Customers have direct account access
A payable-through account is a correspondent account that the respondent’s customers can access directly to transact on their own behalf.
In a traditional arrangement, the respondent handles its customers’ transactions without giving them direct access. This difference matters for due diligence.
Sources: Australian Government, Federal Register of Legislation: 7-1(3)(g); AUSTRAC: Traditional correspondent banking; payable-through accounts.
Australian requirements examine CDD and evidence
For a relationship within sections 96 and 100, Rule 7-1 requires consideration of the respondent’s initial and ongoing CDD for customers with direct access.
It also requires consideration of whether the respondent could supply collected CDD information and the independent verification data on request.
Under Rule 7-2, the approving senior officer must also consider whether they are satisfied about those matters. Other correspondent assessment requirements still apply.
Sources: Australian Government, Federal Register of Legislation: 96 and 100; Australian Government, Federal Register of Legislation: 7-1(3)(g), 7-2(3) and 7-3.
- Traditional arrangement
The respondent handles transactions; its customers do not directly access the correspondent account.
- Payable-through arrangement
The respondent’s customers can directly use its account with the correspondent.
Who can use the account directly?
Direct customer access is the distinguishing feature. Apply the CDD and information-availability conditions in Rules 7-1 and 7-2.
Separate evidence questions. An answer to one does not settle the others.
The international standard is separate
FATF Recommendation 13(e) addresses CDD for customers with direct access and availability of relevant information to the correspondent.
FATF sets a standard for countries. The Australian Act and Rules determine the duties that apply to an Australian institution.
Example: a customer can write a cheque
In a fictional arrangement, a respondent’s customer can write cheques on the account held at the correspondent. The customer has direct account access.
The correspondent examines the respondent’s CDD and its ability to supply the supporting information. A promise without accessible evidence leaves an important question unanswered.
The example illustrates direct access. It does not prescribe a complete assessment procedure.
Sources: AUSTRAC: Payable-through accounts; Australian Government, Federal Register of Legislation: 7-1(3)(g).