October 2022
We are pleased to announce that our latest feature is now available on our website titled "The Human Sins of Technology in Business." This feature is available at the special price of $5.00 + GST until the end of this year.
I can also advise that my recent article "The credit manager as a futurist" has been printed in the AICM's October edition of Credit Management in Australia. A copy of the article is attached, or you can visit the AICM's website to read the magazine at www.aicm.com.au.
Other attachments with this months newsletter includes an information note about mental health from the Australian Small Business Family Enterprise Ombudsman, plus our brochure "What's a criminal look like" a really important message in today's world. As our brochure illustrates, criminals come from all walks of life.
If we want things to stay as they are, things will have to change.
“the Prince” in Giuseppe Tomasi di Lampedusa’s novel The Leopard.
What we all want in business is a level of consistency that can be managed. Unfortunately, in the modern business world, nothing seems to be the same and change is constant. In such an environment, many businesspeople experience high levels of stress and feelings of helplessness.
The problem is therefore as follows. “What should we seek to keep the same and/or what do we need to change to maintain the viability of our business and retain a level of sanity in the strength of our own beliefs?”
The first place to start is reviewing your business’s cash resources and ability to obtain finance, if required. The fact of the matter is that a business without cash is doomed to a short existence and a lot of stress for the owners. Protecting your cash is therefore a priority.
Business finance is a double-edged sword as was discovered in the past, and will be equally so in the future. This factor is especially pertinent with interest rates on the rise. In addition, if your business extends credit, then increasingly, especially in the consumer finance area, and now also in the business world, creditors are losing all their rights.
Selling your products and services is another area for review and whether you even have to sell on credit at all should be evaluated. After all, there are other sales strategies available such as part-payments or for payment upfront. Creating the correct sales strategy under the right circumstances, even to the most high-risk customers, will be paramount.
Finding quality employees in sufficient numbers is an ever-increasing issue. Unless you are in a business with the ability to charge a price premium for your goods and services, employing people is an increasing risk as employees now seem to have more rights than employers. To overcome this problem a number of industries are using contractors, outsourcing or the increasing the use of robots.
Being aware of governments and their agencies, bureaucrats and do-gooders influences and their interference in how you operate your business, is another must. Whilst the intentions of these parties if often well meaning, their demands and actions can soon cripple a business with red tape and unviable demands. Worse still, these parties never guarantee that even if you adhere to their demands, they will buy from you.
In summary, cash resources, being aware and managing finance owed and owing, having appropriate selling strategies, employing people as appropriate, and being aware of outside influences which can ruin your business with their demands, is essential.
In order to manage the above, which are controllable factors, verses what cannot be controlled, requires a positive level of emotional and financial control by management. When achieved, management is in a stronger position to maintain the aspects of their business which have proven reliable in the past, and yet are also able to make the necessary changes to keep their business viable in the future.
It is fascinating to review the past and learn that all the business problems we have today, in particular slow-paying and fraudulent customers, are still present today.
With few exceptions, nothing much seems to have been done to counteract the behaviour of the above-mentioned customers. Why is this so?
There are several reasons including:
Today, many businesses are going to fail because of the aforementioned reasons. All of the above were the same factors that impacted on businesses negatively in the past and yet still affect us today. The question remains then:
“Why do so many of the negative issues of the past still affect us today?”
The answer of course is that we failed to learn from the past and act proactively to minimise their effect on our businesses today.
Historically, from the world of business, it was noted that about 10 percent of all customers would be completely honest, 10 percent would be dishonest, and the balance, 80 percent would only be as honest as you forced them to be.
Currently, especially in the world of consumer finance, the figures could be up to 10 percent honest, 30 per cent dishonest and 60 percent as honest as circumstances allowed them to be. In the business world, you will probably find the ratios something like 10 percent honest, 20 percent dishonest and 70 percent as honest as you force them to be.
On reviewing the above information, it is also essential to understand and manage the different types of customers and the levels of B2B debt you have with each customer type. After all, if the numbers of dishonest customers have large unpaid debts or are slow paying your invoices, this impacts on the financial sustainability of your business.
