MFAA and CAFBA push delivers regulatory response on reform scope
Commercial finance brokers have gained greater regulatory certainty following joint advocacy by the Mortgage & Finance Association of Australia (MFAA) and the Commercial & Asset Finance Brokers Association of Australia (CAFBA) on the application of Australia's Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) reforms.
The two associations said they identified a provision in the incoming legislation that risked creating ambiguity over whether standard commercial finance broking activities fell within scope of a new designated service. Both bodies wrote to the Australian Government and the Australian Transaction Reports and Analysis Centre (AUSTRAC) seeking confirmation that brokers helping clients obtain commercial loans were not the intended target of the reforms.
AUSTRAC acknowledged the issue in its response, confirming it had been recorded to inform the development of guidance and education materials for regulated entities. The regulator also advised that where published guidance does not address a specific issue, businesses should document a reasonable position based on the legislation and retain records of any advice relied upon.
Significantly, AUSTRAC did not indicate that the associations' reading of the legislation was incorrect.
Following its own review of the legislation and the Explanatory Memorandum, the MFAA maintains that traditional commercial finance broking activities were not intended to be captured by the new designated service.
The MFAA has published practical guidance for members covering the current regulatory position, AUSTRAC's expectations, and recommended steps while further clarification is pursued. These include documenting the basis for any position adopted, retaining supporting records, and reviewing that position as additional guidance is released.
The association said it will continue working with the government, AUSTRAC, and CAFBA to seek formal confirmation of the legislation's intended application and will keep members informed as further guidance emerges.
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