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Keeping on top of the latest financial services regulatory & compliance trends?

Investing time in your professional development within a rapidly changing financial services industry is challenging. To meet that challenge, the Australian regulators weekly wrap is designed to keep you at forefront of your practice by quickly setting out the top 5 developments from the past week, analysis and practical considerations for the future.

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1. January changes (Legislation): by way of a quick refresher, new requirements which commence this month include: APS 220 — Credit Risk Management; Financial Services and Credit Panel commences; SP S250 — Insurance in Superannuation; Insurance Claims Handling required AFSL; Financial Compensations Scheme of Last Resort (subject to the bill passing — it is currently with the Senate Legislation Committee, which is due to report on 15 February). After this, we have the Director Identification Number regime (April) and FAR for ADIs (June).
2. Compliance reports (AUSTRAC): reporting entities need to submit a compliance report to AUSTRAC each year that includes answers to questions about how they have met their anti-money laundering and counter-terrorism financing obligations. The compliance report is a requirement under the AML/CTF Act; there can be penalties for failing to submit a required compliance report. Entities must submit their compliance report between 1 January and 31 March of each year, which means AUSTRAC’s new update on the basics here is a timely reminder!
3. CPS 511 (APRA): all APRA-regulated entities need to review their existing remuneration frameworks and develop an implementation plan within 18 months of the release of the final version of CPS 511. That occurred in August 2021, so the pressure is on this year to finish what will be the first key deliverable for implementing CPS 511! And matching it with FAR, for banks, insurers and super funds. Whatever is created for CPS 511, whether SFI or non-SFI, will need to be owned by the Accountable Person for HR (most likely) and mesh with responsibilities. We have created a good tabular comparisons of FAR and CPS 511 to assist; do get in touch if you would like a copy.
4. FAR (Senate): on 25 November 2021, the Senate referred the provisions of the Financial Accountability Regime Bill 2021 to the Economics Legislation Committee for inquiry and report by 15 February 2022. The public hearing has been set down for 27 January 2021 (see here). One hopes that they will see sense, and wind back the ancillary liability provisions — which are poorly constructed and were not consulted upon. Given this this amendment was allegedly a Labor one, and the composition of the Committee is majority Labor these days (see here), I am not holding my breath…
5. AML / CTF chances (AUSTRAC): The Anti-Money Laundering and Counter-Terrorism Financing Rules Amendment Instrument 2021 (№3) d commenced on 14 December 2021, and inserts Chapters 79 and 80 to, and amends Chapter 48 of the Anti-Money Laundering and Counter-Terrorism Financing Rules Instrument 2007 (№1). Chapter 79 sets out the special circumstances in which a reporting entity may carry out the applicable customer identification procedure in respect of a customer, after commencing to provide a designated service described in item 1 of table 1 in subsection 6(2) of the AML/CTF Act i.e. opening an account. Chapter 80 allows the AUSTRAC CEO to make AML/CTF Rules to exclude specific things from being a stored value card (SVC). Chapter 48 includes exemptions of specified designated services relating to salary packaging administration services.

Thought for the future: determining whether a firm does / doe not need a financial services license is tricky at the best of times. With scams increasing, the UK FCA’s approach of proactively identifying and publishing unauthorized firms and individuals and publishing a warning list (see here) is a great idea, and one I hope to see in Australia before long.