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Contents
Welcome Presidents Address From the CEO Outsourcing Fund Administration In conversation with... Courage as a Skill Compliance TrainingA success story The Cinderella Syndrome Know Your Charity ACI Volunteer Program Accreditation & Education News
Enews is also a forum for members to catch up on ACI activities and internal news and be alerted to upcoming events, volunteer opportunities and accreditation and education news. We have been particularly active this year with our volunteer groups and internal strategic planning, with more groups planned for the near future and a couple that have been inactive for a while being revived, so we look forward to their output being able to be shared in enews and on the ACI website. On a sad note we are farewelling our Professional Development Manager, Larissa Cibas and as you will see from the advertisement in this edition, we are looking for a replacement to fill this role.
has been with us now for approximately six weeks and has hit the ground running with the first of our events for the new calendar coming to fruition just as she arrived on board keeping her very busy! Members will have an opportunity to meet Hannah at any of our Sydney events and some of our interstate events as the year progresses. We hope you enjoy this edition of enews and dont forget to send through your contributions, letters and feedback. You can email these directly to our National Manager at: naomi.burley@compliance.org.au
Australasian Compliance Institute Inc. ABN 42 862 119 377 I www.compliance.org.au I Ph 02 9290 1788 I Fax 02 9262 3311
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profession. The growing recognition of value of the accreditation courses is also reflected in the increasing numbers of courses being provided. This is one aspect of the high level of events and member service related activity taking place in the ACI offices. The Board of ACI is committed to a focus upon three core objectives - member services to provide professional support; accreditation and education; and representation of members to influence the external environment in which they operate. You will see these reflected in the organisational charter which drives the strategic direction of the organisation. You will also see this in the nature of ACI's activities over coming months. So whilst ENews has been quiet, ACI has not. ENews will once again, in conjunction with our weekly email updates, be a key medium for communicating with, and providing thought leadership for, our members. That is part of ACI's commitment to member service. David LawrencePresident ACI
Invitation to Volunteers
ACI will shortly be releasing invitations to form two working parties, one looking at the needs of those responsible for compliance in SMEs and the other devoting their time to examining the needs and potentially producing tools and resources for compliance professionals responsible for AML work in organisations. Both will be longer term groups who will set their own long term and short term objectives and we will be inviting members with an interest in these two areas to consider joining these groups. Further information will be available shortly on the Volunteering page of the ACI website and applications are preferably taken by email (so that we can keep track of things better!). Visit: http://www.compliance.org.au/www_aci/ page continued next default.asp?menuid=134
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The views expressed are those of the authors and do not constitute legal advice.
Other meetings were conducted with The trip was rounded off with a number of compliance professionals from a number of companies such as Asia Risk and Incisive Financial Hong Kong based organisations with view to not ...due to the high profile nature of the organisation and its only raising ACIs profile in the strong affiliation with children, these compliance issues are region but to also recruit new members and canvass what magnified with the context of the need to mitigate any professional support ACI could potential reputation risks that may appear provide. One of the more interesting meetings took place publishing. Both organisations were keen to find with Mr Jim Leung Regional Director of out more about ACI and ways in which International Labour Standards with the Walt partnerships could be developed that would build Disney Company and Alannah Goss Disneys ACIs profile within the region.
Volume 6 Issue 1
The views expressed are those of the authors and do not constitute legal advice.
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Volume 6 Issue 1
The views expressed are those of the authors and do not constitute legal advice.
