Issue #17    May 2018

Welcome

Welcome to our first newsletter of 2018.

You may have thought that you missed the first newsletter but you didn’t. In previous years we have sent you a newsletter earlier in the year and by now you would be receiving your second. Many things have contributed to the slight change in timing but the small delay is due mainly to the extensive work that the Department has undertaken to bring Phase 2 reporting entities into the AML/CFT system. This included a National Roadshow series to Lawyers and Conveyancers where the team presented 19 face-to-face sessions in 15 locations around the country! I can assure you that we really value the opportunity to communicate with you. All our newsletters will continue in their current form for the time being; however we are looking at ways to enhance our communication with you.

The most exciting news to tell you is that our team is growing and changing significantly. This is occurring to best meet the challenge of providing the most responsive regulation to our existing reporting entities and to bring the Phase 2 reporting entities into the AML system.

We are expanding in both staff numbers and geographical reach. A new AML/CFT structure is about to be introduced in June this year which will create a larger AML Directorate of 56 staff. These dedicated AML/CFT staff will include:

• Graduate Regulators
• Regulators
• Senior Regulators
• Practice Leaders
• Intelligence Analysts
• Operational Policy Analysts
• Engagement and Innovation staff
• Management

AML/CFT implementation progressing

The implementation of reforms to the AML/CFT Act is progressing well with lawyers and conveyancers the first of the new sectors to be covered by the Act. Throughout March DIA along with the FIU ran a series of roadshows to help lawyers and conveyancers come to grips with their obligations under the Act before 1 July when the legislation take effect. 

The guidance produced for lawyers and conveyancers was released before Christmas and can be viewed here along with other new and updated resources for all reporting entities. We recommend you check out the “Prompts and Notes” document, which contains useful guidance for all reporting entities in developing or reviewing their risk assessment and AML/CFT programme.  Updates of the 2011 Sector Risk Assessment guidance and the AML/CFT Programme Guidance will be released over the next few months. We will keep you posted as to when these resources will be available on DIA’s website.

Following on from lawyers and conveyancers, the next sector to be covered under the Act will be accountants. The guidance for accountants was released in March with roadshows taking place in May, while the legislation will go live October 1.  Following the release of the accountants’ guidance, the cycle begins again with guidance and roadshows for real estate agents who start being covered by the Act on 1 January 2019.

With the increase of reporting entities over the next two years the AML/CFT team at DIA will also expand. With the team 17 strong at the moment, we are looking to bring on a further 35 to 40 staff over the next year to meet the increased workload.

It will be a busy and exciting time ahead as we grow and make it harder for criminals to profit from their activities and maintain New Zealand’s position as the least corrupt nation on the planet.

Changes for Trust and Company Service Providers

All Trust and Company Service Providers (TCSPs) should be aware that Phase 2 of the AML/CFT regime has significant implications for them. 

Effective 1 July 2018, TCSPs will no longer be in a stand-alone category of reporting entity. Instead, and along with law firms, conveyancers, accountants and real estate agents, they will collectively be known as “designated non-financial businesses or professions” (DNFBPs). This will impact on the TCSP sector in the following ways:

1)  Currently, a business is captured as a TCSP if one or more of three specified activities is carried out as the only or principal part of its business.

2)  From 1 July 2018, a business (that is not a law firm, conveyancer, accountant or real estate agent) will be captured as a TCSP if it carries out any one of six specified activities in the ordinary course of business. Providing activities in the ordinary course of business is a much lower threshold than providing them as the only or principal part.   

3)  The newly introduced activities include managing funds, accounts or assets on behalf of a client and engaging in, or giving instructions on behalf of a client in relation to various types of business activity or transaction. 

4)  One of the three currently specified activities is also expanding. Along with arranging for a person to act as nominee director or nominee shareholder or trustee, persons or businesses acting in this capacity may also be TCSPs under the AML/CFT Act.

5)  Rather than reporting only suspicious transactions, TCSPs will now have to report all suspicious activities associated with their TCSP services.

Responses were mostly positive and show the sector has an increased knowledge and understanding of their AML/CFT obligations overall.  We also received constructive feedback on the effectiveness of our communication style and about our regulatory approach.  We welcome the ideas by respondents on ways that we can continue to improve how we work and have been using this feedback to do so.

If you would like to see the survey results click here: AML/CFT Survey 2017

The 2018 survey will be sent out later this month and is a great way for us to continue 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.