Australian Financial Services Regulatory Update – June 2022 | Jones Day
This edition of the Update covers:
- Recent legal and regulatory developments, including the release of regulatory guidance on crypto asset-related investment products, the imposition of additional licence conditions on the ASX following the market outage, ASIC’s report on the cyber resilience of financial markets firms, the adoption of Magnitsky-style targeted sanctions in Australia and ASIC’s surveillance of investment switching by super fund executives;
- Recent financial services litigation, including the imposition of a $30 million penalty on the Mayfair 101 Group for misleading investors through its advertising, a $20 million penalty on Colonial First State Investments Limited for misleading superannuation members through a communications campaign, the agreement reached between ASIC and Westpac on six regulatory matters and the commencement of proceedings by AUSTRAC against Crown Melbourne and Crown Perth; and
- Other regulatory enforcement actions, including a $110,250 infringement notice issued by the ASIC Markets Disciplinary Panel to BGC Partners (Australia) Pty Ltd, an investment broker, for noncompliance with the ASIC Market Integrity Rules (Futures Markets) 2017.
KEY LEGAL AND REGULATORY DEVELOPMENTS
ASIC Releases Guidance on Crypto Asset-Related Investment Products
On 29 October 2021, the Australian Securities and Investments Commission (“ASIC”) released guidance for product issuers and market operators on how they can meet their regulatory obligations in relation to crypto asset exchange-traded products (“ETPs”) and other investment products. The guidance covers product admission and monitoring standards, custody of the assets, pricing methodologies and risk management. Moving forward, responsible entities that intend to hold underlying assets that comprise of crypto assets will need to hold an authorisation in relation to crypto assets in order to hold those assets directly or indirectly. ASIC has also introduced a new ‘crypto asset’ category in the Australian Financial Services (“AFS”) licence application for responsible entities. ASIC’s guidance can be found here.
The final report of the Senate Select Committee on Australia as a Technology and Financial Centre was also released in October 2021, and included recommendations on the regulation of digital assets. As part of the government response to that report, on 21 March 2022, Treasury released a consultation paper, Crypto asset secondary service providers: Licensing and custody requirements. The consultation paper seeks feedback on proposals and options to support minimum standards of conduct by crypto asset secondary service providers and safeguards for consumers. Deadline for submissions closed on 27 May 2022.
ASIC Imposes Additional Licence Conditions on the ASX Following Market Outage
On 24 November 2021, ASIC announced it had concluded its investigation of the November 2020 market outage at the Australian Securities Exchange (“ASX”) and had determined to impose additional licence conditions on three licences held within the ASX Group. The licence conditions are directed at mitigating risks for future upgrades, with specific emphasis on the oversight of the CHESS Replacement Program, due to go live in April 2023. ASIC’s media release can be found here.
On the same day, ASIC also released Report 708 ASIC’s expectations for industry, which examines the broader context behind the market outage and the subsequent inability or reluctance to maintain trading through other venues. The report outlines ASIC’s expectations of market operators and participants, aimed at ensuring future continuity of operations and trading, especially in the event of a future incident. ASIC’s Report 708 can be found here.
ASIC Reports on Cyber Resilience Assessments of Financial Markets Firms
On 6 December 2021, ASIC released Report 716: Cyber resilience of firms in Australia’s financial markets: 2020–21, which provides an update on organisations’ cyber resilience in the two years since the publication of Report 651: Cyber resilience of firms in Australia’s financial markets in November 2018-19. ASIC’s findings in Report 716 indicate that while there has been a small but steady improvement in the cyber resilience of firms operating in Australia’s financial markets (in particular, in small and medium-sized enterprises), the increase of 1.4% falls far short of the 14.9% improvement targeted for the period. ASIC also found that the confidence of larger firms in their own cyber resilience has fallen slightly because of increased complexity in their business operating models and heavy reliance on supply chain partners. ASIC’s Report 716 can be found here.