In light of the looming recession which seems to be an obvious outcome from the increasing interest rate rises, there are certain positive actions which all business can undertake. These include maintaining strong business disciplines, having available up-to-date sales solutions and contracts for different types of customers, plus creating variable sales strategies for customers with poor payment reputations and problems by processing invalid credit claims.
Knowing that a larger number of customers might have payment and financial issues moving forward, is an important factor. It is not just knowing this fact is enough, you need to be taking positive actions about minimising the effect on your business which is essential for the ongoing survival of your business.
Today, more than ever, an up-to-date and relevant trading documentation is essential. A really well prepared and professionally relevant document for each type of customer relationship is required more than ever.
This documentation fulfills two important business requirements.
First, it establishes the LEGAL trading relationship between your business and a customer. When problems occur therefore, as they often do, your documentation should help both parties resolve any problems quickly and efficiently.
Second, this documentation also reveals the ethical and professionalism character of your customer. Such a revelation in today’s business environment is worth dollars in the bank when so many businesses are struggling for sales, purchases and finance.
It makes sense therefore, to ensure your documentation is properly prepared by a lawyer well versed in contracts and debt collection. Equally important, is that this lawyer is prepared to defend their work and your business in court and not just send a junior lawyer.
Updates courtesy of www.asic.gov.au
28 September 2022
22-261MR ASIC helps insurers to respond to family violence
ASIC has granted relief to exempt insurers from providing certain notifications where doing so creates risks of family violence. The relief is outlined in the legislative instrument, ASIC Corporations (Cash Settlement Fact Sheet and Confirming Transactions) Instrument 2022/809.
Since 1 January 2022, insurers have been required to provide a Cash Settlement Fact Sheet (CSFS) and transaction confirmation to joint policyholders when they offer to settle a claim by a cash payment. The ASIC relief seeks to reduce the risk of family violence occurring as a result of insurers providing these notifications to joint policyholders.
These notifications may contain information that could place victims of family violence at risk of harm. For example, a CSFS may identify the location of the victim or provide an opportunity for the perpetrator of violence to interfere with the cash settlement.
To address these concerns, ASIC has granted relief to insurers so that they do not need to provide these notifications where they reasonably believe that providing them would pose risks of family violence.
11 October 2022
ASIC has banned Peter Geoffrey Gribble of Sydney, NSW, from controlling an entity that carries on a financial services business and performing any function as an officer of an entity carrying on a financial services business for three years.
Mr Gribble was banned after two companies of which he was a director refused or failed to give effect to determinations by the Australian Financial Complaints Authority (AFCA).
ASIC Deputy Chair Sarah Court said, ‘Directors of AFS licensees must ensure that their firms comply with AFCA determinations. This is a fundamental obligation of AFS licensees, and crucial in ensuring that Australia’s financial dispute resolution system remains efficient and effective.’
Mr Gribble was the sole director of former AFS licensee Qsmart Securities Pty Ltd (Qsmart), and a director of AFS licensee Quantum Funds Management Limited (Quantum).
17 October 2022
22-278MR ASIC places interim stop orders on Holon crypto funds
ASIC has made interim stop orders preventing Holon Investments Australia Limited (Holon) from offering or distributing three funds to retail investors because of non-compliant target market determinations (TMDs). These funds are:
Holon Bitcoin Fund ARSN 659 090 294
Holon Ethereum Fund ARSN 659 090 516, and
Holon Filecoin Fund ARSN 659 090 614 (together, the Funds).
The interim orders stop Holon from issuing interests in, giving a product disclosure statement for or providing general advice to retail clients recommending investments in the Funds. The order is valid for 21 days unless revoked earlier.
ASIC made the interim orders to protect retail investors from potentially investing in funds that may not be suitable for their financial objectives, situation or needs.
18 October 2022
Crypto scam alert: appasiccoin.org
ASIC is alerting investors about a suspicious website, appasiccoin.org, using crypto to scam Australians.
The operators of the website mislead investors by claiming its investments are endorsed by ASIC. The operators also do not have an Australian financial services (AFS) licence.