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the provisions of the Australian Standard, and in fact to the effective operation of their fund. The ability of some fund administrators to implement effective administration services is impaired by their differing business objectives, their inability to effectively deal with the risks that have been identified, and the shortcomings within their own compliance frameworks. To enable RSEs to satisfactorily address this challenge it is imperative that comparable compliance standards as prescribed in the Australian Standard Compliance programs AS3806 2006 be imposed on fund administrators. Until the market offers alternatives to enable RSEs to meet their obligations, then a prescriptive solution is preferred. Failure to act decisively will have implications for the Funds, for the administrators, for the regulators, and for the industry. These implications will impact at both an operational and strategic level a failure to properly administer funds, an inability to meet member needs, compliance failures, not achieving regulatory benchmarks, and the failure of Funds to meet their strategic business objectives. The following are recommended:
That material service providers be required,
by regulation, to implement the Australian Standard Compliance programs AS 3806 2006; That RSEs be compelled by the regulators to comply with the Australian Standard; That the industry present a submission to their professional bodies highlighting the adverse impact this issue is having on some trustees and their members and making recommendations for change; That the industry present a submission to the regulators: to APRA documenting the impediments to effectively meeting RSE License Conditions (with limited power to act), and ASIC highlighting similar difficulties in meeting AFS Licence Conditions; That the provisions within the Outsourcing Standard (and consequently with Outsourcing Agreements) are considerably
Volume 6 Issue 1
The views expressed are those of the authors and do not constitute legal advice.
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Superannuation Industry (Supervision) Regulations 1994 (SIS Regulations). Available at Superannuation Safety Amendment Act 2004 (SSAA). Available at http://www.comlaw.gov.au General additional conditions for public offer RSE licensees under section 29EA of the Superannuation Industry (Supervision) Act 1993. Superannuation guidance note SGN 130.1 Outsourcing. Available at http:// Superannuation guidance note SGN 140.1 Adequacy of resources. Available at http://
www.comlaw.gov.au ASFA 2003 A risk management framework for superannuation funds. Best Practice Paper. 19 June 2003, Australian Association of Superannuation Funds, Sydney. Questions Outsourcing. www.comlaw.gov.au Available at http://www.comlaw.gov.au http://www.comlaw.gov.au
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The views expressed are those of the authors and do not constitute legal advice.
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In conversation with
Randal Dennings, 2006 recipient of the ACI Honorary Fellow Award
Those of you who were present at the ACI Gala Conference and Awards dinner in October 2006 will recall the stunned disbelief with which Randal Dennings accepted his Award of Honorary Fellow of the Institute. When we caught up with him recently for this article Randal, with characteristic humility, continued to express his total surprise at being honoured in such a way, again, brushing aside his contribution to the profession and his fellow members saying it was no more than others have done and that is was another instance of his Clayton Utz team making him look good. Yet again it is striking that it is the very qualities that Randal was awarded for championing that shine through in this reaction, the ACI values of leadership, courage, integrity, excellence and teamwork and a generosity of spirit that led to him being nominated and awarded by his fellow members for his efforts to education and contribute to the development of his fellow compliance professionals. But it seems Randal has not finished providing advice for the industry. As we got to talking Randal expressed what ACI had meant to him over the years: a community where you could commiserate and celebrate with the peers who had an understanding of the difficult and, lets face it, sometimes lonely job compliance professionals had, especially in the early years. The ACI meetings were a place where you could speak your mind and share the experiences (and pain!) for the betterment of all. During the conversation it becomes apparent that the professional in compliance professional is something important to Randal and as ever he is not content to rest on his laurels, or let ACI do so either. Amateur hour is over. says Randal. Compliance and compliance professionals need to get serious. Not that they werent before, but Randal fears in the confluence of all the disciplines that there is a real risk that unless we professionalise compliance, its rightful place in the model will be lost. Randal sees signs in the language of the GRC model where it often expresses compliance as an assumed variable and calls the challenge for himself and his fellow compliance professionals. It is not necessary to stake out our ground in a competitive sense. He says. Rather, it will be through providing intellectual grunt, being intellectually honest in the way we do our jobs and backing it up by being grounded in sound research and experience. We need to make sure that everything we touch as compliance professionals is excellent. This is one of the reasons why he feels the Brian Sharpe Memorial Essay Award is so important, for the industry to encourage and recognise this kind of work. And Randal has a similar message for ACI, thinking that the time is now ripe to provide a balanced respected voice. In his experience, ACI submissions to Government and regulators do often punch above our weight and are unafraid of being a bit more hard line about when it should speak and what it should say. The more we do this, the ACI draws upon its untapped power of being a truly unbiased and informed
For Randal, the education, training, and sharing of acquired wisdom has been there since the beginning with senior practitioners, and he notes ...due to the high profile nature of the organisation and its that it was the calling of all strong affiliation with children, these compliance issues are the experienced members magnified with the context of the need to mitigate any to give their time and potential reputation risks that may appear knowledge to help others through the traps. It is in this way, he says, that the formal accreditation commentator and resource. The ACI's sole process the Accreditation and Education interest is in the due administration of the law and Committee and the Board have built on this sensible and workable legislative outcomes that foundation is something that makes him proud achieve the legislative objectives. It may be that and provided one of the career highlights for Randal once again has his finger on the pulse of him when he recently attended the CCP (Fellow) the compliance community who have responded residential program. with a new enthusiasm to ACIs volunteer
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invitations and donated their time and intellectual input to providing comment on ACIs behalf on the issues that affect them as professionals. Randal sees it as a challenge for all compliance professionals in the coming year and by doing so demonstrates once again why he belongs with his other Fellows and past recipients of this award. Congratulations again Randal from everyone at ACI and we look forward to your continued involvement and input for the benefit of the profession as a whole.