ACSC and ASIC Urge Organisations to Urgently Adopt an Enhanced Cyber Security Position
On 23 February 2022, the Australian Cyber Security Centre (“ACSC”) issued an alert to all Australian organisations encouraging them urgently to adopt an enhanced cyber security position and set out a list of priority actions that should be taken to defend against malicious cyber activity. In response to the ACSC’s alert, ASIC issued a media release to all regulated entities reiterating its expectations that all boards, senior management, licensees and other regulated entities pay heightened attention to their entity’s exposure to the current cyber security environment. ASIC emphasised that regulated entities should be reviewing and enhancing detection, mitigation and response measures. The ACSC’s alert can be found here. ASIC’s media release can be found here.
Anti-Money Laundering and Sanctions
AUSTRAC Statement 2021: De-Banking
On 29 October 2021, AUSTRAC released an update on the state of de-banking in Australia, discouraging indiscriminate and widespread closure of bank accounts across entire financial services sectors and noting that higher-risk businesses (including remittance services, digital currency exchanges, nonprofits and fintech) are disproportionately facing bank account closures. AUSTRAC emphasised the importance of these services to the Australian economy and commented that AUSTRAC expects banks to take a case-by-case approach to managing money laundering/terrorism financing risk. AUSTRAC considers that traditional institutions should be able to manage high-risk customers with appropriate systems and processes in place without having to resort to indiscriminate account closures. AUSTRAC’s media release is available here.
The final report of the Senate Select Committee on Australia as a Technology and Financial Centre also included recommendations on de-banking. As part of the government’s response to that report, on 21 March 2022, Treasury released Terms of Reference for advice from the Council of Financial Regulators (“CFR”) on potential policy responses to address the issue of de-banking for financial technology firms, digital currency exchanges and remittance providers. CFR’s advice on policy options is due by the end of June 2022.
Australia Enacts Magnitsky-Style Laws
On 8 December 2021, the Autonomous Sanctions Amendment (Magnitsky-style and Other Thematic Sanctions) Act 2021 (Cth) (“Amendment Act”) commenced after being passed by both Houses of Parliament in late November 2021. The Amendment Act operates to expand Australia’s existing country-specific autonomous sanctions regime to allow sanctions targeted at broad thematic categories of conduct, including human rights violations, malicious cyber activity and serious corruption. Targeted sanctions are considered to be a more proportionate response to address unacceptable behaviour as compared to country or sector-wide sanctions, which often impact innocent parties. The enactment of Magnitsky-style laws in Australia and in other major economies will increase the global sanctions risk generally for Australian companies, and in particular financial institutions. Australia’s enactment of Magnitsky-style laws in the form of the Amendment Act has been discussed in detail in a previous Jones Day Commentary which can be found here.
Senate Standing Economic Legislation Committee Reports on FAR
On 15 February 2022, the Senate Standing Economics Legislation Committee (“Committee”) issued their final report following an inquiry into a number of legislative bills, including the Financial Accountability Bill 2021 (“FAR Bill”), which will introduce the Financial Accountability Regime (“FAR”). The Committee noted the broad support for the FAR as well as its intention to improve the operating culture of regulated entities and increase transparency, both in relation to prudential and conduct-related matters, and ultimately recommended that the FAR Bill be passed. The Committee’s report on the FAR Bill can be found here. The FAR has been discussed in detail in a previous Jones Day Commentary which can be found here.
The FAR Bill lapsed when the election was called. The Minister for Financial Services in the new government has indicated that the FAR Bill is a priority for reintroduction; however, some changes are under consideration.
ASIC Consults on Extension of Its CFD Product Intervention Order
On 18 October 2021, ASIC released Consultation Paper 348: Extension of the CFD Product Intervention Order (“CP 348”) seeking feedback on a proposal to extend its product intervention order imposing conditions on the issue and distribution of contracts for difference (“CFDs”) to retail clients until it is revoked or sunsets on 1 April 2031. The current product intervention order will expire on 23 May 2022, unless it is extended with the approval of the Minister. The consultation period closed on 29 November 2021. CP 348 can be found here.
