Anti-money laundering law: brokers escape focus, but…
Brokers who arrange premium funding have been assured by the financial regulator they won’t face the same anti-money laundering standards as the funding companies.
But an industry advocate says brokers may still incur extra costs and paperwork organising premium funding for their clients.
The Australian Transaction Reports and Analysis Centre (Austrac) released clarification late last week of the controversial section 54 of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006.
It confirmed that brokers arranging premium funding on behalf of their clients will not be directly caught by the new legislation and do not have to register with the regulator.
The Act imposes strict due diligence standards on premium funding providers.
The estimated compliance cost to the industry is more than $40 million, according to Pacific Premium Funding Chairman Grant Burley, who has been leading the sector’s negotiations with Austrac.
He says brokers may still incur extra administration costs from collecting data and in some cases assisting providers with verification.
“To the extent intermediaries collect and gather information for premium funders and premium funders do not communicate directly with customers, it is likely premium funders will require insurance intermediaries to gather information on their behalf so they can verify the honest intentions of those clients,” he said.
NIBA CEO Noel Pettersen welcomed the decision. “As a result insurance brokers arranging premium funding have no direct obligations under [the Act] though premium funders may, for practical reasons, need brokers’ assistance.”
But an industry advocate says brokers may still incur extra costs and paperwork organising premium funding for their clients.
The Australian Transaction Reports and Analysis Centre (Austrac) released clarification late last week of the controversial section 54 of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006.
It confirmed that brokers arranging premium funding on behalf of their clients will not be directly caught by the new legislation and do not have to register with the regulator.
The Act imposes strict due diligence standards on premium funding providers.
The estimated compliance cost to the industry is more than $40 million, according to Pacific Premium Funding Chairman Grant Burley, who has been leading the sector’s negotiations with Austrac.
He says brokers may still incur extra administration costs from collecting data and in some cases assisting providers with verification.
“To the extent intermediaries collect and gather information for premium funders and premium funders do not communicate directly with customers, it is likely premium funders will require insurance intermediaries to gather information on their behalf so they can verify the honest intentions of those clients,” he said.
NIBA CEO Noel Pettersen welcomed the decision. “As a result insurance brokers arranging premium funding have no direct obligations under [the Act] though premium funders may, for practical reasons, need brokers’ assistance.”