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

22-274MR ASIC bans Sydney-based director for three years over refusal or failure to pay AFCA determinations

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.

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.