Super rules contradict AUSTRAC guidance
Superannuation funds are seeking clarity from AUSTRAC on the degree to which senior managers have to be vigilant about high-risk members in circumstances where the superannuation laws limit how quickly a fund can terminate a relationship.
AUSTRAC has been told that it is likely superannuation funds will have thousands of high-risk customers, some of whom may be capable of being regarded as politically exposed people (PEP).
The position of the funds has been made clear in a submission from the Australian Institute of Superannuation Trustees (AIST) around AUSTRAC’s updated guidance on Enhanced Customer Due Diligence (ECCD) in circumstances where the regulator has sought to impose obligations on “senior management”.
“Member funds would like to confirm whether AUSTRAC’s expectation is that senior management must provide approvals in all the above scenarios as a minimum. Member funds have also requested clarity on what AUSTRAC means by the term oversight on page 13 of the guidance when it discusses that senior management is expected to have oversight over high-risk customers,” the AIST response said.
“Member funds note that a superannuation fund may have thousands of high-risk customers and/or PEPs.”
“Due to the compulsory nature of superannuation, some member funds have received legal advice that as per their obligations under the Superannuation Industry (Supervision) Act 1993, they may be unable to terminate the relationship with a customer.”
“Member funds seek guidance from AUSTRAC on this point as requiring senior management to approve each PEP or high-risk customer’s ongoing relationship will place a disproportionately high administrative burden on the superannuation sector as compared with other sectors who can terminate relationships with high-risk clients or PEPs.”
Oh dear me! Fancy that, some fund members may be high risk.
Ah well, that’s what you get when you compel people to take out super. Cant be choosy!
Anyway think of all that FUM, and fees