AUSTRAC has ordered the appointment of an external auditor to Mercedes Benz Financial Services Australia after raising concerns about the financier’s compliance with the AML/CTF Act.

Among the concerns were serious issues such as assuming most customers were low risk, a lack of systems to identify and escalate suspicious matters, and inadequate transaction monitoring.

AUSTRAC CEO Brendan Thomas said the non-bank lending sector, such as mortgage providers, personal loans, equipment and motor vehicle financing and leasing, have a responsibility to ensure they have the resources and processes in place to comply with their AML/CTF obligations.

“This industry is vulnerable to money launderers and organised criminals. We need to get better at shutting down avenues for criminals to profit from crime,” Mr Thomas said.

“The outcomes of this audit will help Mercedes Benz better meet their compliance obligations and will inform us if any further regulatory action is required.

The action against Mercedes Benz follows a regulatory campaign focussing on the non-bank lending and financing sector, which raised concerns in relation to gaps that are leaving non-bank lenders and financiers open to money laundering risks.

“Our concerns extend beyond just one business in this sector and we have written to the entire sector detailing non-reporting and under-reporting as well as raising concerns with the sector’s ability to identify and manage high-risk customers and effectively monitor customer transactions.”

“Almost 90 per cent of non-bank lenders and financiers did not report a single suspicious matter to AUSTRAC in 2024 and last year, just two businesses reported around half of all suspicious matters for the entire sector.

“Strikingly, 89 per cent of businesses said they had no high risk customers at all.

“This needs to change and it needs to change quickly or more business will find themselves in Mercedes Benz’s position. We expect businesses to improve their identification of high risk customers and to increase their reporting. We will be watching this very closely.” 

“No business is devoid of risk. In recent years AUSTRAC has provided information on risks to the non-bank lenders and financiers sector and with such low reporting rates, the full picture of potential criminal exploitation remains hidden.”

“The gaps are there but the sector isn’t attuned to the risks.”

AUSTRAC will be monitoring report submissions to assess the response from the sector.  Some businesses have taken immediate proactive steps to improve their AML/CTF compliance. 

“The campaign provided us with the opportunity to directly engage businesses and when we showed them their shortcomings, many were quick to action - we expect this to occur more broadly across the sector.”