Do not invest in this product. ASIC does not endorse it or any other investments. The appasiccoin.org also does not have the permission to use ASIC’s name and has no affiliation with ASIC.
ASIC’s concerns
appasiccoin.org is suspicious because it:
Claims to be endorsed by ASIC. ASIC never gives permission to use its name or logo to promote financial products or services. You should be wary of any website or advertisement that states or implies that the investment they promote is approved by ASIC or Moneysmart, or uses ASIC’s logo – it could be a scam.
Uses encrypted messaging facilities to promote the scam and provides limited contact information.
Does not have an AFS licence, which means customers are not protected when things go wrong.
For further information about investment scams visit ASIC’s Moneysmart website which includes checks that can be done to see if an investment is real. However, keep in mind that these checks do not guarantee the legitimacy of a product.
26 September 2022
New resources for the bullion sector
he high intrinsic value of bullion allows it to be used by criminals to store and invest the proceeds of crime. Criminals target bullion dealers to launder illicit funds and evade taxes, and facilitate crimes including fraud, scams and drug trafficking. Similarly to legitimate investors, criminals may use gold as a hedge against inflation, currency risk, and a store of value during economic and political uncertainty.
To mitigate this threat, reporting entities in the bullion sector are required to maintain and implement an anti-money laundering and counter terrorism financing (AML/CTF) program and report to AUSTRAC.
To help you meet your obligations and protect your business from criminals, AUSTRAC has developed an overview of the unique requirements for the bullion sector.
We have also developed a list of indicators of suspicious activity which will help you identify suspicious circumstances that indicate your business is potentially at risk of criminal exploitation.
26 September 2022
AUSTRAC’s Reporting Entity System Transformation program update
The Reporting Entity System Transformation (REST) program has recently undertaken a series of workshops with participants of the Customer Advisory Group on the AUSTRAC Online user interface.
The workshops involved 67 participants, from 37 reporting entities from across 15 different industry groups who each provided feedback of their experience using AUSTRAC Online.
Participants were asked for feedback on how they currently navigate AUSTRAC Online, what functions are most or least often used and what features would make up their "wish list” for the upgraded AUSTRAC Online portal. Consistent feedback we received highlighted the following functions would support you:
a new dashboard to track the status of transaction reports
personalised options such as ability to create user’s own shortcuts or quick links to regularly used functions and industry specific news
a knowledge base hub with centralised access to up to date materials that are consistent with the AUSTRAC website
improved communications, with new and easier ways to contact AUSTRAC
enhanced notifications function that would include notifications about recent guidance, status of transaction reports, reminders to complete the AUSTRAC Compliance report, as well as access to emails and responses from AUSTRAC.
Our design team are now considering all feedback from these sessions and we look forward to inviting Customer Advisory Group members to comment on our first design concepts later this year.
26 September 2022
Case study: Real outcomes resulting from financial crime guides
Financial crime guides are designed to help your business identify and stop criminal activity. These guides provide you with patterns and indicators to understand, identify and report suspicious financial activity for a range of serious and organised crimes.
About the guide
In November 2021, the ‘Preventing misuse and criminal communication through payment text fields’ financial crime guide was released to help businesses understand, identify and report technology-facilitated abuse through financial transaction payment text fields. This guide helps financial services businesses identify the misuse of payment text fields and understand when to report this issue to AUSTRAC. Key indicators of financial transactions being used for this type of criminal activity include high volume payments at a low value. Payments can be as low as $0.01 and are typically below $10.
Real life implications
Following the release of the financial crime guide, AUSTRAC has seen an increase in suspicious matter reports detailing abusive messaging in financial transactions warranting referral to law enforcement.
In March and April of this year, a major bank reported two suspicious matter reports to AUSTRAC due to a customer using abusive language in the payment text fields. Following receipt of the suspicious matter reports, AUSTRAC worked with law enforcement to identify the subject of the reports and discover they already had an apprehended violence order in place. As a result of the financial intelligence and close partnership between government and industry, the subject of the report was located and arrested for breaching the apprehended violence order.
