Financial Crime World

Anti-Money Laundering Regulations: A Must-Comply Requirement for Law Firms and Conveyancing Professionals in New Zealand

In a bid to combat money laundering and terrorist financing, law firms and conveyancing professionals in New Zealand are now required to comply with anti-money laundering regulations. This development aims to curb the use of legal services as a means to conceal illegal activities.

Designated Non-Financial Business or Profession

According to the Act, the following entities are considered reporting entities:

  • Law firms
  • Incorporated conveyancing firms
  • Conveyancing practitioners who manage client funds, accounts, securities, or other assets
  • Situations where they hold customer funds for property sales until settlement date
  • Make investments on behalf of customers
  • Manage trust assets
  • Exercise enduring powers of attorney

ML/TF Risks

The ML/TF risks associated with these activities are significant. Criminals may attempt to use legal and conveyancing services to obscure the trail of money laundering activities, making it difficult for authorities to track illegal funds. The sale and purchase of property, in particular, is a recognized typology for money laundering.

Real Estate Agency Work

Law firms and conveyancing professionals who provide real estate agency work to effect transactions are also considered reporting entities. This includes activities such as:

  • Purchasing or selling properties
  • Which can provide an appearance of legitimacy for the acquisition and movement of large sums of money

Engaging in Specified Services

Furthermore, law firms and conveyancing professionals who engage in or give instructions on behalf of customers to undertake specified services, including:

  • Conveyancing
  • Transactions
  • Transfers of beneficial interests in land or real property Are also captured by the Act. These activities can provide a protective layer between the customer and the transaction, making it difficult for authorities to trace illegal funds.

Key Risks

The key risk associated with these activities is the anonymity and appearance of legitimacy that may be gained by customers through the use of legal services. This can make it challenging for authorities to detect money laundering and terrorist financing activities.

It’s essential for law firms and conveyancing professionals to understand how legal professional privilege applies in these situations. The Act does not require disclosure of any information that is believed, on reasonable grounds, to be a privileged communication.

Conclusion

In conclusion, law firms and conveyancing professionals in New Zealand must comply with anti-money laundering regulations to prevent the use of their services for illegal activities. It’s crucial for them to understand the ML/TF risks associated with their activities and take necessary measures to mitigate these risks.