paragraph 8.2(b)(ii):

(A) are conducted in a prudent manner using common sense, tact and

discretion; and

(B) do not give rise to a ‘tipping off’ offence (see section 9 for further

details);

(iv) seek guidance from AUSTRAC or professional legal advice if unsure; and

(v) keep a written record of any review and investigation undertaken.


(c) Immediately upon the AML/CTF Compliance Officer determining that a Suspicious Matter Reporting Obligation has arisen, the AML/CTF Compliance Officer must give a written

report to AUSTRAC regarding the matter:

(i) within 24 hours if the Suspicious Matter relates to suspected TF activity; or

(ii) in all other cases, within three Business Days.

(d) A Suspicious Matter report must be submitted in the form prescribed by AUSTRAC from time to time (as accessible on AUSTRAC’s website).

(e) The AML/CTF Compliance Officer must report the Suspicious Matter to the Board within three Business Days after lodging the report with AUSTRAC.

8.3 Threshold transactions

(a) Section 43 of the Act provides that, we are required to report to AUSTRAC all ‘Threshold Transactions’.

(b) A Threshold Transaction is a transaction involving the transfer of $10,000 or more in physical currency or e-currency.

(c) Each Employee who handles a Threshold Transaction must notify the AML/CTF

Compliance Officer of that fact.

(d) The AML/CTF Compliance Officer must:

(i) report all Threshold Transactions to the AUSTRAC CEO within ten Business Days after the transaction takes place using the AUSTRAC prescribed form; and

(ii) report to the Board at the next scheduled board meeting that a Threshold Transaction has occurred.

8.4 Compliance reporting to AUSTRAC

(a) As a part the requirements under the Act, an AML/CTF compliance report must be provided to AUSTRAC with information about our compliance with the Act.

(b) The Company’s AML/CTF compliance report must be lodged online at https://online.austrac.gov.au.

(c) The first compliance reporting period will be from the date of adoption of this Program to

31 December 2010 and the deadline for lodging that first report is 31 March 2010. Thereafter the compliance reporting period will run on a calendar year with the reporting

deadline being 31 March in the following year.

(d) The AML/CTF Compliance Officer must provide AUSTRAC with information about the

Company’s compliance with the Act.

8.5 Compliance with reporting obligations

(a) The AML/CTF Compliance Officer will be responsible for:

(i) overseeing all Employees compliance with our reporting obligations under sections 8.1 to 8.3;


(ii) arranging training for all Employees in relation to our reporting obligations under sections 8.1 to 8.3;

(iii) undertaking an audit of an appropriate sample of Customer files randomly

selected every year and reviewing whether our reporting obligations under sections 8.1 to 8.3 have been complied with.

(b) Prior to lodging the compliance report with AUSTRAC, in accordance with section 8.4, the AML/CTF Compliance Officer must notify the Board of any circumstances brought to the

attention of the AML/CTF Compliance Officer which would lead him or her to believe that we have not complied with the Act or this Program.

(c) The AML/CTF Compliance Officer must provide confirmation to the Board that the

compliance report has been submitted to AUSTRAC under section 8.4 including a summary of its contents and any matters relevant for noting as soon as possible after the

report has been lodged with AUSTRAC.

9 Tipping off offence

9.1 What is tipping off?

(a) A Reporting Entity, its directors, employees or agents must not disclose to anyone other than AUSTRAC that it has:

(i) reported, or is required to report information about a Suspicious Matter Reporting

Obligation or Threshold Transaction; or

(ii) formed a suspicion about a Suspicious Matter.

(b) Failure to comply with this obligation is an offence under section 123 of the Act.

(c) In particular, the Company its Directors, Employees or agents must not do anything that

would lead a Customer or anyone else (other than AUSTRAC) to believe that a suspicion

has been formed or that information has been communicated to AUSTRAC.

(d) In some circumstances, enhanced due diligence procedures may lead a Customer to

suspect that they are being investigated. It is AUSTRAC’s view that the mere act of asking a Customer for additional information about their identity or source or destination

of their funds, for example, would not constitute an unlawful disclosure of information under the tipping off provisions of the Act.

9.2 Exceptions

If required, a Reporting Entity may disclose the matter to:

(a) a lawyer or accountant for the purpose of dissuading the Customer from engaging in

conduct that constitutes, or could constitute, evasion of a taxation law, evasion of a law of a State or Territory that deals with taxation or an offence against a law of the

Commonwealth or a State or Territory;

(b) its lawyers for the purpose of obtaining legal advice;

(c) an Australian Government Agency that has responsibility for law enforcement (i.e.

Australian Capital Territory Police or the Australian Federal Police); or


(d) another Reporting Entity within its designated business group for the purpose of informing the other Reporting Entity about the risks involved when dealing with a

Customer.

10 Record Keeping

10.1 Retention of records

Part 10 of the Act imposes on us obligations to maintain for a period of not less than seven years

records pertaining to our compliance with the Act and Rules. These currently include:

(a) documents obtained from our Customers pertaining to the provision of Designated

Services, which will include but not be limited to transactional records such as application forms, redemption requests, Customer instructions and payment receipts;

(b) documents pertaining to our completion of applicable Customer Identification and Verification Procedures as set out in this Program, as changed from time to time; and

(c) copies of this and any other adopted versions of this Program and any other document

that is intended from time to time to satisfy the requirements under the Act.

10.2 Agency

(a) Where we have, under written agreement with another Reporting Entity under the Act entered into, an arrangement for that other Reporting Entity to collect and retain on our

behalf records that are required to be kept for the purpose of compliance with the Act,

we will be permitted to keep a copy of the record held by that other Reporting Entity provided we have a contractual right of access to the record retained by the other

Reporting Entity.

(b) For us to rely on this procedure, the other Reporting Entity must also be subject to the

same record keeping obligations under the Act in relation to the subject records.

10.3 Employee records

Employee records are kept in accordance with RFM Archiving Policy and the relevant legislation.

11 Ensuring ongoing effectiveness of the compliance program

11.1 Review of the compliance program

(a) A periodic review of the Program must be regularly conducted in order to ensure the

Program is up to date with the changing ML and TF risks that we may face. It is crucial that we build a dynamically evolving risk assessment model in order to assess risk

effectively. If we fail to review our Program on an ongoing basis, we may be vulnerable to abuse by money launderers and terrorist financiers.

