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Anti-Money Laundering and Countering Financing of Terrorism

Anti-Money Laundering and Countering Financing of Terrorism Act 2009
Background
About the AML/CFT Act 2009
Frequently Asked Questions

Anti-Money Laundering and Countering Financing of Terrorism Act 2009

The Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (AML/CFT Act) was passed on 15 October 2009.

The AML/CFT Act forms part of a legislative package that will implement the first tranche of reforms to New Zealand’s anti-money laundering and countering financing of terrorism (AML/CFT) regulatory regime. The new law formally recognises that effective control of money laundering and crime that leads to it needs collaboration between the financial sector and government.

See Justice Minister Simon Power's media release: Parliament passes law on money laundering (16.10.09).

Background

The AML/CFT Act seeks to bring New Zealand into line with the international standards for AML/CFT frameworks.

The AML/CFT Act provides the following:

A set of reporting requirements for entities covered by the Act
A risk-based approach to tracking possible money laundering and terrorism financing activity, which is intended to minimise compliance costs
An enforcement regime, including new civil and criminal offences
A regime for supervision, monitoring and enforcement of AML/CFT obligations involving three supervisors - the Reserve Bank of New Zealand, the Securities Commission and the Department of Internal Affairs.

Under the AML/CFT Act, the Police Financial Intelligence Unit (FIU) will continue its role of receiving and analysing suspicious transaction reports.

About the AML/CFT Act

The AML/CFT Act covers the financial sector, casinos and any person (natural or legal) declared by regulations to be required to comply with the Act. These groups of persons are collectively referred to as “reporting entities”.

Reporting entities will be required to fully implement provisions of the AML/CFT Act on a date to be appointed by the Governor-General by Order in Council. Full implementation will be determined following consultation with industry.

The AML/CFT Act imposes a number of obligations on reporting entities. These obligations include:

An assessment of the money laundering and the financing of terrorism (ML/FT) risk that it may reasonably expect to face in the course of its business
Establishing, implementing and maintaining an AML/CFT compliance programme that includes internal procedures, policies and controls to detect, manage and mitigate ML/FT
Customer due diligence (CDD), including customer identification and verification of identity and ongoing CDD
Suspicious transaction reporting
Record keeping.

The AML/CFT Act will incorporate a risk based approach to compliance. Reporting entities will (within the limits prescribed by the Act and Regulations) have some flexibility to determine the way in which they meet their obligations based on their AML/CFT risk assessment.

The new law appoints the Reserve Bank, the Securities Commission and the Department of Internal Affairs as supervisors and gives them and the Police’s Financial Intelligence Unit powers to carry out their AML/CFT functions. The Reserve Bank will supervise banks, life insurers and non-bank deposit takers. The Securities Commission will cover issuers of securities, trustee companies, futures dealers, collective investment schemes, brokers and financial advisers. Internal Affairs will cover casinos, non-deposit-taking lenders, money changers and reporting entities not covered by the other supervisors. Suspicious financial transactions will be reported to the Police who will assess the need for further investigation.

The Ministry of Justice will be responsible for monitoring, reviewing and advising the Minister of Justice on the regime’s overall efficiency and effectiveness. It will also administer the legislation and regulations and coordinate national level reporting on the regime to relevant international bodies (e.g. FATF).

The Act empowers supervisors to monitor businesses, provide guidance and enforce compliance.

Taking immediate effect are:

The financial intelligence functions of the police
The definition, functions and powers of AML/CFT supervisors
The establishment and operation of an inter-agency AML/CFT coordination committee to ensure the consistent, effective and efficient operation of the regulatory system
The activation of regulation and exemption-making powers.

Provisions relating to cross-border transportation of cash duties and obligations will take effect in a year.

Next steps include the development of more detailed regulations. The public will be consulted before ministers consider them. Supervisors and the police will be empowered to develop guidelines for meeting the Act’s obligations. Where appropriate, supervisors will also develop codes of practice for specific sectors. These codes of practice will set out how reporting entities can meet their regulatory obligations.

Other industries and professions where money laundering could occur, including lawyers, accountants and real estate agents, will be covered by future legislation.

Frequently Asked Questions

Frequently Asked Questions (FAQs) designed to help answer your queries. The FAQs will be updated regularly to keep up with current areas of interest.

If you cannot find an answer to your question please send an email to amlcft@dia.govt.nz.


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Last updated: 03/11/2009