Financial Crime World

New Zealand Tackles Money Laundering with Tough Regulations

Introduction

In a bid to combat financial crimes, New Zealand has implemented stringent anti-money laundering (AML) regulations aimed at preventing the flow of illicit funds. The country’s Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (AML/CFT Act) places significant obligations on businesses to detect and deter money laundering and terrorism financing.

Regulations Supporting the AML/CFT Act

Several sets of rules have been introduced to provide further clarity on the regulations:

  • The Anti-Money Laundering and Countering Financing of Terrorism (Definitions) Regulations 2011: defines key terms used in the AML/CFT Act.
  • The Anti-Money Laundering and Countering Financing of Terrorism (Exemptions) Regulations 2011: outlines exemptions from the Act’s requirements.
  • The Anti-Money Laundering and Countering Financing of Terrorism (Requirements and Compliance) Regulations 2011: sets out specific obligations for businesses to comply with the Act.
  • The Anti-Money Laundering and Countering Financing of Terrorism (Ministerial Exemption Form) Regulations 2011: provides a framework for Ministerial exemptions.
  • The Anti-Money Laundering and Counter Financing of Terrorism (Class Exemptions) Regulations 2018: introduced new class exemptions from the Act’s requirements.
  • The Anti-Money Laundering and Counter Financing of Terrorism (Cross-border Transportation of Cash) Regulations 2010: regulates the transportation of cash across borders.
  • The Anti-Money Laundering and Counter Financing of Terrorism (Prescribed Transactions Reporting) Regulations 2016: requires businesses to report suspicious transactions.

Ministerial Exemptions

The AML/CFT Act allows for Ministerial exemptions from specific provisions. Regulatory exemptions are outlined in the regulations, while Ministerial exemptions can be granted by the Minister of Justice. These exemptions may be subject to conditions and must be applied for through the Ministry of Justice website.

Supervisory Framework

To ensure compliance with the AML/CFT Act, a supervisory framework has been established. This sets out the objectives, functions, powers, and guiding principles of the three AML/CFT supervisors. The framework also outlines the compliance tools and techniques available to them.

Approach to Compliance and Enforcement

The Department’s approach to compliance and enforcement is outlined in the document “Minimising Harm - Maximising Benefit.” This approach aims to balance the need for strict regulations with the need for businesses to operate efficiently.

Mutual Evaluation Report 2021

New Zealand underwent a Mutual Evaluation by the Financial Action Task Force (FATF) in early 2020. The report summarizes the effectiveness of New Zealand’s AML/CFT system and provides recommendations on how it can be strengthened.

Business Obligations

To comply with the AML/CFT Act, businesses must:

  • Conduct a risk assessment: to identify potential money laundering and terrorism financing risks.
  • Develop an anti-money laundering and countering financing of terrorism (AML/CFT) program: that includes procedures to detect, deter, manage, and mitigate these risks.
  • Appoint a compliance officer: to administer and maintain the AML/CFT program.
  • Implement customer due diligence processes: including identifying and verifying customers’ identities.
  • Establish suspicious activity reporting, auditing, and annual reporting systems: