A draft proposal for Nano, from Gen Advisory

November 2020

 

Hi Stephanie,

 

Further to our recent conversations, please find below a draft proposal for your consideration. 

Summary of proposal's key points: 

  • Michael Lukman and Gen Advisory to serve as Nano Lending Pty Ltd's (Nano’s) “Regulatory Compliance Adviser” – particularly in the areas of:

  1. AML-CTF;

  2. ACL; and

  3. APRA - assuming that the “responsible lending” rules do get abolished as announced. 

  • Michael Lukman to provide support to Stephanie Olliver and Nano both before and after the appointment of Nano’s new “Compliance Manager” ("CM").

  • Before appointment of Compliance Manager: Michael to help Stephanie and Nano establish and operationalise: AML-CTF program and controls; ACL compliance monitoring​ tools etc. 

    • Proposed duration: 3 months (Dec 2020 to Feb 2020)  - negotiable.

    • Proposed time commitment by Michael Lukman: 4 hours a day, Mondays to Fridays.

  • After appointment of Compliance Manager: Michael to provide ad-hoc support and training to Nano on an as-needs basis.

I look forward to discussing further with you.

Kind Regards,

Michael Lukman

 

1.0 AML/CTF 

1.1 Nano’s AML-CTF obligations

  • Adopt, maintain and implement an AML/CTF Program;

  • Notify AUSTRAC of any changes or updates to Nano’s AUSTRAC enrolment and registration;

  • Appoint a Compliance Officer for AML-CTF.

  • Conduct regular internal and independent compliance reviews of Nano’s AML/CTF Program and business operations;

 

  • Conduct a Know Your Customer (KYC) and AML-CTF risk assessment for each of Nano’s clients;

 

  • Conduct enhanced customer due diligence procedures.

  • Submit the following reports to AUSTRAC;

  • Transactions of $10,000 or more – i.e. Threshold Transaction Reports (TTRs).

  • Suspicious Matter Reports (SMRs).

  • International Funds Transfer Instructions (IFTIs).

  • Submit an annual Compliance Report within 3 months of every Reporting Period.

  • Develop a risk awareness training program for employees.

 

1.2 How Michael and Gen Advisory can support Stephanie and Nano on AML/CTF –

     Before appointment of new CM

  • Operationalise Nano’s AML-CTF Program.

  • Help Nano operationalise the following procedures:

    • Ongoing customer due diligence.

    • Enhanced customer due diligence.

  • Transaction monitoring.

  • AUSTRAC reporting.

  • Help Nano identity potential RegTech solutions, e.g.

    • for customer on-boarding and KYC: One possibility – ShuftiPro.

    • for transaction monitoring and AUSTRAC reporting: One possibility – JadeThirdEye.  

  • Help Stephanie/Nano in the recruitment of the “Compliance Manager”.

 

1.3 How Michael and Gen Advisory can support Stephanie and Nano on AML/CTF –

     After appointment of new CM

Immediate

Provide training and back-up support to new CM.

Hand over responsibility for the above AML-CTF procedures (i.e. CDD, transaction monitoring, AUSTRAC reporting etc) to CM.

 

Ongoing

Providing ad-hoc advice and support to Nano.

Provide AML-CTF training to Nano’s key staff.

 

Advise on Nano’s systems and controls for managing ML-TF risk.

 

Conduct independent reviews of Nano’s AML-CTF Program (assuming Gen Advisory is not deemed to be “conflicted”.)

 

2.0 ACL

  • Review Nano’s marketing material.

  • Complete CPD training for all RMs and

  • Update Nano’s training registers.

  • Provide ongoing training for all of Nano’s RMs and representatives. 

  • Lodge an Annual Compliance Certificate.

  • Document and report breaches. 

  • Hold professional indemnity insurance.

2.1 Nano’s ongoing ACL obligations

  • Based on ASIC RG 205 and RG 206 and Info INFO, Nano’s ongoing compliance obligations as an Australian Credit Licensee including the following:

  • Ensure Nano’s compliance documents are up to date.

  • Conduct regular Compliance Committee meetings – comprising key Nano executives (including RMs) who have responsibility for the ACL’s functions.

  • Appoint a Compliance Manager with sufficient experience and seniority.

  • Internal dispute resolution: Track and record complaints.

  • External dispute resolution: Become a member of the Australian Financial Complaints Authority (AFCA).

  • Record Nano’s conflicts of interest.

 

2.2 How Michael and Gen Advisory can support Stephanie and Nano on ACL obligations –

      Before appointment of new CM

Serve as “Regulatory Compliance Adviser” to Nano.

Establish and operationalise Nano’s compliance monitoring program.

 

Establish and operationalise Nano’s “compliance tools” – e.g: training register;

 

Help Nano identity potential RegTech solutions which can augment (but not replace) Nano’s Compliance function.

 

Example: For complaints management - Cognitive View.

 

2.3 How Michael and Gen Advisory can support Stephanie and Nano on ACL obligations –

     After appointment of new CM

Provide ad-hoc advice and support to Nano’s staff – including responding to compliance-related questions and issues.

 

Lodge the Annual Compliance Certificate to ASIC.

 

Asssist Nano with other statutory/regulatory filings.

 

Conduct external compliance reviews.

 

Support Nano’s internal compliance personnel and assist with responses to regulator queries.

 

3.0 APRA

3.1 Details revealed so far

ASIC will be removed from enforcing the responsible lending rules for authorised deposit-taking institutions (ADIs) and other mainstream lenders.

Instead, ADIs and many non-bank lenders will be policed under less prescriptive lending standards currently overseen by APRA.

 

For non-bank lenders (such as Nano), they will be bound by APRA’s prudential lending standards, but these will be policed by ASIC.

 

The latest media reports indicate that the axing of the responsible laws will be going ahead as announced.

 

3.2 Summary of differences in ASIC and APRA rules for lending – particularly in relation to residential mortgages

 

3.3 How Michael and Gen Advisory can support Nano on APRA's lending requirements  

Monitor APRA and ASIC announcements on this issue.

Conduct a preliminary analysis of the differences between ASIC's and APRA’s lending requirements.

 

Conduct a preliminary “gap analysis” of Nano’s current systems against APRA’s lending requirements.

Head Office

Level 10, 420 George Street

Sydney, NSW 2000

Australia

FinTech Hub

Stone & Chalk

Level 4, 11 York Street

Sydney, NSW 2000

Australia

Ready to take the next step?

Please call Michael on:

Ph: 0401 444 516

Or email:

michael.lukman@gnad.com.au