Financial planners could be blowing their money unneccessarily in an effort to comply with new anti-money laundering laws, the FPA has warned.
In an email to members, the association said practices should not be rushed into applying costly internal processes from "solution providers" to meet their obligations.
Businesses that breach anti-money laundering and counter terrorism financing laws (AML/CTF) can be fined $11 million, while individuals within the company face up to a $2.2 million penalty.
Scare tactics by businesses looking to profit from AML could lead FPA members to invest significant amounts of money on compliance, FPA professional standards director Deen Sanders said.
"There are always fearmongers running around the marketplace in order to drum up business. That has concerned us," Sanders said.
"We've been hearing comments [that members are spending] $50,000 to $500,000 in terms of responding to AML.
"We're concerned about those sorts of comments. The majority will be doing themselves a disservice."
On December 12, 2007, customer identification, record keeping and AML/CTF compliance program obligations contained within the AML/CTF legislation take effect.
Planners are caught by the new laws because they apply to anyone providing advice on buying or selling shares, life insurance or superannuation.
Businesses are obligated to verify the identity of customers, report suspicious matters, keep appropriate records and develop internal AML/CTF compliance programs.
The FPA will roll out the first phase of a three-part education program to members this month to help planners better understand their obligations under the new compliance regime.
Australian businesses need to be prepared even if the risk of money being laundered is small, Allens Arthur Robinson lawyer Peter Jones said.
"The overseas experience is that very penalties have been imposed," Jones said.
"If you don't have the system in place you run the risk."
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