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Mercedes Benz Financial Services Australia has been ordered to undergo an external audit by the financial crimes watchdog AUSTRAC, following serious concerns about its compliance with anti-money laundering and counter-terrorism financing (AML/CTF) laws.
The regulator flagged a number of compliance failings, including an over-reliance on treating most customers as low risk, weak systems to detect and escalate suspicious activity, and inadequate transaction monitoring.
The move comes as part of a broader crackdown by AUSTRAC on the non-bank lending sector, which it says is failing to meet expectations around AML/CTF obligations.
“This industry is vulnerable to money launderers and organised criminals,” said AUSTRAC CEO Brendan Thomas.
“We need to get better at shutting down avenues for criminals to profit from crime. 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.”
AUSTRAC’s campaign into the sector – which includes providers of mortgages, personal loans, and vehicle finance – found widespread under-reporting, with almost 90 per cent of non-bank lenders failing to submit a single suspicious matter report in 2024.
Alarmingly, just two businesses were responsible for around half of all suspicious matter reports from the entire sector, while 89 per cent of providers claimed they had no high-risk customers at all.
“Our concerns extend beyond just one business,” said Thomas. “The gaps are there but the sector isn’t attuned to the risks.
“No business is devoid of risk. With such low reporting rates, the full picture of potential criminal exploitation remains hidden.”
While some lenders have taken swift steps to strengthen their compliance processes following AUSTRAC’s findings, the regulator says it will continue to monitor the sector closely.
“We expect businesses to improve their identification of high-risk customers and to increase their reporting. We will be watching this very closely.”
AUSTRAC has not yet confirmed if further regulatory action will be taken against Mercedes Benz Financial Services which provides automotive financial services and insurance to consumers.
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