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The next phase of anti-money laundering rules will raise the bar on verification to comply with global standards, but many practices are unaware of the requirements.
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Accountants ‘ill prepared’ for tighter client ID regime
01 August 2023
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Accountants will soon be subject to the next phase of anti-money laundering regulation and should be acting now to instal client ID verification or get caught out, says payment software specialist FeeSynergy.
The so-called Tranche 2 rules will expand the anti-money laundering and counter terrorism financing (AML/CTF) regime beyond the financial sector to encompass accountants, lawyers and real estate with strict requirements for client verification and document checks.
The regime will be policed by Australian Transaction Reports and Analysis Centre – AUSTRAC – and is expected to be phased in from early next year.
FeeSynergy said it has been developing an ID verification facility as an add-on to its payment system Collect for about 12 months following recommendations about AML compliance made by the TPB last year.
FeeSynergy managing director Malcolm Ebb said many of its 500 accounting clients, which takes in mid-tier firms across Australia and New Zealand, are impatient for the system but general awareness among accounting practices about Tranche 2 was low.
“I’m speaking to a lot of accounting networks and saying, ‘What are you doing about AML compliance? Have you got a compliance officer Have you got a committee?’
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“Overwhelmingly they say, ‘What are you talking about?’”
He said many resented “another impost on their business” but the AML regime is global and accountants should not wait for the requirements to be mandated because “you should be doing this stuff anyway”.
FeeSynergy said Collect integrated with most other practice management systems and the ID verification component used an existing system from global credit bureau Equifax that “ticks all the boxes for current TPB and ATO identity verification compliance”.
It uses facial recognition and government databases to verify someone is a real person and the relevant document, typically a driver’s licence, is genuine and has not been tampered with.
“Biometrics and verification against government databases is absolutely going to be the gold standard,” Mr Ebb said.
“We’ve bought Equifax’s state-of-the-art technology into our platform so that our accounting and legal clients can initiate a proper identity verification process that will exceed what the TPB would be recommending.
“It will put our clients in a pretty good position for when AML Tranche 2 comes into play.”
“We’re doing it because it made sense for us to it. Our clients were actually relieved that we were doing something about it because they use our platform already for engagement letters and for onboarding clients.”
He said the data is encrypted and the relevant database was held by Equifax, rather than on the accountant’s system. However, the FeeSynergy system keeps a log of which clients have been verified to comply with AUSTRAC reporting requirements under Tranche 2.
It also identifies Politically Exposed Persons – individuals who occupy a prominent public position or function in a government body or international organisation – and conducts sanctions checks.
The cost will typically be under $10 for each ID verification and the system will launch on 15 August.
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