A missing requirement is not permission to start
If the required initial customer due diligence (CDD) matters remain incomplete, section 28 normally prevents the business from starting the designated service.
A staff approval or low risk score does not remove that restriction. A specific exception or permitted delay must apply before the business relies on it.
The delayed CDD article gives the timing conditions. Existing customers and ongoing services can have different provisions.
Source: Federal Register of Legislation: Sections 28, 29, 30, 36 and 39 to 39F.
Identify the unresolved matter
A useful case record states what is missing and why it matters. The gap might concern identity, representative authority, ownership or the service purpose.
The record can identify the evidence sought, the person responsible and the service restriction. A failed automated check is not always proof that the legal matter cannot be established.
Other reliable evidence may be available. Alternative identification procedures have their own conditions.
Sources: Federal Register of Legislation: Section 28(2) and (3); AUSTRAC: Reasonable grounds; How to establish matters on reasonable grounds.
- Unresolved matter
Record what is missing and why it matters.
- Service restriction
Do not start if required initial CDD remains incomplete and no exception applies.
- Reporting test
Examine the facts against the separate suspicious matter reporting test.
Keep the missing matter and reporting test separate
Incomplete CDD does not automatically require a suspicious matter report. Exceptions have specific conditions.
Follow the process from top to bottom.
The reporting test is separate
Incomplete CDD does not automatically require a suspicious matter report. The business must examine the facts against section 41. A reporting duty can arise before a service starts.
Where a reporting obligation arises, section 39D has a limited exception. The business must reasonably believe that compliance would or could reasonably be expected to alert the customer to the suspicion.
A keep open notice has separate conditions under section 39A. Neither exception is a general permission to ignore customer checks.
Source: Federal Register of Legislation: Sections 39A, 39D and 41(1).
A company file with missing authority
A fictional practice has a company’s identity information but cannot establish the representative’s authority. It records that specific gap instead of marking all CDD complete.
If no exception applies, it does not start the designated service. The reviewer considers further evidence and the separate reporting test.
The business also examines restrictions before returning any funds. Ending a service is not permission to make a transfer that another rule prohibits.
Sources: Federal Register of Legislation: Sections 28(2)(c), 29 and 41; AUSTRAC: Delayed initial CDD and your AML/CTF policies.