Financial Crime World

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Financial Crime Reporting Requirements in New Zealand: What You Need to Know

New Zealand’s financial sector is subject to a complex regulatory regime aimed at preventing and detecting money laundering (ML) and terrorist financing (TF). The country has three main laws that govern anti-money laundering (AML) and countering the financing of terrorism (CFT): the Crimes Act 1961, Terrorism Suppression Act 2002, and Anti-Money Laundering and Countering Financing of Terrorism Act 2009.

AML/CFT Regime in New Zealand

The AML/CFT regime in New Zealand is characterized as a tripartite system, comprising:

  • Criminal laws
  • Regulatory requirements for private sector reporting entities
  • Confiscation and forfeiture of assets under an active criminal proceeds recovery regime

The Russia Sanctions Act and Regulations, which came into effect in 2022, have added new responsibilities to AML reporting entities.

Regulators

There are three main regulators responsible for supervising different sectors and activities:

  • Financial Markets Authority (FMA): oversees issuers of securities, trustee companies, futures dealers, and collective investment schemes
  • Reserve Bank of New Zealand (RBNZ): regulates banks, life insurers, and non-bank deposit takers
  • Department of Internal Affairs (DIA): has a wide scope covering casinos, non-deposit taking lenders, money changers/remitters, cash security firms, debt collection and factoring, financial leasing, payroll, safe deposit, tax pooling, and non-bank credit card firms

Reporting Entities

A business is considered a reporting entity if it engages in regulated services or activities, including:

  • Accounting practices
  • Law firms
  • Conveyancers
  • Real estate agents
  • High-value dealers
  • Casinos
  • TAB New Zealand
  • Trust and company service providers
  • Non-bank non-deposit taking lenders
  • Money remitters
  • Virtual asset service providers
  • Money changers
  • Payroll remitters
  • Debt collecting and factoring
  • Financial lessors
  • Safety deposit box providers
  • Non-bank credit card providers
  • Cash transporters
  • Tax poolers
  • Payment providers/networks

Reporting Requirements

Reporting entities have several legal obligations under the AML/CFT Act, including:

  • Conducting a risk assessment on current and potential customers, products/services, and business partners
  • Establishing, implementing, maintaining, and regularly auditing an AML/CFT compliance program
  • Appointing an AML/CFT compliance officer responsible for administering the compliance program
  • Setting up processes to vet new staff and senior managers engaged in AML/CFT-related duties
  • Ensuring governance structures are in place to keep senior management and directors involved in the compliance function
  • Conducting customer due diligence measures before establishing new customer/client relationships or doing occasional transactions
  • Regularly monitoring customer activity, especially for high-risk transactions or types of business relationships
  • Ensuring a robust process exists to detect and report suspicious activities and other prescribed types of transactions
  • Maintaining full record keeping for at least five years after the end of a transaction or customer relationship
  • Arranging ongoing internal review, independent external audits, and annual reporting about the entity’s level of compliance with its AML/CFT compliance program

Important Note

This list is not exhaustive, and entities should always review the AML/CFT Act itself or consult with legal professionals for specific guidance.