November 2019

We’re committed to providing news and information to businesses to help you better comply with the Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) Act. We know how disruptive and harmful it can be to a business that is unwittingly taken advantage of by money launderers or those involved in financing terrorism. Complying with the AML/CFT Act will help reduce the chance of that happening. Keeping our money clean is also vital to protecting New Zealand’s reputation as a good place to do business.

In this issue:

• AML/CFT information for customers and clients
• High risk jurisdictions list update
• AML/CFT audit
• New webinars
• What to expect from a desk-based review
• Your annual AML/CFT report.

AML/CFT information for customers and clients

Many of you have told us you find it hard to explain to your customers why they must provide their identity documents or information about the source of their wealth. There is a general overview brochure available on the Ministry of Justice website that can be provided to your customers.

There is also more detailed information on our website, including an explanation sheet of why a customer may be asked to provide proof of identification. This information sheet is available in three languages - English, Chinese and Samoan:

• CDD information sheet: proof of identification - English
• CDD information sheet: proof of identification - Chinese
• CDD information sheet: proof of identification - Samoan

High risk jurisdictions list update

The Financial Action Task Force (FATF) updated its list of ‘high risk and other monitored jurisdictions’ on 18 October 2019. New Zealand is part of FATF, an international body established in 1989 with the objective of setting standards and promoting effective implementation of legal, regulatory and operational measures for combating ML/TF and other related threats.

The additional countries on the FATF list are Iceland, Mongolia and Zimbabwe. These countries are identified as having strategic AML/CFT deficiencies and have developed an action plan with FATF to resolve them. Ethiopia, Sri Lanka and Tunisia have come off the list so are no longer subject to FATF’s ongoing monitoring process.

This is a timely reminder that you are required to conduct an enhanced level of customer due diligence on all non-resident customers from countries that have insufficient AML/CFT systems or measures in place. There are additional requirements to monitor and examine business relationships and transactions involving these countries, and where necessary, have additional measures or restrictions on dealing with them.

Please also remember that the level of ML/TF risk associated with a country is much wider than whether it has insufficient AML/CFT measures in place. For example, this includes whether it has high levels of organised crime, bribery or corruption, or borders a conflict zone, or is associated with the production or transnational shipment of illicit drugs.  Further information relating to the requirements of the AML/CFT Act in relation to country risk is in the AML/CFT supervisors’ Countries Assessment Guideline.

AML/CFT audit

Part of your requirements under the AML/CFT Act is to have your risk assessment and AML/CFT programme audited every two years. For many of the businesses the Department supervises this obligation will first come into effect next year.  

We recommend businesses refer to the updated Audit Guidance and commence planning for your audit well ahead of time.  It’s best to get this sorted sooner rather than later. The longer you leave it, the harder it may be to find a suitably qualified Auditor that’s available.

More information about the Audit obligation is on our website, including the updated Audit guide.

New Webinars

Writing a Risk Assessment

We’ve prepared a webinar on how to complete a ML/TF risk assessment for your business.

Knowing your ML/FT risks is fundamental to meeting your obligations under the AML/CFT Act. The Department has created a webinar to help businesses with their ML/FT risk assessments.

The webinar covers:

• What a ML/FT risk assessment is and why you need one;
• What your risk assessment must cover; and
• Methodology for conducting a risk assessment.

Writing an AML/CFT Programme

Once you have assessed the ML/TF risks your business may face, the next step is to write an AML/CFT programme to manage and mitigate the risks. There are minimum requirements that you must have procedures, policies and controls for.

We’ve prepared a webinar to help businesses understand how to write an AML/CFT programme and the minimum requirements that must be covered.

The webinar covers:

• What is an AML/CFT programme;
• Tips for writing your AML/CFT programme; and
• What your AML/CFT programme must cover.

We are currently working on a series of webinars for compliance officers which will dive deeper into some of the AML/CFT requirements.

The next webinar will be on Customer Due Diligence. Keep an eye on our website and in our newsletters to be updated on its release.

To make sure we are covering the topics you need help with most, we have created a survey. Please let us know what you would like us to focus on.

What to expect from a desk-based review

A desk-based review is a review of key documents that you’re required to have to ensure compliance with the legal requirements of the AML/CFT Act. This enables us to gain insight into how well your business is complying with the legislation, as well as identify areas for improvement. 

If we are doing a desk-based review of your business, you will receive a written notification from us. We will provide a list of documents – such as your risk assessment, AML/CFT programme, and training documents – and we will provide a timeframe for you to send them to us. 

After we have reviewed and assessed your documents, we will provide written feedback. If we identify any areas requiring improvement, we may work with you on a remediation plan.

For help with your written documents see AML/CFT Risk Assessment Guideline and the AML/CFT Risk Assessment and Programme: Prompts and Notes for DIA Reporting Entities.

Your annual AML/CFT report

Thank you to those that have recently submitted their annual AML/CFT reports to us. For some sectors, this is the first time you have had to do so.

Your annual report is a key part of your requirements under the AML/CFT Act. It’s an opportunity for you to review the status of your risk assessment and AML/CFT compliance programme. It also helps us as your supervisor to get to know your business better.

The Department uses the information from annual reports to deepen our understanding of how businesses meet their AML/CFT obligations and assess and mitigate their ML/TF risks. It also helps us better understand the sectors we supervise. This is particularly important for our newly supervised sectors.

Our regulatory practice is risk based and we use the information we get from annual reports as part of our risk rating of businesses.  The risk rating helps us to decide which businesses may need a desk-based review or an onsite inspection and what sectors need more guidance and support if common issues are arising.

AML newsfeed

Here are links to AML news you may have missed on our website: 

• $4 million penalty for repeated AML non-compliance
• Shared learnings from High Value Dealers getting on board with AML/CFT Act.
• Reminder for reporting entities relating to higher risk jurisdictions.
• Statement on the Kiwi Access Card.  

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.