Financial terrorism bill progresses
The Anti-Money Laundering and Counter Terrorism Financing Bill has entered its next phase of passing into federal legislation with its introduction yesterday into Parliament.
Over the past 12 months the bill has been the subject of extensive industry consultation, which produced two exposure drafts before reaching its current stage.
The Investment and Financial Services Association (IFSA) was one of a number of organisations that provided submissions on the bill, as was the Financial Planning Association (FPA).
During the drafting stages, IFSA recommended a number of changes to the bill. One of these recommendations related to the treatment of financial advisers under the new legislation, which at first over-regulated the advice process, and then left them completely uncovered by the legislation.
According to IFSA, the Government has now reached an appropriate middle ground, requiring advisers to conduct more rigorous identification checks only to the extent that they are arranging a client service through an external entity.
The first draft of the legislation had, in the opinion of IFSA, captured too much of the advice process so that it would have impinged on the service delivered to clients.
John Anning, FPA manager, policy and government relations, said the FPA had similar concerns with the exposure drafts of the legislation.
“Our main issue was with the reporting entity obligations at the advice stage. These are more usefully triggered at the stage where the planner is implementing a strategy for the client,” he said.
Anning also said that the FPA initially felt that the anti-money laundering process was too heavily prescriptive, but following the draft stages and consultation process, “we feel it is now the best possible outcome”.
However, he also said it is important that they now “work through the detail” and ensure the legislation works as intended.
Another area that was corrected during the consultation process was superannuation. Because of the inherently arms-length dealing most members have with superannuation funds, and the indirect nature of the relationship mediated by the employer in most cases, identification of all parties where potential money-laundering or terrorism financing was occurring would have proved difficult if required at the point of entry.
Instead, further diligence will be required at the point of exit, lessening any impact this might have had on individuals’ contributions to superannuation after implementation of the legislation.
IFSA deputy chief executive officer John O’Shaughnessy said: “IFSA has long been an advocate for a risk-based regime that adequately recognises the high level of regulation our members are already subject to.
“The legislation introduced [yesterday] appears to achieve the necessary balance.”
He said he was happy with the consultative approach adopted by the Government, because it had ensured “many of the more potentially problematic elements contained in earlier draft versions of the bill [had] been addressed”.
IFSA expressed its desire for the bill’s referral to the Senate Legal and Constitutional Affairs Committee, which would provide a final opportunity for comment before it passes into legislation.
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