AUSTRAC’s Item 54 exemption generally still applies when an adviser only recommends or arranges access to an MDA. Increased AML/CTF obligations apply when the adviser or AFS licensee also manages, controls, disburses, or exercises discretion over client money or property as an Item 3 designated service.
Expanded Answer
AUSTRAC’s position turns on the service actually provided. Recommending an MDA, explaining its features, or arranging for a client to access an MDA is generally an Item 54 activity. Item 54 is treated differently only where it is the only designated service provided by the business.
The position changes when the adviser or AFS licensee moves beyond recommendation or arrangement. Item 3 may apply where the business receives, holds, controls, manages, or disburses client money or property for the purpose of carrying out a transaction. Discretionary investment authority is the key risk indicator.
Applies when: the adviser or licensee exercises discretion or control over client assets.
Not required when: the adviser only recommends an MDA or arranges access to an external MDA provider.
Where Item 3 applies, the business should expect broader AML/CTF program, governance, monitoring, training, review, and AUSTRAC reporting obligations to apply.
Why it matters
Misclassifying an MDA recommendation as discretionary asset management can create unnecessary compliance burden. Misclassifying discretionary control as Item 54-only creates AML/CTF gaps, weak governance, and AUSTRAC exposure.
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Practical guidance
- Map each MDA-related service to recommendation, arrangement, or discretionary control.
- Confirm whether your AFS licensee or adviser has authority to direct transactions or manage client assets.
- Update AML/CTF controls if your service model includes Item 3 activity.
Further reading
AML/CTF Financial Planners Australia