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Not every enforcement action is a fine – ask Australian Military Bank

A little old, but instructive…

AUSTRAC issues remedial direction to Australian Military Bank

4 May 2021

AUSTRAC has issued a remedial direction to Australian Military Bank Ltd (AMB) requiring the mutual bank to review and uplift its compliance with Australia’s anti-money laundering and counter-terrorism financing (AML/CTF) laws.

The action follows ongoing regulatory engagement with AMB which identified concerns related to the effectiveness of AMB’s AML/CTF systems and controls.

The remedial direction requires AMB to:

  • With the assistance of an independent auditor, conduct an assessment of the money laundering and terrorism financing risks faced by the business.
  • Improve its systems, controls and record keeping; this includes addressing concerns related to its AML/CTF program, implementing appropriate systems to collect and verify information to identify a customer (Know Your Customer), ensuring compliance with reporting obligations and reviewing its governance and oversight arrangements to ensure senior management and its board maintain oversight.
  • Appoint a second independent auditor to assess whether AMB has implemented measures and addressed any deficiencies in its compliance.

AUSTRAC Chief Executive Officer, Nicole Rose PSM said by issuing the remedial direction, AUSTRAC aims to ensure that the Australian Military Bank, with the assistance of two independent AML/CTF auditors, complies with its AML/CTF obligations and addresses the risks that criminals pose to the business.

“The Australian Military Bank has demonstrated a commitment to uplifting its AML/CTF controls. It is encouraging that AMB has already started implementing a remediation action plan and this remedial direction will help to ensure AMB meets its compliance and reporting obligations,” Ms Rose said.

AUSTRAC regulates and collaborates with the financial services sector to build resilience, improve risk management and ensure they have appropriate systems in place and to help them identify, track and disrupt criminal exploitation of the financial sector.

“Where these obligations are not met, AUSTRAC will not hesitate to draw on our range of regulatory tools and enforcement powers to maintain public confidence in Australia’s financial system and prevent non-compliance.”

In 2019, AUSTRAC released Australia’s mutual banking sector risk assessment which found the overall money laundering and terrorism financing risk for the industry is ‘medium’. The report provides information and guidance to support mutual banks to assess their level of risk, strengthen their controls and report suspicious activity to AUSTRAC. 

AUSTRAC’s regulatory approach

AUSTRAC uses a range of regulatory activities and interventions to ensure compliance. Interactions are tailored based on the level of risk posed by the entities we regulate and their circumstances, and range from education and collaboration, through to regulatory interventions and enforcement.

AUSTRAC enforcement powers include:

  • issuing infringement notices
  • issuing remedial directions, which require a reporting entity to take specified action to ensure compliance
  • accepting enforceable undertakings detailing the specific actions a reporting entity will commence or cease in order to comply with the AML/CTF Act
  • seeking injunctions and/or civil penalty orders in the Federal Court
  • referring a matter to the Commonwealth Director of Public Prosecution for possible criminal prosecution.

Link:

AUSTRAC Notice

AUSTRAC Enforcement Actions list

Categories: Anti-Money Laundering AUSTRAC Updates Enforcement Actions

eric9to5

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