Additionally, to protect customers from abusive messages via payment text fields, some financial service providers have implemented measures to identify and block abusive or offensive messages. The use of real-time monitoring, customer self-reporting and in-depth data analysis has already helped to reduce the risk of misuse of payment text fields and has led to the protection of vulnerable members of the community.
Further information
26 September 2022
U.S. Treasury issues sanctions on virtual currency mixers
Since May 2022, the United States Department of the Treasury’s Office of Foreign Assets Control (OFAC) has sanctioned two virtual currency mixers in an effort to combat money laundering and terrorism financing.
The Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian E. Nelson said, “Virtual currency mixers that assist illicit transactions pose a threat to U.S. national security interests. We are taking action against illicit financial activity by the DPRK and will not allow state-sponsored thievery and its money-laundering enablers to go unanswered.”
To date, OFAC has sanctioned two mixing service providers, including Blender.io in May 2022 and Tornado cash in August 2022. Both of these service providers indiscriminately facilitate anonymous transactions by hiding their origin, destination, and counterparties with no attempt to determine their origin. While the alleged purpose is to increase privacy, mixers like Blender.io and Tornado Cash are commonly used by illicit actors to launder funds. For example, since 2019 Tornado cash has been used to launder more than $7 billion worth of virtual currency. This includes over $455 million stolen by the Lazarus Group, a Democratic People’s Republic of Korea (DPRK) state-sponsored hacking group that was sanctioned by the United States. In 2019, this was the largest known virtual currency heist to date.
12 October 2022
Corruption risks associated with donations and lobbying
Donations and lobbying can be used to gain privileged access to decision-makers within a party, especially if it is in government, by elevating a donor's or lobbyist's profile. Candidates and political parties also obtain donations through fundraising activities, requests for in-kind support, direct payments and via associated entities. Together these factors have the potential to compromise a member of parliament or councillor once elected.
These are matters which can erode public trust in the people and institutions that are relied on to make decisions in the public interest. Repeated calls to strengthen donation regulations point to regulatory gaps and opportunities for improvement, while investigations in other jurisdictions highlight relative weaknesses of the Victorian framework.
IBAC has identified several areas of risk in relation to donations and lobbying, as well as opportunities for regulatory improvement.
18 October 2022
Victoria's integrity agencies call for greater budgetary independence
Victoria's integrity agencies: Independent Broad-based Anti-corruption Commission, Victorian Auditor-General's Office and the Victorian Ombudsman, have come together to present an evidence based paper outlining the need for greater budgetary independence. The intention is to remove the politics from the debate, so that governments of whatever stripe cannot be accused, fairly or otherwise, of interfering with the independence of those agencies whose job it is to hold them to account.
The current process of having the government of the day rather than the Parliament decide the funding of Victoria's integrity agencies has been a hot topic for many years; in the last year it has grown even hotter.
Their joint paper sets out a case to further strengthen the perceived and actual independence of these three officers of Parliament.
The key recommendation is that consideration of their funding be the responsibility of a new independent statutory commission/tribunal, similar to the current Victorian Independent Remuneration Tribunal. All evidence, reasoning and recommendations to the Treasurer would be tabled in Parliament to promote full transparency.
While there are many dimensions to independence, the paper deals only with the issue of how the respective offices are funded. This matter has recently become an 'issue de jour' in the context of a proposed federal integrity commission, and in both New South Wales and, most recently, in Queensland. The three integrity agencies judge it timely therefore to add to this growing national debate, so that Victoria stays aligned with contemporary thinking and approaches.
It is also timely to consider the issue in light of the Government's acceptance of the recommendations made in Operation Watts by IBAC and the Ombudsman to improve Parliamentary integrity.
In presenting this paper the three integrity agency heads make no implied or express criticism of their current funding levels. Rather they are seeking to establish a transparent and robust process which is apolitical, and in doing so, to provide the Parliament and the community with assurance that their respective offices have the resources they need to do their jobs well. They believe it is in the best interests of all who aspire to government to promote these reforms. This is an opportune time to seek a commitment from all parties to a reform that must be profoundly in the public interest.
