New Zealand Cracks Down on Money Laundering with Tougher AML Guidelines
Strengthening its Reputation as a Safe Haven for Businesses
New Zealand has introduced stricter guidelines to combat money laundering and terrorism financing, aiming to strengthen its reputation as a safe haven for businesses. The Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (AML/CFT Act) places obligations on various industries to detect and deter illegal activities.
Obligations Under the AML/CFT Act
- Financial institutions, casinos, virtual assets service providers, accountants, lawyers, conveyancers, and high-value dealers must conduct risk assessments to identify potential money laundering and terrorism financing risks in their operations.
- Establish an Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) programme that includes procedures for detecting, deterring, managing, and mitigating such risks.
AML/CFT Act Timeline
The AML/CFT Act has been in full force since June 30, 2013, with various regulations commencing at different times. The guidelines aim to enhance the reputation of individual businesses and New Zealand as a whole by providing a robust framework for detecting and preventing illegal activities.
Supporting Regulations
In addition to the main act, several supporting regulations have been introduced, including:
- Definitions regulations
- Exemptions regulations
- Requirements and compliance regulations
- Ministerial exemption form regulations
- Class exemptions regulations
- Cross-border transportation of cash regulations
- Prescribed transactions reporting regulations
Exemptions
The guidelines provide for two types of exemptions:
- Regulatory exemptions set out in the AML/CFT regulations
- Ministerial exemptions, which can be granted by the Minister of Justice for businesses, transactions, products, services, or customers. These exemptions may be subject to conditions and can only be granted after a thorough assessment of the applicant’s circumstances.
Supervisory Framework
New Zealand’s AML/CFT supervisory framework sets out the shared objectives, functions, powers, and guiding principles of the three AML/CFT supervisors and the compliance tools and techniques available to them.
Approach to Compliance and Enforcement
The government has released an approach to compliance and enforcement in this area, outlining its strategy for ensuring that businesses comply with the guidelines. The Financial Action Task Force (FATF) Mutual Evaluation Report 2021 provides a comprehensive assessment of New Zealand’s AML/CFT system and offers recommendations on how it can be strengthened.
Business Obligations
To meet their obligations under the AML/CFT Act, businesses must:
- Establish an AML/CFT programme
- Appoint a compliance officer
- Conduct customer due diligence processes
- Maintain suspicious activity reporting, auditing, and annual reporting systems
Codes of Practice and Guidelines
The government has released codes of practice and guidelines to help businesses determine what they need to do to comply with the new regulations.
Conclusion
The introduction of these stricter guidelines aims to protect New Zealand’s reputation as a safe haven for businesses and ensure that it remains a responsible player in the global financial system.