MAGAZINE - Realview

AML/CTF
Further criticism has recently been directed at AUS-
TRAC due to a perceived lack of enforcement against noncompliant
entities within the financial services sector, and
also a lack of serious penalties for those businesses that
have failed to lodge a compliance report for the 2008
period. Estimates suggest that about 20 to 25 per cent of
the approximately 15,000 reporting entities across Australia
have failed to lodge compliance reports, suggesting
an alarming level of “don’t care” sentiment.
There are growing concerns, particularly within the
gaming industry, that many entities do not have adequate
programs in place or, worse still, have not even addressed
the issue. Of course, this is not really surprising when you
consider that similar rules and obligations apply to big
banks and right through to the local pub in a country town
operating a few pokies – albeit that the entities do not
share the same degree of complexity.
Many of the businesses that have done the right thing
and spent considerable time and money during the financial
crisis building programs to address AML/CTF obligations
are becoming increasingly disillusioned by an
apparent lack of penalties for non-compliance. Little
wonder, then, that the regulator has just struck back,
after having accepted enforceable undertakings from Barclays
Bank and Mega International Commercial Bank
(also see story page 9). In my discussions with Jensen he
made it very clear that AUSTRAC is not just going to sit
“Australia remains behind many other Western nations
in terms of the regulation and prevention of money
laundering and terrorism financing”
back. It has a range of powerful enforcement tools and
intends to use them.
Overall, however, Australia remains behind many other
Western nations in terms of the regulation and prevention of
money laundering and terrorism financing. This cannot be
a good thing, particularly in light of recent corporate scandals
and the international desire to crack down on money
laundering activities.
As Jensen prepares to step down from his post at AUS-
TRAC he can probably be satisfied with the initiatives he
and his team have put in place over the past few years – especially
the requirement that all reporting entities lodge targeted
annual compliance reports and undertake regular
independent reviews of their AML/CTF programs.
The real question is what the Federal Government is doing
to close the gaping holes in the system and how it is going to
deal with the enormous challenge of having tens of thousands
of small-and-medium-size enterprises comply with a piece of
legislation that can be headache-inducing in its complexity. R
James Cozens is a consultant with corporate governance
solutions specialist CompliSpace.
RISK August 2009 23