The Jade ThirdEye team recently hosted a Senior Leaders Roundtable Lunch in Sydney with an exceptional panel including Aub Chapman - Aub Chapman Consulting and Jeremy Moller - Norton Rose Fulbright. The event saw a full turnout, with a diverse group of senior leaders igniting engaging and thought-provoking discussions.
The roundtable was held on the day that the Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2024 was introduced in the Australian parliament. The bill covers the much-awaited addition of “Tranche 2 entities”. It also covers changes that will impact existing reporting entities directly or indirectly with the limited number of knowledgeable AML professionals being spread more thinly across the extra estimated 80,000 new reporting entities.
Whilst the discussions were wide ranging, five of the key themes discussed at the roundtable were:
It’s clear that an AML program needs to be compliant, especially as we have seen penalties for non-compliance. An AML program needs to be efficient to make the most of limited resources. But an AML program also needs to be effective, to detect financial crimes and submit them to AUSTRAC. People who focus on effectiveness are usually compliant, but focussing on compliance doesn’t usually guarantee effectiveness. There is a balance to be found that ensures your program is compliant, efficient and effective.
Keeping up to date is hard. There is so much change occurring as regulations change, criminals evolve their methods and internal products are released. There is so much to do to keep the wheels turning, that people often don’t make the time to evolve their AML program to keep up to date with change.
Reporting entities should conduct more frequent reviews of their policies, procedures and controls, continuously analysing them for compliance, efficiency and effectiveness.
Despite best efforts, there’s only so much we can accomplish within the limitations of a 24-hour day. Leveraging technology is essential to improve efficiency, but it’s equally important to have skilled people who understand the technology and ensure it functions as intended. The skilled people are the ones that will modify their technology to detect the activity that is most likely to be reportable to AUSTRAC and reduce the noise of false positives. The technology provides outputs that people need to review, so people should be spending their time on the most important things. In the context of effectiveness this means investigating transaction monitoring alerts to decide whether they should be reported to AUSTRAC.
The impending addition of Tranche 2 reporting entities will spread the skills even more thinly making technology that is easy to understand and use, is agile so that it can be modified promptly and is well supported ever more important.
Criminals operate across many reporting entities, but each reporting entity operates in isolation. Privacy and tipping off concerns keep reporting entities from passing information between them. But generic information can be passed, for example rules that successfully detect financial crimes and effective processes. Jade ThirdEye is in a position to help reporting entities based on our experience with other reporting entities in similar sectors and we try to make sure that our clients can connect with each other. This roundtable, user groups and other events that connect people are vital in this exchange of information.
AML compliance can be seen as a cost that should be minimised. But equally the AML team can be seen in the role of revenue preservation. They protect the company against compliance failures resulting in fines and/or reputational damage, they can detect fraud and reduce the consequential loss and they can enhance the reputation of the company for looking after their customers. By safeguarding against these risks, they are also protecting shareholders and ensuring long-term value.
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