AML update: education and training resources

From 12 December 2007, businesses which deliver services outlined under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (including financial services), need to have in place an anti-money laundering and counter-terrorism financing program.

To assist businesses, AUSTRAC has published an e-learning course and industry resources (including case studies for training purposes).

There are specific presentations for:

• Banking

• Financial Planners

• Gambling

• Mutual Societies

• Providers of Designated Remittance Services

• Superannuation

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National Finance Broking Scheme consultation package released

The Ministerial Council on Consumer Affairs (MCCA) has released a package (pdf) (including an exposure draft Bill) proposing finance broking legislation which is consistent nationally, and which extends to protections for small business clients. Its core feature will be the licensing of brokers.

All types of broking structures will be regulated: mortgage brokers, finance brokers, single line broking and single mobile operators, as well as aggregators and franchised organisations. While brokers of credit for small businesses are covered by the framework of the regulatory scheme, there will be differences in the requirements for disclosure and the contractual relationship, to take into account differences in the way brokers and businesses transact.

It will include all credit unless the applicant is a business entity which:
· Employs more than 100 people if it is a manufacturing business; or otherwise, 20 people; or
· The credit sought is more than $2 million

The definition of broker is similar to that in the Consumer Credit Administration Act 1995 (NSW), and will include those intermediaries who are suppliers of goods and services and who negotiate or obtain credit for purchasing those goods and services.

Brokers will be required to have professional indemnity insurance with coverage set out in the regulations. Applicants for licenses will be required to have attained prescribed educational standards.

The closing date for submissions is 15 February 2008.

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Austrac AML deadline approaches

From 12 December 2007, businesses which deliver services outlined under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (including financial services), need to have in place an anti-money laundering and counter-terrorism financing program.

As part of this program, businesses must establish and document procedures to collect and verify information about the identity of a customer.

In addition to the new obligations, businesses are required to complete a Compliance Report.

The report covers the reporting period from 13 December 2006 to 31 December 2007 and must be submitted to AUSTRAC by 31 March 2008.

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Daylight saving starts 7 October

Tasmania starts daylight saving on 7 October 2007.

Australian Capital Territory, New South Wales, Victoria, Western Australia and South Australia start on 28 October. All end on 30 March, 2008, except South Australia which ends on 6 April 2008.

Queensland and the Northern Territory do not have daylight saving.

Confused? Use ABC's Clock.

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NSW Mortgage duty changes

The NSW State Government has brought forward the complete abolition of mortgage duty from 1 January 2011 to 1 July 2009.

In the meantime, from 1 September 2007 no mortgage duty applies to the financing of owner occupied housing .

No mortgage duty will apply to the financing of investment housing from 1 July 2008.

More

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Consumer Credit Code amendments update

The recent call by the Treasurer for the States to accelerate work on the licensing, conduct and disclosure of mortgage brokers has put pressure on the States to provide an update on consumer credit code review progress.

The Ministerial Council on Consumer Affairs has now announced that:

• It is anticipated that a draft exposure Bill for the mational regulation of finance brokers will be released by December 2007.
  
• In response to concerns raised about reverse mortgages, the Ministerial Council on Consumer Affairs has agreed that there should be a prescribed Information Statement for reverse mortgages and a statutory protection against negative equity.
  
• The Ministerial Council on Consumer Affairs has agreed to investigate the introduction of mandatory participation in external dispute resolution by all providers of consumer credit. The consultation regulatory impact statement is being prepared.
  
• Consultation on the bill facilities regulation amendment has now closed. It is anticipated that the regulation could be made as early as the end of October 2007.
  
• As part of an ongoing review of the fringe credit industry, the Ministerial Council on Consumer Affairs has invited comments on the exposure drafts of the Consumer Credit Code Amendment Bill 2007 and Consumer Credit Amendment Regulation 2007. The deadline for submissions has been extended until 5 October 2007.
  
• In respect of reform to pre-contractual disclosure, the Standing Committee of Officials of Consumer Affairs has agreed to UCCCMC commissioning research, by an independent consultant, into pre-contractual disclosure with the goal of developing a disclosure
  model which addresses the needs of consumers. Negotiations are currently underway with the preferred tenderer.
  