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Courage as a skill
Harvard Business Review Article Reprint/Access
ACI would like to make available to members the article as described below through the HBR Article Access singleclick system. You will need to type in the URL as below into your internet browser to access the article. Link: http://custom.hbsp.com/b01/en/implicit/ p.jhtml?login=AUST031207S&pid=R0701E Title: Courage as a Skill Author: Kathleen K. Reardon Description: A division vice president blows the whistle on corruption at the highest levels of his company. A young manager refuses to work on her boss's pet project because she fears it will discredit the organization. A CEO urges his board, despite push back from powerful, hostile members, to invest in environmentally sustainable technology. What is behind such high-risk, often courageous acts? Courage in business, the author has found, seldom resembles the heroic impulsiveness that sometimes surfaces in life-or-death situations. Rather, it is a special kind of calculated risk taking, learned and refined over time. Taking an intelligent gamble requires an understanding of what she calls the "courage calculation": six discrete decision-making processes that make success more likely while averting rash or unproductive behaviour. These include setting attainable goals, tipping the power balance in your favour, weighing risks against benefits, and developing contingency plans. Goals may be organizational or personal. Tania Modic had both types in mind when, as a young bank manager, she overstepped her role by travelling to New York -- on vacation time and on her own money -- to revitalize some accounts that her senior colleagues had allowed to languish. Her high-risk manoeuvre benefited the bank and gained her a promotion. Lieutenant General Claudia J. Kennedy weighed the risks and benefits before deciding to report a fellow officer who had plagiarized a research paper at a professional army school. In her difficult courage calculation, loyalty to army standards proved stronger than the potential discomfort and embarrassment of "snitching" on a fellow officer. When the skills behind courageous decision making align with a personal, organizational, or societal philosophy, managers are empowered to make bold moves that lead to success for their companies and their careers.
To make an order contact the ACI office directly on (02) 9290 1788 or email admin@compliance.org.au
Volume 6 Issue 1
The views expressed are those of the authors and do not constitute legal advice.
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Volume 6 Issue 1
The views expressed are those of the authors and do not constitute legal advice.
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The interactive element of the module and the links to policies and additional information that we provided throughout was very well received by learners. We provided further support with a menu of links to policies, as well as publishing an 97% were either satisfied or very satisfied Intranet site page with policy links for easy access 98% said relevant to their role to all employees. CD and Finalist in the Australian Institute's Training and Development Epaper versions were also learning Award category made available for people "The whole thing is very well done and entertaining, so there is little who were unable to easily pain and some good reminders. I actually enjoyed completing the complete the module assignment. Didn't think I would ever give that response to online at work (such as required assessments." home-based and mobile workers). "I thought in general the training was excellent, particularly the format
and interactive aspects. It gave some good grounding in 'the Stakeholder engagement basics', though I think the major strength was in the potential to and support was also a get people thinking: the case studies were also well thought out." primary key to the module's success, and "I would like to compliment the team on the "Doing the right thing at Michelle worked with the Westpac". This assessment was brilliant. The graphics where subject matter experts fantastic. It made it enjoyable to do." and business unit stakeholders to ensure The above are some statistics and feedback comments received on that appropriate input and Westpac's 'Doing the Right Thing' e-learning module launched in engagement was sought. September 2006. An introductory preview session was held prior to the module's release, which enabled us to We attended the awards dinner in April where we obtain and act on some valuable preliminary were not initially named with the other finalists feedback before the official launch. who were called to the stage to receive their
Volume 6 Issue 1
The views expressed are those of the authors and do not constitute legal advice.
