Speaking at the SMSF Association National Conference, SMSF Association deputy chief executive Peter Burgess explained that even SMSFs with rollover-compliant electronic service addresses are still encountering delays when rolling money from APRA funds to SMSFs.
“The problem here is the SMSF verification service. It doesn’t provide the validation that the APRA funds need to meet their anti-money laundering CTF obligations,” said Mr Burgess.
“Now the APRA fund can verify a lot of things with this SMSF verification service, they can verify that a member is actually a member of the SMSF, they can verify the compliance status of an SMSF, they can verify the ESA provider. But when it comes to the bank account, all that’s verified is that the information that the member has provided agrees with the ATO records.”
Mr Burgess said there is no validation back to the financial institution, which is where the problem lies.
“For the APRA funds to meet their anti-money laundering obligations, they need to verify that that’s the financial institution. This verification service doesn’t do that,” he explained.
“It’s just verifying that the information the member has provided matches what the ATO has on record, not the financial institutions necessarily.”
This means that when a client tries to instigate a rollover from an APRA fund to an SMSF, the APRA fund is always looking for extra verification to verify the bank account, he said.
“In some cases, they want a certified copy of bank statements, so they can get company that is actually recognised,” he stated.
Mr Burgess said the SMSF Association is now meeting with the APRA fund sector on a regular basis to try and address this.
“What is really encouraging is that they are just as determined and committed as we are to removing the obstacles and unpacking all the issues so that we can transfer money between our two sectors in a timely manner,” he said.
“What we’re trying to do with these consultations is agree on what documentation they’re going to require to roll over the money from an APRA fund to an SMSF. Let’s agree upfront, if you’ve got to validate the bank account and you can’t rely on this service, then what documents do we need to validate the bank account? Let’s agree on what they are. Let’s make it standard so it applies to all APRA funds and we won’t have a situation where every APRA fund seems to have its own rules in terms of what documents they need to validate the bank account.”