• In respect of instalment contracts, a Bill has been finalised and submitted to the Ministerial Council on Consumer Affairs for approval to be made by the Queensland Parliament.
  Provisions affecting solicitor lending have been removed altogether
  pending further consideration of the underlying issues.
  
• A consultation regulatory impact statement on responsible lending through credit cards is being prepared and should be released before the end of the year.
  
• An independent review on mandatory comparison rates is still being considered.

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Consumer Credit Code Amendments

The Ministerial Council on Consumer Affairs has invited comments on the exposure drafts of the Consumer Credit Code Amendment Bill 2007 and Consumer Credit Amendment Regulation 2007.

The Bill and Regulations will principally affect fringe credit providers, such as payday lenders, who typically offer short term loans (from four weeks to 18 months) for small amounts (averaging less than $300), particularly to people unable to access credit from the mainstream lenders.

The purpose of the Consumer Credit Code Amendment Bill 2007 and Consumer Credit Amendment Regulation 2007 is to implement the recommendations contained in the Fringe Credit Providers - Decision Making Regulatory Impact Statement. Although the amendments will apply to all credit providers, they particularly target practices which are considered unjust and exploitative.

The proposals include:

• An amendment to prohibit credit providers from asking or taking security over essential
  household goods
• An amendment to require consumers to be given information about direct debit
  authorities
• Amendments to remove the presumption that applies to a Business Purpose Declaration
  and to encourage credit providers to ascertain the purpose of the loan
• An amendment to clarify that the pawnbroker exemption only applies where money is
  lent on the security of pledges of goods and the sole recourse provided for failure to repay
  the loan is for the pawnbroker to sell or otherwise dispose of the goods pledged
  

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AML Fact Sheets
The Attorney-General's Department has published a series of fact sheets about the Anti-Money Laundering and Counter-Terrorism Financing Act (AML/CTF Act) includiong one about changes for customers.

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AML compliance report questions released for consultation

The AML/CTF Rules to be made under section 47(1) of the AML/CTF Act will specify the reporting period(s) and the lodgement period within which compliance reports are required to be submitted to AUSTRAC.

Subsection 47(3) requires reports to be in the approved form and to contain any such information as required by the form.

AUSTRAC has released indicative AML compliance report questions to provide reporting entities with information as to the types of questions that will be contained in the first AML/CTF compliance report under the AML/CTF Act, regulations and Rules, and to seek feedback.

The AML/CTF compliance report is based on key elements of the AML/CTF Act, regulations and the Rules. The report is structured with questions grouped under section headings as follows:

1. Introduction/information
2. Correspondent Banking
3. Electronic Funds Transfer Instructions
4. Anti-money laundering and counter-terrorism financing programs
a. AML/CTF programs Part A
b. AML/CTF risk awareness training program
c. Employee due diligence
d. Compliance
e. Independent Review
f. AML/CTF programs Part B - Customer Identification Procedures

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ASIC reviews reverse mortgages

ASIC has conducted a review and urged the promoters of reverse mortgages to ensure their advertising and promotional material is clear and not misleading.

ASIC found five cases of misleading advertisements that made claims suggesting that reverse mortgages did not need to be repaid.

ASIC raised these concerns with the promoters of the advertisements. In each case the promoter took immediate steps to either withdraw or amend their advertising.

The statements used in the advertisements included:

• ‘There are no repayments’, ‘…no loan repayments ever’ and ‘No need to make repayments!!’.

Although reverse mortgages do not usually require the borrower to make regular repayments, they certainly require repayment. Typically, a reverse mortgage will need to be repaid when the home is sold or no longer occupied.

• ‘Centrelink payments aren’t affected’.

ASIC considered that this claim could be misleading as taking out a reverse mortgage may affect a consumer’s Centrelink payments, depending on their individual circumstances and how they use the money they receive.

