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Compliance & Governance

There have been many compliance and governance regulatory developments both in Australia and worldwide in the wake of recent events such as HIH and Enron.

At Allens Arthur Robinson (AAR), we're committed to keeping our clients informed of the impact of these changes on their businesses, via regular publications and website updates. If you'd like to be notified when we add new publications to the site, please go to our subscription page to sign up for email alerts or, alternatively, you can subscribe to our RSS feed.

• Anti-money laundering
• FSR and CLERP
  • FSR - CLERP 6
  • CLERP 7
  • CLERP 9

Anti-money laundering

Since the announcement by the Federal Government on 8 December 2003 that Australia is to introduce reforms aimed at implementing the new global anti-money laundering and counter-terrorist financing standards, AAR has made monitoring its developments and implementation a priority.

The international standards for combating money laundering are contained in the Forty Recommendations of the inter-governmental body, the Financial Action Task Force on Money Laundering (FATF).

In June 2003, the Forty Recommendations were significantly extended by FATF and additional recommendations were introduced (the Eight Special Recommendations) to address new, and increasingly sophisticated, money laundering techniques and systems and to address terrorist financing.

The major changes to the revised Forty Recommendations include:

• expanded customer due diligence requirements for financial institutions;
• enhanced measures for dealing with higher money-laundering risks associated with correspondent banking relationships and politically exposed persons;
• enhanced transparency through measures to improve information on the beneficial ownership of legal entities such as companies, and legal arrangements such as trusts; and
• an expanded role for particular industry sectors: the extension of anti-money laundering obligations to non-financial businesses and professions (including accountants, trust and company service providers, and lawyers).

To stay abreast of these reforms as they develop, please see out dedicated anti-money laundering site.

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FSR and CLERP

The Federal Government's comprehensive program of corporate law reform has had a profound effect on the Australian business landscape. The Corporate Law Economic Reform Program (CLERP) is part of the Government's drive to promote business, economic development and employment in Australia.

So far CLERP has comprised the following initiatives:

• the Corporate Law Economic Reform Act 1999 (Cth) which implemented changes in the areas of fundraising, directors' duties and corporate governance, takeovers and accounting standards (CLERP 1-5);
• the Financial Services Reform Act 2001(Cth) (and subsequent FSR legislation and regulations) which consolidated the regulation of the financial services sector (known as CLERP 6 or FSR);
• the Corporations Legislation Amendment Act 2003 (Cth) which introduced changes from 1 July 2003 designed to simplify lodgment and compliance procedures for companies and schemes (CLERP 7);
• the CLERP 8 discussion paper titled 'Cross-Border Insolvency' which was released on 17 October 2002;
• the CLERP 9 discussion paper titled 'Corporate disclosure: strengthening the financial reporting framework' which was released in September 2002; and
• the CLERP 9 Act, ie the Corporate Law Economic Reform Program (Audit Reform & Corporate Disclosure) Act 2004 (Cth) which became law on 30 June 2004 and introduces significant changes to the regulation of corporate governance in Australia (particularly in relation to auditor qualifications and independence, financial reporting, director and executive remuneration and disclosure).

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FSR - CLERP 6

FSR was the sixth stage of the Government's CLERP. Its purpose is to reform and consolidate regulation of the financial services industry and it covers most financial services and products (excluding credit). FSR became law on 27 September 2001 and some of it came into effect on that date. However, most of FSR started on 11 March 2002 and the transitional arrangements for many of the licensing, disclosure and financial markets requirements ended on 10 March 2004 so that from 11 March 2004, all financial services providers must generally be licensed under the FSR laws.

We see FSR as an important part of the financial market overhaul and continue to monitor further developments in this area.

We have a dedicated FSR site, which contains background information on the regime and details of current developments. We update the site regularly with news on the latest issues.

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CLERP 7

In late March 2003, a package of three new laws was passed to give effect to the proposals set out in the Federal Government's discussion paper, CLERP 7 – Simplified Lodgments and Compliance.

The new legislation contains a number of amendments to the Corporations Act 2001 (Cth), and is intended to simplify the lodgment of documents with ASIC and reduce the overall compliance burden on companies and managed investment schemes. For more information on the CLERP 7 changes, see our publication Focus: CLERP 7: Simplified Lodgement and Compliance.
 

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CLERP 9

The CLERP 9 Act focuses on:

• continuous disclosure;
• financial reporting and audit regulation;
• executive remuneration;
• shareholder participation;
• fundraising; and
• analysts' independence and management of conflicts of interest.

The CLERP 9 Act continues the Government's support for more flexible regulation based on better periodic and continuous disclosure rather than a more prescriptive approach. There are, however, some mandatory elements in the legislation which include, for example, new requirements for CEO/CFO sign-off to directors.

For information on each of these aspects of the Act, please visit our Corporate Governance site. Our site also includes information on the HIH recommendations including an analysis of those that have now been included in the legislation.

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