(b) A review of the Program must occur on each second anniversary of the adoption date of

the Program (or sooner if necessary), or on another date as considered appropriate by the AML/CTF Compliance Officer.

(c) The review must be carried out by an appropriate, independent party. The independent reviewer may be an internal or external party. The Board is responsible for appointing

the reviewer.


(d) The review must assess:

(i) the effectiveness of the Program, having regard to the ML/TF risk;

(ii) whether the Program complies with the Rules;

(iii) whether we have effectively implemented the Program; and

(iv) whether we have complied with the Program.

(e) The AML/CTF Compliance Officer must:

(i) amend the Program (for adoption by the Board) to take into account of any

deficiencies identified in the review;

(ii) develop a plan (with appropriate training) for implementation of the amendments

of the Program; and

(iii) manage the conduct of the developed plan.

(f) At least once each year the AML/CTF Compliance Officer must review the ML and TF risks

we are susceptible to in the course of providing the Designated Services as set out in Schedule 3 of this Program having regard to the factors identified in section 4.6 above.

11.2 Breaches register

The AML/CTF Compliance Officer must keep a breach register which contains details of any breaches or failure to comply with the procedures set out in this Program. On an annual basis,

the AML/CTF Compliance Officer must review the breaches register and consider whether the breaches or non-compliance which occurred during the relevant period indicate any systemic

deficiencies in the Program and recommend to the board how these deficiencies ought to be rectified.

11.3 Responsibility of board

The Board will be responsible for adopting, reviewing and overseeing the implementation and operation of the Program in accordance with the Act and the Rules.

11.4 AUSTRAC feedback

(a) We must have in place a procedure that allows us to receive and have regard to

feedback from AUSTRAC in respect of our performance on managing the ML/TF risk.

(b) The AML/CTF Compliance Officer must:

(i) amend the Program (for adoption by the Board) to take into account any

deficiencies identified in feedback provided by AUSTRAC;

(ii) develop a plan (with appropriate training) for implementation of the amendments

incorporating the AUSTRAC feedback of the Program; and

(iii) manage the conduct of the developed plan.


Part B – Customer identification and verification procedures

12 Customer identification procedures

12.1 Why do we need to identify customers

(a) Section 32 of the Act requires that we identify Customers before we provide a Designated Service to them.

(b) The Rules provide that we need to both collect certain information in relation to

Customers and verify that information against primary or secondary documentation. By this means we aim to form a reasonable belief as to the true identity of the Customer

and retain some record of the process by which we sought to verify their identity. We will be able to use information collected to check against databases and other records

and assign to particular Customers a low, medium or high risk of participation in ML or TF activity.

12.2 How do we identify a customer?

(a) Whenever we receive a request for the provision of a Designated Service from a prospective Customer, we must first establish in what capacity the Customer seeks

delivery of the Designated Service (according to the categories set out in paragraph (b) below) and then carry out the relevant Customer Identification and Verification Procedure

set out in Schedule 1 of this Program.

(b) The following identification forms apply different Customer Identification and Verification Procedures depending on the category that best describes the Customer, namely:

(i) Identification form – an individual (whether acting in a personal or sole trader capacity);

(ii) Identification form – a company;

(iii) Identification form – a trustee or a partnership;

(iv) Identification form – an association or a registered co-operative; or

(v) Identification form – a government body.

(c) In some cases, identified by information collected from a prospective Customer, we will

become aware that the Customer is an individual acting in the capacity as trustee of a trust, or a company acting in the capacity as trustee of a trust. In such cases we must

apply the Customer Identification and Verification Procedures applicable in the relevant

identification forms (as pertain to an individual or a company) as well as the identification form for the Trust.

(d) Where multiple Customers are acting jointly (for example applications received from a husband and wife) we must separately identify and verify each Customer.


(e) After we have ascertained Customer type, we must then:

(i) ensure we have collected the information in relation to the Customer required

under the relevant Schedule pertaining to that Customer type, this includes

verification of the settlor or the trust, if applicable, and the name of each trustee and beneficiary for trusts and verification of beneficial owners for companies, if

applicable;

(ii) collect and verify information in relation to the Customer required under the

relevant Schedule (verification can be based on original or certified documentation provided by the Customer or can be carried out using reliable and

independent electronic data from at least two separate data sources).

(f) Unless the required Customer Identification and Verification Procedure and, where applicable, any heightened procedures in relation to high-risk Customers set out in

sections 12.5, 12.6 and 12.7 of this Program (where applicable), have been completed in relation to a Customer, we must not proceed to deliver a Designated Service to the

Customer.

12.3 Procedure if unable to determine the identity of the beneficial owner

If we are unable to ascertain a beneficial owner, we must identify and take reasonable measures to verify:

(a) for a company or a partnership, any individual who:

(i) is entitled (either directly or indirectly) to exercise 25% of more of the voting

rights, including a power to veto, or

(ii) holds the position of senior managing official (or equivalent);

(b) for a trust, any individual who holds the power to appoint or remove trustees of the

trust;

(c) for an association or a registered co-operative, any individual who:

(i) is entitled (either directly or indirectly) to exercise 25% or more of the voting

rights including a power to veto, or

(ii) would be entitled on dissolution to 25% or more of the property of the

association or registered co-operative, or

(iii) holds the position of senior managing official (or equivalent).

12.4 Heightened procedure for high-risk customers

(a) The Customer Identification and Verification Procedures set out in Schedule 1 of this Program should be applied to all prospective Customers without exception.

(b) The heightened procedures set out in sections 12.5 and 12.8 of this Program will be applied in relation to a particular Customer when we suspect on reasonable grounds that

the Customer may be at high-risk of engagement in ML or TF activity. In assessing whether a prospective Customer may be high-risk we will have particular regard to the

existence of one or more of the ‘Red Flag’ risk indicators set out in Schedule 4 of this

Program.


