Anti-money laundering red tape for SMEs
Monday, December 10, 2007/
SMEs in the financial planning sector face additional red tape and potentially hefty penalties under new anti-money-laundering regulations to take effect this week.
Under the new regulations, financial planners will be required to conduct identity checks on new customers similar to the “100 point” check conducted by banks to open new bank accounts and keep accurate records of the information collected.
The laws are designed to prevent money laundering and make it harder to provide financial support for terrorism by keeping more accurate information on the identity of people involved in financial transactions.
The heaviest burden under the laws falls on banks and large fund managers – ANZ says it will spend more than $60 million over the next three years complying with the rules – but small financial planners could also struggle to meet the requirements.
And the consequences of not complying are serious, with possible fines of up to $11 million for companies and $2.2 million for individuals for breaches, although the head of the Government agency responsible for the laws says businesses that make genuine attempts to comply will not be prosecuted.
Gavan Ord, business policy adviser with CPA Australia, says: “Financial planners will have to put a client ID process in place where they’ll ask a series of questions to show evidence of who you are, so it will just be a matter of implementing a procedure to obtain that information and pass it on to the relevant fund manager or bank.”
And, Ord says, we could see a second tranche of laws covering accountants, real estate agents and lawyers in the near future.
“The requirements for accountants could be more difficult, but we won’t know until we see the final legislation,” he says. “When Labor was in opposition they were unhappy the laws were split in two and the second tranche delayed, so we take that to mean we may see something sooner rather than later.”