ASIC Releases Guidance and Examples on Limited Advice
On 1 December 2021, ASIC released INFO 267: Tips for giving limited advice (“INFO 267”) and an example of an annotated statement of advice to assist financial advisers, advice licensees and other providers of personal limited advice in meeting their financial obligations, best interest duty and ethics obligations. INFO 267 provides further guidance as to best practices in these areas, including in areas of advice scoping, record-keeping and avenues for client expectation management. INFO 267 can be found here.
ASIC Consults on Proposed Intervention Orders for Short-Term Credit and Continuing Credit Contracts
On 9 December 2021, ASIC released Consultation Paper 335: Product Intervention Orders: Short Term Credit and Continuing Credit Contracts (“CP 335”) seeking feedback on the proposed use of product intervention powers to address high-cost predatory lending in the short-term credit and continuing credit contract industries. CP 355 outlines ASIC’s proposal to make product intervention orders which prohibit these products from being provided in circumstances which involve unreasonably high costs, in excess of the cost caps in the relevant exemptions in s 6(1) and s 6(5) of the National Credit Code. The consultation period closed on 21 January 2022. CP 335 can be found here.
APRA Issues Climate Risk Self-Assessment Survey
On 2 March 2022, APRA issued a cross-industry letter advising on the purpose and timing of a voluntary climate risk self-assessment survey that will be undertaken with medium-to-large APRA-regulated entities. The survey assesses the alignment between current entity approaches to considering the financial risks of climate change, as well as the expectations set out in APRA Prudential Practice Guide 229: Climate Change Financial Risks and the Taskforce on Climate-Related Financial Disclosure, or TCFD. APRA’s letter can be found here.
ASIC Reports on Its Surveillance of Investment Switching by Super Fund Executives
On 17 October 2021, ASIC released the findings of its surveillance of personal investment switching by directors and senior executives of superannuation trustees. ASIC looked at a sample of 23 trustees (including trustees of industry and retail funds), and focused on conduct during the time of increased market volatility arising from the COVID-19 pandemic. ASIC reports that its surveillance revealed conduct that fell below ASIC’s expectations, including (i) failure to identify investment switching as a risk; (ii) disparity in board-level engagement on the issue of conflicted investment switching; (iii) lack of preventative controls, such as trade pre-approvals or switching blackout periods; (iv) inadequate oversight of investment switching; and (v) lack of oversight of related persons (such as a spouse) of directors and executives.
On 6 April 2022, ASIC confirmed that based on the evidence obtained during its surveillance, it was satisfied that no further action was warranted against any individuals in relation to the identified transactions. ASIC has written to the 23 trustees who were reviewed, outlining its concerns and requesting that they take steps to improve existing policies and procedures. ASIC also states that it will continue to work with APRA on ensuring that trustees have appropriate policies and procedures in place to manage possible conflicts of interest. ASIC’s media release is available here.
APRA Releases 2021 MySuper and Choice Heatmap
On 16 December 2021, APRA released its superannuation heatmaps for 2021 for MySuper and choice products. The heatmaps provide information on the returns, fees and costs, and sustainability of default investment options—the MySuper products—and now also information on the returns, fees and sustainability of multisector choice investment options. The MySuper Heatmap incorporates the first annual Your Future Your Super performance test in August 2021, consisting of an assessment of investment performance and administration fees. Thirteen MySuper products failed the first annual performance test (comprising 1 million member accounts and $56 billion in members’ benefits). Three of the 13 trustees have since exited the market and transferred their members and assets to other funds. At least two more have announced their intent to do so, and APRA has imposed licence conditions on two others to require them to seek a new home for their members. APRA has indicated that trustees can expect a relentless focus on holding trustees to account for what they are delivering to members. The 2021 superannuation heatmaps can be found here. APRA Member Margaret Cole’s remarks on the heatmaps can be found here.