12.5 Additional information which may be sought

Where a prospective Customer is assessed to be high risk, the Customer’s request for delivery of

Designated Services must be immediately referred to our AML/CTF Compliance Officer for further

assessment and response. We must ensure that no further action is taken in relation to delivery of the requested Designated Service to the Customer unless and until additional information can

be collected and verified in relation to the Customer. Our AML/CTF Compliance Officer will determine what additional information will be sought in relation to the Customer which may

include but not be limited to the following:

(a) the Customer’s occupation, business activities or functions;

(b) formal confirmation of the Customer’s purpose and intention in requesting the relevant

Designated Service including where appropriate the purpose of specific transactions, or the expected nature and level of transactions to be undertaken by the Customer;

(c) any other name the Customer is known by (other than that already provided);

(d) the Customer’s country(ies) of citizenship and residence;

(e) the Customer’s financial position and other information regarding the income or assets

available to the Customer;

(f) the Customer’s source of funds, including where appropriate, confirmation of the origin of

funds;

(g) details in respect of the ownership and control structure of the Customer;

(h) the beneficial ownership of the funds used by the Customer with respect to the Designated Service;

(i) confirmation of the intended beneficiaries of the proposed transactions including, where

appropriate, the destination of funds; and

(j) where the Customer is not a natural person, further particulars relevant to the identity of

natural persons who exercise ultimate control over the affairs of the Customer.

12.6 Enhanced customer due diligence program

If we have become aware that any of the flag indicators set out in Section 4 exists in relation to a prospective or existing Customer we will take measures appropriate to those circumstances

including:

(a) seek information from the Customer or from third party sources in order to undertake

one or more of the following as specified in (i) to (iv) below:

(i) clarify or update KYC information already collected from the Customer;

(ii) clarify or update beneficial owner information already collected from the

Customer;

(iii) obtain any further KYC information or beneficial owner information, including,

where appropriate, taking reasonable measure to identify: - the source of the Customer’s and each beneficial owner’s wealth, and

- the source of the Customer’s and each beneficial owner’s funds;

(iv) clarify the nature of the Customer’s ongoing business with us;

(b) undertake more detailed analysis of the Customer’s KYC information and beneficial owner

information, including, where appropriate, taking reasonable measures to identify:


(i) the source of the Customer’s and each beneficial owner’s wealth, and

(ii) the source of the Customer’s and each beneficial owner’s funds;

(c) verify or re-verify KYC information in accordance with the customer’s identification

program;

(d) verify or re-verify beneficial owner information in accordance with the beneficial owner

identification requirements;

(e) undertake more detailed analysis and monitoring of the Customer’s transactions – both

past and future, including, but not limited to:

(i) the purpose, reasons for, or nature of specific transactions, or

(ii) the expected nature and level of transaction behaviour, including future

transactions;

(f) seek senior management approval for:

(i) continuing the business relationship with a Customer, and

(ii) whether a designated service should continue to be provided to the Customer;

(g) consider whether a transaction or particular transactions should be processed.

12.7 Identification of politically-exposed persons

(a) AUSTRAC considers that only foreign Politically Exposed Persons will need to be identified

in accordance with the Customer Identification and Verification Procedures and enhanced due diligence procedures contained in the Program.

(b) There is no obligation on reporting entities to carry out enhanced due diligence procedures in relation to Australian Politically Exposed Persons unless required to do so

under some other process and procedure contained in the Program (for example, a

Suspicious Matter Reporting Obligation).

(c) The majority of funds invested in the Schemes are sourced from Australian residents.

Therefore, the Schemes have little exposure to ML and TF risks associated with providing Designated Services to foreign Customers. The Company considers it unlikely that a

Politically Exposed Person will seek the Designated Services of the Company. On this

basis, the Company has determined that it is appropriate for all new Customers to be asked to disclose their occupation so that the Company can assess whether they are a

Politically Exposed Person.

(d) However, if there are any doubts with regard to whether a Customer is a Politically

Exposed Person, a Google search or a World-Check search (if this service is subscribed

to) should be conducted (see section 12.8(b) below) of the individual’s name in order to determine whether the Customer is a Politically-Exposed Person.

12.8 Additional identification, verification and risk assessment resources

The AML/CTF Compliance Officer should also consider in relation to a prospective Customer

suspected to be high-risk a search of one or more commercial databases that provide information that can assist in a more reliable risk assessment of the Customer. These databases may include

the following:


(a) Global Data Coverage - service specialising in providing a world-wide identity checking and verification: www.globaldatacompany.com;

(b) World-Check - proprietary database of known high risk individuals and businesses

including political exposed persons, money launderers, terrorists and sanctioned entities: www.world-check.com; and

(c) Department of Foreign Affairs and Trade - access to a ‘consolidated list’ of banned terrorist organisations and individuals to which Australian laws apply:

www.dfat.gov.au/icat/UNSC_financial_sanctions.html.

12.9 Possible concurrent reporting obligations

Where circumstances arise that trigger a Red Flag, this must be immediately brought to the

attention of the AML/CTF Compliance Officer who must determine whether the Company has a separate Suspicious Matter Reporting Obligation which must be dealt with in accordance with

section 8.1 of this Program.

12.10 Who does not need to be identified?

(a) The Company is not required to verify the identity of existing Customers who were

provided Designated Services prior to 12 December 2007 (Existing Customer).

(b) However, we must verify the identity of an Existing Customer where we have

subsequently become aware of any of the circumstances that arise that trigger a Red Flag (in relation to the Customer). Where we become aware of such circumstances we

will be required to ensure completion of the Customer Identification and Verification Procedures relevant to the Customer set out in the Schedule 1 of this Program as well as

apply to the Customer appropriate heightened identification procedures determined by

the AML/CTF Compliance Officer to be in accordance with sections 12.5 to 12.8 of this Program.

12.11 Certified copies

Where original proofs of identity set out in Schedule 1 of this Program provided to verify a

Customers identity are not able to be sighted by Employees, a Certified Copy of the proofs may

be provided subject to the proof being certified in the manner set out in Schedule 2 of this Program.

12.12 Disclosure Certificates

If:

(a) we have determined that that information cannot otherwise be reasonably obtained or

verified;

(b) the information to be provided or verified is reasonably required under our AML/CTF

program;

(c) we have applied the relevant procedures and requirements in our AML/CTF program, but

have been unable to obtain or verify the information; and

(d) the information is one or more of the items of information specified below,

we may request that a Customer (that is a company, trust, partnership, association or registered

co-operative) provide a disclosure certificate.

http://www.globaldatacompany.com/

http://www.world-check.com/

http://www.dfat.gov.au/icat/UNSC_financial_sanctions.html


Domestic Companies

A disclosure certificate for a domestic company must:

be signed or otherwise authenticated by a director or secretary or AML/CTF Compliance

Officer or equivalent officer of the company; and

contain the full name and full residential address of each beneficial owner of the company.

