Australia's current financial services regulatory & compliance landscape is changing rapidly - Clyde & Co's weekly Regulatory Roundup will ensure you are up to date with the most important changes. In each edition, we will set out key developments from the past week for you to consider.
Subscribe here: ONLINE LINK
1. ASIC to launch Professional Registers Search in June 2024: this new register will allow users to search for a licence or registration across multiple register databases simultaneously. The existing ASIC Connect registers are all moving across to the new Professional Registers Search, and ASIC anticipates all professional register extracts and documents will be made available in late 2024. The development and implementation of this new consolidated register reflects ASIC’s core strategic propriety to become an effective data-driven regulator with a ‘digital front door’, and its role as an advocate for digital transformation and innovation across the financial services sector. Bravo!
2. ASIC affirms its regulatory priorities at the AFIA Risk Summit: at the Australian Finance Industry Association Risk Summit, ASIC Commissioner Alan Kirkland spoke about ASIC’s regulatory priorities in the context of the current regulatory climate. Cost-of-living pressures, climate change and rapid technological transformation are all impacting on consumers’ needs and the way in which they navigate the financial services market. ASIC noted it seeks to address the most significant threats arising from these global trends. To this end, ASIC emphasised it would continue to focus on compliance with the financial hardship obligations and would closely monitor reports of misconduct involving vulnerable consumers.
3. APRA imposes licence conditions on Mercer Super: APRA has identified deficiencies in Mercer’s risk management and compliance management procedures to comply with prudential standards SPS 220 Risk Management, SPS 231 Outsourcing and SPS 232 Business Continuity Management. These new licence conditions mean Mercer Super must develop and implement a remediation plan to address the deficiencies, and appoint and independent third party expert to complete an operational effectiveness review of its management and compliance frameworks. The noteworthiness of this action can be placed in the context of APRA's three actions against prudential entities for governance matters in the last 18 months, and ahead of the implementation of the financial accountability regime / CPS 230 in 2025 for GIs and RSEs.
4. Sportsbet has agreed an enforceable undertaking from AUSTRAC: AUSTRAC has accepted an enforceable undertaking from Sportsbet Pty Ltd to uplift its compliance with Australia’s anti-money laundering and counter-terrorism financing laws. It requires Sportsbet to undertake an ongoing remedial action plan to improve its AML/CTF program, which AUSTRAC will monitor, and to provide reports to AUSTRAC from an auditor who will continually monitor the progress of Sportsbet’s uplift. Interestingly, despite the big ticket litigation matters, AUSTRAC seems far more willing than ASIC to accept EUs - the latter has not accepted an EU in quite some time, and precious few since the Hayne Royal Commission where it was criticised for entering into too many of them. They're an effective and flexible regulatory tool, so hopefully they will make a balanced return soon, as they are often appropriate where the entity is committed to transparency and uplift as AUSTRAC noted that Sportsbet has been in this circumstance.
International perspective: the US Department of the Treasury has published a 2024 Non-fungible Token (NFT) Illicit Finance Risk Assessment. The risk assessment explores how vulnerabilities associated with NFTs and NFT platforms may be exploited by illicit actors for money laundering, terrorist financing, and proliferation financing, and found that NFTs are highly susceptible to use in fraud and scams and are subject to theft. The report stated that “…inadequate cybersecurity protections, challenges related to copyright and trademark protections, and the hype and fluctuating pricing of NFTs can enable criminals to perpetrate fraud and theft related to NFTs and NFT platforms. Moreover, some NFT firms and platforms lack appropriate controls to mitigate risks to market integrity and to combat money laundering and terrorist financing, and sanctions evasion." As more of the digital assets market turns to the enormous potential of NFTs e.g. real world asset tokenisation, we can likely expect the same focus to be on NFTs by AUSTRAC.
"Compliance in this complex, evolving environment comes down to following three basic principles: transparency, accountability, and consistency" (ASIC Commissioner Simone Constant)
unknownx500