APRA Releases Annual Report on Counter-Cyclical Capital Buffer
On 17 December 2021, ASIC released its annual report on the counter-cyclical capital buffer (“CCyB”), confirming that it maintained the CCyB at 0% of risk-weighted assets (“RWA”) in 2021. The CCyB is an additional amount of capital that APRA can require authorised deposit-taking institutions (“ADIs”) to hold or release at certain points in the economic and financial cycle. It is one of the tools in APRA’s macroprudential policy framework to reinforce bank resilience, which can be relaxed during stress to provide banks with additional flexibility to maintain their lending. The CCyB has remained at 0% since its introduction in 2016, but will rise to 1% of RWA from 1 January 2023.
In the annual report, APRA confirms that it views financial stress in the banking sector as low. Nevertheless, APRA is becoming increasingly concerned with rising housing prices, credit growth and increasing high-level, debt-to-income mortgage lending. APRA’s annual report on the CCyB is available here.
ASIC Consults on Licensing Requirements for Corporate Collective Investment Vehicles
On 17 March 2022, ASIC released Consultation Paper 360: Corporate collective investment vehicles: Preparing for the commencement of the new regime (“CP 360”) seeking industry feedback on its proposed licensing requirements for corporate collective investment vehicles (“CCIVs”), which are a new type of company limited by shares. CCIVs share similar characteristics to some other internationally recognised investment structures and are designed to increase the international competitiveness of Australia’s managed funds industry. CP 360 sets out ASIC’s proposal on how it will administer AFS licence obligations that will apply to persons operating a CCIV and/or dealing in CCIV securities. CP 360 can be found here.
Annual Update on APRA and ASIC’s Engagement
In December 2021, APRA and ASIC released their annual engagement update. In 2021, APRA and ASIC worked closely on a number of matters of mutual interest in relation to cross-industry and industry-specific issues in 2021, including:
- ASIC and APRA began to develop the joint administrative framework for implementing the FAR. The FAR focusses on improving standards of governance and risk management in the banking, insurance and superannuation sectors, and increasing transparency and accountability across these sectors. APRA and ASIC are working together to develop the framework for jointly administrating the FAR to enable collaboration and coordination, and to minimise duplication, in areas of joint regulatory interest. The FAR was discussed in more detail in a previous Jones Day Commentary which can be found here; and
- ASIC and APRA have undertaken strategic work to strengthen cooperation on enforcement matters. An example of this cooperation was the agencies’ engagement during their respective investigations in relation to AMP superannuation funds. The court enforceable undertaking accepted by APRA in November 2021 was designed to address regulatory concerns of both APRA and ASIC with AMP Super.
ASIC and APRA’s annual engagement update can be found here.
APRA’s Policy and Supervision Priorities for 2022
On 1 February 2022, APRA released its policy and supervision priorities for the next 12 to 18 months. Consistent with APRA’s 2021-2025 Corporate Plan, key priorities are forward-looking and centred around APRA’s two strategic themes—”protected today” and “prepared for tomorrow”, which were discussed in detail in a previous Jones Day Commentary found here. APRA’s key priorities feature a heightened emphasis on new and emerging financial risks, practices and business models that are testing traditional regulatory boundaries and supervisory practices. In response to these changes, which include the rapid digital evolution of the financial system, APRA will commence a major multiyear initiative to modernise its prudential architecture.
In the area of supervision, APRA’s top priorities include (i) rectifying substandard industry practices in superannuation and eradicating unacceptable product performance; (ii) cyber risk preparedness and responsiveness across all industries that APRA regulates; (iii) a continued focus on risk culture, including rolling out a risk culture survey to benchmark perceived risk behaviours and the effectiveness of risk structures within entities; and (iv) upgrading contingency and continuity frameworks, particularly in the banking sector. APRA’s policy and supervision priorities can be found here.