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ACI Events
ACI is pleased to announce that thanks to the generous continuing sponsorship of PricewaterhouseCoopers we are able to welcome back onto our Events schedule, the well respected Thought Leadership Seminar Series. The first of these will go to four of our capital cities during June, with the next in the series scheduled for September/October. The seminars this year will develop thematically over the year, beginning with the June sessions topic: Enabling the Business to Take the Right Risks. Ernst & Young are also generously sponsoring a half day seminar for ACI during June on the topic of AML and the Risk Based Approach. These events draw on the experience of the expert speakers to provide their knowledge and points from the lessons they have learnt from their work so far in this area to assist attendees in adopting this particular approach to the AML regulation within their organisations. Due to the number of phone calls we get every week about this topic, ACI is also reviving one of its previous seminar themes - Compliance 101 Your first day on the job. This half-day session will be held in Sydney at the end of June as is ideal for anyone who has no background in compliance who may recently begun a role with compliance responsibilities or have had these responsibilities added to their role and are thinking Where to I start?. This program sits outside ACIs Accreditation program as it does not require the one years work experience of the Associate program minimum and provides the basic fundamental knowledge to assist someone to get up and running in their role. ACI is also currently working on two sector forumsone for Mining at the beginning of July and one for Finance at the end of July. We also welcome suggestions for new events and submissions of papers for events and seminars already on the calendar.
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Corporation X has a compliance officer because it is a responsible organisation, however this person is kept out of sight of those who make money for Corporation X . One day, Corporation X makes the news because one of its best selling products is found to contain banned substances and is responsible for the deaths of a number of young mothers .For some years, Corporation X has denied that this product contained such substances and besides, it was much cheaper to use the banned substances . A public relations and media blitz is immediately undertaken, but it backfires and now the directors, CEO and senior managers are charged with a variety of offences . The compliance officer is brought out from the cellar and told to save the bacon of the ugly sisters, or else !!!.
This is only a fairy story of course, because it never happens that way in real life, does it ?? In this fairy story, if the compliance officer did manage to save the bacon of the ugly sisters, they would be returned to the cellar and left there until the next crisis. Unfortunately, truth is often stranger than fiction, so variations of this fairy story occur in the real world all too often. In all the real life versions of this fairy tale, there are two common factors: the compliance function, if it existed, was treated as Cinderella the corporate culture rewarded profit and denigrated those who questioned this ethos of the corporation
OK, some organisations do treat compliance as the ugly sisters treated Cinderella, but since when has compliance been a money earner, rather than a cost ? Business organisations need to make money or they
Each question would be scored out of 10 ; if any one question rated below 7, then a FAIL assessment should be made, even if the total is 85 or more .
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For business organisations, the challenge is to use compliance as a competitive advantage ; it is the process of achieving legal compliance that confer a competitive advantage . An example of a process that could deliver a competitive advantage is set out below :-
This brings five relatives of the ugly sisters together and has them working with Cinderella, rather than against Cinderella and will deliver a healthy, ethical corporate ecology, which is the reason for compliance .
Volume 6 Issue 1
The views expressed are those of the authors and do not constitute legal advice.
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Know Your Charity: How to protect yourself from fraud and fight terrorist financing
Hany Abou-El-Fotouh, CAMS Assistant General Manager Head of Compliance Oman International Bank
Genuine and fake charities have been misused for terrorist financing and fraud. Financial institutions must protect themselves from being used by terrorist to financing terror operations. Similarly, individuals must be alert no to donate their hardearned money before they are confident that the money would not fall in the wrong hands.
