Barristers Sole Class Exemption
Return to Information for Lawyers and Conveyancers
Factsheet June 2021
Background
The Associate Minister of Justice has approved a class exemption for barristers sole from certain provisions of the Anti-Money Laundering and Countering the Financing of Terrorism Act 2009 (AML/CFT Act), valid from 15 March 2021 until 15 March 2026. This factsheet sets out the exemption that has been approved and how this may affect barristers[1].
Reason for the exemption
Barristers have been granted an exemption from some sections of the AML/CFT Act in certain circumstances. While money laundering/terrorism financing (ML/TF) risks are still applicable to barristers, these risks are mitigated by the restrictions on activities a barrister can perform, the obligations to report relevant information, solicitors’ obligations to clients under the AML/CFT Act, and the low ML/TF risk associated with instructions from Crown entities.
Captured activities
The AML/CFT Act is activities-based. Most services a barrister provides will not be captured by the Act. The exemption is only relevant when a barrister is performing captured activities in the ordinary course of their business. In practice, that will typically be when a barrister is, in the ordinary course of their business, advising on, documenting or effecting a transaction involving real property.
Please refer to the Lawyers and Conveyancers section of the DIA website for information on:
- Captured activities
- Interpreting “ordinary course of business”
https://www.dia.govt.nz/AML-CFT-Information-for-Lawyers-and-Conveyancers
Circumstances in which the exemption applies
There are two circumstances where the exemption may apply:
- barristers who receive instructions from a solicitor (who is not an in-house lawyer, other than an in-house lawyer employed by the Crown) in respect of a client.
- barristers who receive instructions from the Crown[2].
It is important to note that the exemption for each of these situations are slightly different from each other. The amendment notice, which includes a full list of exempt provisions is available online[3], with the table on the second and third pages of this factsheet providing an outline of the exempt provisions for each circumstance.
The exemption does not apply to a barrister who receives instructions directly from a client, or a barrister who performs the activities listed in the definition of a designated non-financial business or profession (DNFBP) in section 5 of the AML/CFT Act (outside of the instructions of a lawyer).
Obligations that still apply
In all circumstances when performing captured activities in the ordinary course of business, barristers will have to comply with the Act’s provisions relating to suspicious activity reporting and keep relevant records. Depending on who they are instructed by, they also have enhanced customer due diligence obligations in specific circumstances and simplified customer due diligence obligations.
Disclaimer
Please note this factsheet is provided for information purposes only and cannot be relied on as evidence of complying with the requirements of the AML/CFT Act. It does not constitute legal advice.
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Barristers who receive instructions from a solicitor (who is not an in-house lawyer, other than an in-house lawyer employed by the Crown) |
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Exempt provisions |
Customer due diligence requirements (section 11), and reliance on risk assessment (section 12) |
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Standard and simplified due diligence – barristers instructed in the way covered by this exemption are not required to conducted standard and simplified due diligence on their customers (sections 14-21) |
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Enhanced customer due diligence in certain circumstances (s22(1), 22(2), 22(5), 22A-25)
Enhanced customer due diligence is not required when a business relationship is established, or an occasional transaction is conducted with a customer which: -is a trust or another vehicle for holding personal assets, involves a non-resident customer from a country that has insufficient AML/CFT systems or measures in place, involves unusually large or complex transaction/s, involves nominee shareholders, or the reporting entity determines the level of risk involved warrants it (s22(1)) -is a politically exposed person (s22(2)) -involves new or developing technologies, or new or developing products that might favour anonymity (s22(5))
Enhanced customer due diligence is not required for activities requiring suspicious activity report (22A). Sections 23-25 are exempt due to their link to other exempt provisions. |
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Politically exposed person (PEP) requirements (s26) – exempt from requirement to conduct PEP checks and take additional measures when a customer is a confirmed PEP. |
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New or developing technologies, or products, that might favour anonymity (s30) – exempt from requirement to take additional methods in relation to new and developing technologies. |
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Ongoing customer due diligence and account monitoring (s31) – exempt requirement to conduct ongoing customer due diligence and account monitoring in relation to a customer. |
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Prohibitions (s37-39) – exempt from requirement to comply with these sections which relate to being unable to conduct customer due diligence, false names and customer anonymity, and business relationships involving shell banks. |
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AML/CFT programme requirements (s56 and 57) – exempt from requirement to establish, implement and maintain an AML/CFT programme and designate a compliance officer. |
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Risk assessment and audit of risk assessment requirements (s58, 59 and 59B) – exempt from requirement to undertake a risk assessment and exempt from requirement to review and obtain an audit of risk assessment and AML/CFT programme. |