ASIC’s Corporate Governance Priorities for 2022
On 3 March 2022, ASIC Chair Joseph Longo presented to the Australian Institute of Company Directors Australian Governance Summit, outlining the three corporate governance priorities of ASIC for 2022, namely (i) governance failures relating to nonfinancial risk that result in significant harm to consumers and investors, including failures by directors to identify and manage the risk attaching to a company’s business activities, failures to ensure that appropriate resources are allocated to deal with risks and failures to respond to indicators that risks are not being properly managed; (ii) cyber governance and resilience failures, as demonstrated by the proceedings brought by ASIC against RI Advice Group Pty Ltd (which have now settled); and (iii) egregious governance failures or misconduct resulting in corporate collapse, which includes instances where company money, or money belonging to company creditors, is misapplied or misappropriated. ASIC Chair Joseph Longo’s speech can be found here.
RECENT FINANCIAL SERVICES LITIGATION
Colonial First State to Pay $20 Million Penalty for Misleading Superannuation Members
On 19 October 2021, Murphy J of the Federal Court of Australia ordered Colonial First State Investments Limited (“Colonial”), as trustee for the Colonial First State FirstChoice Superannuation Trust, to pay a penalty of $20 million for designing and implementing a communications campaign in which it made false or misleading representations about members’ entitlements in relation to their superannuation investments. The Federal Court found that Colonial (i) made false or misleading representations in contravention of ss 12DB(1)(h)-(i) of the Australian Securities and Investments Commission Act 2001 (Cth) (“ASIC Act”); (ii) engaged in conduct that was misleading or deceptive or likely to mislead or deceive in contravention of s 1041H(1) of the Corporations Act 2001 (Cth) (“Corporations Act”); (iii) provided general advice to members and failed to give appropriate warnings, in contravention of s 949A of the Corporations Act; and (iv) failed to comply with financial services law and to provide the financial services covered by its AFS licence efficiently, honestly and fairly in contravention of ss 912A(1)(a)-(c) of the Corporations Act. ASIC and Colonial filed a Statement of Agreed Facts and Admissions in which Colonial admitted liability for the abovementioned contraventions. The Federal Court accepted the parties’ joint submission that the appropriate penalty for the admitted contraventions was $20 million. The Federal Court’s judgment can be found here.
ASIC Commences Proceedings Against ANZ Over ‘Introducer Program’ Home Loan Referrals
On 26 November 2021, ASIC commenced proceedings in the Federal Court of Australia against ANZ for breaches of the National Consumer Credit Protection Act 2009 (Cth) (“NCCP Act”). ASIC alleges that between June 2016 and March 2018, ANZ accepted customer information and documents from individuals who were engaging in credit activity without an Australian Credit Licence (“ACL”). As a result, ASIC alleges that (i) by engaging in a credit activity, in the course of which it conducted business with referrers who did not hold an ACL, ANZ contravened s 31(1) of the NCCP Act in respect of 79 loan applications referred to them; (ii) by failing to take reasonable steps to ensure that its representatives complied with s 31(1) of the NCCP Act, ANZ contravened s 47(1)(e) of the NCCP Act; and (iii) by repeatedly contravening s 31(1) of the NCCP Act, and failing to take steps to ensure its representatives complied with that provision, ANZ failed to do all things necessary to ensure that the credit activities authorised by its ACL were engaged in efficiently, honestly and fairly, in contravention of s 47(1)(a) of the NCCP Act. In an ASX media release on the same day, ANZ announced it has cooperated with ASIC during its investigation and has established a customer remediation program as well as continuously improving its home loan processes and controls.
ASIC and Westpac Reach Agreement on Six Regulatory Matters
On 30 November 2021, ASIC and Westpac announced they had reached agreement to resolve six separate longstanding matters through agreed civil penalty proceedings filed in the Federal Court of Australia.
The matters follow regulatory investigations conducted by ASIC, many instigated following the issues being self-reported by Westpac, including some which were raised during the Financial Services Royal Commission. Westpac admitted the allegations in each of the proceedings and will make remediation payments to customers totalling approximately $80 million. ASIC and Westpac prepared Statements of Agreed Facts and announced that they would jointly submit agreed proposed penalties for each of the six proceedings, totalling $113 million. The six proceedings are as follows:
- Debt sales: Investigation into the provision of incorrect interest rate information provided by Westpac to debt purchasers.
