In light of the Banking and Financial Services Royal Commission, small businesses and sole traders might be excused for thinking that the Federal Government’s legislative reforms are wholly focused on the large corporations.
Those who have been following the news will recall the massive prosecution of the Commonwealth Bank for failing in its anti-money laundering and counter-terrorism financing obligations. This prosecution is part of a broader trend to crack down on money laundering and counter-terrorism financing within Australia which may soon be coming to a small businesses near you.
Although not yet introduced to parliament, there has been substantial industry speculation that these anti-money laundering and counter-terrorism financing obligations, which currently only apply to certain financial institutions, will be extended to businesses of all sizes in certain industries before the end of this year. Those industries are likely to be include accountants, real estate agents, conveyancers, solicitors, dealers in high-value items (such as jewellery or art) and providers of trust services, among others.
If you operate a business in one of the nominated industries, you will probably be required to identify the actual beneficiaries of all business transactions, even in cases where there is a complicated web of companies and trusts, and report any suspicious activity which comes within the parameters of the legislation to AUSTRAC.
This could impose a substantial administrative burden on affected businesses, as they will need to establish processes to ensure compliance, including customer due-diligence, identifying and reporting suspicious transactions and liaising with AUSTRAC.
Although this legislation has not yet been introduced to parliament, it is worth noting that the similar legislation in New Zealand allowed only a six-month transitional period for businesses to comply.
If you would like to discuss any of this legislation and how it may affect your business, please don’t hesitate to contact our office on (02) 9525 8688.