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Annual AML/CFT report (s60) – exempt from the requirement to prepare an annual report |
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Key non-exempt provisions |
When instructed by the Crown, barristers are still required to comply with simplified customer due diligence requirements (s18-21) In relation to section 11, customer due diligence is not requiredto be conducted except where a business relationship is established, or an occasional transaction is conducted with a customer which: - is a trust or another vehicle for holding assets, involves a non-resident customer from a country that has insufficient AML/CFT systems or measures in place, involves unusually large or complex transaction/s, involves nominee shareholders, or the reporting entity determines the level of risk involved warrants it (s22(1)). Customer due diligence is required to be conducted in response to a suspicious activities report being submitted (s22A). The exemption does not exempt barristers from obligations to report suspicious activities (s39A-48). Suspicious activities may still be detected and should be reported, as soon as practicable, but no later than three working days after forming suspicion. Record keeping (s49-55) - Barristers are not exempt from the Act’s record keeping provisions and must keep relevant records. Provisions of the Act which relate to wire transfers, correspondent banking relationships, prescribed transaction reports, and enhanced customer due diligence in relation to wire transfers and correspondent banking are not included in the exemption because they are not applicable to barristers when instructed in a way covered by the exemption (barristers may attract these obligations when instructed directly by a client, as per Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008 (Client Care Rules)). |
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Barristers who receive instructions from the Crown |
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Exempt provisions |
Customer due diligence requirements (section 11) (except where sections 22(1) and 22A apply) – see non-exempt provisions below for descriptions on these exceptions. Reliance on risk assessment (section 12) |
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Standard due diligence – barristers instructed in the way covered by this exemption are not required to conduct standard due diligence on their customers (sections 14-17) |
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Enhanced customer due diligence in certain circumstances (22(2), 22(5)) Enhanced customer due diligence is not required when a business relationship is established, or an occasional transaction is conducted with a customer which: - involves a customer who is a politically exposed person (s22(2)) - involves new or developing technologies, or new or developing products that might favour anonymity (s22(5)) |
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Politically exposed person (PEP) requirements (s26) – exempt from requirement to conduct PEP checks and take additional measures when a customer is a confirmed PEP. |
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New or developing technologies, or products, that might favour anonymity (s30) – exempt from requirement to take additional methods in relation to new and developing technologies. |
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Ongoing customer due diligence and account monitoring (s31) – exempt requirement to conduct ongoing customer due diligence and account monitoring in relation to a customer. |
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AML/CFT programme requirements (s56 and 57) – exempt from requirement to establish, implement and maintain an AML/CFT programme and designate a compliance officer. |
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Risk assessment and audit of risk assessment requirements (s58, 59 and 59B) – exempt from requirement to undertake a risk assessment, and review and audit of risk assessment and AML/CFT programme. |
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Annual AML/CFT report (s60) – exempt from the requirement to prepare an annual report |
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Key non-exempt provisions |
When instructed by the Crown, barristers are still required to comply with simplified customer due diligence requirements (s18-21) In relation to section 11, customer due diligence is not requiredto be conducted except where a business relationship is established, or an occasional transaction is conducted with a customer which: - is a trust or another vehicle for holding assets, involves a non-resident customer from a country that has insufficient AML/CFT systems or measures in place, involves unusually large or complex transaction/s, involves nominee shareholders, or the reporting entity determines the level of risk involved warrants it (s22(1)). Customer due diligence is required to be conducted in response to a suspicious activities report being submitted (s22A). The exemption does not exempt barristers from obligations to report suspicious activities (s39A-48). Suspicious activities may still be detected and should be reported, as soon as practicable, but no later than three working days after forming suspicion. Record keeping (s49-55) - Barristers are not exempt from the Act’s record keeping provisions and must keep relevant records. Provisions of the Act which relate to wire transfers, correspondent banking relationships, prescribed transaction reports, and enhanced customer due diligence in relation to wire transfers and correspondent banking are not included in the exemption because they are not applicable to barristers when instructed in a way covered by the exemption (barristers may attract these obligations when instructed directly by a client, as per Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008 (Client Care Rules)). |
[1] Barrister means a person who holds a practising certificate as a barrister only, and not as a barrister and solicitor, in accordance with the Lawyers and Conveyancers Act 2006.
[2] In this context, Crown means a customer described in section 18(2)(b) to (f), (j), (l), or (m) of the Act.
[3] https://www.legislation.govt.nz/regulation/public/2021/0039/latest/whole.html
