New Zealand is one of the safest places in the world to live and carry out business, due to its extremely low levels of corruption. However, more than $1.35 billion is illegal laundered through our country each year. New Zealand is one of the safest places in the world to live and carry out business, due to its extremely low levels of corruption. However, more than $1.35 billion is illegal laundered through our country each year. Money laundering is the process of disguising the origins – generally illegal – of funds and by transferring them through a number of channels, creates “clean” money. Not only does this criminal activity deprive the country of taxes to support our services, but extends to financiers of terror activities, who seek to evade identification and detection whilst transferring funds.
Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (Act) and the Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) Amendment Act 2017 are the statutes which set out the requirements for businesses to ensure they comply with anti-money laundering processes.
How does this affect my business?
Recent changes to laws surrounding anti money laundering has left many businesses and service providers with more extensive obligations in regard to their reporting and the information they collect from their clients.
Businesses must take appropriate measures to protect against instances of money laundering and report on the processes they have in place to do so. If you are a business owner, or trader, you need to check if you fall under the definition of a “reporting entity” under Section 5 of the Act. Recently those entities have been extended to include:
- sports betting companies
- real estate agents
- many lawyers
- some business who deal in expensive items
If you are a reporting entity, you are required to complete the following:
- A Risk Assessment of the money laundering and financing of terrorism that you could expect in the course of running your business
- An AML/CFT Programme that includes procedures to detect, deter, manage and mitigate money laundering and the financing of terrorism
- A Compliance Officer appointed to administer and maintain your AML/CFT programme
- Customer Due Diligence processes including customer identification and verification of identity
- Suspicious Transaction Reporting, Auditing and Annual Reporting systems and processes.
You may be required to apply a more stringent approach to identify those clients who you provide services for, such as further copies of identification, proof of address by supplying a copy of a recent utility bill, the details of those beneficiaries under a trust, and more. If you do notice or suspect unusual activity, then you are required to report it to the appropriate channels or the police. The purpose of this is to ensure that New Zealand does not become targeted as a place where businesses can be misused for criminal activity, and to allow swift detection of abnormal activities.
It’s important to note that all information held must be in accordance with the Privacy Act 1993.
Who do I report to?
The parties who oversee and regulate matters in relation to anti-money laundering are government agencies.
The Reserve Bank oversees banks, life insurance companies, and entities who take deposits, but are not banks.
The Financial Markets Authority supervises brokers and custodians, peer to peer lending providers, crowdfunding platforms, derivatives issuers, and investment management services.
The Department of Internal Affairs supervises casinos and other financial service providers.
The Ministry of Justice is responsible for the administration of the legislation, and deals with matters regarding exemptions to the Act.
The New Zealand Police (Financial Intelligence Unit) is the agency who receives and investigates suspicious activity. It provides information on money laundering methods and provides guidance to reporting entities about how to report under the Act.
If you think you or your business may be a reporting entity under the Act, it’s important to check your obligations and ensure that you are on track to comply with the updated legislation.