by Susan Edmunds
Reporting entities must have an audit of their risk assessment and AML/CFT programmes every two years, or when the FMA asks for one.
For most reporting entities, their first audit deadline will be the end of June, which is two years from the date the legislation kicked in.
There are about 800 reporting entities who are supervised by the Financial Markets Authority. Each business is a reporting entity. Financial advisers are about two-thirds of that total.
Audits cost about $1000, although costs vary.
Gavin Austin, of ABC Compliance said there were likely to be a number of advisers who had been putting off their audits.
He said his business had been very busy with AML audits for some time but still not as many had come in as might have been expected. “There are AFAs out there who still haven’t written their risk assessment or AML/CFT programme. They’re probably running around getting that dun and then trying to tee up an audit at the same time. You can’t get the same people to do both. Then there are those people who are burying their heads in the sand a bit.”
Austin said whether the end of June deadline was achievable would depend on how it was interpreted. “If it has to be written by that date, it could be tricky. I’m taking the view that as long as the audit is done they may not necessarily have received the written report by then.”
Advisers would not pass their first audit without changes having to be made, he said. “There will be things they haven’t got right.”
Most would get the policy and process right but did not have enough internal checks in place to make sure it was working. “If no one checks the risk assessment is applied property it’s not worth the paper it’s written on. It’s not just writing a good risk assessment but what are you doing to make sure things you are doing are effective and minimising risk.”
Austin said he had always recommended advisers opt for an early audit to take them out of the June rush. The biggest issue for many was that they resented the cost, he said.
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