Regulatory specialists at Mallesons Stephen Jaques have advised that those that will be affected by forthcoming anti-money laundering legislation should be planning now to ensure their readiness and to reduce the potential impact on their business.

Speaking at a seminar jointly hosted in Melbourne by Mallesons Stephen Jaques and the Australian Corporate Lawyers Association, Mallesons’ Partner Ros Grady said: “While we do not have draft legislation yet, we already know a great deal about what it is likely to require organisations to do. It is important that organisations begin planning now on two fronts: Firstly, project planning for their AML compliance and, secondly, making submissions to Government once the draft legislation is released.”

The Australian government is currently giving consideration to draft AML legislation. The legislation is expected to have a broad impact on the financial services sector as well as legal, property and gaming sectors and dealers in precious metals and stones. Tough new ‘Know Your Customer’ provisions are expected and this will affect a wide range of business systems with, potentially, the impact being as great as the provisions within the recent Financial Services Reform legislation.

During the seminar Ros Grady and fellow Partner Katherine Forrest discussed some likely practical impacts of the new AML legislation on Australian organisations and related compliance and project planning issues. They also shared their thoughts about what approach the Australian legislation should take on this matter.

Both were able to draw upon insights gained during an international fact-finding trip undertaken by Ros Grady and fellow Mallesons’ Partner Andrea Beatty. The trip to New York, Washington, Toronto and London included meetings with a range of regulators, industry bodies and business organisations about AML laws and practices.

Australia’s Federal Minister for Justice and Customs, Senator Chris Ellison, has previously said in relation to anti-money laundering and anti-terrorism financing reform: “To do nothing is not an option.”

Katherine Forrest echoed that sentiment, noting: “To do nothing is not only not an option for the Government but also for Australian organisations. Given that AML changes are coming, and they are likely to be significant, it is prudent to start planning right now.”

Ros Grady and Katherine Forrest suggested steps organisations could already be taking in planning for AML compliance, including:

• Considering whether they are likely to be affected and to what extent. The legislation is expected to cover a wide range of activities. For example, it is expected to cover providers and handlers of, and dealers in, ‘financial products’ (including credit products and some insurance);
• Gathering organisational information about current customer and transaction information flows (between business units, related bodies corporate etc) and about current system capabilities; and
• Undertaking a comprehensive AML risk inventory covering overseas as well as domestic operations, subsidiaries and intermediaries.

They also recommended that organisations be involved in making submissions to the Government (whether directly or through industry bodies) on the draft legislation. They suggested issues that could be covered in submissions, including:

• The need for a ‘light touch’ regulatory approach with industry involvement in setting requirements at a practical level;
• The need for transition periods;
• The importance of ‘Know Your Customer’ requirements which are risk based, practical and cost effective; and
• The need for review and possible amendment of existing laws (such as privacy laws) which might be affected by the new AML regime.