Issue #19    March 2019

Strengthening the System

Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) measures aim to disrupt and deter financial crime, increase confidence in the New Zealand financial sector, and meet international standards for combating money laundering, terrorism financing and other related threats to the safety of our communities. At least  $1.35 billion is laundered every year in New Zealand alone, with the true cost being much higher due to the social harm that is caused.

Assets seized by the NZ Police that they suspect are the proceeds of crime include real estate, bank accounts, cash, shares, and high value goods such as jewellery and art.

Expanding the reach of the AML/CFT system

On 1 January 2019, the AML/CFT laws expanded to the real estate sector, further strengthening our system in New Zealand.

If you are a real estate agency and have not yet registered your compliance officer with us, please do so here.

On 1 August 2019 the AML/CFT legislation will extend to cover some high value dealers and the NZ Racing Board. We briefly explain the impact for high value dealers in this newsletter. Over the next couple of months, we will also publish guidance for those businesses affected.

Supporting our reporting entities

We are currently developing a technology platform so that our reporting entities can submit their annual reports entirely online. This replaces the process used in previous years where a manual PDF had to be completed and emailed through to us. Compliance Officers will be sent more information in the next couple of months about what to expect.

Following feedback and to help make it easier to find information from us, we are making some changes to our website. Next month we will launch a new look landing page and with sector specific pages. These will replace the existing Codes of Practice and Guidelines page. 

We have also updated the FAQs on our website, including more information about suspicious activity reports and customer due diligence. There is also now a section for Real Estate Agents.

Be wary of claims from service providers

On a final note, please be reminded that DIA does not endorse private sector AML services – consultancies, auditors or technologies. We are aware of some technology service providers claiming that we endorse or approve their technology platforms. This is not true. Please be mindful of selecting products or services that claim they are “DIA approved” or “endorsed”.

As always, 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:

• High value dealers come on board 1 August 2019
• Risk based regulatory approach
• Suspicious activity reports

High value dealers come on board 1 August 2019

On 1 August 2019, the AML legislation will extend to cover some high value dealers.

Criminals often target high value dealers and purchase goods with the proceeds of their crimes. This includes items such as cars, motorcycles, jewellery and art. Including high value dealers in the AML legislation will make a difference and help prevent money laundering in New Zealand.

The legislation will apply to high value dealers who buy or sell specific goods using cash transactions over a threshold amount. The Ministry of Justice has completed its consultation on the threshold amount ($5,000, $10,000 or $15,000), which will be confirmed once a decision is reached by Cabinet.

The compliance obligations differ to other sectors who must comply with the AML/CFT Act. From 1 August 2019 high value dealers will need to:  

• Verify customers’ identities when they receive cash in single transactions, or a series of related transactions, equal to or above the cash threshold;
• Report prescribed transactions equal to or above the cash threshold; and
• Keep records and undertake an audit if requested.

High value dealers may also report any suspicious activities that appear to be linked to money laundering or terrorism financing.  

We know how important brand and reputation is to businesses in New Zealand. We also know how disruptive and harmful it could be to a business who is unwittingly taken advantage of by money launderers or those involved in financing terrorism.

One of our regulatory tools is a desk-based review that enables us to gain insight to how well the business is complying with the legislation, as well as identify possible improvements. 

We have started desk-based reviews for Accountants and Lawyers and one area for improvement is the quality of the risk assessment, a foundation document for a reporting entity’s AML/CFT programme.

A risk assessment must be tailored to the specific business and there should be a clear methodology. We do not publish templates as the development of a risk assessment must be customised to:

• Identify the risks of Money Laundering (ML) or Financing Terrorism (TF) that the business may reasonably expect to face.
• Determine the level of risk involved, including the ML/TF risks presented by its customers/clients, the products and services offered, and the countries dealt with.
• Consider guidance produced by DIA as AML/CFT supervisor and the NZ Police Financial Intelligence Unit, such as the sector guidelines, the relevant sector risk assessment, and the National Risk Assessment.
• Be reviewed regularly to ensure it is up to date and describe how it will be kept up to date.

If we are doing a desk-based review of your business, your compliance officer will receive a written request from us asking for a list of documents – such as your AML/CFT programme, risk assessment and training records – and a time frame in which to send them to us.

After we have reviewed and assessed your documents, we will provide written feedback. If we identify any areas for improvement, we will work with the compliance officer on a remediation plan.

For more help, see AML/CFT Risk Assessment Guideline and the AML/CFT Risk Assessment and Programme: Prompts and Notes for DIA Reporting Entities

Suspicious activity reports

Submitting Suspicious Activity Reports (SARs) is an important AML/CFT measure for detecting money laundering and terrorism financing. They are submitted by a reporting entity through goAML when they observe activity that raises red flags and gives them reasonable grounds for suspicion.  

The submission of a SAR is anonymous and confidential.

After an SAR is submitted, the information is analysed and may be used for criminal investigations or national security matters. Reporting entities must not ‘tip off’ any person who may be the subject of a SAR. This is to keep people safe and to ensure that any criminal investigations or security matters are not impeded.

For more information read the Suspicious Activity Reporting Guideline available from the NZ Police FIU website.

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.