Trusts

A disclosure certificate for a trust must:

be signed or otherwise authenticated by a trustee of the trust;

verify KYC information about the trust, where the verification confirms the existence of the

trust name and address of each trustee and the name of each beneficiary or class of beneficiary, if the KYC information to be verified is not otherwise reasonably available from

the sources described for trusts; and

contain the full name and full residential address of each beneficial owner.

Partnerships

A disclosure certificate for a partnership must:

be signed or otherwise authenticated by a partner of the partnership;

verify KYC information about the partnership, where the verification confirms the existence of

the partnership, if the KYC information to be verified is not otherwise reasonably available from the sources described for partnerships; and


Associations

A disclosure certificate for an incorporated or unincorporated association must:

be signed or otherwise authenticated by a chairman or secretary or treasurer or AML/CTF

Compliance officer or equivalent officer of the association;

verify KYC information about the association, if the KYC information to be verified is not

otherwise reasonably available from the sources described for associations; and


Registered Co-operatives

A disclosure certificate for a registered co-operative must:

be signed or otherwise authenticated by the chairman or secretary or treasurer or AML/CTF

Compliance Officer or equivalent officer;

verify KYC information about the registered co-operative, if the KYC information to be verified

is not otherwise reasonably available from the sources described for co-operatives; and



12.13 Agents

(a) If appropriate, the Company may appoint an agent to carry out the applicable Customer

Identification and Verification Procedures. However, the Company will remain accountable for the actions of the agent. Circumstances where the company may rely

upon an agent to conduct its Customer Identification and Verification Procedures include where a financial advisor has arranged for a Customer to invest in any of the Schemes or

where the function of a Member Registry has been outsourced to an external agent.

(b) In order to be able to rely upon this exception, the following conditions must be satisfied:

(i) the Company must determine that it is appropriate for it to rely upon the

applicable Customer Identification and Verification Procedures carried out by the financial adviser, having regard to the ML and TL risks faced by the Company

relevant to the provision of the Designated Services to the Customer; and

(ii) the Company must obtain a copy of the record made by the financial adviser

when verifying the Customer’s identity or alternatively, enter into an agreement

for the management of identification or other records and ensure that the Company has access to those records.

(c) Where the Company has appointed, subject to a written agreement, an external agent to provide services relating to administration of a Member Registry, the Company may rely

upon applicable AML/CTF Program and Customer Identification and Verification Procedures taken out by the entity. The Company must be satisfied that it is appropriate

to rely upon those procedures and must have access to identification or other records.

(d) In circumstances where reporting entities have formed a designated business group, reporting entities within the business group may rely upon applicable Customer

identification procedures taken out by other reporting entities.


Glossary and interpretation

13 Definitions

In this document:

Term Definition

Act means the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth).

ADI means an authorised deposit-taking institution for the purposes of the

Banking Act 1959 or a State banking institution within the meaning of paragraph 51(xiii) of the Constitution of Australia.

AFSL means Australian Financial Services Licence no. 226701 issued by the

ASIC.

AML/CTF means anti-money laundering and counter-terrorism financing.

AML/CTF Compliance Officer

has the meaning provided in introduction section of this Program.

APRA means the Australian Prudential Regulation Authority.

ASIC means the Australian Securities and Investments Commission.

ATO means the Australian Taxation Office.

AUSTRAC means the Australian Transaction Reports and Analysis Centre.

Australian Company means a company (other than a Foreign Company) that is registered by

ASIC under the Corporations Act 2001.

Australian Financial Market

means a financial market operated by:

(a) Australia Pacific Exchange Limited;

(b) Australian Securities Exchange Limited;

(c) National Stock Exchange of Australia; or

(d) any other prescribed financial markets for the purposes of section 9 of the Corporations Act, as amended from time to

time.

Australian Listed Company

means a Public Company included in the official list of an Australian Financial Market.

Beneficial Owner Means an individual who ultimately controls (directly or indirectly) the Customer. In the case of a company that is any individual who owns

through one or more shareholdings more than 25% of the issued

capital.

Board means the Directors of the Company.

Business Day means a day that is not a Saturday or Sunday or public holiday in Canberra, Australian Capital Territory.

Certified Copy means a document that has been certified as a true copy of an original of that document by a person within a category of persons set out in

Schedule 2. The required certification will be effected by the person

printing their name and signing and dating their signature alongside


Term Definition

words to the following or like effect: ‘I certify this to be a true copy of the original of this document.’

Certified Extract means an extract of a document that has been certified as a true copy of some of the information contained in a complete original document

by a person within a category of persons set out in Schedule 2. The required certification will be effected by the person printing their name

and signing and dating their signature alongside words to the following

or like effect:

‘I certify this to be a true copy of an extract of the original of this document.’

Company means Rural Funds Management Limited ACN 077 492 838.

Corporations Act means Corporations Act 2001 (Cth).

Customer means a person who has or intends to receive Designated Services from the Company.

Customer Identification and

Verification Procedures

means the Customer identification and verification procedures prescribed under the Rules and as described in Part B of this

Compliance Plan.

Designated Service means the services that we provide that is regulated, and not otherwise

exempted, under the Act, and in relation to our particular business activities, are described in Section 1.1 of this Program.

Director a director of the Company.

Employee means an employee or prospective employee of the Company or any of

its Related Body Corporates.

Existing Client has the meaning provided in section 12.10(a).

FATF means the Financial Action Task Force on money laundering and

terrorism financing.

Foreign Company means a company that is incorporated in a country other than Australia.

Government Agency

means:

(a) a government or government department or other body;

(b) a government, semi-governmental or judicial person; or

(c) a person (whether autonomous or not) who is charged with the administration of a law.

Government Superannuation

Fund

means a government superannuation fund established by legislation.

International Fund Transfer Instruction

has the meaning given to that term by section 46 of the Act.

Know Your Customer or KYC

means the inquiries we undertake and due diligence that we must perform to identify and verify the identity of our clients and ascertain

relevant information pertinent to providing a Designated Service to

them.

