Keeping AML/CTF compliance close to home
Financial services companies caught up in the new Anti-Money Laundering/Counter-Terrorism Financing (AML/CTF) regime are being encouraged not to outsource their responsibilities to contractors or consultants.
That is the bottom line of new draft guidelines issued by AUSTRAC, which has used a newly-issued guidance note dealing with the appointment of compliance officers to make clear its preference that such roles are held by senior executives within a company.
Its guidance note said that the AML/CTF Rules (concerning designated business groups) had the same meaning as the definition of ‘officer’ in the Corporations Act 2001.
“This definition includes a requirement that the officer be a person ‘who makes, or participates in making decisions that affect the whole, or a substantial part, of the business of the entity; or … has the capacity to affect significantly the entity’s financial standing’,” the guidance note said.
It said that although this definition was not obligatory for an AML/CTF Compliance Officer, AUSTRAC considered it “preferable that a person be appointed who has such a connection with the reporting entity or designated business group, rather than an independent contractor, who will not have such a close relationship”.
However, the AUSTRAC guidance note, issued for industry comment this month, suggests that the appointment of contractors or consultants might be acceptable where there is danger that conflicts of interest might occur.
It said that when assessing whether to appoint an independent contractor, “the reporting entity may consider this appropriate when an internal position that could undertake the AML/CTF Compliance Officer role may potentially adversely affect the reporting entity’s compliance with their AML/CTF obligations; for example, a person in an actual or perceived position of conflict of interest”.
The financial services industry had until 16 January to comment on the draft guidelines.
AUTHOR
Mike Taylor
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