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AUSTRAC releases AML/CTF compliance implementation tools

As we approach the 12 June 2007 start date for AML/CTF compliance reporting obligations, AUSTRAC has produced a Self Assessment Questionnaire (SAQ) to assist the financial services sector, bullion dealers and gambling establishments meet their obligations under the incoming anti-money laundering and counter-terrorism financing system.

The SAQ is a Word document which can be used as a checklist for your implementation progress and also to identify issues to add to your compliance program. It is not a form which needs to be lodged with AUSTRAC but AUSTRAC may have access to it and any supporting documentation if it conducts an audit of your compliance program.

AUSTRAC has also released five policies outlining its approach to education, monitoring, exemptions, enforcement and supervisory capability under the AML/CTF Act to help industry understand its approach.

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Do Not Call Register opens for consumer registration

In anticipation of a 31 May 2007 start date, the Do Not Call Register has started accepting consumer registrations.

Individuals will be able to register their numbers either online at https://www.donotcall.gov.au/or by post. Telephone registrations will be available soon.

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Do Not Call Register due to start on 31 May: what you need to do

The Do Not Call Register is expected to be operational by 31 May 2007.

For a business, the core obligation is not to make an unsolicited telemarketing call to a number on the Register and ensure that any agreements you make to outsource telemarketing comply with the Act (Sections 11 and 12).

If a number is not on the Register, a business may call it provided the business (or its provider) complies with the telemarketing standards.

The Act allows persons (such as telemarketers) to submit their contact lists to the Register Operator for checking against the Register. Upon submission of the list and payment of the appropriate fee (if any), the Register Operator must inform the access seeker which of the numbers in their list (if any) are, or are not, on the Register.

What's a telemarketing call?

A telemarketing call is a voice call to a telephone number, where, having regard to:

(a) the content of the call; and
(b) the presentational aspects of the call; and
(c) the content that can be obtained using the telephone numbers, URLs or contact information (if any) mentioned in the call; and
(d) if the telephone number from which the call is made is disclosed to the recipient (whether by calling line identification or otherwise)—the content (if any) that can be obtained by calling that telephone number;
it would be concluded that the purpose, or one of the purposes, of the call is:
(e) to offer to supply goods or services; or
(f) to advertise or promote goods or services; or
(g) to advertise or promote a supplier, or prospective supplier, of goods or services; or
(h) to offer to supply land or an interest in land; or
(i) to advertise or promote land or an interest in land; or
(j) to advertise or promote a supplier, or prospective supplier, of land or an interest in land; or
(k) to offer to provide a business opportunity or investment opportunity; or
(l) to advertise or promote a business opportunity or investment opportunity; or
(m) to advertise or promote a provider, or prospective provider, of a business opportunity or investment opportunity; or
(n) to solicit donations; or
(o) a purpose specified in the regulations.

The Regulations exclude the following from the definition of a telemarketing call:

• product recall calls;
• fault rectification calls;
• appointment rescheduling calls;
• appointment reminder calls;
• calls relating to payments;
• solicited calls (eg returning a call for information); and
• calls not answered by the person to whom the call is made.

Even if a telephone number is not registered on the Do Not Call Register, telemarketers will have to comply with the new Telemarketing Standard.

The standard applies to:

• all telemarketing calls made to an Australian number to offer, advertise or promote goods, services, interests in land, business opportunities or investments, or to solicit donations
• all research calls to conduct opinion polling and to carry out standard questionnaire-based research, and
• calls made for the above purposes by public interest entities (such as charities, registered political parties, and religious organisations) who are exempt from the general prohibition on calling numbers listed on the Do Not Call Register when making specific types of telemarketing calls.

The standard establishes minimum standards in four main areas:

1. The standard provides clear and enforceable rules including restrictions on hours of calling. A caller must not make or attempt to make:

• a telemarketing call on a weekday before 9 am or after 8 pm
• a research call on a weekday before 9 am or after 8.30 pm
• a telemarketing or research call on a Saturday before 9 am or after 5 pm
• a telemarketing or research call on Sunday or a nationally recognised public holiday.

2. Under the standard, contact information and the purpose of the call must be provided by the person making a telemarketing call as well as revealing, on request, the source from which the caller obtained the telephone number.

