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New Zealand Steps Up Efforts to Combat Financial Crime as FATF Guidelines Take Effect
In a significant move to combat financial crime, New Zealand has implemented new guidelines aimed at preventing organized criminal gangs, corrupt individuals and sanctions evaders from hiding their illicit activities behind anonymous shell companies.
Background
The revised Recommendation 24, agreed upon by the Financial Action Task Force (FATF) in March 2022, has been updated with new guidance to help countries implement stricter standards. The guidelines require competent authorities in New Zealand to have access to accurate and up-to-date information on the true owners of companies.
Key Features
The new guidelines aim to:
- Mitigate money laundering and terrorist financing risks associated with foreign companies operating in New Zealand
- Identify, design and implement measures to ensure that beneficial ownership information is held by a public authority or body functioning as a beneficial ownership registry, or an alternative mechanism that provides efficient access to such information
- Explain various types and sources of relevant information, including mechanisms and sources for obtaining such information
Implementation Approach
A multi-pronged approach is recommended, combining information from multiple sources, such as:
- Companies themselves
- Public authorities
- Alternative mechanisms that ensure rapid and efficient access to beneficial ownership information
Benefits
FATF’s mutual evaluations have shown that countries using a multi-pronged approach are more effective in preventing the misuse of legal persons for criminal purposes and ensuring transparency of beneficial ownership.
Development Process
The new guidelines were developed through several months of intense consultations with external stakeholders, including the private sector. They aim to assist policymakers and practitioners in implementing the necessary measures to prevent shell companies from being used as safe havens for illicit proceeds linked to crime or terrorism.
Impact
The implementation of these guidelines marks a significant step forward in New Zealand’s efforts to combat financial crime and maintain its reputation as a responsible and transparent financial center.