- Deceased estates: Investigation into the charging of advice related fees to deceased customers.
- General insurance: Investigation into the incorrect issuing of duplicate general insurance policies (home and contents and landlord insurance policies) without a customer’s consent.
- Contribution fees: Investigation into inadequate disclosure of advisor fees received for certain super and investment products.
- Deregistered companies: Investigation into the process for identification and management of deregistered customers, and the subsequent rectification.
- Insurance in super: Investigation into insurance in superannuation products, where customers were charged insurance premiums that included banned commission payments.
The decision of the Federal Court was handed down on 22 April 2022, and Westpac was ordered to pay the agreed amount of $113 million in penalties.
ASIC and ANZ Reach Agreement on Investigation Into ANZ’s ‘Breakfree’ Package
On 9 December 2021, ASIC and ANZ announced they had reached an agreement to resolve an investigation into ANZ’s failure to provide certain benefits it had agreed to give customers with offset transaction accounts or a ‘Breakfree’ package through agreed civil penalty proceedings. ANZ has admitted contraventions of the ASIC Act and Corporations Act and is undertaking customer remediation programs. ASIC and ANZ have filed a Statement of Agreed Facts and joint submissions on an agreed proposed penalty of $25 million.
ASIC Commences Proceedings Against OnePath for Fees for No Service
On 15 December 2021, ASIC commenced proceedings in the Federal Court of Australia against OnePath Custodians Pty Ltd (“OnePath”), the trustee of the superannuation fund OnePath Master Trust, for allegedly charging fees for no service and making false or misleading representations to fund members. ASIC alleges that from December 2015, OnePath incorrectly charged more than $4 million in fees to more than 18,000 fund members when it was not entitled to do so. OnePath was a subsidiary of ANZ Limited until 31 January 2020 when it was sold to IOOF Holdings Ltd, now known as Insignia Financial Limited. ASIC’s media release is available here.
Mayfair 101 Group to Pay $30 Million Penalty for Misleading Advertising
On 22 December 2021, Anderson J of the Federal Court of Australia ordered Mayfair Wealth Partners Pty Ltd, Online Investments Pty Ltd (trading as Mayfair 101), M101 Nominees Pty Ltd and M101 Holdings Pty Ltd (together, “Mayfair 101 Group”) to pay a combined penalty of $30 million for misleading advertising. The Federal Court found that the Mayfair 101 Group deliberately misled investors through its advertising into investing in its M+ and M Core Fixed Income Notes (“Notes”) under the belief that they would be of low risk when in fact the Notes were highly speculative and carried very substantial risk. In addition to the imposition of civil penalties, the Federal Court also permanently restrained the Mayfair 101 Group from using certain words and phrases (such as ‘term deposit’ and ‘certainty’) in any future advertising. The Federal Court’s judgment can be found here.
Statewide to Pay $4 Million Penalty for Misleading Correspondence and Failure to Report Breach
On 17 January 2022, the Federal Court of Australia handed down the reasons for its December 2021 decision in which it ordered Statewide Superannuation Pty Ltd (“Statewide”) to pay a penalty of $3.5 million for misleading correspondence sent to members, and $500,000 for failing to report the issue to ASIC. On the basis of an Agreed Statement of Facts, the Federal Court made declarations that (i) Statewide issued annual statements to members containing misleading information regarding members’ insurance coverage in contravention of s 1041J of the ASIC Act and ss 12DA(1) and 12DB(1) of the ASIC Act and, through its conduct, breached its general obligations as an AFS licensee under ss 912A(1)(a) and (c) of the Corporations Act; and (ii) by failing to lodge a written report with ASIC relating to the breaches of its general obligations as an AFS licensee within 10 days of becoming aware of such breaches, Statewide contravened ss 912D(1B) and 912D(3) of the Corporations Act. This is the first civil case in which the Federal Court has imposed a civil penalty on an AFS licensee for failing to report breaches to ASIC since the new penalty powers were introduced in 2019. The Federal Court’s judgment can be found here.
