The commencement of the remaining key provisions of the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (AML/CFT Act) has been confirmed as 30 June 2013 by the Anti-Money Laundering and Countering Financing of Terrorism Act Commencement Order 2011. The two-year notice period has been given to allow time for reporting entities to make the necessary systems and organisational investments to comply with the AML/CFT Act and accompanying regulations.
The commencement order also brings into force provisions that enable Ministers and AML/CFT supervisors to make codes of practice. The first code of practice relates to identity verification and is in the final stages of development.
In addition to the commencement order, four new regulations have been made under the AML/CFT Act. These regulations follow on from Cabinet policy decisions made in November 2010 and June 2011. Details of the November 2010 Cabinet decisions were discussed in Issue No. 6 of Corporate Reporter. Some minor changes to Cabinet's November decisions were made in June, including:
- the removal of proposals relating to the inclusion of stored value instruments in the definition of bearer negotiable instrument (BNI), low-value superannuation schemes and staff vetting requirements, for further work to be undertaken;
- modifications to improve the effectiveness of exemptions for workplace-based superannuation schemes, securities registries, lawyers, accountants, conveyancing practitioners and real estate agents; and
- expanding the application of simplified due diligence measures to Trustee corporations.
All of the AML/CFT Cabinet papers provided to Ministers are available on the Ministry of Justice website here.
The new regulations are:
the Anti-Money Laundering and Countering Financing of Terrorism (Definitions) Regulations 2011 which deal with matters relating to certain terms defined in the AML/CFT Act. In particular, these regulations:
- include certain financial advisers and trust and company service providers as "reporting entities" under the Act;
- exclude certain entities from the Act;
- specify certain transactions as "occasional transactions" and establish the applicable threshold for occasional transactions;
- establish a beneficial ownership threshold for the customer due diligence requirements; and
- extend eligibility for designated business groups and establish the procedure for electing to be a member.
These regulations commence on 28 July 2011;
- the Anti-Money Laundering and Countering Financing of Terrorism (Exemptions) Regulations 2011 which exempt some transactions and services from the AML/CFT Act or parts of the Act. Details of how these regulated exemptions are to work are available on the Ministry of Justice website here. These regulations commence on 30 June 2013;
- the Anti-Money Laundering and Countering Financing of Terrorism (Ministerial Exemption Form) Regulations 2011 which prescribe the form in which the Minister of Justice must make Ministerial exemptions. These regulations come into force on 28 July 2011; and
the Anti-Money Laundering and Countering Financing of Terrorism (Requirements and Compliance) Regulations 2011 which supplement certain provisions of Part 2 of the AML/CFT Act (relating to requirements and compliance). In particular, these regulations:
- require customer due diligence to be carried out on existing anonymous accounts;
- require information to be collected about beneficiaries of trusts that are customers of reporting entities;
- expand the scope of entities to which simplified due diligence can be applied; and
- prescribe annual reporting requirements.
The regulations come into force on 30 June 2013.
The new AML/CFT regime is intended to assist New Zealand in the global fight against organised crime and will enhance New Zealand's ability to detect and trace illegal money through the financial system. The regime also brings New Zealand more closely in line with Australia by improving compliance with the recommendations of the Financial Action Task Force – the inter-governmental body responsible for international standards that combat money laundering and terrorist financing.
The Act applies to financial institutions, casinos, certain trust and company service providers and certain financial advisers (reporting entities).
Further information about obligations of reporting entities and how the regime will be supervised is available on the Ministry of Justice website (here) and the AML/CFT supervisor's websites:
- For life insurers, banks and non-bank deposit takers, visit the Reserve Bank of New Zealand website.
- For issuers of securities, trustee companies, futures dealers, collective investment schemes, brokers and financial advisers, visit the Financial Markets Authority website.
- For casinos, non-deposit taking lenders, money changers and anyone else who is not supervised by either the Reserve Bank or the Financial Markets Authority, visit the Department of Internal Affairs website.