iscover 
From 1 July, reforms extended the Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) Act 2006 to cover a new tranche of businesses and professional service providers, including lawyers, conveyancers, accountants and trust and company service providers.
All new entities captured by the definition could be required to enrol with the Australian Transaction Reports and Analysis Centre (AUSTRAC) and meet a raft of AML/CTF obligations, including developing an AML/CTF program, appointing a compliance officer, conducting customer due diligence and reporting suspicious matters.
The reforms have also brought a new range of "designated services" under AUSTRAC's remit, including certain professional services relating to equity or debt financing.
It is the wording of these designated services that has raised concerns for the FBAA, which says that commercial asset finance brokers could also be captured and therefore subject to the obligations.
Could asset finance brokers be caught up?
Under AUSTRAC's guidance, a business may be providing a designated service, and therefore come under AUSTRAC’s remit, if it is "assisting a person in organising, planning or executing a transaction" for equity or debt financing relating to a body corporate or legal arrangement.
The guidance states that debt financing includes "all capital and debt raising methods", with examples including “secured or unsecured bonds, bills or notes, asset financing, loans (including government loans) and debentures.”
It’s this broad definition that the FBAA has raised questions over whether commercial asset finance brokers arranging finance for a business to purchase a vehicle or piece of equipment could fall within the expanded regime.
FBAA regulatory compliance specialist David Carson said the association had sought information before the 1 July changes because of concerns over how AUSTRAC's guidance had been drafted.
"The way their guidance has been drafted would appear that commercial asset finance broking could be defined as a designated service which would bring it under AML/CTF rules," Carson said.
"We are not convinced it was ever the legislative intent to capture this activity so we remain hopeful that we can obtain clarification that it is not captured."
What does the FBAA want from AUSTRAC?
The FBAA has requested an urgent meeting with AUSTRAC to discuss the practical implications of the reforms and whether specific AML/CTF obligations could apply to brokers.
FBAA chief executive Leo Gagic said brokers should not rush into making major changes at this stage, but acknowledged there was "genuine concern" over whether the industry had been captured by the reforms.
"Our industry is keen to understand its compliance responsibilities and ensure we are appropriately preparing for any regulatory changes," Gagic said.
He said AUSTRAC needed to address the "significant uncertainty and confusion across the broker community regarding whether these changes apply to our sector, and if so, explain the extent of the obligations that may arise".
"We have contacted AUSTRAC again to seek definitive guidance on these matters, and we note that other industry associations have done so as well."
Gagic added that the FBAA remained committed to supporting Australia's AML/CTF framework and working with AUSTRAC.
"It is important for our industry to uphold best practices, for the sake of brokers and our customers."
The FBAA said it would update members once further clarification had been received.
[Related: APRA proposes shake-up of presale requirements]
Want to see more stories from trusted news sources?Make Broker Daily a preferred news source on Google.