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Anti-Money Laundering Summit 2014 11 September 2014 10.0010.30 1 Tranche 2: The Service Provider Perspective Dr Michael Fraser CA Reporting Leader Chartered Accountants Australia and New Zealand

Michael Fraser, Chartered Accountants Australia & NZ - Examining privacy concerns for service providers (i.e. accountants) under the potential second tranche of AML legislation

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Michael Fraser delivered the presentation at the 2014 Anti-Money Laundering Summit. The 2014 Anti-Money Laundering Summit discussed the current AG review into AML and the impending regulatory changes. For more information about the event, please visit: http://bit.ly/AMLSummit14

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Page 1: Michael Fraser, Chartered Accountants Australia & NZ - Examining privacy concerns for service providers (i.e. accountants) under the potential second tranche of AML legislation

Anti-Money Laundering Summit 2014

11 September 2014

10.00—10.301

Tranche 2:

The Service Provider Perspective

Dr Michael Fraser CA

Reporting Leader

Chartered Accountants Australia and New Zealand

Page 2: Michael Fraser, Chartered Accountants Australia & NZ - Examining privacy concerns for service providers (i.e. accountants) under the potential second tranche of AML legislation

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Privacy is not something that I'm merely entitled to, it's an absolute

prerequisite.

• Marlon Brando

Page 3: Michael Fraser, Chartered Accountants Australia & NZ - Examining privacy concerns for service providers (i.e. accountants) under the potential second tranche of AML legislation

Agenda

• Setting the scene

• Risk Based CDD – effective?

• Suspicious Matter Reporting

• Privacy: The ethical debate.

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Page 4: Michael Fraser, Chartered Accountants Australia & NZ - Examining privacy concerns for service providers (i.e. accountants) under the potential second tranche of AML legislation

Risk Based CDD

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Pair customer & risk Further thought needed?

Reduce Costs Subjective

Lower Compliance Burden Success relies on assessor

Deep dive on high risks More guidance needed?

Page 5: Michael Fraser, Chartered Accountants Australia & NZ - Examining privacy concerns for service providers (i.e. accountants) under the potential second tranche of AML legislation

Suspicious Matter Reporting

• Relevant matter and reasonable grounds

• Subjective – lead to confusion?

• Robust processes for SMR

• Training, peer review etc.

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Page 6: Michael Fraser, Chartered Accountants Australia & NZ - Examining privacy concerns for service providers (i.e. accountants) under the potential second tranche of AML legislation

Privacy vs Law Enforcement

• An area of high concern

• $10,000 threshold: Inflation?

• Document retention period too long?

• Digital identify/verify less invasive

• Access to other bodies

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Page 7: Michael Fraser, Chartered Accountants Australia & NZ - Examining privacy concerns for service providers (i.e. accountants) under the potential second tranche of AML legislation

Application to SMEs

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Privacy Act

AML/CTF Act

Page 8: Michael Fraser, Chartered Accountants Australia & NZ - Examining privacy concerns for service providers (i.e. accountants) under the potential second tranche of AML legislation

Secrecy and access

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Prohibiting disclosure of information

Allowing sharing of information

Page 9: Michael Fraser, Chartered Accountants Australia & NZ - Examining privacy concerns for service providers (i.e. accountants) under the potential second tranche of AML legislation

Privacy Principles

APP Summary of requirement

1—2: Management and policies Open and transparent privacy policy

3—5: CollectionBy fair means and individual advised as to its

purpose

6—8: Use and disclosureUsed for purposes collected and disclosed

with individuals consent or if law requires

9: Unique identifiers Can only be assigned to individuals in limited

circumstances

10: Accuracy Information is up-to-date and complete

11: Storage and securitySafeguards in place to protect information

from misuse

12—13: Access and alterationProvide access to individual and alter those

records if requested

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Page 10: Michael Fraser, Chartered Accountants Australia & NZ - Examining privacy concerns for service providers (i.e. accountants) under the potential second tranche of AML legislation

Code of Ethics

• APES 110, Code of Ethics for Professional Accountants – Section 140: Confidentiality

• Must not disclose confidential information unless: • authorised by the client; or

• legal or professional right or duty to disclose (but strongly advised to obtain legal advice prior)

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Page 11: Michael Fraser, Chartered Accountants Australia & NZ - Examining privacy concerns for service providers (i.e. accountants) under the potential second tranche of AML legislation

Privacy: Safeguards

Collection

Evaluation

Retention

Destruction

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Page 12: Michael Fraser, Chartered Accountants Australia & NZ - Examining privacy concerns for service providers (i.e. accountants) under the potential second tranche of AML legislation

The international experience

• Cost v benefit

• Effective engagement?

• Social duty v business benefit

• Level playing field?

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Page 13: Michael Fraser, Chartered Accountants Australia & NZ - Examining privacy concerns for service providers (i.e. accountants) under the potential second tranche of AML legislation

Thank you

Chartered Accountants Australia and New Zealand is a trading name for the

Institute of Chartered Accountants in Australia (ABN 50 084 642 571) and the

New Zealand Institute of Chartered Accountants – see

charteredaccountantsanz.com for further information.

Page 14: Michael Fraser, Chartered Accountants Australia & NZ - Examining privacy concerns for service providers (i.e. accountants) under the potential second tranche of AML legislation

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“If you tell the truth, you don't have to remember anything.”

― Mark Twain