Anti-Money Laundering and Countering Financing of Terrorism Act 2009

39 Prohibition on establishing or continuing business relationship involving shell bank

(1)

A reporting entity must not establish or continue a business relationship with, or allow an occasional transaction or activity to be conducted through it by,—

(a)

a shell bank; or

(b)

a financial institution that has a correspondent banking relationship with a shell bank.

(2)

For the purposes of subsection (1), a shell bank is a corporation that—

(a)

is incorporated in a foreign country; and

(b)

is authorised to carry on banking business in its country of incorporation; and

(c)

does not have a physical presence in its country of incorporation; and

(d)

is not an affiliate of another corporation that—

(i)

is incorporated in a particular country; and

(ii)

is authorised to carry on banking business in its country of incorporation; and

(iii)

is sufficiently supervised and monitored in carrying on its banking business; and

(iv)

has a physical presence in its country of incorporation.

(3)

For the purposes of paragraph (d) of the definition of shell bank in subsection (2), a corporation is affiliated with another corporation only if—

(a)

the corporation is a subsidiary of the other corporation; or

(b)

both corporations are under common effective control; or

(c)

both corporations are declared to be affiliated in accordance with regulations (if any).

(4)

For the purposes of the definition of shell bank in subsection (2), a corporation has a physical presence in a country if, and only if,—

(a)

the corporation carries on banking business at a place in that country; and

(b)

banking operations of the corporation are managed and conducted from that place.

Compare: Anti-Money Laundering and Counter-Terrorism Financing Act 2006 ss 15, 95 (Aust)

Section 39(1): amended, on 11 August 2017, by section 68 of the Anti-Money Laundering and Countering Financing of Terrorism Amendment Act 2017 (2017 No 35).