Financial services law firm Kit Legal is warning advice, accounting and legal practices to not interpret the supportive tone from the Australian Transaction Reports and Analysis Centre (AUSTRAC) regarding the new Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) requirements as a reason to delay implementing compliance procedures related to the issue.
“I keep hearing the same thing, we’ve got time, AUSTRAC isn’t going to come after small firms in the first year,” Kit Legal founder and head of legal Catherine Evans revealed.
However, Evans stressed that is not a correct interpretation of the regulator’s message and instead pointed out AUSTRAC stated it does not expect “perfection” early.
“It didn’t say it expects nothing, and its patience is for firms making an honest effort, not for firms doing nothing at all,” she explained.
AUSTRAC has been explicit about where its attention will be drawn, which is to those firms that ignore their duty to enrol and do not make any attempt to meet their responsibilities.
“There’s a big difference between a firm still working through its controls and a firm that has filed nothing and is hoping the deadline was soft,” Evans said.
Further, she warned practitioners AUSTRAC has already written to advice firms about the small number of suspicious matter reports the industry is lodging and reminded them of their obligations.
In terms of what firms should be doing if they want the Australian Securities and Investments Commission to acknowledge they are trying to comply with their new AML/CTF obligations, Kit Legal stated it is more about being able to “show your workings”.
For example, it confirmed firms should know the activities that qualify as designated services under the AML/CTF legislation and the associated enrolment requirements.
They should also have developed a risk assessment specific to their business and not just downloaded a template from the internet.
Further, the law firm said customer due diligence needs to be ongoing and not just treated as a one-off at onboarding.
Finally, it indicated firms should be able to outline the decisions they have made and be able to justify the related course of action.
“One July was the start line, not the finish line, so the firms that come through this well won’t be the ones that scrambled to enrol and then stopped. They’ll be the ones that treated it as part of how they run the business,” Evans noted.
Jason Spits
SENIOR JOURNALIST
Jason is a senior journalist with Benchmark Media and writes for the selfmanagedsuper website and magazine and smstrusteenews website. He has covered financial services since 1999 and has written about life insurance, superannuation, investment management and financial advice, in both a freelance and in-house capacity, and also did a brief stint as a media manager for an industry association. He has been the editor of trade titles Money Management and Financial Standard, and was most recently senior journalist with life insurance title Riskinfo.
Articles by Jason