Listed Company means:

(a) an Australian Listed Company;

(b) a Foreign Company registered with ASIC that is a company


Term Definition

included in the official list of an Australian Financial Market; or

(c) a Foreign Company (whether or not registered with ASIC) that

is a company whose shares, in whole or in part, are listed for quotation in the official list of any of the following financial

markets:

(i) Bourse de Paris;

(ii) Eurex Amsterdam;

(iii) Hong Kong Stock Exchange;

(iv) London Stock Exchange;

(v) New York Stock Exchange;

(vi) Stock Exchange of Singapore;

(vii) Tokyo Stock Exchange;

(viii) Bursa Malaysia;

(ix) Borsa Italiana;

(x) Frankfurt Stock Exchange;

(xi) JSE Securities Exchange;

(xii) NASDAQ National Market;

(xiii) New Zealand Stock Exchange;

(xiv) SWX Swiss Exchange; and

(xv) Toronto Stock Exchange.

ML means money laundering as described in the introduction section of

this Program.

Non-compliant

Jurisdiction

means any nation state which is not a member of FATF, from time to

time, which at the date of adoption of this Program includes any nation

state other than:

(a) Argentina;

(b) Australia;

(c) Austria;

(d) Belgium;

(e) Brazil;

(f) Canada;

(g) China;

(h) Denmark;

(i) Finland;

(j) France;

(k) Germany;

(l) Greece;

(m) Hong Kong;

(n) Iceland;

(o) India;

(p) Ireland;

(q) Italy;

(r) Japan;

(s) Korea;


Term Definition

(t) Luxemburg;

(u) Mexico;

(v) The Kingdom of the Netherlands;

(w) New Zealand;

(x) Norway;

(y) Portugal;

(z) The Russian Federation;

(aa) Singapore;

(bb) South Africa;

(cc) Spain;

(dd) Sweden;

(ee) Switzerland;

(ff) Turkey;

(gg) The United Kingdom; and

(hh) The United States of America.

Politically Exposed

Person

means individuals who are or have been entrusted with prominent

public functions in a foreign country, but not middle ranking or more junior individuals, 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 and family members or close associates of persons in the foregoing

categories.

Program means the measures and procedures set out in this document that we

maintain to identify, mitigate and manage the ML and TF risks that we

may reasonably face when providing Designated Services.

Proprietary or

Private Company

has the meaning given to a proprietary company in section 45A

Corporations Act.

Public Company has the meaning given to that term in section 9 of the Corporations Act.

Quarter means a period of three months ending on 31 March, 30 June, 30 September or 31 December.

Red Flag means the occurrence of any of the events listed in Schedule 4 of this

Program.

Registered MIS means a managed investment scheme registered by ASIC under the

Corporations Act.

Regulated Trust means a trust that is:

(a) a self-managed superannuation fund within the meaning of

section 19 of the Superannuation Industry (Supervision) Act 1993 (Cth): the relevant regulator is the Australian Taxation

Office;

(b) a regulated superannuation fund, an approved deposit fund, a

pooled superannuation trust, or a public sector superannuation

scheme, within the meaning of the Superannuation Industry (Supervision) Act 1993 (Cth), including small APRA regulated

funds; or

(c) any other registered trust subject to regulatory oversight of a

Government Agency in relation to its activities as a trust.


Term Definition

Related Body Corporate

has the meaning given to that term by section 9 Corporations Act.

Reporting Entity means a person who provides a Designated Service as described under section 5 of the Act.

Rules means any rules or regulations made pursuant to the Act including but not limited to the Anti-Money Laundering and Counter-Terrorism Financing Rules Instrument 2007 No.1 (Cth).

Schemes means each of the managed investment schemes the Company is appointed as the responsible entity of from time to time which at the

date of adoption, and/or amendment, of this Program includes:

(a) Rural Funds Trust ARSN 112 951 578;

(b) RFM Diversified Agricultural Fund ARSN 099 573 627;

(c) Agricultural Income Trust Fund No. 1 ARSN 093 804 276;

(d) RFM Chicken Income Fund ARSN 105 754 461;

(e) RFM Almond Fund 2006 ARSN 117 859 391;

(f) RFM Land Trust ARSN 128 112 443;

(g) RFM Australian Cotton Fund ARSN 099 573 690;

(h) RFM Australian Wine Fund ARSN 099 573 485;

(i) RFM Almond Fund 2007 ARSN 124 998 527;

(j) RFM Almond Fund 2008 ARSN 127 947 960; and

(k) RFM StockBank ARSN 153 436 803;

(l) RFM Poultry ARSN 164 851 218; and

(m) RF Active ARSN 168 740 805.

Suspicious Matter has the meaning provided in section 41 of the Act.

Suspicious Matter Reporting

Obligation

has the meaning provided in subsection 41(1) of the Act.

TF means financing terrorism as described in the introduction section of

this Program.

Threshold

Transaction

has the meaning given to that term in section 5 of the Act.

we, our and us means the Company.

14 Interpretation

In this document:

(a) a singular word includes the plural and vice versa;

(b) a word which suggests one gender includes the other gender;

(c) a reference to a clause, schedule, annexure or party is a reference to a clause of, and a schedule, annexure or party to, this document and references to this document include

any schedules or annexures;


(d) a reference to a party to this document or any other document or agreement includes the party’s successors, permitted substitutes and permitted assigns;

(e) if a word or phrase is defined, its other grammatical forms have a corresponding

meaning;

(f) a reference to a document or agreement (including a reference to this document) is to

that document or agreement as amended, supplemented, varied or replaced;

(g) a reference to this document includes the agreement recorded by this document;

(h) a reference to legislation or to a provision of legislation (including subordinate legislation) is to that legislation as amended, re-enacted or replaced, and includes any subordinate

legislation issued under it;

(i) if any day on or by which a person must do something under this document is not a Business Day, then the person must do it on or by the next Business Day;

(j) a reference to a person includes a corporation, trust, partnership, unincorporated body, government and local authority or agency, or other entity whether or not it comprises a

separate legal entity; and

(k) a reference to ‘month’ means calendar month.


Schedule 1

Investor identification information forms

Investor identification information forms The Financial Services Council (FSC) and the Financial Planning Association have released an updated

Guidance Note assisting financial planners and product issuers to manage their customer identification obligations under Chapter 7 of the Anti-Money Laundering (AML) and Counter-Terrorism Financing Rules.

Accompanying the Guidance Note are customer identification forms (for various customer types). These

forms include:

1. Individuals & Sole Traders

2. Australian Companies

3. Australian Regulated Trusts and Trustees

4. Associations

5. Partnerships

6. Registered Cooperatives

7. Government Bodies

8. Unregulated Trusts and Trustees

FSC guidance and the customer identification forms can be found on the FSC website at http://fsc.org.au/standards-guidance/financial-services-council-guidance-notes.aspx.