Originally, charities were formed to provide aid to groups of the community that need assistance. The majority of charities are legitimate channels to help people in need. However, some charities are frauds that have been created to take advantage of the needy and the generous. And some charities have been used for money laundering or terrorist financing. For example, In February 2004, the assets of Al Haramain Foundation's (AHF) branch in Oregon were blocked. AHF has allegedly violated currency and monetary instrument reporting requirements, tax laws, and other money laundering offences. According to International Narcotics Control Strategy Report of 2005, individuals connected with AHF appear to have concealed movement of over $100,000 to Chechen mujahideen. How Charities Raise Funds? Charities rely on several methods to collect funds for philanthropic or humanitarian purposes. Most rely on a variety of income sources that can include:
Part of these funds have been and are vulnerable to being diverted to terrorist networks, often without the donor's knowledge. How Financial Institutions Apply `Know Your Charity' Financial institutions must carry out enhanced due diligence on charitable organization accounts. The relationship must be approved at a senior management level and risk-rated `high'. The relationship officer should visit the premises of the charitable organization and prepare a visit report. The report should include sufficient details such as:
The organization's legal type, license of activity, source of capital (if applicable), number of employees, years established, years at present location, nature of activity, geographical location of activity etc Details about owners/directors and their powers Check if a Politically Exposed Person (PEP) or a connected individual owns the charitable organization partly or fully Check if the charitable organization is authorized to accept donations locally or overseas
Public support, Government funding, Private foundations grants; or Fees collected for services they provide as part of charitable programs.
Financial institutions should recognize the `indicators' or "red flags" that call for further scrutiny. Some of the indicators are listed below:
Corporate layering: transfers between bank accounts of charities and directors or staff of the charitable organization for no apparent reason Wire transfer by charitable organizations to beneficiaries located in countries known to be bank or tax heaven or countries of concern Lack of apparent fund-raising activity (i.e. lack of small checks or typical donations) connected with charitable bank deposits Transactions with no logical economic purpose (no link between the activity of the charitable organization and other parties involved in the transaction)
There are several solicitation methods, which include mandatory religious donations. A charity can raise funds in many different ways. Examples of most poplar solicitation techniques are:
Fundraising events, i.e., raffles, and marathons/races Direct in-person requests Direct mail or telephone solicitation requests Newspaper and magazine advertisement
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Know Your Charity: How to protect yourself from fraud and fight terrorist financing contd
Tips Before You Donate Money As a donor, you should have some answers before you give money. Questions frequently asked are "How do I know that this charity is legitimate?" and "Where does this money go once I make a donation?" The following tips are designed to help you know whether a charity is genuine and how to avoid being victimized by a charity that is not legitimate or that may fund terrorists without your knowledge: Do not give cash to strangers. You do not know if that person would use your hard-earned money for the charitable purpose or divert it elsewhere. Do your homework. Take the time to learn about the charitable organization you support or considering supporting. Ask for literature and read it. Tell the solicitor that you would like to do some research on the charity. Read and understand everything before you make a decision. Ask questions e.g. ask where and how your contribution will be used. Dont be deceived by a convincing name. A fake or dishonest charity will often have an impressive name, or one that looks like the name of a reputable, legitimate charity. Dont let pressure win. Dont surrender to pressure and feel that you must contribute on the spot. Legitimate organization will not expect you to donate instantly. Remember, you can say no. Don't pay cash. Once you have a satisfactory answer to all your questions, you can make all donations by check to the charitable organization or by credit card. But beware! Do not give your credit card number to someone you do not know. On November, 7 2002, the US Treasury Department issued a document entitled "U.S Department of the Treasury Anti-Terrorist Financing Guidelines: Voluntary Best Practices for U.S Based Charities." The guidelines are mainly aimed at financial institutions and charitable organizations. However, the Treasury Department also advises individual companies that donate directly to charities to regularly check its list of individuals and organizations the department has designated as related to terrorism. (The list and the guidelines can be found at www.treasury.gov) Donating to a charity is a way to support the needy during these troubled times. Sadly, there are some people ready to take advantage of your kindness. Therefore, you must do your homework before donating your hard-earned money and reasonably take all measures to ensure that the money does not fall in the wrong hands. Hany Abou-El-Fotouh. CAMS is the Head of
Compliance, Oman International Bank, Muscat. He speaks frequently about compliance and anti-money laundering issues and is a member of MECOF, the Middle East Compliance Officers Forum, a strategic partner in that region with ACI.
http://finance.groups.yahoo.com/group/ middle_east_compliance/
Volume 6 Issue 1
The views expressed are those of the authors and do not constitute legal advice.
