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Welcome to another year of AML/CFT News, and to our new subscribers. Most of you will know that the AML/CFT Amendment Bill has been introduced to parliament. The bill proposes to bring lawyers, accountants, real estate agents, and some high value dealers into the AML/CFT regime. The Department of Internal Affairs is the proposed new supervisor for these new sectors. The select committee process for the bill is now underway. You can make a submission here. Submissions close on 20 April 2017.

The three AML/CFT supervisors recently attended and presented at the AML Solutions Summit in Auckland.  It was a good opportunity for me to talk to both those businesses with current AML/CFT obligations, as well as the businesses proposed to come in under the amendment bill.

My presentation was based on how we approach supervision and our efforts to be a modern responsive regulator. We’re focused on wanting to understand your business and the challenges you face, and to help you keep criminals from misusing your business. We want to ensure a level playing field as we know the majority of businesses want to do the right thing. Most importantly we are here to help.

Natasha Weight
Manager Financial Integrity

We are pleased to inform you that the results of our 2016 awareness survey are now available on our website. There is also a supporting document containing statistics and feedback from our sector. 

Like last year, we received a response rate of 35 per cent. Thank you to those who made time to respond, we really value your feedback. 

Responses were mostly positive and show the sector has an increased knowledge and understanding of AML/CFT overall.  We also received constructive feedback on the effectiveness of our communication style and about our regulatory approach.  We want to continue to improve and welcome the ideas by respondents on ways to do so.

If you would like to see the awareness survey results click here.

The 2017 survey will be sent out in May and is a great way for us to receive feedback from reporting entities right across our sectors. So if you receive the survey by email, please don’t disregard it, we would appreciate you taking the time to complete it and let us know what you think.

The Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (Act) requires a reporting entity to have adequate and effective procedures for monitoring and managing compliance with its AML/CFT programme. 

When considering how to meet this requirement, you should think about how you will know your people are following your AML/CFT procedures. Perhaps ask yourself what steps you need to take to ensure that they are?

How you choose to do this will vary depending on the size, structure and complexity of your business. 

For example, you could carry out sample checks of Customer Due Diligence (CDD) material gathered by your staff. Alternatively, you could consider an approval system so that a customer cannot be signed up until a second person has checked that all procedures have been followed and the correct information obtained. 

Once you have decided what procedures for monitoring and managing compliance best fit your business, you should make sure you document them by providing a detailed description in your AML/CFT programme.

When conducting on-site inspections, our team often has to explain the obligations relating to suspicious transactions. 

While most businesses know they must report a suspicious transaction that has been conducted, it is important to remember that the reporting requirement under Section 40 does not just relate to completed transactions. The reporting obligation also applies where a customer seeks to conduct a transaction that is suspicious, even if the transaction is not completed. This is referred to as a proposed transaction. 

This means that if a customer tries to conduct a transaction through your business, and you have reasonable grounds for suspicion, you must still report it. An example would be a transaction where you commenced enhanced CDD, but the customer failed to provide anything so the transaction did not proceed. If you consider the transaction suspicious, it must still be reported to the FIU using the goAML web portal within three working days of the suspicion being formed. We recommend specifically reading Section 40 of the Act at the next scheduled review of your compliance programme to ensure it contains adequate procedures for reporting a proposed transaction.

Keeping detailed written records of key findings forms an important part of your AML/CFT obligations. Section 57 (g) of the Act requires that a reporting entity’s AML/CFT programme has provision for examining and keeping written findings specifically relating to:     

• complex or unusually large transactions,
• unusual patterns of transactions that have no apparent economic or visible lawful purpose, and
• any other activity that the reporting entity regards as being particularly likely by its nature to be related to money laundering or financing of terrorism.

Our experience has taught us that this component of the Act is sometimes confused with the requirement for account monitoring.

Put simply, account monitoring should raise red flags in relation to the three circumstances listed above. Written findings go one step further in providing a detailed record of your examination of the red flagged transaction. This includes where you have carried out enhanced CDD, and any other steps you have taken to determine if there are grounds for suspicion. 

If the examination of the red flagged transaction finds it to be legitimate and there are no reasonable grounds for suspicion, you must still record the outcome. Properly documenting this decision will protect you and your business from any subsequent questions that may arise about the purpose of that transaction. In the event that any wrongdoing on the part of the customer is later identified, you can show that your business took the required steps to identify, examine and record the decision making process.   

If suspicion is formed during the examination of the transaction or proposed transaction, a Suspicious Transaction Report (STR) must be submitted to the Financial Intelligence Unit using the goAML web portal within three working days of the suspicion being formed.

Have you changed your company’s name, moved office or got a new compliance officer? If you have, we’d like to know.

We want to make sure that we have the correct contact details for you and your business. In 2016, the annual reporting process highlighted a number of companies who had changed names or appointed a new AML/CFT compliance officer.

It is important to keep us up to date with your company changes. This will ensure you don’t miss any important information we need to send you.

If any of your company’s information has changed, please send us an email at amlcft@dia.govt.nz