Practitioners need to take care when choosing a regtech program, the head of the country’s trade intelligence agency has warned.
AUSTRAC CEO Brendan Thomas offered sage advice to regtech companies developing and selling technology to solicitors and other businesses at the #ACCELERATERegTechGlobal conference early this month in Sydney, where they had gathered to learn about AML/CTF compliance.
Brendan highlighted issues for solicitors considering programs to help them comply with the Anti-Money Laundering and Counter-terrorism Financing Amendment Act 2024 (Cth).
He said AUSTRAC wanted to ensure new businesses chose a program appropriate to their level and type of risk.
“Some of the compliance issues we’re seeing involve the use of regtech; for instance when businesses set up a system that is not appropriately tuned into the specific risks or types of suspicious behaviour we expect to see in that business model,” he said.
“Some reporting entities might invest in a great system and improve their technology but they don’t bother changing management practices or implementing proper oversight of those technologies; for example, embedding oversight in areas where human discretion or human fallibility might come into play.”
Brendan said businesses could outsource their responsibilities but they could not outsource legal liability.
“So while your products are a great way to support businesses to meet their reporting obligations, a regtech solution doesn’t by itself mean a business is compliant or managing its AML risks properly,” he said.
“I’d advise you to be very clear with your clients, that tech systems are only ever part of a solution; management responsibility, board oversight, and understanding and responding appropriately to risk is what we are looking for.”
Brendan said the key message for reporting entities was that regulatory technology should not be deployed to tick a compliance box.
“The rules aren’t finalised yet and the guidance isn’t out so it’s impossible to design a solution that fully meets tranche 2 obligations at this stage,” he said.
QLS has recently updated its AML/CTF hub which practitioners can access here.
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