Issue #18    November 2018

An update on all things AML/CFT

Lawyers, conveyancers, accountants and bookkeepers are now required to comply with the Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) Act. Since July and October of this year respectively, they join financial service providers, casinos, and trust and company service providers as sectors supervised by the Department of Internal Affairs (DIA).

Real estate agents will join the AML/CFT system in January 2019. We have published some guidelines for real estate agents, delivered a national roadshow, and are meeting with agencies and stakeholders throughout New Zealand to ensure they understand the compliance obligations.  

We are also engaging with high value dealers and the NZ Racing Board to prepare them for their compliance requirements from August 2019.

Increased support

To support the increasing numbers of reporting entities that we supervise, we are expanding our AML Group.  An office in Christchurch was recently established to help support our South Island based reporting entities, and we have made some exciting new additions to our teams.

We have appointed two Operations Managers for our Wellington and Christchurch teams, and a number of front line regulators and specialist roles across the group.  The new recruits bring a broad range of skills and experience including law, accounting, banking, communications, relationship management, intelligence and investigative skills. 

Katie Joyce is our Wellington based Operations Manager. She joins us from the banking industry and has a strong background in AML, along with history as a Senior Investigator and Fraud Analyst.  Katie is leading a team of regulators based in Wellington, including the group that receive and manage our responses to queries.

Andrew Holmes is our Auckland Operations Manager. Many of you may already know Andrew, as he has been with us since the AML/CFT Act came into force in 2013. Andrew is leading a team of regulators based in Auckland.

Your important role

Reporting entities make a big difference in disrupting money laundering, terrorism financing and other serious crimes, in both New Zealand and around the world.  We are committed to supporting our reporting entities in meeting their compliance obligations and keeping our money clean.

We encourage everyone to refer to our website regularly for updates on our guidance, information and advice. The team are ready to assist either by phone - 0800 25 78 87 - or email the team on AMLCFT@dia.govt.nz.

Mike Stone

Director
AML Group, Regulatory Services, Department of Internal Affairs  

In this issue:

• Annual Reports
• Sector Risk Assessment updated
• Frequently Asked Questions for reporting entities
• Compliance checks underway
• When a reporting entity doesn’t comply

Financial service providers, casinos, and some trust and company service providers were required to submit annual reports by the end of August this year.  Thank you to those who submitted your annual reports on time. We are following up with the small percentage of reporting entities that have not yet submitted their annual reports.

Our new sectors – the legal sector, accountancy sector and the real estate sector will be required to submit an annual report by the end of August 2019.

In 2019, the Annual Report submission due date will be same for all sectors – including those who join us partway through the 12 month period that ends 30 June 2019.

We have recently released an updated Sector Risk Assessment on money laundering and terrorism financing risks and vulnerabilities for financial service providers, casinos and trust and company service providers.

The Sector Risk Assessment details vulnerabilities that can make businesses more susceptible to money laundering, high risk factors that attract money launderers, and information on terrorism financing.

Compliance Officers for these sectors have been emailed the updated assessment, and are asked to review their AML/CFT programme and consider if changes need to be made.

Read the Sector Risk Assessment

Frequently Asked Questions for reporting entities

We have published Frequently Asked Questions on our website based on queries received from our reporting entities that cover topics such as:

• Compliance officers
• Risk Assessment
• Customer Due Diligence
• Prescribed transaction reports
• Suspicious activity reporting
• Staff vetting
• Independent audits
• Annual AML/CFT Reports.

There are also some questions specific to the legal and accounting sectors.  

Compliance checks underway

Our compliance checks continue with desk-based reviews and on-site inspections for reporting entities throughout the country.

These checks help to identify gaps in reporting entities’ risk assessments and AML/CFT programmes, and provide an opportunity to improve the effectiveness of these compliance programmes to protect businesses from misuse by criminals.  

Compliance audits may be business as usual for some sectors, but for those that are new to the AML regime, we will contact you prior to a desk-based review or an on-site inspection.

Desk-based review requests will list what documents you need to send to us, and a timeline for the response.  

If required, an on-site inspection may follow a desk-based review.  If this is the case, we will notify you and work with your compliance officer to agree timing.

We prioritise our activity based on risk and where a business genuinely wants to comply, we want to help them comply.

When a reporting entity doesn't comply

We expect everyone to comply with the law, and we believe most individuals and businesses are willing to comply. We have a range of tools in our compliance toolbox, and our focus is on working with reporting entities to remedy situations. For serious or deliberate non-compliance we take a firmer stance. 

Prosecution for civil liability acts

In a recent court decision Qian DuoDuo Limited (QDD) was prosecuted for civil liability acts under the AML/CFT Act and fined $356,000.  The judgment determined widespread breaches of the AML/CFT Act. This included failing to undertake adequate and effective risk assessments, to conduct enhanced due diligence, account monitoring and record keeping.

Formal warning issued

In October, we issued a published, formal warning to IE Money Limited, an Auckland-based business that provides money remittance and foreign exchange services to domestic and overseas customers.

IE Money Limited failed to meet AML/CFT Act requirements of conducting customer due diligence, monitoring accounts and transactions, record keeping, and establishing, implementing and maintaining an AML/CFT programme. 

It is not alleged that IE Money Limited was actually involved in money laundering or the financing of terrorism. IE Money Limited co-operated during the on-site inspection and has taken remedial work since receiving our final inspection report.

We encourage everyone to refer to our website dia.govt.nz/amlcft regularly for updates on our guidance, information and advice.

The team are ready to assist either by phone - 0800 25 78 87 - or email the team on AMLCFT@dia.govt.nz.