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A couple of weeks ago we attended the successful FIU/ACAMS Conference here in Wellington, along with a number of businesses from our sector. I want to share some of the feedback we received from our sector, during their working group session, and my response. My thanks to Phil O’Connell from SkyCity Casino and Richard Manthel from AML Solutions who co-chaired the session and passed on their notes to me so I could best respond.

I was very happy to receive positive feedback on the collaborative and positive approach of my team. It’s great to get this feedback, as we all try very hard to be approachable and helpful as much as we can.

The group noted that the customer due diligence (CDD) information sheet we provided for businesses to use with their customers was very valuable, and that other similar tools would be useful. You can find the CDD information sheet here. If you have suggestions for other useful tools we could develop for you please send us an email at amlcft@dia.govt.nz we’d love to hear your ideas! 

The group asked for more help with enhanced due diligence (EDD). I can tell you that the three supervisors (us along with the Financial Markets Authority and Reserve Bank) have begun work on EDD guidance. The guidance is still under development as we need to make sure that it aligns with work being done by the Ministry of Justice to expand the AML/CFT regime (they are considering the capture of lawyers, accountants, real estate agents, and high value dealers). We’ll let you know when it’s available next year.

The group also noted that feedback from the Department on the annual reports would be useful. We provided some information on last year’s reports in our last newsletter here (see “3. Interesting facts from the last annual report”), but we’ll take that feedback on-board and provide more information on this year’s reports, once we’ve completed our analysis.

Another point the group made was that there was a lack of court action against non-compliant businesses. The Department has recently filed proceedings in the Auckland High Court against two money remitters under the AML/CFT Act. These are the first civil proceedings to be filed since the Act took effect in June 2013. You can find our media release here. The Department is alleging that the two businesses have failed to meet AML/CFT requirements including CDD, account monitoring, and record keeping. When a business who is required to comply with AML/CFT obligations continues to fail to do so, we can and will take action.

There was also feedback that a number of businesses would like a single point of contact at the Department. If you don’t already have a contact and you would like our help please use this address and we’ll get in touch with you amlcft@dia.govt.nz

The other point made was that there was an un-level playing field for some businesses if their competitors are not compliant. I really encourage you to let us know if you are aware of any businesses who should be complying with the AML/CFT Act that aren’t meeting their obligations. We do our best to ensure everyone is compliant that should be, but if you have information that will help us with that, we would really appreciate it.

Thanks to those who provided feedback, it’s great to get the opportunity to hear how things are going for you and how we can work smarter to help you protect your businesses from money laundering and terrorist financing.

Natasha Weight
Manager Financial Integrity

This year we are pleased to see the positive trend continue in annual reporting. The percentage of annual reports filed with the Department on or before the deadline has continued to steadily increase over the last two years. Our statistics show that in 2015 there was a 3 per cent increase from the initial year of annual reporting and this year, there has been a 5 per cent increase in on time reporting.

This steady rise demonstrates the increasing level of AML/CFT awareness across all of our reporting entities. As the AML/CFT regime matures, reporting entities are becoming increasingly familiar with the annual report requirement and they are using the annual report as a means to demonstrate their willingness to do the right thing. We understand that reporting of this type can be time consuming and acknowledge all the effort and hard work invested by reporting entity Compliance Officers to achieve this great result. Your hard work is appreciated by the Department.

If you are one of the few reporting entities still to file your annual report, the time to act is now. The upload facility is still available here Annual AML/CFT report upload facility and our webpage will provide you with all the information you need to submit your annual report.

If you have additional questions please get in touch with one of our team via email at amlcft@dia.govt.nz or by Freephone on 0800 25 78 87.

Some of you may have noticed our increased focus on conducting on-site inspections of reporting entities and wondered why we do them and what they involve.

The authority to carry out an on-site inspection of reporting entities comes from section 132(2)(a) of the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (the Act).

On-site inspections are a ‘hands on’ way for the Department’s Financial Integrity Team to determine whether a reporting entity has adequate and effective anti-money laundering and terrorist financing measures in place and that its obligations under Part 2 of the Act are being fulfilled.

On-site inspections are normally carried out by two members of the Financial Integrity Team and can range from several hours up to several days depending on the size and complexity of the reporting entity. We endeavour to provide you with as much notice as possible if we intend to conduct an on-site inspection of your business. During the inspection, our team will speak with you and your team members and may also wish to speak with any third parties who conduct due diligence on behalf of your business. We will also review samples of your business records for consistency with your AML/CFT programme and compliance with the Act.

We aim to make our on-site inspections inclusive, interactive and informative. We will advise you of any actual or potential issues identified during the inspection and also provide advice on the most appropriate and practical solutions.  On completion of the inspection, we will give you a detailed report of our findings that uses an easily understandable rating system and you get the opportunity to ensure the report is factually correct. If non-compliance is found, the Department may decide to work with you to remediate (correct) the non-compliance, or to take appropriate enforcement action as set out in Part 3 of the Act.

Feedback from our reporting entities is that you prefer to meet with us face to face. On-site inspections are a great way for our team to meet and connect with AML/CFT compliance officers around the country and throughout our reporting sectors. They give us the opportunity to listen to the common AML/CFT issues and challenges you face every day.

While there is no formal registration requirement, the Department maintains records of reporting entities that are captured under the Act. The list of reporting entities supervised by the Department is published quarterly and can be found here on our website list of reporting entities. If you believe that you fall under the supervision of the Department but are not listed as a reporting entity on our website, please contact us via email at amlcft@dia.govt.nz or by Freephone on 0800 25 78 87.

You will need to provide your name, company’s legal and trading names, your contact details, a description of the products/services you offer and your office location(s). Our Financial Integrity Team will assess the information you have provided and decide whether you need to comply with the Act. If you need to comply, we will add you to our list of current reporting entities and assist you to understand the scope of your AML/CFT obligations. Please remember that despite our desire to help where we can, we do not provide legal advice. In helping you decide whether you are a reporting entity under the Act you may choose to seek your own legal advice.

Some of you may have received requests from overseas individuals and companies asking you to conduct customer due diligence (CDD) on them so that they can get an IRD number. This is because of recent changes to tax law. Information on requirements for obtaining an IRD number is available on the Inland Revenue website but to make it easier we have summarised it for you:

We have been informed by IRD that since 22 August 2016, offshore (overseas based) persons who apply for an IRD number are required to have:

• a current and functional New Zealand bank account, or
• CDD completed by a New Zealand reporting entity under the Anti-Money Laundering and Counter Financing of Terrorism Act 2009.

An offshore person includes individuals, companies, trusts, unit trusts, non-individual partnerships, unincorporated joint ventures, or other unincorporated bodies.

There is no obligation on a New Zealand reporting entity to provide CDD for a person applying for an IRD number. However, if an IRD number applicant is not an existing customer of a New Zealand reporting entity, they may choose to become a customer so they can meet the CDD requirements of Inland Revenue. If you are taking on these customers they will ask you to complete section 10b of the IR742 form (for an individual), or section 9b of the IR744 form (for a company, estate, trust, partnership or other organisation).

Alternatively, you can provide a letter confirming you have completed customer due diligence on the offshore individual or company in accordance with the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (AML/CFT Act)

Just like any situation where you are taking on new customers, if you complete CDD on an offshore individual or company, it is important that the level of CDD is proportionate to the customer risk profile. All identity verification information must be retained on file in accordance with your AML/CFT record keeping policy. Enhanced CDD should be completed where necessary as outlined in section 22 of the AML/CFT Act.

For more information about this legislation change and the way it may impact you please go to the Inland Revenue website located here or contact Inland Revenue directly on 0800 775 247.