Report suspicions or face the consequences
Financial planners who fail to report suspicious client activity can wind up facing prosecution down the track, according to Minter Ellison partner Richard Batten.
Under the Anti-Money Laundering and Counter-Terrorism Financing (AML/CTP) regime planners have a duty to report any suspicions they have about their clients' activities, said Batten.
But planners are not obliged to cease providing advice to a client after they have reported their suspicions to the regulator, he added.
"If you merely have a suspicion that someone's doing something illegal - so as you're not counselling or procuring the offence - then there's nothing specifically to stop you continuing to advise or assist the client," Batten said.
That said, planners are not allowed to tell their client they have submitted a report to the Australian Transaction Reports and Analysis Centre (AUSTRAC) - or anyone else, for that matter, said Batten.
"AUSTRAC are obviously concerned about tipping off the client. The whole purpose of the AML regime is to provide enforcement agencies with access to data so they can investigate any suspicions," he said.
Financial Planning Association (FPA) chief executive Mark Rantall pointed out that financial planners do not have 'professional client privilege' like lawyers.
Planners have a duty under the AML/CTP regime to report suspicious activity to their licensee and then to AUSTRAC, said Rantall.
Being ethical requires the financial planner to observe both the letter and the spirit of the code of ethics, he added.
"By allowing a client to do something that is unethical, the adviser is bringing their behaviour and their professional judgement into question - potentially bringing the profession into disrepute," he said.
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