Refer to FSC Guidance Note No. 24 Financial Services Council/FPA Guidance on Managing AML/CTF and FATCA.

The Company also maintains current customer identification forms on its website at

http://ruralfunds.com.au/investor-centre/forms/

http://fsc.org.au/standards-guidance/financial-services-council-guidance-notes.aspx

Schedule 2 - Certification of original documentation


Schedule 2

Certification of original documentation

1 Certification definitions and applicable procedure

When applying the verification procedures set out in Schedule 1 it is acceptable for ‘Certified Copies’ or ‘Certified Extracts’ of original documents to be provided by a Customer in place of

originals.

2 Categories of persons authorised to certify documents

Persons who can certify documents or extracts are:

(a) (a lawyer) a person who is enrolled on the roll of the Supreme Court of a State or

Territory, or High Court of Australia, as a legal practitioner (however described);

(b) a judge of a court;

(c) a magistrate;

(d) a chief executive officer of a Commonwealth court;

(e) a registrar or deputy registrar of a court;

(f) a Justice of Peace;

(g) a notary public (for the purposes of the Statutory Declaration Regulations 1993);

(h) a police officer;

(i) (a postal agent) an agent of the Australian Postal Corporation who is in charge of an

office supplying postal services to the public;

(j) (the post office) an permanent employee of The Australian Postal Corporation with 2 or more years of continuous service who is employed in an office supplying postal

services to the public;

(k) an Australian consular officer or an Australian diplomatic officer (within the meaning of

the Consular Fees Act 1955);

(l) an officer with two or more continuous years of service with one or more financial institutions (for the purposes of the Statutory Declaration Regulations 1993);

(m) a finance company officer with two or more continuous years of service with one or more financial companies (for the purposes of the Statutory Declaration Regulations 1993);

(n) an officer with, or authorised representative of, a holder of an Australian financial

services license, having two or more continuous years of service with one or more licensees; and

Schedule 2 - Certification of original documentation


(o) (an accountant) a member of the institute of Chartered Accountants in Australia, CPA Australia or the National Institute of Accountants with two or more years of continuous

membership.

Notwithstanding the above, we will always apply a common sense discretion in considering

whether to reject a purported certification where we reasonably suspect the person purporting to certify a document may, in fact, not be within the permitted categories of persons capable of

certifying documents or where we have reason to believe that certification of the document has

not be validly or reliably performed.


Schedule 3

AML/CTF risk assessment

Risk Assessment Evaluation

(risk level)

Response

(procedures to mitigate risks)

Consequence Likelihood

Customer risk

Customer involved in complex business

ownership structure with no legitimate

commercial rationale

May be vehicle for ML

Unlikely Low Implement appropriate


Verification Procedure.

Circumstances may

indicate Red Flag. Ensure Employees

attend risk awareness training

program.

The non-individual Customer (e.g. the

trust, company or partnerships) has a

complex business

structure with little commercial

justification which obscures the identity

of the ultimate

beneficiaries of the Customer

May be vehicle for ML

Unlikely Low Implement appropriate

Customer identification and

verification.

Circumstances may indicate Red Flag.

Ensure Employees attend risk

awareness training

program.

The Customer is in a

position which may expose them to the

possibility of corruption

May be more

susceptible to ML

Unlikely Medium All Customers are

subject to the identification and

verification procedures set out

in Part B of the Program. Politically

Exposed Persons

will, be subject to enhanced due

diligence.

The Customer is based in or

conducting a business through or in a high

risk jurisdiction

May be more susceptible to ML

Unlikely Medium All Customers are subject to the

identification and verification

procedures set out

Schedule 3 – AML/CTF risk assessment


Risk Assessment Evaluation (risk level)

Response (procedures to

mitigate risks)


in Part B of this

Program. Foreign

Customers will, at the discretion of

the AML/CTF Compliance Officer,

be subject to enhanced due

diligence. Foreign

Customers from a Non-compliant

Jurisdiction must be subject to

enhanced due

diligence. The AML/CTF

Compliance Officer must carry out

annual risk assessment reviews

incorporating an

assessment of information

provided by FATF and AUSTRAC in

relation to Non-

Compliant Jurisdictions.

The Customer is

engaged in business which involves

significant amounts of cash

We may

unwittingly facilitate ML

Possible Medium We must refuse to

accept payment for investment,

application money or other payments

from Customers in physical currency.

There is no clear

commercial rationale for the Customer

seeking a Designated

Service

May be a vehicle

for ML

Unlikely Low Implement

appropriate Customer

Identification



Ensure Employees attend risk

awareness training

program.

The Customer is a May be more Unlikely Medium All Customers are

subject to the





mitigate risks)


Politically Exposed

Person

susceptible to ML Customer

Identification

Verification Procedures set out

in Part B of the Program. Politically

Exposed Persons will, be subject to

enhanced due

diligence.

An undue level of

secrecy is requested

regarding a Designated Service

Behaviour may

indicate ML or TF

activities

Unlikely Low Implement

appropriate




Ensure Employees

attend risk awareness training

program.

The source of funds is difficult to verify

The provisions of the Designated

Services may unwittingly

facilitate ML

Possible Medium We must not accept payment of

investment, application money

or other payments

from a Customer in physical currency.

Payment must only be accepted by

electronic funds transfer or cheque

drawn from a bank

account.

The beneficial owners

of a non-individual

Customer are difficult to identify and/or

verify

The non-individual

Customer may be

an entity created to facilitate ML or

TF

Unlikely Medium All Customers will

be subject to the


Verification Procedures set out

in Part B of this Program. For

example, for trusts,

beneficial ownership may be

determined by reference to the





mitigate risks)


trust deed.

If beneficial

ownership is not apparent after the

Customer Identification

Verification procedure has been

complied with, seek

explanation from Customer and

consider whether Customer should

be subject to

enhanced due diligence

The beneficial owners of the non-individual

Customer are

resident in a high risk jurisdiction

May be more susceptible to ML

Unlikely Medium All Customers are subject to the

identification and


in Part B of this Program. Foreign

Customers will, at

the discretion of the AML/CTF

Compliance Officer, be subject to

enhanced due

diligence. Foreign Customers from a

Non-Compliant Jurisdiction must


diligence. The

AML/CTF Compliance Officer

must carry out annual risk

assessment reviews

incorporating an assessment of

information provided by FATF

and AUSTRAC in relation to Non-

compliant

Jurisdictions.





mitigate risks)


There is a one off

transaction in

comparison with an ongoing business

relationship or serious of transactions

Could indicate ML

or TF activity

Unlikely Low If a Customer

engages in

transactions that lack business sense

or apparent investment strategy

or are inconsistent with the Customer’s

stated investment

objections will raise a Red Flag.

