PFA Regulatory Update – January 2025
PFA Regulatory Update – January 2025
ASIC 2025 enforcement priorities – new focus on ‘unscrupulous’ property investment schemes:
ASIC has placed what it calls ‘unscrupulous property investment schemes’ firmly in its sights as parts of its enforcement priorities for 2025.
While ASIC hasn’t detailed what it regards as an ‘unscrupulous property investment scheme’, this update from ASIC flags the type of scheme it may be targeting: in this case, ASIC took action against Sasha Hopkins and the A Team Property Group for operating unregistered managed investment schemes, and without an Australian Financial Services License (AFSL), in contravention of the Corporations Act; the Federal Court found in favour of ASIC, ordering Mr Hopkins to pay $1.25 million and be disqualified for four years, and ordered that A Team Property Group and five investment schemes be wound up.
We also know ASIC is prepared to issue stop orders where it believes that product issuers have failed to take reasonable steps to ensure product distribution is consistent with the TMD.
Importantly, as we’ve seen with ASIC’s successful prosecution against Firstmac earlier this year, reasonable steps must be taken by issuers to ensure that the distribution of investment products are consistent with their TMDs.
Other key enforcement priorities worth noting for unlisted property funds include:
Licensee failures to have adequate cyber security protections
Greenwashing and misleading conduct involving ESG claims – no great surprise here, as this has been a focus of the regulator for some time
ASIC’s ‘enduring priorities’ remain unchanged, and include focus on:
Misconduct involving a high risk of significant consumer harm – particularly conduct targeting financially vulnerable consumers
Systemic compliance failures by large financial institutions – resulting in widespread consumer harm
Governance and directors’ duties failures
New guidance on outsourcing anti-money laundering/counter terrorism financing obligations
AUSTRAC released updated guidance to identify and manage the potential risks arising from outsourcing anti-money laundering and counter-terrorism financing (AML/CTF) functions.
Most importantly, AUSTRAC says that generally any business will remain liable for any breaching of AML/CTF obligations, even when outsourcing business functions, and may incur penalties for breaches.
AUSTRAC’s new guidance recommends that businesses:
identify the risks that may arise through outsourcing
conduct due diligence on outsourcing providers
understand restrictions on sharing AML/CTF information
use a written agreement for outsourcing
monitor and review ongoing outsourcing arrangements
document procedures for managing outsourcing arrangements in your AML/CTF program.
Any questions for the Issues and Regulatory Committee?
The PFA Issues and Regulatory Committee (IRC) is available to answer any PFA member questions.
The IRC meets with ASIC regularly – please contact the IRC if you have a question or an issue you would like to see raised with the regulator. Please email any IRC correspondence to pfa@propertyfunds.org.au