AUSTRAC cutting red tape

AUSTRAC is required to annually self-assess its performance against six KPI’s, introduced by the Australian government to reduce unnecessary regulatory burden on the community.

We look at how AUSTRAC assessed its performance throughout the 2018-19 financial year as outlined in a recent report, and what the results mean for you and your business.

 

AUSTRAC’s self-assessment against the six KPIs

 

KPI 1: Not unnecessarily impeding efficient operation of regulated entities

AUSTRAC assesses that it has fully achieved this KPI throughout the reporting period by:

  • Supporting legislative reform to deliver regulatory efficiencies and facilitate the sharing of AUSTRAC information.
  • Fostering public and private partnerships through the Fintel Alliance to better understand the operating environment and combat serious financial crime.
  • Ensuring regulatory cost is not unnecessarily incurred – exemption powers allow AUSTRAC to absolve entities of AML/CTF reporting responsibilities in unique circumstances, for example where reporting could put a business in a position of competitive disadvantage.
  • Making annual compliance reporting easier.

 

KPI 2: Clear, targeted and effective communication with regulated entities

AUSTRAC assesses that it has fully achieved this KPI throughout the reporting period by:

  • Delivering a new and improved website.
  • Providing tailored education and outreach such as industry guidance for Australia’s superannuation sector to educate entities on how they can proactively combat financial crime.
  • Publishing relevant, industry-specific risk assessments such as ML/TF risks associated with the use of traveller’s cheques.
  • Providing clear, specialist advice through its Contact Centre.

 

KPI 3: Actions undertaken by AUSTRAC are proportionate to risk

AUSTRAC assesses that it has fully achieved this KPI throughout the reporting period by:

  • Taking a risk-based approach to regulation – AUSTRAC’s regulatory approach is based on assessing ML/TF risk exposure of reporting entities and how well they are meeting their obligations and managing risks.
  • Using administrative, regulatory and enforcement powers proportionately to address serious legislation breaches through a range of available penalties such as refusals and suspension of registration.
  • Investigating and ensuring compliance.

 

KPI 4: Compliance and monitoring approaches are streamlined

AUSTRAC assesses that it has fully achieved this KPI throughout the reporting period by:

  • Investing in staff to ensure a consistent, whole-of-agency approach.
  • Streamlining regulatory monitoring – a new system generates alerts of potential non-compliance.
  • Developing a more consistent response to non-compliance – all new regulatory matters are reviewed by a cross-agency board.

 

KPI 5: Transparency in dealings with regulated entities

AUSTRAC assesses that it has fully achieved this KPI throughout the reporting period by:

  • Being transparent in its regulatory approach – AUSTRAC’s approach to regulation is published on its website.
  • Openly reporting on agency performance – including corporate plans and annual reports.
  • Participating in a range of forums to engage with reporting entities, such as risk assessment workshops with digital currency exchanges.

 

KPI 6: Contribution to continuous improvement of regulatory frameworks

AUSTRAC assesses that it has fully achieved this KPI throughout the reporting period by:

  • Collaborating with regulatory technology providers to develop innovative compliance solutions and help to improve reporting entities’ resilience to ML/TF risks.
  • Learning and engaging with international counterparts to address the increasingly global nature of ML/TF threats. For example, the International Supervisors Forum comprises 19 international delegates from partner AML/CTF regulatory agencies who collaborate to share information and develop best practices across a range of issues such as the regulation of digital currency exchange providers.
  • AML/CTF Rules publication.

 

How reliable is AUSTRAC’s self-assessment?

AUSTRAC is also required to seek external stakeholder validation of its assessment against the KPIs, and the majority of the respondents were supportive of AUSTRAC’s self-assessment.

AUSTRAC invited 15 industry associations and bodies who represent a cross-section of its reporting entities to undertake a survey in relation to its regulatory performance for 2018-19.

Six bodies responded to the survey, with the following results:

  • 3 per cent of responses strongly agreed or agreed with AUSTRAC’s self-assessment.
  • 5 per cent neither agreed nor disagreed.
  • 2 per cent disagreed.

 

Conclusion

AUSTRAC is being held accountable by the Australian government to ensure that it is not creating unnecessary red tape for businesses and individuals. It is required to report annually on its performance against six KPIs, which includes seeking external stakeholder validation and publishing the results.

The results for the 2018-19 financial year indicate that AUSTRAC is performing relatively well in terms of minimising unnecessary burden on the community, while pursuing its main goal of combating abuse of Australia’s financial system and preventing serious and organised crime.

Nyman Gibson Miralis provides expert advice and representation in complex cases involving money laundering and financial crime, which are investigated by a wide range of law enforcement agencies including AUSTRAC.

Contact us if you require assistance.