The cost of compliance – can you afford not to comply?
Whilst the Anti-Money Laundering and Counter-Terrorism Act (AML/CFT Act) has been in force for almost two decades, compliance with this law and its rules has never been more important for the club industry. Regulator AUSTRAC has made the club industry aware that moving forward, they will have an increased focus on compliance by the industry to adhere to the AML/CTF rules.
Clubs with more than 15 electronic gaming machines must have in place a compliance program to manage the risk of their designated services which may be used for money laundering or terrorism financing activities.
It is the duty of the Board of Directors, with the assistance of senior management, to ensure that robust Risk Management procedures are in place within the organisation. AML/CTF compliance is an important part of the risk management framework of your club and cannot be dismissed.
For clubs, now is the time to assess the following:
- Have you registered with AUSTRAC as a reporting entity?
- Have you conducted a Risk Assessment (regularly updated) which demonstrates that you understand the risk posed—specific to your organisation—by customer types, service delivery and the designated services?
- Are you able to demonstrate that you have processes in place to know your employees (KYE compliance processes)?
- Does the program you have documented clearly articulate and demonstrate the above aspects as well as others relevant to Part A and Part B of the rules?
- Do the Board and Senior Management understand their obligations and has appropriate sign off to the program been obtained from the Board?
If you have answered no to any of the above or are unsure of the measures put in place by your club, it is now time to act and make sure that your AML/CTF program is fully updated to meet compliance obligations.
Failure to comply with the AML/CTF laws may result in significant civil and criminal penalties, which may include imprisonment. It can also cause irreparable damage to the reputation of your club.
The focus is on your AML/CTF compliance, however, it is also a timely reminder to ensure that other key aspects of the risk management framework are in place and being managed effectively. Two other key risks that have had recent amendments made are:
- Mandatory data breach reporting (in place since February 2018); and
- Whistleblower amendments (amendments passed in February 2019).