Regulator has acknowledged FBAA concerns that reforms could sweep in commercial asset finance brokers, but guidance still pending
The Australian Transaction Reports and Analysis Centre (AUSTRAC) has responded to enquiries from the Finance Brokers Association of Australia (FBAA), acknowledging that finance brokers and intermediaries may have been unintentionally captured by sweeping new Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) reforms that took effect across Australia on July 1.
FBAA chief executive Leo Gagic contacted AUSTRAC after raising concerns that certain finance broking activities, including commercial asset finance broking, could fall within the definition of "debt financing" as a designated service under the Act.
The move symbolised a direct, hands-on approach to advocacy that Gagic outlined to MPA barely a month into the role, and builds on the FBAA's initial request for urgent clarity from AUSTRAC.
AUSTRAC concedes the guidance is unclear
Following high-level discussions between the association and the regulator, AUSTRAC acknowledged the validity of the FBAA's concerns, confirming that item 4 of table 6 may be worded broadly enough to potentially capture commercial asset finance broking, while conceding its current guidance does not explain the intended scope of "debt financing”.
"AUSTRAC has acknowledged our valid concerns and advised it is actively considering the issue before clarifying its position," Gagic said.
AUSTRAC advised that finance brokers do not need to begin working towards compliance until it publishes its position on the scope of "debt financing" under the Anti-Money Laundering and Counter-Terrorism Financing Rules.
"If the outcome is that finance brokering activities are within scope of the AML/CTF Act, we recognise that affected businesses will need time to work towards compliance, including establishing AML/CTF programs and training staff," the regulator said.
Gagic reinforced that message to members: "Brokers do not need to do anything now, and we will update the industry when we know more."
The reforms have brought tens of thousands of newly regulated entities into AUSTRAC's remit, according to analysis from Norton Rose Fulbright, underscoring how much weight now rests on how terms like "debt financing" are ultimately defined.
AUSTRAC has not yet set a timeline for its final position.
