WIXLIB

Anti-Money Laundering &Counter-Terrorism Financing(AML/CTF)Broker information packVersion 1.017 November 2015

Purpose of the changeThe recent update to the Anti-Money Laundering and Counter-Terrorism Financing Rules (AML/CTF Rules) imposed a numberof additional obligations on the financial sector aimed at preventing money laundering and the financing of terrorism.5%The primary purpose of the regulatory changes is to prevent money laundering and the financing of terrorism, by betterunderstanding the ownership structure of our non-individual customers, and to bring Australia in line with internationalstandards.Consequences of money laundering and terrorismfinancingThe GroupandLicenseesSerious and organised crime isconservatively estimated to cost theAustralian economy 17 billion each yearOurCommunityOurcustomers2* Reputational damage and lack of consumer confidence* Fines and penalties from the regulator* Drop in share price* The consequences of illegal activities* Global and local terrorist attacks* Serious and organised crime* Victims of crime and violence* Financial instability* Threats to mental and physical well-being, including personal safetyChanges to Anti-Money Laundering & Counter-Terrorism Financing (AML/CTF) Broker Information pack – V1.0 17 November 2015

Beneficial OwnersThe definition of Beneficial Owner has been expanded toinclude the concept of “control”. This means that anyindividual who owns or controls 25% or more of thecustomer, either directly or indirectly, is considered aBeneficial Owner.Product Providers also have an obligation to regularlyreview and update KYC information, including BeneficialOwners.Verifying Beneficial OwnershipProprietary companies5%In the case of a proprietary company, Beneficial Owners must be identifiedand verified.Unregulated TrustsUnregulated TrustsAll trustees are considered Beneficial Owners by virtue of control and must beidentified and verified.3Changes to Anti-Money Laundering & Counter-Terrorism Financing (AML/CTF) Broker Information pack – V1.0 17 November 2015

Beneficial Ownership – Example 1Beneficial Owner by virtue of ownership5%Company with various individuals as shareholdersA.70%C.Beneficial ownerB.25%Beneficial owner45%The Beneficial Owners who own orcontrol 25% or more of thecustomer must be identified andverified according to our revisedAML/CTF policies and procedures.Changes to Anti-Money Laundering & Counter-Terrorism Financing (AML/CTF) Broker Information pack – V1.0 17 November 2015

Beneficial Ownership – Example 2Beneficial Owner by virtue of controlA.Company with individual shareholders all less than 25%5%B.E.20%No one qualifies as abeneficial owner by“ownership”, therefore, abeneficial owner by “control”must be identified.20%D.C.20%Beneficial Owner(For this company the Managing20% 20%5Changes to Anti-Money Laundering & Counter-Terrorism Financing (AML/CTF) Broker Information pack – V1.0 17 November 2015Director controls the company)

Beneficial Ownership – Example 3Beneficial Owner by virtue of ownershipCompany with individuals and a company as shareholders - all equal sharesABC Pty LtdThe four individual beneficialowners must be identified andverified according to our revisedAML/CTF policies andprocedures.A.Owner6D.25%B.25%BeneficialXYZ Pty Ltd25%BeneficialOwnerC.25%BeneficialOwnerChanges to Anti-Money Laundering & Counter-Terrorism Financing (AML/CTF) Broker Information pack – V1.0 17 November 2015E. 100%Shareholderof XYZ PtyLtd25%BeneficialOwner

Beneficial Ownership – Example 4Beneficial Owner by virtue of controlF.TrustSettlorA.B.TrusteeTrusteeIf the settlementamount isequal to orgreater than 10,000.7All trustees must be identifiedand verified.The settlor name needs to becollected and verified against thetrust deed where the amountsettled is equal to or greater than 10,000.C.D.E.Trustee Beneficiary BeneficiaryChanges to Anti-Money Laundering & Counter-Terrorism Financing (AML/CTF) Broker Information pack – V1.0 17 November 2015

Settlor of TrustThe Settlor of a Trust is the natural person or legal entity who sets up the Trust and signs the Trust Deed to ‘create’ the trust.In Australia, the Settlor is usually someone in an accountant or lawyer’s office and generally has no further involvement inthe affairs of the trust.5%With the updated regulations, if the settlement amount of the Trust is 10,000 or more, we are required to collect the full name of theSettlor and verify the name against the name in the trust deed. There are some exceptions, for example if the Settlor is deceased.8Changes to Anti-Money Laundering & Counter-Terrorism Financing (AML/CTF) Broker Information pack – V1.0 17 November 2015

How are we supporting you?Newquestionsand fields inonlineapplicationsTo provide thenecessaryinformationrequired nChecklistsNew customeridentificationchecklists outlinewhat informationand documentationneeds to becollected and whatdocumentation canbe used to verifyidentification. Thechecklists will beavailable oncommbank.com.aufrom NovemberComm BankMFAA/FBAAPresented at anumber ofupcoming brokerprofessionaldevelopment daysto ensure thebrokersunderstand whatthe changes areand how it impactsyouWe are workingwith the industrybodies to ensureour training isaligned and theright standards aremetCustomerServicePartnerSupportAll CommBankwebsites includingCommBroker arebeing reviewedand will beupdated to reflectthe changes toAML/CTFOur goal is tolimit the impact tobrokers andmaintain thecurrent level ofcustomer andbroker partnerserviceCommBank Support9Changes to Anti-Money Laundering & Counter-Terrorism Financing (AML/CTF) Broker Information pack – V1.0 17 November 2015

