FAAA wants AFSLs, not advisers to carry AUSTRAC burden

Licensees, not individual advisers, are the most appropriate entities to carry the burden of reporting to AUSTRAC, according to the Financial Advice Association of Australia (FAAA).

The FAAA has told the Government that changing the current regime and imposing more responsibilities on individual advisers would create significant confusion and cost for the financial advice profession.

In a response to the Attorney-General’s Department, the FAAA noted that an information paper dealing with the new Anti-Money Laundering/Counter Terrorism Financing (AML/CTF) regime had left the situation unclear with respect to reporting by individual advisers.

“It is currently unclear whether any legally binding obligations would apply to a potential definition of PSP [professional service providers]. Given the significantly different levels and types of AML/CTF risk involved in the provision of these professional services, the FAAA would be concerned about unintended consequences by the creation of such a definition and how it may be applied in the future,” it said.

“Since the enactment of the AML/CTF Act on 12 December 2006, AFS licensees have been required to register with AUSTRAC and meet the obligations of ‘item 54 only reporting entities’ under the Act.”

“We can see no reason to change who the reporting entity is for the financial advice sector, which is well established under the AML/CTF regime: Changing the reporting entity for ‘item 54 only designated services’ (currently the AFSL) would:

• create significant confusion and cost for the financial advice profession
• waste effective AML/CTF risk management and compliance systems, processes and controls
• require new systems and controls to be developed at the ‘new’ reporting entity level
• remove the economies of scale delivered through the structure of the AFSL regime of the financial advice profession.

“This would have a significant impact on financial advisers, the majority of whom operate small businesses or are sole practitioners, and it would deliver no additional AML/CTF benefit or protection.,” the FAAA said.