3. The standard requires the caller to terminate the call where the call recipient asks for the call to be terminated or otherwise indicates that he or she does not want the call to continue.

4. The caller is also required to ensure that calling line identification is enabled at the time that the caller makes or attempts to make a call

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AML/CTF Rules finalised

The Australian Transaction Reports and Analysis Centre (AUSTRAC) has finalised a series of AML/CTF Rules.

The Rules will commence at different times to match the staged implementation of the AML/CTF Act which will not be finalised until December 2008.

The Rules which will commence on 12 June 2007 relate to AML/CTF compliance reports (Part 3, Division 5), correspondent banking (Part 8) and records about correspondent banking (Part 10, Division 6) of the AML/CTF Act.

The Rules which will commence on 12 December 2007 relate to identification procedures generally including for pre-commencement customers and certain low-risk customers (Part 2 except for Division 6 which will commence on 13 December 2008),AML/CTF programs (Part 7), records of identification procedures (Part 10, Division 3) and records of AML/CTF programs (Part 10, Division 5).

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Daylight saving ends Sunday
Daylight saving in Tasmania, Australian Capital Territory, New South Wales, Victoria and
South Australia ends on Sunday 25 March 2007.

More information

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Mandatory Comparison Rates to be extended by 2 years

The Queensland Government has introduced the Consumer Credit (Queensland) and Another Act Amendment Bill 2007 (pdf) into Parliament.

If passed, the Bill will extend the sunset clause in the Consumer Credit Code that relates to the Mandatory Comparison Rate system by 2 years to 30 June 2009.

The extension of 2 years will provide Ministerial Council on Consumer Affairs with sufficient time to give proper consideration to the Regulatory Impact Statement and determine the future of the Mandatory Comparison Rate system.

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Network Law Outage

The Network Law site was unavailable this morning due to a power problem.

The outage was caused by a main power line cut by a back-hoe which lead to a power supply failure at our ISP.

If any repair work is required we understand the shutdown will be brief.

We apologise for any disruption to your business.

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AML Amendment Bill introduced

The Attorney-General has introduced the Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2007 into Parliament to amend the AML/CTF Act.

The Bill addresses operational and technical issues, as well as taking into account concerns raised by Reports of the Standing Committee on Legal and Constitutional Affairs and the Senate Standing Committee for the Scrutiny of Bills. Some of the changes will be backdated to 12 December 2006 when the Act commenced.

Austrac has issued draft revised AML/CTF rules for comment.

These draft AML/CTF Rules set out specific requirements on matters such as customer identification, ongoing customer due diligence, reporting of suspicious matters and AML/CTF programs.

Austrac has also published the Policy (Civil Penalty Orders) Principles 2006 .

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Seize the day at ACUI Conference

If you're coming to the ACUI Conference in Brisbane from 26-28 February, start your day positively with a brisk early morning guided walk, taking in some of the sights of Brisbane city, with some stops for gentle stretching along the way. A great way to stay fit and recharge your energy levels so you can fully enjoy your 2007 ACUI conference experience.

These sessions are being sponsored by Network Law and will be held on Monday, Tuesday and Wednesday from 6.30am. Meet at the main entrance to
the Convention & Exhibition Centre, Brisbane. We look forward to seeing you!

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Network Law website changes

Our website has been upgraded to improve our services to you.

For clients, all Instruction Forms have been altered to show the principal office address
of the Lender, with the option for the client to change it to a branch address. This allows branch offices to send instructions.

If you have any problems, contact your local Network Law representative or email help@networklaw.com.au

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Arranging loans in Western Australia

The Finance Brokers Control Act (WA) regulates the arranging or negotiating of loans in that State. Persons who carry on that business in WA must be licensed by the Department of Consumer and Employment Protection (DOCEP), even if those loans are not regulated by the Consumer Credit Code.

Recent amendments permit non-WA residents to obtain a licence and permit the licensing of finance broker businesses whose owners (directors or partners) are not qualified provided a qualified person controls the finance broking operations.

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