FATF & AUSTRAC weekly regulatory update
Regulatory Update (AUSTRAC & FATF)
The most recent outcome from the 4th round of evaluations was released this week with The Kingdom of Saudi Arabia receiving an encouraging assessment report. A quote from the website states:
“The Kingdom of Saudi Arabia is achieving good results in fighting terrorist financing, but needs to focus more on pursuing larger scale money launderers and confiscating their assets.”
FATF (who joined forces with MENAFATF for the assessment) stressed that despite a range of measures introduced (including fundamental changes to the framework and two separate national risk assessments) the region is subject to significant risks given the presence of Al Qaeda cells, ISIS and other groups in the region.
There have been many investigations and convictions recorded as a result of Saudi Arabias focus on TF but limited mechanisms to impose targeted financial sanctions. The report also noted a concerning lack of Suspicious Transaction Reports and low levels of awareness of ML/TF risk awareness outside the traditional reporting entities (eg DNFPBs). Further opportunities for improvement identified in the report included more proactive investigations by Saudi authorities and more sophisticated financial analysis.
The report was conducted during an onsite in 2017 and was based on the 2013 methodology and 2012 FATF recommendations. Given the recent major updates to the Regulatory Framework of the member country, there was limited assessment available on the effectiveness of the regime overall.
You can find a copy of the full report here
FATF Business Bulletin:
Also released this week is the third issue of the FATF Business Bulletin, outlining a summary of updates from the 4th round of Mutual Evaluations, the FATF President’s priorities and the Joint FATF/EAG Fintech and Regtech Forum
A copy of the bulletin is also available via the FATF website but we have included a copy here for you to view:
The final update for this week is the publication of the ministerial determination for the 2018/19 industry contribution levy.
According to the consultation paper released alongside the determination accessible here, the upcoming levy year presents two distinct differences from prior levy years. These differences will affect:
- The total amount to be recovered for 2018-19, and
- The way in which the recoverable amount will be apportioned amongst reporting entities.
The costs for the new program “Strengthening Australia’s Defences Against Money Laundering and Terrorism Financing” announced by the Australian Government will be offset through a higher Industry Contribution levy on the largest reporting entities. It is estimated that out of the total reporting entity population of more than 14,000 entities, approximately 570 entities will be required to pay the levy in 2018–19. This continues the government’s objective to exempt small businesses and in turn, minimise their regulatory burden.
Indications published in the determination show the minimum levy payable remains at $1,000 but the maximum amount has increased from 2017/18 and comes in at a whopping $10,497,020.54. A summary of the changes for those unlucky entities considered to be ‘leviable’:
- the overall earnings component has increased from 0.043 to 0.047% of earnings
- the earnings component threshold remains the same (at $100,000,000)
- the earnings component cap has been increased from 1,000,000 to 1,500,000, and
- the transaction reporting component has been segregated to distinguish between entities who earn greater or less than $15bn (see below table)