AST ASIC Enforcement Amid Change


On Nov. 22, AST ASIC gave a speech on responsibility in innovation.


  • AST ASIC speech focused on its responsibility in period of accelerated change and risk.
  • Overview
  • The pandemic, coupled with low interest rates, accelerated pace of change in market.
  • Laws should keep pace with change, and with people's expectations and demands.
  • Senator Bragg’s select committee made recommendations on cryptocurrency and digital asset regulation; decentralized autonomous organizations (DAOs, and tax.
  • Plus Australia's anti-money laundering and counter-terrorism regimes in digital world.
  • AST ASIC is working closely with the Treasury to assist with this ambitious agenda.
  • Approach to Enforcement
  • Investors and consumers must have confidence that the financial system works.
  • Especially important in sectors such as superannuation and wealth management.
  • AST ASIC recently issued updated regulatory guidance (regulatory guide 100 Court enforceable undertakings and information sheet 151 ASIC’s approach to enforcement).
  • Highlights court enforceable undertakings as flexible enforcement tool for compliance.
  • AST ASIC will only use court enforceable undertakings where it is in the public interest.
  • Offenders should be held accountable for poor conduct, and be publicly acknowledged.
  • Superannuation Trustee Issues
  • Performance: focus on communications around performance by trustees who recently failed APRA’s performance test; ASIC will intervene to achieve corrective disclosure or take enforcement action where misleading or deceptive conduct is identified.
  • Distribution: Consumers should get suitable products, and not be misled or ill-advised.
  • Proactively surveilling industry; enforcement action likely where trustees found to be breaching the law and not acting in good faith, or where conduct causes actual harm.
  • Retirement focus: trustees must challenge themselves to focus on overall retirement needs of their members, not just the accumulation of a superannuation balance.
  • AST ASIC working on forecast tools and consumer information to assist trustees.
  • Decentralized Autonomous Organizations (DAOs)
  • Organizations governed by artificial intelligence in form of smart contracts, using blockchain technology to record transactions with/between members and third parties.
  • No boards of directors or employees; rules of engagement encoded in smart contracts.
  • Not clear who is accountable if things go wrong, or don’t go as intended or anticipated.
  • Nor is it clear how a DAO itself can be held accountable in a court of law; legal analysis of how DAOs work is in its early stages, with many unanswered questions.
  • Cryptocurrency
  • Crypto assets, cryptocurrencies driven by extraordinary consumer/investor demand.
  • Few can say they really understand them; consumers should approach with caution.
  • ASIC has provided some guidance on exchange traded funds linked to crypto-assets.
  • They at least are financial products, and traded on a licensed exchange, so there will be some protections there; for the most part, investors are on their own for now.
  • Australia’s largest bank is proposing a means of crypto-exposure for retail customers.
  • Only a pilot project, but it seems no longer on fringes of the financial services industry.
  • Technology underpinning changes brings many potential opportunities and benefits.

Regulators AST ASIC
Entity Types B/D; Bank; CNSM; Corp; IA; Ins; Pension
Reference Sp, PR, 11/22/2021
Functions Client Money; Compliance; Financial; Legal; Market Conduct; Operations; Product Administration; Product Design; Reporting; Risk; Sales Practices; Suitability; Technology; Treasury
Countries Australia
Products Banking; Corporate; Cryptocurrency; ETFs; Fund Mgt; Insurance; Payments; Pensions; Retirement Plan; Securities
Regions AP
Rule Type Guidance
Rule Date 11/22/2021
Effective Date 11/22/2021
Rule Id 122120
Linked to N/A
Reg. Last Update 11/22/2021
Report Section International

Last substantive update on 11/24/2021