19 October 2022
Section 155 notices - a basic guide for individuals and small businesses
This guide aims to assist individuals and small businesses to understand the ACCC's information gathering powers under section 155 of the Competition and Consumer Act 2010 including the section 155 process and what you should do if you receive a section 155 notice. This guide also includes frequently asked questions in relation to the ACCC's section 155 powers and sample parts of a section 155 notice.
This publication was updated in October 2022 to incorporate the ACCC’s approach to claims of legal professional privilege.
30 September 2022
ARM Architecture in court over alleged cartel conduct for university project
The ACCC has today launched civil proceedings in the Federal Court against Ashton Raggatt McDougall Pty Ltd (ARM Architecture) and its former managing director, Anthony (Tony) John Allen, alleging they engaged in cartel conduct by attempting to rig bids for the tender for a building project at Darwin’s Charles Darwin University.
In 2018, Charles Darwin University announced plans for a new $250 million Education and Community Precinct in the heart of the Darwin CBD. The project is primarily funded by the Commonwealth Government and the university.
ARM Architecture was awarded the contract for principal design and consultant services under the first phase of the project after a tender in May 2019.
In September 2020, the tender for the second phase of the Charles Darwin University project was issued. It is alleged that following the issue of the tender, Mr Allen sent emails to eight other architectural firms requesting them not to submit a bid for the second phase of the Charles Darwin University project.
The ACCC alleges that in doing so ARM Architecture, through the conduct of Mr Allen, attempted to rig or induce other competitors to agree to rig the tender for principal design consultant services. The ACCC also alleges that Mr Allen attempted to induce other competitors to agree to rig this tender.
Once Charles Darwin University became aware of the alleged conduct, ARM Architecture was excluded from consideration for the second phase of the building project, which was valued at about $2.6 million plus GST.
06 October 2022
Jim’s Group pays penalties for alleged breach of Franchising Code and the Australian Consumer Law
Jim’s Group Pty Ltd has paid $24,420 in penalties in its capacity as franchisor of the Jim’s Dog Wash franchise after the ACCC issued it with two infringement notices for an alleged contravention of the Franchising Code of Conduct, and an alleged contravention of the Australian Consumer Law (ACL).
The first infringement notice related to an alleged failure by Jim’s Group to disclose certain information to a prospective franchisee, as required by the Franchising Code. In particular, the ACCC alleged that the disclosure document significantly understated the number of former franchisees within the Dog Wash division and failed to provide the contact details of those former franchisees.
“If someone is thinking about buying a franchise, being able to contact former franchisees is critical for making informed decisions,” ACCC Deputy Chair Mick Keogh said.
“Under the Franchising Code, franchisors must provide prospective franchisees with a compliant disclosure document which provides specified information which is important to prospective franchisees.”
20 October 2022
Former Bingo CEO Daniel Tartak pleads guilty to aiding and abetting demolition waste price fixing
ormer Managing Director and CEO of Bingo Industries, Daniel Tartak, has today entered pleas of guilty to criminal cartel offences, after charges were laid by the Commonwealth Director of Public Prosecutions (CDPP) following an ACCC investigation and referral.
On 16 August 2022, Mr Tartak was charged with two cartel offences relating to a price fixing arrangement for demolition waste services in Sydney. Bingo Industries was also charged and entered guilty pleas in respect of price fixing charges relating to the same conduct.
While Mr Tartak was its Managing Director and CEO, Bingo agreed with its competitor Aussie Skip Bin Services to fix and increase prices for supplying skip bins for building and demolition waste. Mr Tartak was charged with aiding and abetting this cartel conduct.
“Colluding with your competitors to increase prices at the expense of your customers is serious cartel conduct. Taking appropriate action against companies and individuals allegedly involved is a significant part of our work,” ACCC Chair Gina Cass-Gottlieb said.
The matter will now proceed to a sentencing hearing in the Federal Court on 9 and 10 March 2023.
As this is a criminal matter currently before the Court, the ACCC will not provide any further comment at this time.
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