wmlro.com: Sydney money transmitter gives undertaking to AUSTRAC
Money transmitter Eastern and Allied operates under the name Hai Ha Money Transfer in Sydney, Australia. Austrac says it "is concerned that Eastern and Allied does not have an AML/CTF program with adequate risk-based controls and systems to identify, mitigate and manage the money-laundering/terrorism-financing (ML/TF) risk the business may face when providing its remittance services." And the company has agreed to open itself up for additional and further action by AUSTRAC.
The Company has given an enforceable undertaking to AUSTRAC to
" * undertake a revised ML/TF risk assessment of its business
* review and modify its systems and controls to identify, mitigate and manage its ML/TF risk
* submit to AUSTRAC an independent expert report detailing Eastern and Allied's compliance with AML/CTF laws and a plan to remedy any deficiencies. "
It's the last part of that which will send shivers down the spine of all money laundering risk officers. AUSTRAC having decided that the company's systems are deficient has now extracted an undertaking that consultants, which the company must itself pay for, must do a detailed audit including stress and breakage testing and submit its results to AUSTRAC.
There is no indication that AUSTRAC will decide that the reporting of such deficiencies, even if remedied, will result in no further action and penalty.
For Eastern and Allied, then, the risk is - at worst - that it may yet be put out of business as a result of an inspection conducted not by AUSTRAC but by its own consultants.
The consultants will be in a difficult position: they will have to report what they find or face the risk that AUSTRAC will refuse to accept their reports in future, effectively putting them out of the game. But they will not want to make their client's position untenable which a fully comprehensive report may do.
AUSTRAC has pushed the burden - and costs - of the inspection onto the regulated business instead of conducting its own inspection.
But there is one key issue that MLROs all over the world should pay special attention to: "Of particular concern to AUSTRAC was Eastern and Allied's failure to implement adequate employee due diligence, a key component of an AML/CTF programme"
Note : "employee due diligence."
Download PDF version of this page