Financial Crime World

Financial Regulators Crack Down on Non-Compliance: What You Need to Know

In an effort to strengthen oversight and enforcement, Australia’s financial regulators are intensifying their efforts to tackle non-compliance in the sector.

New Powers for ASIC and APRA

The Australian Securities and Investments Commission (ASIC) has been granted new powers under the Treasury Laws Amendment (Design and Distribution Obligations and Product Intervention Powers) Act 2019 to intervene in cases where financial products pose a significant risk of detriment to consumers. This includes the ability to issue stop orders or other enforcement action.

Meanwhile, the Australian Prudential Regulation Authority (APRA) has broad powers to take enforcement action against uncooperative institutions, including:

  • Imposing additional conditions on licenses
  • Disqualifying individuals
  • Pursuing criminal prosecution

AUSTRAC’s Efforts to Combat Money Laundering and Terrorist Financing

AUSTRAC, the Australian Transaction Reports and Analysis Centre, is stepping up its efforts to combat money laundering and terrorist financing. In September 2020, a major Australian bank agreed to pay a record-breaking A$1.3 billion fine for breaching money laundering laws, highlighting the serious consequences of non-compliance.

Disciplinary Powers

Regulators have a range of disciplinary powers at their disposal, including:

  • Imposing criminal sanctions, such as imprisonment or financial penalties
  • Civil penalties and revocation of licenses
  • Suspending or varying licenses
  • Imposing enforceable undertakings

Other bodies responsible for compliance enforcement include the Office of the Australian Information Commissioner (OAIC) and the Australian Competition and Consumer Commission (ACCC).

Tribunals

Several tribunals adjudicate financial services criminal and civil infractions, including:

  • The Australian Financial Complaints Authority (AFCA), which resolves disputes between consumers and financial services providers
  • The Administrative Appeals Tribunal (AAT), which conducts merits reviews of administrative decisions related to corporation and financial services regulation

Penalties

The penalties imposed on firms and individuals for violations can be severe. In addition to fines, regulators may also impose other sanctions, such as suspending or revoking licenses.

While settlements are common in some cases, the Royal Commission has questioned ASIC’s willingness to settle disputes rather than pursuing compulsory enforcement action. As a result, regulators are taking a more proactive approach to enforcing compliance and holding non-compliant entities accountable.

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