An embarrassing hiccup marred yesterday's Australian financial services companies' anti-money laundering/counter-terrorism financing (AML/CTF) deadline.
The Australian Transaction Reports and Analysis Centre (Austrac) discovered a major loophole in the AML/CTF Act 2006 caused by a drafting error.
"At this stage, an issue of unit(s) in a managed investment scheme does not fall within the AML/CTF Act," Austrac chief executive Neil Jensen said.
December 12 was D-day for 19,000 entities falling under Austrac's remit. Fund managers were the largest group after banks.
Companies had to have AML/CTF programs up and running, or be able to show that they were about to implement one.
The Investment and Financial Services Association (IFSA) has been consulting with Austrac to help its members implement the new rules.
"We're very disappointed that this has come at the 11th hour," IFSA chief executive Richard Gilbert told InvestorDaily.
"Some of our members have gone to considerable lengths to be compliant and have spent considerable sums of money and it's all been for nought. We've sought clarification on this issue and we want some expedition."
KPMG investigations and integrity risk management national leader Gary Gill said the glitch was not an excuse for the investment industry to sit on its hands and do nothing.
"It's clearly an unintended error. The intention of the legislation was always that the issue of units in managed investment schemes would be covered. Once parliament is back in the new year an amendment will be made to address the issue," Gill said.
"It's been hard work for the industry because it hasn't previously been covered by AML legislation, but it's not going to be a wasted effort."