The Customer makes

or accepts payments (for example,

electronic transfers) to or from accounts

which have not been identified by the

reporting entity

Account may be

established for ML or TF purposes

Unlikely Medium Electronic fund

transfers can only be accepted from

or paid to bank accounts in the

Customer’s name. Bank accounts in

foreign jurisdictions

may, at the AML/CTF

Compliance Officer’s discretion,

be subject to

enhanced due diligence. Bank

accounts in Non-compliant

Jurisdictions will

indicate a Red Flag and must be

subject to enhanced due

diligence.

The Customer makes or accepts payment

(for example, electronic transfers)

to or from offshore

accounts.

Accounts may be established for ML

or TF purposes

Unlikely Medium Electronic fund transfers can only

be accepted from or paid to bank

accounts in the


foreign jurisdictions may, at the

AML/CTF Compliance

Officer’s discretion,


diligence. Bank





mitigate risks)


accounts in Non-

compliant

Jurisdictions will indicate a Red Flag

and must be subject to

enhanced due diligence.

The Customer makes

withdraw, transfer or draw down

instructions by phone

or fax

Could potentially

indicate TF purposes

Unlikely Low Customer’s

instructions will be required to be

given in writing

(including by email).

Customer identification and


in Part B of

Program should serve to identify

high risk of Customers.

Unusual investment

instructions may also trigger a Red

Flag.

The Customer has access to offshore

funds (for example, cash withdrawal or

electronic funds transfer)

This may be indicative of ML

activity

Unlikely Low Electronic fund transfers can only


accounts in the Customer’s name.

Bank accounts in


AML/CTF Compliance

Officer’s discretion,


diligence. Bank accounts in Non-

compliant Jurisdictions will

indicate a Red Flag


enhanced due





mitigate risks)


diligence.

The Customer when

migrating from one Designated Service to

another carries a different type and

level of ML or TF risk

Enhanced due

diligence required for high risk

Designated Services may not

have been

undertaken

Unlikely Low Prior to a Customer

receiving another Designated

Services the provision of that

Designated Service

must be assessed by reference to the

risk assessment to determine if further

KYC information is

required.

The Customer has

income which is not employment based or

from a regular known

source

Income maybe

derived from illegal sources and the

provision of

Designated Services could

facilitate ML

Possible Medium We will only receive

payment by cheque or electronic funds

transfer from a

bank account in the Customer’s name.

The source of the funds will be

subject to review

by the bank. Where a high risk

Customer has been identified (such as

a foreign Customer

from a Non-compliant

Jurisdiction or a Politically Exposed

Person), the source of the funds may

be requested as

part of the enhanced due

diligence process.

Customer is new rather than having a

long term and active business relationship

with the reporting entity

We are unlikely to be familiar with the

Customer’s business activities

making it more difficult to identify

whether the

proposed transaction is

unusual

Possible Low The identification and verification

procedures must be carried out in

respect to all new Customers in

accordance with

Part B of this Program. If the

Customer’s instructions are

unusual, this may





mitigate risks)


trigger a Red Flag

and enhanced due

diligence must be carried out.

The Customer’s business or provision

of Designated

Services is primarily of a money

remittance service nature

Funds may be derived from illegal

services and the

provision of Designated

Services may unwittingly

facilitate ML

Unlikely Low We will not provide Designated

Services to money

remittance service providers.

The Customer’s business is registered

in a foreign jurisdiction with no

local operations

It may be difficult to transfer source

of funds

Unlikely Medium Electronic fund transfers can only


accounts in the



AML/CTF

Compliance Officer’s discretion,


diligence. Bank

accounts in Non-compliant

Jurisdictions will indicate a Red Flag


enhanced due

diligence.

The Customer’s

business is an

unregistered charity foundation or cultural

associations

The entity maybe

established for ML

or TF purposes

Unlikely Low The identification

and verification

procedures set out in Part B of the

Program must be carried out.

The Designated

Services provided to the Customer are

primarily of a private banking and/or

wealth management

client

Potential for

Designated Services to

unwittingly facilitate ML

Unlikely Low The Customer

Identification Verification

Procedures must be carried out in

accordance with

Part B of the





mitigate risks)


Program.

The Customer is

represented by another person such

as under a power of attorney

Underlying

Customer’s identity may not be

appropriately identified and

verified

Unlikely Low A certified copy of

the power of attorney must be

provided along with all identification

and verification

procedures completed in

respect to the underlying

Customer in

accordance with Part B of the

Program.

Delivery method

Where Customer

does not have face to face contact with

Employees

Electronic

identification verification

documents may be

more susceptible to forgery then

sighted originals.

Possible Medium The Customer

Identification Verification

Procedures must be

carried out in accordance with

Part B of the Program. Electronic

copies of all

documents must be appropriately

certified. Non face to face Customers

will be treated as high risk and where

discrepancies arise

in identification documents

provided, the Customer will be

subject to


Payments made from or to unknown third

parties in connection

with the provision of the Designated

Services

Illegally gained funds may enter

the financial

system and be distributed to a

number of sources in order to

facilitate ML or TF

Possible Medium Distribution or redemption

payments will only

be paid by non-negotiable cheque

drawn in the Customer’s name

or paid to a bank

account in the





mitigate risks)


Customer’s name

with an ADI.

Cash payments ML can be more easily facilitated via

cash payments

Possible Medium We must not process

investments, application money

or other amounts

received by cash payments.

Distribution or redemption

payments must be

made by cheque with an ADI or by

electronic transfer via an account in

the Customer’s name held with an

ADI.

Designated Services

The Designated

Service allows for the acceptance of

physical currency

Illegally gained

funds into the financial system

without

documentary evidence

Possible Medium We must not

process investments,

application money

or other amounts received by cash

payments. Payments must be

made by cheque with an ADI or by

electronic transfer

via an account in the customer’s

name held with an ADI.

