Lawyers, you should take note that the Anti-Money Laundering and Countering Financing of Terrorism Amendment Bill (the Bill) could be passed as early as June this year. New Zealand Lawyers need to prepare for this.
This means you will have similar obligations to those that are currently imposed on banks and finance companies regarding monitoring for money laundering and criminal activities through your trust accounts.
It’s not clear at this stage how long you will have to prepare; however, we do know it will be before 1 July 2018.
In that time period you will need to complete a detailed AML/CFT risk assessment which considers:
- Nature, size and complexity of your business
- Products and services you offer
- Delivery channels you use
- Countries you deal with, and
- Instructions you receive.
Based on this assessment, you must then develop a programme for your business that sets out the policies, procedures and controls for detecting money laundering and financing of terrorism. You will also have to explain in that plan how you will manage and mitigate the risk of money laundering occurring in your business.
Your policies and procedures must address how you will meet your obligations under Anti-Money Laundering and Countering Financing of Terrorism Act (the Act) and, in particular, your obligation to conduct client due diligence (CDD).
CDD involves gathering and verifying information about your clients including verification of their identities at the start of your business relationship. Ongoing CDD obligations mean you must regularly review the information about each business relationship you have with your clients and reassess the level of the risk involved.
Other obligations under the Act include:
- Appointing an AML/CFT compliance officer to administer and maintain your programme
- Vetting and training your employees
- Regularly monitoring transactions and accounts
- Reporting suspicious transactions
- Monitoring compliance
- Regularly reviewing your risk assessment and programme
- Completing a two yearly audit, and
- Reporting annually to the Department of Internal Affairs (DIA).
It’s expected that the DIA will complete a sector risk assessment guide and, we believe, they will also be running roadshows throughout the country. In the meantime, however, we recommend you familiarise yourself with the AML/CFT requirements.
The AML/CFT regime will very much need a shift in mind-set and a re-evaluation of the manner in which your business is conducted. You will also need to factor in the administration time and cost associated with preparing the assessment and the programme, and your ongoing compliance obligations.
If you need guidance on complying with your AML/CFT obligations, feel free to contact Nicola Russ, head Simpson Western's Finance and Insolvency team. Since the introduction of the AML/CFT Act, Nic has worked closely with a number of finance companies on AML matters.