This week’s blog takes a closer look at the recent Anti Money Laundering (AML) /Counter Terrorism Financing (CTF) changes and the impending changes that will affect us all in the financial services industry.
By way of quick introduction over the past few years Australia has been tightening its requirements in meeting international standards for customer due diligence and international anti-money laundering requirements.
We would hope that financial services organisations affected by these recent AML / CTF changes should be ramping up projects with technology builds and change readiness planning, ahead of the 1 January 2016 go live date. The significance of this date cannot be underestimated as penalties will occur for non-compliance from this date.
If you are wondering whether your organisation is ready or not there are potential two key areas that will affect your project – two key considerations when organisations are preparing to meet their obligations and making sure that they are ready to integrate the changes into their operational processes.
Integrating AML/CTF changes into your organisation
Just as we have faced challenges relating to ongoing regulatory change over the years, AML/CTF is another regulatory update that we need to factor in to every day business dealings. Our goal is to do this as effectively and efficiently as possible.
And like any regulatory policy you need to integrate it with one eye on your compliance obligations and the other on balancing the commercial realities. This level of change however is going to drive required behaviour and for large organisations, this means one umbrella AML Program for the entire business group, as well as organisation-wide projects to implement, rather than multiple AML Programs and projects for individual business units.
Where these large organisations offer an array of financial services, they will likely find the need to fine tune their AML/CTF Program as they develop an understanding of the impact to daily operations. In addition, projects may introduce guides to interpret their AML program for different business units, to assist in implementation, or even seek exemptions.
One key example of this is the on-boarding of new clients and collecting beneficial owners. This is a new concept, and the definition of a beneficial owner can vary by customer type and circumstance. As the beneficial owner can also affect the customer’s risk rating, getting it right is critical to compliance, especially when advisers or online only applications are involved.
The opposite approach – one size fits all
Whilst AML/CTF changes may be subject to a company-wide program, with the project having to cope with differences in implementation at the business unit level, financial services providers responsible for the sales channel may be looking for a one-size-fits-all approach. This is particularly relevant for financial advisers as they seek to on-board clients with the minimum of fuss and maximum operational efficiency. No one here wants to stand out as being difficult to work with. Industry associations are becoming the forum for testing concepts to deliver an outcome that suits both the government and investors.
Organisational change, business readiness and training is where this dichotomy will come to a head for projects – how to manage the plethora of detailed rules and align them to standardised, across-the-board implementations by external interests.
IQ Group has forged a long path in this area with its South African pedigree and we hope to continue to share our insights with you all.
Senior Consultant – Business Analyst
Ross is currently a member of the IQ Group AML/CTF implementation team currently putting his skills to good use with one of Australia’s leading retail banks.