The Designated

Service allows for the payment of physical

currency

Funds can be

easily distributed to a number of

sources in order to facilitate MT or TF

activities

Possible Medium Distribution or

redemption payments will only

be made by us by electronic funds

transfer to a bank

account held by the Customer with an

ADI or by non-negotiable cheque

drawn in the name

of the Customer.





mitigate risks)


The Designated

Service allows for the

payment of distributions or

redemptions to a third party

Funds can be

distributed to a

third party who has not been identified

or verified.

Possible Medium Distributions or

redemption

payments will only be paid by non-

negotiable cheque drawn in the

Customer’s name or paid to a bank

account in the

Customer’s name.

The Designated

Service involves a

large volume of transactions

Suspect transaction

could over look

detection

Unlikely Low All transactional

information in

relation to a Customer’s

portfolio is electronically

recorded in real time.

The Designated

Service allows international funds

transfer

Funds can be used

to facilitate TF activity

Unlikely Medium Electronic fund

transfers can only be accepted from

or paid to bank

accounts in the Customer’s name

with an ADI. Bank accounts in foreign

Jurisdictions may,

at the AML/CTF Compliance

Officer’s discretion, be subject to

enhanced due diligence. Bank

accounts in Non-

compliant Jurisdictions will

indicate a Red Flag and must be

subject to


Jurisdiction risk

The Customer is from a Non-compliant

Jurisdiction

High risk of ML or TF activities not

being detected

Possible Medium Customer identification and

verification procedures must be

complied with in

accordance with





mitigate risks)


Part B of the

Program.

Enhanced customer due diligence

procedures will apply to foreign

Customers from a Non-compliant

Jurisdiction.


Schedule 4

Red Flag risk indicators

Transaction monitoring

1 The Customer engages, or seeks to engage, in transactions involving cash or cash equivalents or other monetary instruments that appear to be structured to avoid the $10,000 reporting

Threshold Transactions, especially if the cash or monetary instruments are in an amount just below the reporting or recording Threshold Transactions.

2 The Customer requests to pay or be paid in cash or cash equivalents.

3 The Customer’s account has a large number of ingoing or outgoing or electronic transfers that have no apparent business purpose.

4 Receiving five or more applications from the same Customer during the same Quarter.

5 Receiving three or more applications and three or more redemptions from the same Customer

during the Quarter.

6 A Customer exercising the Scheme’s cooling-off period for an application more than once during a six month period.

7 A Customer changing bank account details more than once during a six month period.

8 The Customer maintaining multiple accounts, or maintaining accounts in the names of family

members or corporate entities, for no apparent purpose.

Suspicious matter reporting obligation

9 Information arises that:

(a) indicates that the Customer may not be who they claim to be;

(b) might be relevant to the investigation of an evasion of tax law or the prosecution of a

person for an offence against a Commonwealth, State or Territory law, or may be of assistance in enforcement of the Proceeds of Crime Act 2002 (Cth) (or criminal and State

or Territory legislation);

(c) indicates that the provision of the designated service may be preparatory to the commission of a terrorism financing or money laundering offence; or

(d) may be relevant to the investigation of or prosecution of a person for a terrorism financing or money laundering offence.

Other suspicious behaviour

10 The Customer showing unusual concern about our compliance with reporting requirements and the processes and procedures contained in the Program.

Schedule 4– Red Flag risk indicators


11 The Customer engaging in transactions that lack business sense or apparent investment strategy, or are inconsistent with the Customer’s stated investment objectives.

12 The information provided by the Customer that purports to identify a legitimate source for funds is suspected to be false, misleading or substantially incorrect.

13 The Customer appears to be acting as an agent for an undisclosed principal, but declines or is reluctant, without legitimate commercial reasons, to provide information or is otherwise evasive

regarding that person’s identity.

14 The Customer has difficulty describing the nature of their business or lacks general knowledge of their industry.

15 The Customer (or in the case of a corporate entity, persons representing or purporting to act on behalf of the Customer) exhibits unusual concern, reluctance or refusal regarding compliance

with our Program.

16 The Customer (or a person publicly associated with the Customer) is known to have a criminal, or otherwise questionable, background or is the subject of news reports indicating involvement in

possible criminal, civil, or regulatory violations.

Foreign customers

17 The Customer is revealed to have a substantial personal or business connection with, or makes

payment from, or requests payment to, a financial institution account or provides an address in a Non-compliant Jurisdiction.

18 The Customer is identified as a Politically Exposed Person.

19 The Customer is a person physically located in or a corporation incorporated in a prescribed

foreign country.


Schedule 5

Employee classification

High Risk Roles

The following roles have been identified as ‘High risk roles’:

Number Role

1. Managing Director

2. Chief Operating Officer

3. Executive Manager – Funds Management

4. Financial Controller

5. Manager – Corporate Services

6. Client Services Manager

7. Business Manager - Livestock

Classification of a high risk role

A high risk Employee is an Employee:

with access to the release of funds from RFM bank accounts; or

with access to the Members’ registry and having the ability to amend and/or authorise amendments

of data, i.e. make changes to bank account details for payments etc; or

who performs or authorises the act of Customer Identification Verification Procedure for new and

existing investors; or

who can process or authorise investment transactions, i.e. an application to invest new monies or a

request to withdraw or transfer their interests in a scheme; or

with the ability to engage in direct contact (whether oral, in writing or in person) with a potential, or

existing, investor.

Employment checks (required):

- At least one, and where possible two, reference checks from previous employers of the person,

including a character reference;

- Australian criminal history search (police check); and

- Bankruptcy search.

Schedule 5 – Employee classification


Medium Risk Roles

The following roles have been identified as ‘Medium risk roles’:

Number Role

1. Management/Financial/Fund/Tax/Systems Accountant

2. Bookkeeper

3. Fund Administrator

4. Business Development Manager

5. Investor Relations and Distribution Manager

6. Business Manager – RFF, Almond Projects

7. Executive Assistant

Classification of a medium risk role

A medium risk Employee is an Employee:

with access to the upload of payments to RFM bank accounts; or

with access to the Members’ registry and having the ability to amend registry data, i.e. make changes to bank account details for payments etc.; or

who performs Customer Identification Verification Procedure for new and existing Investors; or

who can process investment transactions, i.e. an application to invest new monies or a request to

withdraw or transfer their interests in a scheme; or

with the ability to engage in direct contact (whether oral, in writing or in person) with a potential, or

existing, investor.

Employment checks (required):

- At least one, and where possible two, reference checks from previous employers of the person, including a character reference;

- Australian criminal history search (police check); and

- Bankruptcy search.

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