Financial Crime World

Detecting Financial Crime in New Zealand: What You Need to Know

Financial crime is a serious issue globally, and New Zealand is no exception. To combat this, the country has implemented the Anti-Money Laundering and Countering Financing of Terrorism Act (AML/CFT) in 2013.

What is the Objective of the AML/CFT Act?

The primary objective of the AML/CFT Act is to ensure that New Zealand adheres to FATF recommendations and maintains a secure financial system. This is achieved through compliance from businesses, which helps detect and deter money laundering and the financing of terrorism.

Which Businesses Need to Comply with the Act?

Initially, the act covered financial institutions, banks, casinos, and specific trust and company service providers. However, an amendment in 2017 expanded the scope to include real estate agents, conveyancers, lawyers, accountants, and businesses dealing in expensive goods or betting on sports and racing.

How Does it Work?

The AML/CFT Act requires businesses within its scope (reporting entities) to comply with basic obligations:

  • Risk Assessment: Businesses must complete a thorough risk assessment to identify key areas of vulnerability.
  • AML/CFT Programme: Based on the risk assessment, businesses must implement procedures, policies, and controls to detect, manage, and mitigate risks.
  • Customer Due Diligence (CDD): Businesses must verify each customer’s identity to ensure they are who they say they are.
  • Suspicious Activity Reporting (SAR): Businesses must report any suspicious activity to the Financial Intelligence Unit.
  • Annual Reporting: Businesses must file an annual report that covers risk assessment and their AML/CFT programme.

The Act is Only as Successful as its Participants

New Zealand’s AML/CFT legislation can only be as successful as its participants. While many businesses are still coming to grips with compliance requirements, it’s essential to understand the obligations and simplify the compliance process. For those struggling with compliance or unsure where to start, First AML offers specialist advice and automated AML software to help navigate these challenges.

By understanding the AML/CFT Act and its implications, businesses in New Zealand can take a proactive approach to detecting financial crime and maintaining a secure financial system.