AUSTRAC has confirmed to the Finance Brokers Association of Australasia (FBAA) that new Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) laws, which took effect from 1 July, may have inadvertently swept up finance brokers and intermediaries who were not meant to be covered.
FBAA chief executive Leo Gagic (pictured) raised concerns with the regulator after identifying that certain broking activities, including commercial asset finance broking, could fall within the definition of "debt financing" as a designated service under the act. Following discussions between the association and AUSTRAC, the regulator agreed the issue had merit.
AUSTRAC confirmed that item 4 of table 6 in the legislation may be worded broadly enough to potentially capture commercial asset finance broking, while also conceding its current guidance does not clearly explain how it interprets the scope of "debt financing."
Gagic said the association had moved quickly to seek clarity once the risk became apparent.
"AUSTRAC has acknowledged our valid concerns and advised it is actively considering the issue before clarifying its position," he said.
The reforms have been described as the most significant overhaul of Australia's AML/CTF regime in almost two decades, with Norton Rose Fulbright estimating they will bring 80,000 to 90,000 new reporting entities into the regime.
Importantly, AUSTRAC has indicated brokers should not rush to act while the matter remains unresolved. The regulator said that if finance broking activities are ultimately found to fall within scope of the AML/CTF Act, affected businesses would be given time to prepare.
"If the outcome is that finance brokering activities are within scope of the AML/CTF Act, we recognise that affected businesses will need time to work towards compliance, including establishing AML/CTF programs and training staff," AUSTRAC said.
Gagic reinforced that message to brokers directly.
"Brokers do not need to do anything now, and we will update the industry when we know more," he said.
Get the hottest and freshest property and mortgage news delivered right into your inbox. Subscribe now to our FREE daily newsletter.
