Planners facing on-site Austrac inspection
The Australian Transaction Reports and Analysis Centre (Austrac) has commenced a program of random on-site inspections of financial planners for compliance with anti-money laundering laws.
The on-site inspections by the regulator involve a sample of up to 4,000 advice firms, fund managers and superannuation, life insurance and custody businesses throughout Australia.
Austrac will use the inspections to monitor the compliance of planners with the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act), which allowed planners (and other entities) two years to achieve compliance.
A core obligation under the Act is implementation of an anti-money laundering and counter-terrorism (AML/CTF) program to “ensure the identification, management and reduction of the risk of money laundering and terrorism financing”.
The inspections will assess the degree to which organisations required to provide Austrac with annual compliance reports under the AML/CTF Act are conducting effective independent reviews of the programs, among other aspects.
Austrac’s acting chief executive, Thomas Story, said financial planners, fund managers, superannuation and life insurance businesses have “self-reported that they have substantially complied with AML/CTF program implementation”.
However, he said Austrac’s assessments found this compliance “may be overstated in some circumstances”.
The inspections represent a “shift away from assisted compliance by the regulator and a greater focus on securing compliance”, he said, including a “greater proportion of enforcement activity”.
“While direct enforcement action is one supervisory technique available to us, we will use enforcement where other lower intensity activities do not result in improved compliance,” Story said.
Austrac has a suite of enforcement powers available under the AML/CTF Act, including civil penalties that carry fines of up to $11 million for companies and $2.2 million for individuals.
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