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ACI Volunteer Program News & National Conference call for Workshop Presenters
Volunteering with ACI
ACI currently has active Working Parties looking at Enforceable Undertakings; providing a submission to the Productivity Commission in regard to APVMA and the possibility of a working party looking at legal privilege and providing comment to the ALRC, all of these instigated by interested members so we would encourage you to come to us with your ideas for projects and issues that need to be addressed! Future invitations will include a working party to look at the needs of members working for SMEs, Anti-Money Laundering and an invitation to members to participate on the ACI Events Committee. As invitations are finalised they are released onto the Volunteers page of the ACI website so if you are interested please keep an eye on this page: http://www.compliance.org.au/www_aci/default. asp?menuid=134 Other invitations for working parties will continue to be released throughout the coming months but again, if members identify an issue around which a group would like to produce a body of work, please contact the ACI office to facilitate the formation of a Working Party. It not only assists individual members in demonstrating their commitment to the profession but ultimately provides resources for all members. Submissions and other materials from volunteer working parties is made available for members on the ACI website under Tools & Resources Library and are free to members. If you have any suggestions for projects or any further enquiries regarding volunteering in general please feel free to contact Naomi Burley at the ACI office on (02) 9290 1788 or email naomi.burley@compliance.org.au
Compliance: the value proposition measurement and marketing How do you measure effectiveness, how do you demonstrate value
Whilst plenary speakers are currently being confirmed ACI would like to issue a call for Workshop Presenters for the Conference on this theme. We are looking for up to six individuals who can present a case study from their practical experience in a company and draw out the set of principles and processes that helped them establish compliance as a value proposition within their business and how they measure and demonstrate their value and effectiveness. This would require the individual providing a thirty minute presentation on their case study and then facilitating a workshop activity to provide the participants with practical tips, traps and examples of how to go about doing the same thing in their organisations. The workshops would be duplicated on the two days. Presenters also need to be happy to have their work printed and displayed around the conference and then made available on the ACI website as a resource for other members following the conference. If you would like to respond to this invitation please provide a detailed submission regarding the case study and material you would want to cover and send through to ACIs Events Coordinator, Hannah Tourle, at: Hannah.tourle@compliance.org.au Submissions will be evaluated by the Events Committee and volunteers contacted as soon as possible thereafter to make necessary arrangements to include their session on the program of workshops.
Volume 6 Issue 1
The views expressed are those of the authors and do not constitute legal advice.
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Upcoming Training The Associate Intensive in Sydney on the 1st of June is completely full and we are looking forward to a very exciting session. Were sure the participants will find the training as valuable as the attendees at the recent Perth Associate did. ACI was particularly pleased with the success of this Intensive in Perth which demonstrated again the wide variety of industry sectors that the training is applicable to and that ACI is not as finance sector centric as many members would believe, with attendees from a spectrum of sectors. Places are still available though for the Sydney Associate Intensive in August and the Gold Coast Intensive in November. Those intending to undertake the CCP level work should also be aware that the only remaining opportunity to do this in 2007 will be in September, when the CCP Residential will be held in the Blue Mountains. Registrations for all training can be made on the ACI website:http://www.compliance.org.au/www_aci/ events_listing.asp Further information about these training options can be obtained from the ACI office as well.
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CCP
Peter Borbiro Samantha Brown ATO Skandia
Associate
Lisa Arnold Dean Austin Peter Bingham Annetta Chawynski Vanessa Darby Adriaan den Dulk Rebecca Ellis George Gholam Jennifer Heng Philip Higgins Kim Ho Cheryl Johnstone Filomena Kinkead Eric Lauro Financial Services Consulting Macquarie Bank Transend Networks Pty Ltd Australian Alliance Insurance MLC Risk Resource Pty Ltd ING Australia Limited NAB CGU Insurance Ltd RAC WA The Money Managers Ltd Bendigo Bank InsuranceLine Essential Services Commission of SA
Volume 6 Issue 1
The views expressed are those of the authors and do not constitute legal advice.