The expansion of anti-money laundering (AML) laws to include ‘professional services providers’ should include recognition that many accounting firms are the registered address for corporate trustee SMSFs and exclude this administrative function from the proposed changes, according to the SMSF Association.
The industry body made the call as part of its submission to the Senate Legal and Constitutional Affairs Legislation Committee inquiry into the Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2024, which is currently before the upper house of parliament.
The association stated it supported the bill’s move to include ‘tranche two entities’ under expanded AML and counter-terrorism funding (CTF) laws, which would cover a range of professional service providers (PSP), including accountants, financial planners, wealth advisers, legal practitioners and real estate professionals.
While the association welcomed the regulation of tranche two entities based on a range of designated services they provided, rather than specifying professions or sectors, it noted some services would be unintentionally captured and in the case of corporate trustee SMSFs may warrant an exemption.
“For example, item 9 of table 6 [in schedule 3, part 3.10 of the bill] creates a new designated service where a professional service provider provides a ‘legal arrangement’ with a registered office address where the customer does not have a true office address or a physical presence in Australia,” the submission stated.
“In Australia, approximately two-thirds of SMSFs have a corporate trustee, noting both the SMSF and the corporate trustee (company) will be captured as ‘legal arrangements’ under the expanded regime.
“It is common for the accountant to be listed as the registered office for the corporate trustee. This practice ensures there is a system for addressing important or time-sensitive correspondence and reduces the risk of the address not being updated if the customer moved residences for example.
“Importantly, the SMSF and corporate trustee have been established by the customers to save and prepare for their retirement, not to operate a business. Each year the SMSF must be audited and lodge an annual return with the ATO. The funds within the SMSF cannot be accessed until the customer meets a condition of release, such as reaching preservation age or turning 65 years old.
“Given these facts and the associated low risk with this activity, we believe acting as a registered office for a customer’s corporate trustee of an SMSF should be exempt as a designated service.”