RI Advice to Pay $6 Million Penalty for the Conduct of Its Authorised Representative
On 3 February 2022, the Federal Court of Australia ordered RI Advice Group Pty Ltd (“RI Advice”) to pay a $6 million penalty for failing to take reasonable steps to ensure that its authorised representative provided appropriate financial advice, acted in his clients’ best interests and put clients’ interests ahead of his own, in contravention of s 961L of the Corporations Act. The Federal Court also ordered the authorised representative to pay a penalty of $80,000 for his conduct, which involved inappropriately advising clients to invest, and stay invested in complex structured financial products. The Federal Court’s judgment can be found here.
Aware Financial Services to Pay $20 Million Penalty for Charging Fees for No Service
On 17 February 2022, the Federal Court of Australia ordered Aware Financial Services Australia Limited (formerly State Super Financial Services Australia Limited) (“Aware FS”) to pay a $20 million penalty for charging more than 25,000 customers a total of $50 million in fees for financial services it did not provide, in contravention s 12DI(3) of the ASIC Act. On the basis of an Agreed Statement of Facts and Admissions, the Federal Court declared that by charging fees for no service and failing to have internal procedures, measures and controls in place to monitor compliance, Aware FS also breached its obligations as an AFS licensee to act efficiently, honestly and fairly, and to comply with financial services laws in contravention of ss 912A(1)(a) and (c) of the Corporations Act. After self-reporting the conduct to ASIC, Aware FS implemented a remediation program and admitted liability. ASIC and Aware FS jointly submitted to the Federal Court that a penalty of $20 million was appropriate. The Federal Court’s judgment can be found here.
AUSTRAC Commences Proceedings Against Crown Melbourne and Crown Perth
On 1 March 2022, AUSTRAC commenced proceedings in the Federal Court of Australia against Crown Melbourne Ltd (“Crown Melbourne”) and Burswood Nominees Ltd (“Crown Perth”). AUSTRAC alleges that Crown Melbourne and Crown Perth engaged in serious and systemic noncompliance with their obligations under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) (“AML/CTF Act”). In particular, AUSTRAC alleges that (i) Crown Melbourne and Crown Perth each contravened s 81 of the AML/CTF Act, by failing to adopt and maintain and adequate AML/CTF program, on an innumerable number of occasions on and from 1 March 2016; (ii) Crown Melbourne and Crown Perth contravened s 36 of the AML/CTF Act, by failing to conduct adequate ongoing customer due diligence. AUSTRAC is seeking declarations of contravention and pecuniary penalties. AUSTRAC has commenced the proceedings following inquiries in New South Wales, Victoria and Western Australia into various entities within the Crown Resorts Limited Group. AUSTRAC’s concise statement can be found here.
OTHER REGULATORY ENFORCEMENT ACTION
BGC Partners Pays $110,250 Infringement Notice
On 16 December 2021, the ASIC Market Disciplinary Panel (“Panel”) issued an infringement notice to BGC Partners (Australia) Pty Ltd (“BGC”), an investment broker, requiring the payment of a $110,250 penalty. The infringement notice follows findings made by the Panel that on two occasions on 22 March 2019, BGC transacted pre-negotiated business orders on the ASX 24 market without making the required enquiry through the trading platform’s message facility. The Panel noted that there had been previous compliance failures of this type by BGC Partners. As a result, the Panel found there were reasonable grounds to believe that BGC had failed to comply with Rule 3.3.1A(1) of the ASIC Market Integrity Rules (Futures Markets) 2017 as required by s 798H(1) of the Corporations Act. Compliance with the infringement notice is not an admission of guilt or liability, and BGC Partners is not taken to have contravened s 798H(1) of the Corporations Act. ASIC’s media release can be found here.