If you provide certain financial services as a part of doing business, you have to safeguard yourself against money laundering and financing terrorism. This might include changing how you ID customers.
This law change applies to real estate agents, conveyancers, many lawyers and accountants, and others.AML/CFT - what's new
What: The Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) Act is being expanded to cover a lot more New Zealand businesses.
Financial institutions have had to comply with the AML/CFT Act since 2013 — now other businesses will also need to comply, including real estate agents and many lawyers and accountants.
When: When you must comply varies depending on your business activity:
1 July 2018 for lawyers, conveyancers, and some trust and company services
1 October 2018 for accountants and bookkeepers
1 January 2019 for real estate agents.
Why: This will help to detect and prevent criminals laundering money or financing terrorism through New Zealand businesses. It also makes sure New Zealand meets international standards and protects our reputation as a good place to do business.
What you need to do: Check if the law applies to you.
If it does, you will need to:
meet new reporting requirements
meet new requirements for identifying your customers
keep good records.
Who's affected?You’ll need to meet new requirements if you manage money or assets for clients, provide trust or company services, sell property or provide conveyancing services, or handle large amounts of cash.
some accountants and bookkeepers
other businesses that provide trust and company formation services
all real estate agents.
Find out if your business is affected (external link) — Ministry of Justice
If you deal in high-value items, eg cars, yachts, jewellery, precious metals or antiques, new rules will apply to you from 1 August 2019.
What you need to do
If the new laws apply to you, what you need to do depends on your business activities and your customers. If you’re confused or not sure what to do, contact the government agency that supervises your industry for help. Supervisors are responsible for helping businesses meet their obligations. You can go to them with questions or problems.
The Department of Internal Affairs supervises lawyers, conveyancers, trust and company service providers, accountants, and real estate agents. It also supervises other businesses that handle large amounts of money, eg payroll remitters, casinos and debt collectors.The Reserve Bank supervises banks, life insurers and non-bank deposit takers.The Financial Markets Authority (FMA) supervises businesses like financial advisers, derivatives issuers, brokers and managed investment scheme managers.
- Who does what? (external link) — Department of Internal Affairs
- Reserve Bank and AML/CFT (external link) — Reserve Bank
- Financial Markets Authority and AML/CFT (external link) — Financial Markets Authority
Things to do to get set up
Put someone in charge of AML/CFT
You’ll need to identify an AML compliance officer, who’ll be responsible for making sure your obligations are met. The compliance officer can be anyone (including you), as long as they have a direct reporting line to senior management.
Identify your risks and create a compliance programme
You understand your business better than anyone else — so you’re in the best position to identify the risks your business might face from money laundering and terrorism financing, and to develop effective ways to manage and control these risks. If a criminal was to try and use your services, what would they do? How could they exploit you?Your compliance officer will do a risk assessment and put together a compliance programme for your business. These will need to be available if your supervisor asks to see them.
You might want to get help with putting together your risk assessment and compliance programme.But make sure you use a reputable company and pay a fair price.
Things to do ongoing
Use and update your risk assessment and compliance programme
You’ll need to:
- Monitor clients’ accounts for potentially suspicious activity.
- Regularly review your risk assessment and compliance programme.
- Have your risk assessment and compliance programme audited every 2 years.
- Submit an annual report to your supervisor.
You may need to change the way you ID clients. You’ll also need to verify the identity of customers who pay cash deposits of $10,000 or more — and you may need to ask for information about where the money came from too.There are rules on which forms of ID you can accept. You can either:
- Follow the identity verification code of practice.
- Adopt your own policy that’s equally as effective.
If you choose to create your own policy, you must tell your supervisor. They’ll check your policy meets the requirements of the law.
Identity verification code of practice (external link) — Department of Internal Affairs
Codes of practice and guidelines (external link) — Department of Internal Affairs
Compliance costsThere’s no way around it: yes, this will probably cost you some time and money. But there are things you can do to reduce your costs, especially if you’re a low-risk business.One option is to form a designated business group with other similar businesses to share your compliance obligations.Working with others to reduce your costs (external link) — Ministry of Justice
Do you have questions about the new laws?
Contact the Department of Internal Affairs AML team by freephone at 0800 257 887 (NZ only) or +64 4 495 7200 or by email at firstname.lastname@example.org.