FMA warns on AML

Firms that have not had their anti-money laundering compliance systems independently audited will be the priorities for the Financial Markets Authority’s attentions, it has confirmed.

Tuesday, June 11th 2013, 6:40AM 9 Comments

AML legislation kicks in at the end of this month and it is widely expected that the FMA will take less of a “hand-holding” approach to the second raft of regulation and expect full compliance quickly.

The FMA says it will be requesting audit reports from entities that are regarded as a high or medium risk. “We will set up a time for the first audit with entities in these sectors. FMA expects some audit reports to be available for the period 30 June 2013 to 31 December 2013, with subsequent audit reports to be prepared by the reporting entities two yearly or earlier, subject to FMA’s request.”

It will review risk assessments and compliance programmes.

The FMA says when non-compliance is detected, notices or warnings may be used. Further non-compliance could result in criminal or civil prosecution.

It says that it will use and intelligence and risk-based approach to monitoring and surveillance.

“As part of our risk-based approach, we will proactively monitor a range of reporting entities within our supervised sector. This allows us to identify any new risks and any compliance themes or areas of poor practice across the sector. It also helps FMA to identify a need for further guidance and ensure our expectations are practical.”

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Comments from our readers

On 11 June 2013 at 9:38 am btw said:

I thought you didn't need to complete an independant audit for two years?

On 11 June 2013 at 1:14 pm Andrew Brockway said:

Hi BTW. The wording in the Act (Section 59) is "A reporting entity must ensure its risk assessment and AML/CFT programme are audited every 2 years or at any other time at the request of the relevant AML/CFT supervisor". Hence the FMA (being a supervisor) can request an audit at any time.

On 11 June 2013 at 5:27 pm btw said:

That's right. So until requested its not due for another two years..... Why have they made a blanket request that everyone must have an audit from inception? Why indeed even require an audit of such a short time period. E.g., if we get an audit done on 2 July to comply with this latest guidance the auditable time period is only a day. What's the point?.

On 11 June 2013 at 10:05 pm DSI said:

FMA pushing AML requirements on all players most AFAs never come across anyone laundering money but have to cover the cost of the requirements but the likes of the big Aussie banks get caught laundering funds for Liberty Reserve with tens of millions of dollars in their accounts and no one blinks an eye? You wonder why public trust is lacking?

On 11 June 2013 at 10:20 pm Angela said:

What a load of rubbish have any of the regulators looked into the banks laundering funds for Liberty Reserve? But no add more rubbish admin onto the AFAs no wonder the world is so fecked!!

On 12 June 2013 at 7:56 am Curious said:

Any word on who can do audits yet?

On 13 June 2013 at 10:18 am Concerned Stakeholder said:

Curious - any qualified person can do the audit as long as they did not provide recommendations for the actual "Risk Assessment" and AML Process you use. So if your accountants gave you advice on how to access the risks in your business and how to put the AML process in place then they can't do the Audit. The audit must be independent and there are a number of Regulatory Compliance Advisers out there. To name a few (no recommendation - you make you own choice): IDS (Barry Read), Strategi, Adviser Business Compliance (ABCompliance)and Allan Lloyd (PM Services). I have heard that costs may range from $400 to $800 depending on the type of Audit requested as there are two options. Travel costs will probably be on top of that so advisers should club together to get several AFAs in one city done together.

On 13 June 2013 at 12:37 pm Bernie said:

I'd be wanting to make sure my Risk Assessment (at the very least) had been audited, given this is what the AML programme is based on. You wouldn't want to get it wrong as it will increase your compliance costs. The AML programme has to operate for a period of time to be able to audit the 'effectiveness' not just the design of controls; 3 months onwards should allow auditors to get a decent sample especially in respect of transaction monitoring. Otherwise the AML programme audit will just be limited to testing the design of controls.
The auditor needs to be 'suitably' qualified. You have to explain how your auditor is 'suitably' qualified to your supervisor when requested. Working in this space internationally means holding a relevant qualification from a recognised Instiution/Body; no 'test' on this 'downunder' yet but would imagine the ACAMS qualification a good starting point. As a Kiwi having spent 5 years dealing with AML enforcement offshore (Regulators in the USA, UK) we still have some catching up to.

Start looking at your transactions through an AML lens and I will guarantee you'll find interesting behaviors and patterns - these may or may not turn out to be something of an ML/FT nature. I have seen quite a bit of internal fraud pop up.

On 13 June 2013 at 1:49 pm Concerned Stakeholder said:

Sounds like you would be well "qualified" Bernie. I spoke to the FMA about the term "Suitably qualified" and no mention was made about having any relevant qualification from any recognized Institution/Body. Their response was anyone who has a thorough understanding of the relevant regulations whatever that actually means . The published guidelines also state this quite clearly on pages 3 and 4 so your point of having ACANS quals as a starting point might be overdoing it a bit.

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FMA warns on AML

Firms that have not had their anti-money laundering compliance systems independently audited will be the priorities for the Financial Markets Authority’s attentions, it has confirmed.

Tuesday, June 11th 2013, 6:40AM 9 Comments

Comments from our readers