AML deadline looms

Advisers who are reporting entities under the Anti-Money Laundering Act have until midnight to complete their annual return.

Monday, August 31st 2015, 6:00AM

Advisers are drawn into the AML rules when they deal in category one products.

They must have a written risk assessment, and a regularly-audited AML/CFT programme.

Not complying with the requirements can result in penalties including fines up to $200,000 for an individual.

Eight hundred reporting entities filed annual reports to the FMA last year.

Advisers were last year allowed to use “best estimates” for their first AML returns, for questions where they had not kept information.

This year they are expected to have systems in place to help them collect the information more easily, although some questions can still be answered approximately.

One question that was problematic last year asked for details of transactions advisers have been involved in.

SiFA has argued that it should be only transactions that the adviser has settled and received money for, not any in which they have had a hand.

The FMA’s guide for advisers completing the return this year says they only need to provide an estimate to answer this question. “We expect submissions to be based on an approximate calculation or judgement of the value or number, rather than an exact count of transactions and values.”

But it says transactions refer to instances where they arrange for other reporting entities or third parties to provide a product or service.

“‘Settled by’ does not mean the entity must have physically handled client money or client property.”

The FMA said it expected advisers to meet their record-keeping obligations under the AML Act and put in place a repeatable system so the information requested could be provided easily for each year’s report.

It noted concerns about duplication in reporting transactions but said that was not a problem.

“When completing the annual AML/CFT report, adviser businesses will note that the total number and value of transactions may be reported multiple times (such as, by the adviser business, the product provider and possibly the custodian). This is because we are trying to understand the money laundering/terrorist financing risk (not compliance risk) at an individual reporting entity level. When it comes to annual AML/CFT reports, we look at reporting entities in isolation to understand that risk.”

IFA president Fred Dodds said the process seemed to be running smoothly. “We have had no panic from our members.”

Tags: AML