Financial Crime Reporting Requirements Tighten in New Zealand
New Zealand’s Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) Act 2009 has introduced several obligations on reporting entities to prevent the country’s financial system from being used for money laundering and financing of terrorism.
Conducting a Written Risk Assessment
Each reporting entity must conduct a written risk assessment to determine the likelihood of money laundering and financing of terrorism in its business operations. This assessment is a crucial first step in developing an effective AML/CFT compliance programme, which must be tailored to the entity’s specific risks.
Guidelines for Completing a Risk Assessment
The Financial Markets Authority (FMA) has issued guidelines on how to complete a risk assessment, as well as a separate guideline for AML/CFT programmes. These documents provide reporting entities with a framework for identifying and mitigating their risks.
Establishing an AML/CFT Programme
Once a risk assessment is completed, reporting entities must establish an AML/CFT programme that sets out procedures, policies, and controls for detecting, managing, and mitigating the identified risks. The programme must be in writing and based on the risk assessment.
Annual Reports
In addition to these obligations, reporting entities are required to submit annual reports on their risk assessments and AML/CFT programmes. These reports will provide the FMA with valuable information on the risk of money laundering and financing of terrorism within each entity, as well as help ensure that the agency’s resources are used effectively.
Independent Audit
Reporting entities must also undergo an independent audit every two years or at the request of the FMA. The auditor’s report will assess the entity’s risk assessment and AML/CFT programme to ensure they are effective in mitigating the identified risks.
Prescribed Transactions Reports (PTRs)
From November 1, 2017, reporting entities have been required to submit PTRs to the Financial Intelligence Unit (FIU) at the New Zealand Police. The PTR obligation applies to international wire transfers above NZ$1,000 and domestic physical cash transactions above NZ$10,000.
Tips for Reporting Entities
- Engage an independent auditor early to ensure one is available to assist with the audit process.
- Refer to the FMA’s guidelines and FAQs on the AML/CFT audit process to help complete reports efficiently.
Strengthening New Zealand’s Financial System
The tightened reporting requirements are aimed at strengthening New Zealand’s financial system and preventing its use for illicit activities.