CAFBA has called for a standardisation of anti-money laundering and counter-terrorism compliance policies, as the administration and cost of these policies are a “burden” to brokers and financiers.
Writing in a submission to the Productivity Commission’s inquiry into competition in the Australian financial system, the Commercial Asset Finance Brokers Association of Australia (CAFBA) suggested that the current array of policies for Anti-Money Laundering/Counter-Terrorism Finance (CTF) laws (AML/CTF) is putting pressure on brokers and should be improved.
The body called on the commission to “focus on areas where red tape can be reduced in the financial sector”, adding: “The onerous requirements, associated paperwork and confusing interpretations by lenders regarding Anti-Money Laundering (AML)/Counter-Terrorism Finance (CTF) reform are causing challenges for small businesses…
“A clear productivity gain that could improve how small businesses and brokers access credit is to provide greater consistency in AML/CTF compliance processes.”
Highlighting that there is a range of AML/CTF compliance forms required to be completed by small businesses and/or their brokers when applying for loans, the association argued that despite the best intentions of the law, the “legislation has not stopped identity fraud”.
The submission reads: “Professional brokers and financiers are burdened by the cost and administration of the regulation, which has not stopped [from] criminals finding ways around it…
“Policies can be widely different and include unnecessary information that may be focused on market research rather than compliance with the legislation.”
It added: “CAFBA believes that there is a need to standardise the way that major banks apply current AML/CTF compliance policies. There must be improved consistency in basic processes to increase productivity for both small businesses and brokers."
The association also suggested that the “the current professionalism and quality of commercial and asset finance services provided to businesses is at risk, particularly due to emerging and unregulated financial service providers”.
“While a well-developed broker market that caters to small business lending could increase competition, we must ensure that standards are maintained,” the submission said.
CAFBA’s submission concluded: “While there are many finance options available to small businesses in Australia, brokers play a crucial role in facilitating their access. New and emerging finance providers through 'fintech' can and will play an important role in increasing competition, but high standards must be maintained. Consistency and standardisation of AML/CTF policy within the finance sector would increase efficiency and productivity. Professionalism and quality of services provided by all providers within the finance sector is crucial to provide both value for money and maintain productivity.”