FPA wants three-year transition to AML/CTF requirements

The Financial Planning Association (FPA) has called for a transitional period of three years in regard to the introduction of the Federal Government’s Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) legislation, to allow its members sufficient time to prepare for the procedures they will be required to follow under the bill.

The association feels its recommended timeframe will give its members enough time to implement the new systems required and undertake the educational processes that will be needed in order to fully comply with their increased obligations.

Outside of this suggestion, the FPA joined other industry bodies in praising the amendments to the draft bill announced last week.

The revisions included changes to the client identification procedures that financial planners will need to adhere to.

FPA chief executive Jo-Anne Bloch said: “It is particularly pleasing to note that the Government has removed the requirement to identify customers at the advice stage. We appreciate the commitments made by Minister Ellison to continue to work with financial planners, because we will have obligations at the product purchase stage, which raises a number of issues.”

However, chartered accounting firm KPMG has warned that the less prescriptive nature now contained in the bill may be more of a hindrance than a help to financial institutions bound by the AML/CTF regulations, particularly when it comes to appointing a compliance officer to handle this area.

“While the Government and AUSTRAC [Australian Transaction Reports and Analysis Centre] won’t tell banks exactly what to do in terms of managing their AML and CTF risks and responsibilities, there will be significant implications for those that get it wrong. This issue is driven home by an increase in AUSTRAC’s powers to include enforceable undertakings in line with other regulators, and the requirement for organisations to appoint a single AML/CTF compliance officer,” KPMG forensic partner Gary Gill said.

“In theory, the board retains oversight responsibility for implementing and managing an institution’s entire AML regime. However, in reality, you can guess whose door AUSTRAC will knock on first,” he added.

On a positive note, KPMG felt the obligations to verify a customer’s identity would not only work toward achieving the objectives of the new bill, but also help combat the increasing issue of identity crime.