Appendix: AdditionalBeneficial Owner CaseStudies10

Individuals

IndividualsPart A: Determining the Beneficial Owner(s) Note: Beneficial owners should beidentified and verified in accordance withthe KYC procedure for individuals.Q. Who is the Beneficial Owner of an individual?A. In the majority of cases, the individual opening the account, is the beneficial owner.B. However, there may be some reasonable grounds to consider that another person ‘controls’ thecustomer & is subject to KYC. This could include: A parent/guardian of a minor A person appointed under a Power of Attorney Enduring Power of Attorney/guardian for an incapacitated personPart B: Collection and Verification of informationCOLLECTEDVERIFIED Full name Full name Residential address Residential address or Date of Birth Date of birth Occupational/Industry code Beneficial Owner (where applicable)12

Sole Traders

Sole traderPart A: Determining the Beneficial Owner(s)Q. Who are the Beneficial Owners of John Smith trading as John’s Plumbing who need to be identifiedand verified?A. Person B - John Smith John Smith t/aJohn’s PlumbingAAccountSignatorySignatories are not necessarily controllers, but are still required to be identified and verified, followingexisting procedures. For sole traders, you can assume the individual is the Beneficial Owner, unless there are reasonablegrounds to consider otherwise.Part B: Collection and Verification of information BJohnSmith14 COLLECTEDVERIFIED Full name Full name Residential address or principal place ofbusiness Residential address or Date of Birth Date of birth Occupational/Industry code Full business name (if any) Australian Business Name (if any)

Domestic Proprietary Companies:

Domestic proprietary company (example 1)Part A: Determining the Beneficial Owner(s)Company with individuals as shareholdersQ. Who are the Beneficial Owners of ABC Pty Ltd who need to be identified andverified?ABC Pty LtdA. Person A and B – both own 25% or more of the companyBeneficial Owners - Companies A50%16B50% In the first instance identify all individuals that own, directly or indirectly, 25%or more of the company If no person owns 25% or more, identify each person who controls 25% ormore of the shares (for example, through voting rights) If no person who owns or controls 25% or more of the company can beidentified, identify and verify the natural person who exercises primarycontrol through the position they hold, i.e. strategic/financial decision maker.e.g. Managing Director, CEO or equivalent.

Domestic proprietary company (example 2)Part A: Determining the Beneficial Owner(s)Company with individuals as shareholdersQ. Who are the Beneficial Owners of ABC Pty Ltd who need to be identifiedand verified?A. Person A and B – both own 25% or more of the companyABC Pty LtdBeneficial Owners - Companies A70%17B25%C5% In the first instance identify all individuals that own, directly or indirectly,25% or more of the company If no person owns 25% or more, identify each person who controls 25%or more of the shares (for example, through voting rights) If no person who owns or controls 25% or more of the company can beidentified, identify and verify the natural person who exercises primarycontrol through the position they hold, i.e. strategic/financial decisionmaker. e.g. Managing Director, CEO or equivalent.

Domestic proprietary company (example 3)Company with individuals as shareholdersPart A: Determining the Beneficial Owner(s) ABC Pty LtdFCEOA20%18B20%C20%D20%E20%Q. Who are the Beneficial Owners of ABC Pty Ltd who need to be identified andverified?A. Person F - the natural person who exercises primary control. There is noperson who owns 25% of the company or controls 25% or more of thecompany.Beneficial Owners - Companies In the first instance identify all individuals that own, directly or indirectly,25% or more of the company If no person owns 25% or more, identify each person who controls 25% ormore of the shares (for example, through voting rights) If no person who owns or controls 25% or more of the company can beidentified, identify and verify the natural person who exercises primarycontrol through the position they hold, i.e. strategic/financial decision maker.e.g. Managing Director, CEO or equivalent.

Domestic proprietary company (example 4)Company owned by another domestic proprietary companyPart A: Determining the Beneficial Owner(s)Q. Who are the Beneficial Owners of ABC Pty Ltd who need to be identified andABC PtyLtdverified?A. Persons A, B, C, and D – each person indirectly owns 25% or more of ABC PtyLtd.100%XYZ PtyLtd Company XYZ Pty Ltd is 100% owned by Company ABC Pty Ltd. Company XYZ Pty Ltd has Persons A, B, C and D, who each own 25% of sharesin Company XYZ Pty Ltd. Therefore, Persons A,B,C and D are indirect owners ofABC Pty Ltd, each owning 25% of the shares. AIndirectownership ofABC Pty Ltd19B25%25%25%25%C25%25%example a company, you must identify and verify that partner, as per the relevantKYC procedures for a company and then identify the individual beneficial ownersD25%25%If one or more shareholder is a non-individual, who owns 25% or more, forof that company.Beneficial Owners - Companies In the first instance identify all individuals that own, directly or indirectly, 25% ormore of the company If no person owns 25% or more, identify each person who controls 25% or moreof the shares (for example, through voting rights) If no person who owns or controls 25% or more of the company can be identified,identify and verify the natural person who exercises primary control through theposition they hold, i.e. strategic/financial decision maker. e.g. Managing Director,CEO or equivalent.