Lack of awareness on AML
Some advisers who should comply with anti-money laundering legislation do not realise their obligations – and others are wilfully ignorant, compliance experts say.
Tuesday, February 14th 2017, 6:01AM 1 Comment
by Susan Edmunds
The Financial Markets Authority last week revealed it had formally warned 12 reporting entities for breaches of the Anti-Money Laundering and Counter Financing of Terrorism laws.
Gavin Austin, of ABC Compliance, and formerly of the FMA, said it was not a surprise.
“It’s a shot across the bows, but it’s what is needed. There are still a lot of people out there that just haven’t done it. They’ve got their heads buried in the sand, or maintained for whatever reason that they didn’t think they needed to be reporting entities.”
He said some people could not understand how their business activities could be considered a risk. “they don’t think they should be caught by it, so they are butting their heads against the system.”
But he said they should be wary because it was possible that the FMA would think that people who were not compliant with their AML obligations might not be compliant with other areas of their business, too.
Barry Read, of IDS, said many of the people who were caught out were those for whom advice on category one products was not their core business.
He said he had been contacted by advice entities who received requests for the two-yearly AML audit report. Both had assumed incorrectly that they were not reporting entities under the law.
“It could be as simple as having implemented two KiwiSavers without advice when they normally do mortgages and insurance.”
He said in those cases, to avoid the AML laws, advisers would have to not handle the KiwiSaver transaction or do so as an agent of another reporting entity, which would carry the compliance obligations.
But he said the FMA had power to take stronger enforcement action, so those who had been warned had effectivley been given another chance.
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